In the foreword to the book, John M. Letiche writes, "this small book is a 'treasure-chest' for economists, philosophers and political scientists interested in the relations between contemporary economics and moral philosophy." Written in a clear, crisp and stimulating style, Prof. Amrtya Sen provides more than a terse synthesis of the relevant literature on ethics and economics. Here he shows the contributions that general equilibrium of economics can make to the study of moral philosophy; the contributions that moral philosophy and welfare economics can make to mainstream economics; and the harm that the misuse of the assumption of self-interested behavior has done to the quality of economic analysis.
Description and Summary
First of all, this book is a collection of his three lectures conducted abroad. He has divided the book into three main chapters and discusses various aspects in economics and ethics. In the first lecture, he goes in to the thoughts of Adam Smith, the father of economics. Here, he discusses the rational behavior & self-interest and the relationship of Adam Smith with Self-interest maximization. "Self interest dominates the majority of men." As Smith explains in The Theory of Moral Sentiments, Prudence is the union of two qualities of 'reason and understanding', on the one hand, and 'self-command', on the other. The notion of 'self-command', which Smith took from the Stoics, is not in any sense identical with 'self-interest' or what Smith called 'self-love'. As Smith himself puts it, 'man, according to Stoics, ought to regard himself, not as something seperated or detached, but as a citizen of the world, a member of the vast commonwealth of nature'. One of the passages of Adam Smith that has been quoted again and again by the latter-day Smithians, is quoted by Sen is the following: "it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their sel-love, and never talk to them of our own necessities but of their advantages."
In the second lecture, Sen makes some economic judgement related to moral philosophy. First of all, he says that interpersonal comparisons of utility make no sense and are indeed totally meaningless. Second, Sen compares the pareto optimality & economic efficiency, well-being & Agency, Valuing & value and the relationship between self-interest and welfare-economics. Sen continues that if economic efficiency were the only criterion for economic judgement, and if the various conditions imposed by the so-called 'Fundamental Theorem of Welfare Economics' were to hold, then there would be in general no welfare-economic argument for anyone to behave in a way other than that required for self-interest maximization. Such behaviour on the part of all will indeed produce pareto optimality, and the attempt on the part of anyone to the part from self-interest maximization would, if it would do anything, only threaten the achievement of 'economic efficiency', i.e. Pareto optimality. Therefore, if welfare economics is in fact put in this extremely narrow box, and if the structural assumptions were to hold (including ruling out non-market interdependences), then there would indeed be no welfare-economic case against self-interested behaviour. Here Sen discusses that the impoverishment of economics related to its distancing from ethics affects both welfare economics and predictive economics.
In the third and final lecture, he goes into the demands of the systematic ethical evaluation, and the role of consequences, freedom and rights in this evaluation. Here, he discusses how the conceptualization of personal achievement and advantage in welfare economics has been deeply influenced by the utilitarian view of the person and how this influence continues to be important even in the post-utilitarian phase of welfare-economics.
In this elegant critique, Amartya Sen argues that a closer contact between welfare economics and modern ethical studies can substantively enrich and benefit both disciplines. He argues further that even predictive and descriptive- economics can be helped by making more room for welfare economic considerations in the explanation of behavior, especially in production relations, which inevitably involve problems of cooperation as well as conflict. The concept of rationality of behaviour is thoroughly proved in this context, with particular attention paid to social interdependence and internal tensions within consequentialist reasoning. In developing his general theme, Sen also investigates some related matters; the misinterpretation of Adam Smith's views on the role of self-seeking; the plausibility of an objectivist approach that attaches importance to subjective evaluations; and the admissibility of incompleteness and of 'inconsistencies' in the form of over completeness in rational evaluation. Sen also explores the role and importance of freedom in assessing well-being as well as choice. Sen's contributions toeconomics and ethics have greatly strengthened the theoretical bases of both disciplines; this appraisal of the connections between the two subjects and their possible development will be welcomed for the clarity and depth it contributes to the debate. It's interesting how ethics and their practice seem to fall along the lines of events that tend to produce profits, and are therefore, more easily justified than not, to the point of being made a part of the law that governs ethics as well as processes. This aspect of human tendencies to favor profits as ethical under any circumstances may well have given rise to the Enron's, Worldcom's, etc., that often also produce the exonerations of bankruptcies where privileges of "restarts" are common, under different names, or through acuisition/mergers where social responsibilities are thrown by the wayside and efforts to salvage the more profitable opportunities are typical of commercial justice. The inconsistency that these ethics represents is often difficult to rationalize in rational minds.
Through this lectures, he was trying to argue that welfare-economics can be substantially enriched by paying more attention to ethics, and that the study of ethics can also benefit from a closer contact with economics. He argued that even predictive and descriptive economics can be helped by making more room for welfare-economic considerations in the determination of behavior. He didn't try to argue that either of these exercises would be particularly easy. They involve deep-seated ambiguities, and many of the problems are inherently complex. But the case for bringing economics closer to ethics does not rest on this being an easy thing to do.
Professor Amartya Sen, who became the first Asian to win the Nobel prize for economics today, has won acclaim as "conscience keeper" of the world of economics by probing into ethical and philosophical questions relating to inequality and causes of poverty and famine. The Indian Express dated on 15, October 1998 revealed Amartya Sen as a 'conscience keeper' of world of economics. The Times of India dated on 15, October 1998 says that Prof Sen's distinctiveness as an economist rests on the fact that he has ranged far and wide over the vast terrain covered under the rubric of economics. His diversity not only embraced different areas of economics but also bridged what, for most practitioners of the science, is an unbridgeable chasm -- that between the theoretical and the practical, combining empirical work with policy orientation. His contribution has been substantive to all the areas he has touched upon: social choice, definitions of poverty and welfare indices, causes of famine, and most importantly, the restatement of what indeed is development. Recognition of his outstanding insights to the science of economics has come in the form of a Nobel prize.
Book Review by Deepak Bhatt, 25.10.2012, 06:00 a.m.