Economics with a Moral Compass?
A great interview with Amartya Sen- Economics with a Moral Compass? Welfare Economics: Past, Present, and Future;
Angus Deaton: Okay. Also, when I agreed to do this, I thought, I’ll go back and read what Amartya Sen has written, and I found a very dated vita. When I got past the first 26 books, I thought, we’re going to need a team to do this, or a village perhaps. So I’m hoping Tim will pile in as we go.
Just a little bit about our relationship to Amartya: Neither of us were students of Amartya, in the sense that he did not supervise our dissertations, though Tim tells me that Amartya was formerly his moral tutor or something of the sort, in Oxford, for a brief —
Amartya Sen: Not quite that moral —
Angus Deaton: — or maybe tutor in morals, rather than moral tutor. But Amartya did not advise him, nor did Amartya advise me, so neither of us is standing here as Amartya’s pupils in the usual, academic sense. However, for both of us Amartya’s writing has been absolutely crucial in influencing us at very many points in our career. I think I met Amartya first in 1969, which is almost half a century ago, and even though we’ve worked on different things for most of our lives, that cross-influence has been incredibly important to me, as it has been for Tim.
I think that’s true of many of our generation, especially in Britain, and of some of the generation before. I’m thinking of people like Tony Atkinson, Nick Stern, and Jim Mirrlees, who died very recently, sadly.
To get into the substance, let’s start. Tim talked about Ken Arrow and his role in starting the Annual Review of Economics, and I heard [Amartya] about a year ago explain how you and Sukhamoy Chakravarty, as students at Presidency College in Calcutta, heard that Arrow had written this book, Social Choice and Individual Values (Arrow 1951). You couldn’t afford to buy it because you were penniless students, but you got a bookseller of Calcutta to lend you a copy, provided that you promised to keep it clean. That sort of launched your career, or your interest in social choice theory, and I think Arrow has been a very important influence on your life ever since.
Amartya Sen: Oh, totally. That was my first year in Calcutta, as an undergraduate in Presidency College. I’d just come from my school in Shantiniketan, and Sukhamoy Chakravarty — an extraordinarily gifted guy — was already well established in Presidency College. We wanted to read new books faster than they came to the library, and well beyond what we could buy. We would go to the local bookshops on College Street, and they would lend us this book or that for a day, covered in an old newspaper so that we didn’t soil the cover. It was a very generous thing to do. I think the most important book that I read under that rubric was Ken Arrow’s. Actually, that was about six months after the book came out, so pretty early, and I remember sitting down with Sukhamoy and trying to figure out how Arrow got those extraordinary results, particularly his spectacular “impossibility theorem” showing that we cannot combine individual preferences over states of affairs into a social ordering, satisfying certain simple and apparently minimal conditions. How does the proof work, and could it be shortened? Now we know, of course, that it can be very much shortened, using insights that can be derived from Arrow’s own thinking. Arrow’s social interests, his analytical creativity, and his elegant use of mathematical logic all had a profound impact on me.
Another book, which is not connected with Ken Arrow’s subject matter — nor in general with social choice theory of which Arrow was the founder in its modern form — and which had, at that time, a big influence on me — was Ken Galbraith’s book called American Capitalism (Galbraith 1952). We were both, Sukhamoy and I, “lefties” — much influenced by Marxian analysis (extensively studied in Calcutta then) — and I found that I had much to learn from Ken Arrow and social choice theory, and in a rather different way also from the other Ken, Ken Galbraith. When I look back and think about the ideas that contributed to my social understanding (supplementing what we got from mainstream textbooks for our class), Arrow and Galbraith both gave me a lot, in addition obviously to Adam Smith, John Stuart Mill, and of course Marx, with each of whom I already had familial relations.
I do want to come back to Ken Arrow, because no one had as big an influence on me as Arrow, vastly enriching my growing involvement with classical political economy, particularly Marx — but also Smith (I was interested in both from my school days). There was, however, something seriously missing, I was beginning to consider, in the Marxian line of thinking — rich as it was. Maybe politics? It would be absurd to think of Marx as being apolitical, but he was basically uninterested in political organization, while having deep insights in political philosophy. Arrow’s social choice theory, with its foundational involvement in the relation between people’s preferences, interests, desires, and values on one side, and democratic social choice on the other, supplemented classical political economy beautifully. It also made me wonder whether, in the eighteenth century, the mathematician Condorcet’s interest in establishing an early form of social choice theory was influenced by his wanting to go beyond Adam Smith’s economics — on which Condorcet was an expert (and not just on committee decisions with which he is more usually associated). Arrow came to me as a flood of illumination.
If Arrow filled a big gap in my naive thinking, Galbraith filled another, in particular how to keep in check privileged people with their particular social ambitions through a system of countervailing powers. Each interest group may press the society to go in its favored direction, but the presence of many interest groups restrains the dominance of any one of them. If Arrow can be seen as a positive supplement to Marx (adding to what I had got from Marx), Galbraith was, in a more negative way, a denial of Marx’s temptation to rely on his favored set of values, which he saw as good for society. Even if the idea of the “dictatorship of the proletariat” may sound attractive in an egalitarian way, it can play havoc with building a pluralist society.
Of course I did get a huge amount from Marx. This included a basic concern with the underdogs of society. But there were also many other things in Marx, such as the philosophical idea of “objective illusion” — he talked about it as “false consciousness.” Even though the sun and the moon may look — in objective observation — as equal in size, they are not; and similarly, what the laborers are given — their wages — and what they contribute to production may look similar in size in market economics, but they are not. Also Marx provided a clear understanding that payment according to needs would be a very different principle from rewarding work and labor. Marx discussed the plurality of moral principles extensively in his last substantial work, Critique of the Gotha Program (Marx 1875). He criticized the Social Democratic Party of German Workers, which produced the Gotha Program, for being concerned only with distribution according to work (seeing working people as “nothing but workers”), ignoring the varying human needs of people. In this he came much closer to what we call welfare economics now. A theory of justice, I was beginning to consider, could start from either end — fulfilling needs or fairly rewarding work.
So surely, there was a recognition by Marx of moral plurality. And yet he did not get very interested in countervailing powers, which is central to the practice of politics. Marx shared the common illusion that if somehow you get dedicated people to take charge of the government, they are going to govern things well. Ken Galbraith’s American Capitalism, which in a sense is a praise of capitalism (one aspect of it), helped to shatter the illusion. He presented quite a profound understanding of the corruption of power and the need to restrain even dedicated people, including those dedicated to high political objectives. I had borrowed Galbraith’s book for four hours from a bookshop in Calcutta (this would have been early in 1953) and I got hugely absorbed in it, as I was trying to finish reading it in a coffee shop. I tried to explain to the coffee shop manager that paying for one cup of coffee was sufficient for me to earn the right to sit there for four hours and reading this new book. I didn’t have more money than that, and I wanted to read the book — and furthermore, the light was very good on my table. My persistence worked.
I’m so glad that Angus brought this up. Those were very formative periods in the development of my understanding. Among the many influences were the ideas that I got from Arrow in particular (they established a life-time interest in me), but this was supplemented by other contributions I could read, such as Galbraith’s. In the newly independent India, which was trying to be a successful democracy, the feasibility of consistent democratic politics was a much discussed issue. Could we have democratic consistency? In many academic discussions (Calcutta was full of academic politics at that time), a common interpretation was that Ken Arrow was showing that you couldn’t have democratic consistency. But it was not, it seemed to me, what he was actually showing. There was a need for some “negation of negation” (to borrow from Hegel), I was convinced. While trying to dispute that pessimistic understanding of Arrow’s impossibility result, it became clear to me that I should pursue this issue in a bigger way, in addition to whatever mathematical propositions I might want to pursue (they were of course fun).
Angus is right to think that it “sort of launched my career”! I was a first-year undergraduate in Calcutta then — I was young (I think I was around 17), but rather determined. After two years of undergrad education in Calcutta, I went to Cambridge, and almost no one encouraged me in my interest in social choice theory. Some were frankly hostile. Joan Robinson, who was personally very fond of me, tried to persuade me that to get into social choice theory would be a complete waste of time. Richard Kahn was totally hostile. Nicholas Kaldor did what he normally tended to do, namely encourage you on the ground that a certain amount of folly in your life is necessary for character building. The only one who took an interest was, oddly enough, a Marxist, namely Maurice Dobb — perhaps the most famous Marxist economist in Britain then. He took a lot of interest in it. He was the only one among the Cambridge economics faculty who lectured regularly on welfare economics, and indeed a number of his fellow left-wingers regarded that to be a great mistake — “a bourgeois folly” — on Maurice’s part. Dobb was rather allergic to mathematical reasoning (like many other members of the Cambridge Economics faculty at that time), but he wanted me to explain to him the substance of Arrow’s theorem and why it was interesting.
The other teacher taking a somewhat sporadic interest in my involvement with social choice theory was a semi-Marxist, named Piero Sraffa. He had been very close to Antonio Gramsci, the great leftist intellectual, who established the Italian Communist Party and founded the extraordinary journal, L’Ordine Nuovo. I remember Bob Silvers once telling me that if the New York Review [of Books] reached the [same] level of originality as L’Ordine Nuovo, then he would be very pleased. I can’t think of a higher compliment, coming from somebody like Robert Silvers, the founder (along with Barbara Epstein) of the New York Review who ran it in its heyday. That was a very long heyday going on, happily, over decades and decades.
I am sorry, Angus, I’m taking a lot of time.
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