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Thursday, May 14, 2009

Development as Freedom

Political, Economic, and Social Freedoms Are Often Complementary Goods

Amartya Sen, the winner of the 1998 Nobel Prize for Economics, has been called a “student of the world’s miserable.” Sen’s research has concentrated on the economic problems that affect the world’s poorest citizens: chronic hunger, famine, illiteracy, infant mortality, and disease. For the past 35 years, he has devoted his considerable scholarly talent to solving the problems of economic development in poor countries.

In his latest book, Development as Freedom, Sen defines development as “the enhancement of freedoms that allow people to lead lives that they have reason to value.” He believes that economists have put a misplaced emphasis on GDP as the golden measure of development, and thus his definition goes far beyond that of simply maximizing per capita income. Sen argues that if increasing incomes in a country are not accompanied by other factors that define a high standard of living (such as political freedom, the availability of “social goods,” including education, health care for all citizens, and protection from hunger and premature death) then the country is only getting richer. It is not truly “developing.”

Though many economists assume that a high per capita income is a necessary prerequisite for these other forms of progress, Sen cites several examples that refute this assumption. One such exception is the Indian state of Kerala, which has a high life expectancy, low fertility, and low illiteracy compared to countries such as Brazil, South Africa, and Gabon, which are much richer economically. (Indeed the life expectancy of the citizens of Kerala exceeds that of African Americans despite a 20-fold difference in average incomes.)

Political, economic, and social freedoms are often complementary goods, Sen maintains. For example, expanding social freedoms by providing educational opportunities (especially among women) tends to increase income and reduce infant mortality. Similarly, economic freedom leads to faster income growth, which in turn provides the resources necessary for education, health care, and similar goods.

Perhaps the most interesting complementarity of freedoms Sen addresses relates to his well-known work on the relationship between famine and democracy. Although famines have occurred throughout history and remain common today, Sen documents that famine has never occurred in a functioning democracy. He reasons that freely elected governments cannot allow their own people to die en masse and expect to remain in office very long. Thus a democracy not only provides its citizens the freedom of political process but also offers a degree of security from the most destructive political bungling.

Sen’s childhood memories of growing up in famine-stricken Bengal, India, have given him a strong sympathy for the plight of those in “grinding poverty,” but he does not generally advocate a systematic transfer of income from rich to poor. Instead Sen focuses on providing the poor with the freedom to live rewarding lives. While this may entail public expenditures for education, health care, or emergency income security, he argues that one cannot live a fulfilling life accepting handouts. Alas, Sen evidently holds to the conventional belief that only government can be counted on to provide those benefits.

Although there are points to disagree with, free-market thinkers will find much to praise in this intelligent and thought-provoking book.

Victor Matheson is an instructor of economics at Lake Forest College in Illinois.