Our good friend Amartya Sen checks-in recently with an essay in the New York Review of Books (March 26, which I am just getting to). Our good friend, because as a leading economist he is also a serious and long standing student of development challenges given his work on poverty, income distribution, famine, and so on. The occasion of this particular NYRB essay is the ongoing financial crisis. In it, he addresses recent calls for a “new economics,” as exemplified in the "New World, New Capitalism" symposium held in Paris in January, hosted by Nicolas Sarkozy and Tony Blair. The idea, as Blair proposed, is to call for a new financial order based on “values other than the maximum short-term profit.”
Sen’s approach here is deft, as it so often is. Deft, because “new” is always difficult. New proposals are so seldom truly new. Why try? Deft, even more so because his homely recommendation is to revisit a writer we once thought we knew to find that we knew him not. In his gentle way, Sen reminds the educated reading public that Adam Smith was in no way an apologist for unfettered markets, and was fully aware of what markets might not do not do so well, like provide for the unfortunate. And he supported extra-market policies. He reminds this public, and professional economists too, that The Wealth of Nations, and even more so The Theory of Moral Sentiments, expounded at length on the dependence of markets on trust among economic actors as well as on market externalities such as public education, public health, and other services.
Rather than a new economics, Sen suggests that economists need to revisit the scripture in whose name they have so often demeaned non-market policy initiatives, and rethink the value of such initiatives. Sen says, “If we were to look for a new approach to the organization of economic activity that included a pragmatic choice of a variety of public services and well-considered regulations, we would be following rather than departing from the agenda of reform that Smith outlined as he both defended and criticized capitalism”. So, Sen doesn’t actually disagree with Blair’s point. He simply speaks in a more respectful way to the conservative fibers of our being. Markets need not be abandoned. They need not even be compromised. Rather they need to be supported by non-market services and conditions. In the end, Sen suggests that the current economic crises do not call for a new capitalism, “…but they do demand a new understanding of older ideas, such as those of Smith…” Clever, even if heartfelt.
Sen is also our good friend because so much of his work points toward communication and its essential role in the provision of extra-market services and conditions. His work on public choice argues that freedom is not so much the enabling acquisition of wealth as it is the capability to choose whether and if so what kind of wealth we might want, or what kind of education, or welfare services or for that matter art. As he says in Development as Freedom, “… it is the people directly involved who must have the opportunity to participate in deciding what should be chosen.” This participation in deciding what should be chosen speaks to the need for government agencies to broadly engage multiple stakeholders in the development of public policy, to the need for media development to make this possible, and to a range of other communication processes that are necessary if societies are to evolve the external conditions that efficient markets require.
It is through this proper balance between citizen choice and market mechanisms that development serves, as Sen says, freedom. This view is of special relevance to an institution like the World Bank, depending so exclusively as it always has on economic thought. It is a view arguing that communication may not be a panacea to development challenges. Certainly it is no substitute for economic analysis. Nevertheless, it makes a compelling case for the proposition that communication is an essential part of the toolkit for development analysis, planning, and implementation.
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