Global Policy Forum

By Pana Janviroj

It was unfortunate that the ideas of Indian-born economist Amartya Sen did not reach Thailand prior to 1997, otherwise the country might have better faced up to, or even been able to avoid, the economic crisis. Back then, as many may recall, faith in the open market system prevailed. Thai policymakers of the 1990s did not dare move away from sole attention on "growth" despite their concerns about inequality and the quality of growth.

But to Sen, the market economy hasn't succeeded, not because some people's interests are suppressed and other people are kept from the market, but because people gain individual advantage from it.

Sen is one of the leading advocates of economic thinking who does not share Milton Friedman's and the Chicago School's faith in free market economics. The Friedman world has little space for consideration of poverty. These champions of complete economic liberalisation simply thought that poverty would be drastically reduced if their system were allowed full rein.

Sen dismissed such a view as too narrow. Instead, he promoted "welfare economics" which looks beyond the operation of the market to a scrutiny of the institution of poverty and the concept of "need".

Next month, Sen will be in Bangkok to share his thoughts and push the issues related to deprivation, poverty and democracy on to the agenda of acceptable norms of development. The 1998 Nobel laureate will join 1,500 participants at a regional confidence on "Challenges on creating human security in the era of globalisation", hosted by Chulalongkorn University.

Sen's presence on the issue of human security caps his success in merging economics and ethics. Here, he shot down a previous argument of free marketers like Friedman that two parties will enter an exchange, as long as it is voluntary, if they can benefit.

Sen's thinking, however, is that many people who aren't poor are nevertheless interested in the problem of poverty, and its eradication, not because they think it is more "efficient" to remove it but because it is "wrong"! In other words, many individuals often behave ethically, that is, they do not put their own self-interest first.

In practice, he also observed that various cooperative strategies among firms or groups are invariably adopted because people have notions of other's rights (as well as their own); they have a sense of community, which they want to continue even in a free market environment.

While people do have a general ethical view of life that is not purely selfish, there are implications for the economic organisation of society, taxation structures, financial assistance to the poor and the recognition of social needs.

Another of Sen's landmark works was a study about famine. Here he found that in famine-affected areas, food production rose. Possessors of food hoard what they have, and prices rise, even though the affected population has less income. The market has failed, is wrong and could make a bad situation worse.

In wake of the 1997 crisis, Sen argued that growth should be accompanied by democratic decision making. Faced with the stringent economic policies of the International Monetary Fund, which worsened unemployment and human suffering, he called for a system of social support - which came to be known as a social safety net for the poor.

In his view of human security, Sen noted that East Asian countries do not have the social security systems that one finds in the European welfare-capitalism model. And "Asian values" - in which community values are such that people will automatically take care of each other in a crisis - are varied and do not necessarily hold true.

"There is a need for a social mechanism, and that social mechanism wasn't in place," he says. "And on top of that, since there was no democracy either, you couldn't demand that social mechanism. That is why democracy has become a major issue throughout the region. It is a major issue being fought in Indonesia, and I think it is an issue that will come up in China and other countries too."

To Sen, freedoms are not only primary ends of development, they are also among its principle means. There are also remarkable empirical connections that link freedoms of different kinds with one another.

Political freedoms in the form of free speech and elections help to promote economic security. Social opportunities in terms of education and health facilitate economic participation. Economic facilities in the form of opportunities to participate in trade and production can help to generate personal abundance as well as public resources for social facilities.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.