Andy Blunden March 2003

Amartya Sen


On Ethics and Economics, Amartya Sen, OUP 1998;
Commodities and Capabilities, Amartya Sen, OUP 1998;
Utilitarianism and beyond, Ed. Amartya Sen, Cambridge 1999.

This article is supseded by: Amartya Sen on Well-being and Critical Voice.


The drift of Amartya Sen’s “Nobel Prize Winning” contribution to economic theory is an amendment to utilitarian theory as a guide to public policy.

Utilitarianism

As a guide to public policy, utilitarianism is the doctrine that the best state of affairs is that in which the sum total of “utility” is a maximum. This primitive conception is shot through with anomalies and unwarranted assumptions, but Sen believes that it is reasonable to proceed towards an effective doctrine to guide public policy by criticism and transformation of utilitarianism. Whether the result is an improved form of utilitarianism or “beyond utilitarianism” is, for Sen and justifiably, a secondary question.

There are many forms of utilitarianism; the simple thought that we ought to desire that people get what they want to the maximum degree possible, raises more problems than it answers.

In its crudest form, utilitarianism firstly accepts that what people want and how much they want it is given by how much they are prepared to pay for it on the existing market, which, since the seller will always ask as much as possible for what they sell is equal to what they pay for it. This yields “happiness” or “satisfaction” or “desire fulfilment” as an addable (scalar) quantity, so that the sum-total of purchases in the national market place yields a measure of how happy the population is, and consequently, the aim of the government ought to the maximisation of GDP.

This result is so absurd that it barely needs criticism:

and further:

All these criticisms of utilitarianism were well-known a long time ago. (Marx ridiculed them in the 1860s.) One of the “improvements” of utilitarianism is so-called Choice Utilitarianism. This gets rid of the absurdity of summing utility by basing the mathematics on either/or choices by economic agents, rather then being concerned with adding up values. This game-theoretic mathematics allows policy to orient towards the “Pareto Optimum”. The Pareto Optimum is a state of affairs defined as the state in which there exists no potential exchange between two agents left unmade which would mutually beneficial. It can be mathematically proved that a “perfectly competitive” market, achieves a Pareto Optimum. In other words, perfect laissez faire economics produces a Pareto Optimum, the situation in which everyone has the best they can get. Any form of regulation whatsoever is a barrier to the free exchange between agents finding the Pareto Optimum.

This version of utilitarianism is just as bad. If public policy reduces everyone to penury, only provided that everyone is free to buy anything they want from the empty market, then this is the best possible state of affairs. A devastating recession which leaves everyone bankrupt and starving is just as much a Pareto Optimum as a full-on boom when everyone is living on credit.

Utility, Opulence and Capability

Amartya Sen makes a number of specific criticisms of utilitarianism which are his own. The most significant of these is the criticism of “utility” as a measure of well-being. He rightly points out that “functioning” is a more rational measure of well-being than opulence — command over a mass of commodities, or utility — the value of desired objects. People can use things they command, whether purchased or enjoyed by nature, in order to achieve a level of functionality in life, but the level of functionality achieved is dependent on numerous factors over and above the things used. A landless peasant may be very “happy” at getting a pile of straw to sleep on for the night, and may have no “desire” for crepes suzette, but neither fact contributes anything to a measure of their well-being. Functionality, however, is amenable to perfectly objective measurement: life expectancy, freedom from illness, level of education, freedom, access to love ones, etc.. Measurement of expenditure on food, medicines, educational services, transport etc., indicates only the effort taken under given conditions to achieve a level of functionality, but this may be as much inversely related to the degree of functionality achieved as directly related. The more a person is subject to crime, the more they spend on crime prevention, the more unhealthy a person is, the more they spend on medicine. Public policy can therefore only measure its own success by the summation of functionality or capability.

On top of this, Sen points out that even the level of functionality achieved is not a proper measure; in the first place, someone may not want to achieve a certain functionality, and in the second place, such a capability (such as the ability to do violence to other people) may not be morally valued by the community as a whole. Therefore, the more ephemeral capability is the true measure of well-being, rather than achieved functionality.

Utilitarianism is a justification for free-market capitalism. The phenomena described in the dot points above are all too familiar phenomena of the action of the free market. They are not just “anomalies” for utilitarianism, they are its unambiguous expression. The point of utilitatarianism is simply to prove that all these abominations are “the best of all possible worlds” ridiculed three hundred years ago by Voltaire.

It is clear enough that utilitarian ethics is simply a justification for free-market economics which has the superficial appearance of intuitive validity. So there is value in criticising utilitarianism, in exposing its fraudulent character, and in trying to produce an alternative measure of the goodness of a state of affairs. Such a measure could be used to legitimise public policy which is not aimed just at maximising the accumulation of capital.

“Green economics” has had a similar aim, to encourage governments to keep statistics on values which are external to the economy (such as forests and rivers, clean air and so on) so that the government has available a measure of its success or failure, alternative to the calculation of GDP.

The great advantage of utilitarianism in its most na´ve and primitive form, is that it fairly well captures the real ethic of capitalism. That is, it is very poor ethics, but reasonably good economics. (I say “reasonably good” because of course no real person ever acts as the narrowly self-interested infinitely well-informed computer which utilitarian economic assumes them to be.) The definition of the free economic agent which constitutes the definition of the person for utilitarianism is the basis for the exchange of commodities at their value, and constitutes the ideal condition for the accumulation of capital.

Sen raises the deeper question raised by the critique of utilitarianism as public policy, as to what, if any, justification is there for presuming that in a community there is any agent having the legitimacy to choose one state of affairs over another and determine public policy accordingly, at all. Or, more specifically, where such legitimacy may lie. To construct a theory of capability-utilitarianism still supposes that the agency which collects the data on capability and enforces laws aimed at maximising it has the legitimacy to do so.

And incidentally, the project also raises the question of the capability to do so.

Utilitarianism in its na´ve form was nothing but an apology for the naked rule of capital, whose function is to advise governments to let the market do its work without interference, to justify self-seeking by “proving” that the greatest good for the greatest number is achieved by unfettered individualistic self-seeking. As a guide to public policy therefore it was simply an advice to do as little as possible, within the limits imposed by avoiding or suppressing riot, revolution and war.

Once we say that, actually, the market does not produce the greatest well-being for the greatest number, or any version of social justice at all, then the provision of a measuring scale is a fairly marginal contribution to doing something about the problem.

On the one hand we have an economic system, capitalism, based on the free exchange of commodities at their value, whose outcome is the concentration of economic and therefore political power in the hands of a few, and on the other hand a state and governmental machine which aims to measure and regulate this economy. Perhaps being in possession of a sound critique of utilitarian ethics makes it easy to interfere in the market with a good conscience, but we are still a long way short of an ethic which can implement a general improvement of living capabilities.

The thermometer can tell the doctor when you have a fever, can cannot cure the illness. Most people don’t need a thermometer to know when they have a fever.

Ethics and Economics

Sen examines the relation between ethics and economics historically, in terms of current interrelations and in terms of future possible development. Sen refers to the “ethical” and “engineering” aspects of economics. He observes that the first work of the “engineering” variety was written at the time of Aristotle, but in Sanskrit. In European history, that is to say in the history which gave birth to capitalism, the parting of the way between ethics and political economy falls between Adam Smith’s writing of his Moral Philosophy in 1759 and The Wealth of Nations in 1776.

Economic science (or “economic engineering” as Sen calls it) has throughout its history been developed for the purpose of providing advice to government on economic, fiscal, monetary, social, employment and trade policy, and generally only secondarily for the purpose of helping capitalist entrepreneurs make money more effectively. Thus, the motive force for the development of reflections on economic activity to take the scientific path arose from two interrelated departures: firstly the emergence of the market itself as a dominant and overarching fact of life, rather than a peripheral and manageable phenomenon, and simultaneously the emergence of civil governments separately from the life of civil society itself.

Thus while the population was split into buyers and seller of labour-power, owners and users of the means of production, productive activity split into a labour process and a money process, a relation in which the money-process dominated and controlled the labour process, at the same time, the process of managing the production process split into industry on the one hand and a central regulating agent, the government, on the other.

The split between ethics and economics is nothing more than the ideal reflection of the split between productive activity and control of that activity, between practical and theoretical activity.

To heal the fracture between ethics and economics as Sen hopes, can only be achieved by healing the rift in society itself between labour and exploitation, between practical and theoretical activity, between production and government. This when Sen correctly raises the legitimacy of economic management by government he gets closer to the problem of the separation between ethics and economics.

Just as it was discovered that the only solution to the “population problem” was the achievement of self-determination by women, the only solution to the “poverty problem” is self-determination for the working class.

Improvements to economic science are useful as theoretical tools for the advice of government; ethics talks about how we should live. The call to overcome the divergence between ethics and economics is not misplaced, but it is not something which is resolved in the domain of theory but in social struggle.

 


Reviews of other works by Amartya Sen
Justice, Amartya Sen and mathematics, review of Rationality and Freedom
Sen on Participation, review of India: Development and Participation
Amartya Sen on well-being and critical voice, overview of the development of Sen's ideas.