Development as Freedom by Nobel Prizewinning economist Amartya Sen draws on the works of moral philosophers and economists, from Aristotle to Adam Smith, to argue that economic development goes beyond increasing wealth—it’s about expanding freedom.
In redefining development as freedom, Sen takes a holistic view of poverty and characterizes it as impeding people’s ability to lead the lives they want.
Sen contends that income and wealth are only important as a means to something else, not for their own sake. As such, poverty is about more than low income; it’s about a lack of opportunity. Conversely, development is about more than simply increasing wealth; it’s about increasing opportunity.
Sen contends that poverty is harmful and unjust because it deprives people of the ability to lead the lives they want, and development is valuable because it allows people to improve their lives as they see fit.
Sen and the Human Development Index
Sen’s work on redefining poverty, which earned him the Nobel in 1998 and led to the publication of Development as Freedom in 1999, has affected policy-making. With Sen’s help, the United Nations established the Human Development Index, which provides a more comprehensive metric of welfare than just income. The index is composed of three parts:
Life expectancy at birth
Years of schooling per adult and expected schooling of children
Gross National Income (GNI) per capita
Each part is indexed on a scale from 0 to 1; the three scores are then averaged to get a single score from 0 to 1. The UN believes this “capabilities approach” to development offers a more useful metric than GDP or GNI because, in addition to income, health and education affect development as well.
Sen defines poverty as “capability deprivation”—hindering someone’s chances to improve their station in life. Sen sees two benefits to this definition:
Sen explains that forms of capability deprivation (which he also refers to as “unfreedoms”) include the processes and opportunities that affect a person’s welfare. For example, violations of human rights are one form, because they disrupt the process of free decision-making; famines are another because they diminish opportunities.
(Shortform note: Sen takes issue with all definitions of poverty that use income as the sole metric, of which there are many. For example, the World Bank defines extreme poverty as living on $1.90 or less per day. For developed nations, the OECD defines poverty as half the median household income. And, the US Census Bureau’s poverty line varies by size of family unit. Sen argues all of these ignore factors that affect a person’s capabilities, such as access to education and health care.)
Sen defines development as the process of expanding the freedoms that people can exercise. Sen gives two reasons why defining development as freedom is better than other definitions of economic development: freedom’s value and its efficacy.
According to Sen, wealth is merely an instrument for achieving the higher objective of attaining what we want: human flourishing and happiness. Freedom, on the other hand, is essential to achieving our objectives. In fact, enabling freedom is the purpose and value of economic development.
Achieving progress individually and as a nation depends on people having the ability to make their own choices. Sen says that having free agency is the most effective way for people to attain the things they value, like happiness.
Milton Friedman on Economic Freedom
Before Sen, economist Milton Friedman also made freedom central to his vision of economics. In his 1964 book Capitalism and Freedom, Friedman argues that only in a nation with economic freedom can citizens have political freedom as well. This is because political freedom and economic freedom are inextricable. In nations lacking economic freedom, governments control the exchange of goods and services, as well as the exchange of political views via the printing press, internet, and other means of expression.
While Sen values other forms of freedom beyond economic, Friedman argues that all other freedoms come from the ability to engage in voluntary transactions. Therefore, capitalism is the only economic system that enables the other forms Sen desires (described in the next section).
Now that we’ve established Sen’s basis for redefining poverty, we’ll examine what specifically he means when he refers to development as “freedom.” Sen’s is a more expansive view of freedom than traditional definitions, including both negative rights (such as freedom from coercion) and positive rights (such as the rights to education and health care).
Sen argues that these freedoms are both the primary purpose of development, as well as the most effective means of development.
Sen cites five types of freedoms that advance a person’s potential, each of which reinforces the others:
Sen explains that these political freedoms are mostly synonymous with the civil rights of a liberal democracy. They include the ability to choose who governs and on what principles and the right to freedom of expression and of the press. They also entail the right to form and choose among political parties, as well as the right to criticize authority figures.
(Shortform note: Not all economists believe in prioritizing democracy as much as Sen does. In The Bottom Billion, Paul Collier argues that democracy is a hindrance to economic development in poor nations flush with natural resource revenue. This is because politicians, unlike dictators, fixate on pandering to win elections rather than pursuing long-term policies like investments in education. Unlike Collier, Sen puts greater emphasis on the intrinsic importance of citizens having a say in who governs.)
By commercial liberties, Sen means the freedom of individuals to produce, exchange, and consume their choice of goods and services. Here, Sen focuses on the ability to engage in economic activity free from arbitrary constraints—such as government price controls and forced labor. The right to access financial institutions and credit is also part of economic freedom. This access is crucial because it gives low-income people a chance to earn interest through savings or to receive loans for new business ventures.
Is Economic Freedom Essential?
Sen’s assertion that economic freedom is essential to other freedoms is part of a long intellectual tradition. In his Second Treatise of Government, John Locke made the philosophical case that property rights—the ability to enjoy the fruits of your own labor—are natural rights that should be protected by the government.
Communists, however, have differing views on economic freedom. The central tenet of Marxism (at least when Marx and Engels wrote The Communist Manifesto) was the abolition of private property. The socialist magazine Jacobin argues that “Capitalist Freedom is a Farce.” In this view, unregulated economic freedom leads to monopoly, which allows capitalists to exploit their employees and force workers to tolerate low wages, poor conditions, and controlling bosses; all of which, they argue, are antithetical to freedom.
“Public provisions” means having access to services that enable people to live better, such as education and health care. Sen explains that access to an education provides literacy, which is crucial to exercising political freedoms because it allows citizens to make more informed decisions; good health is important to commercial freedom because it allows people to be more productive workers.
Gary Becker and Human Capital
Throughout Development as Freedom, Sen stresses the importance of the public provision of education, putting an economic emphasis on people rather than things. Fellow Nobel laureate Gary Becker also oriented economic theory around people with his human capital theory.
Becker argued that understanding economic development requires differentiation among people based on their knowledge and abilities, rather than lumping all workers together under the banner of “labor.” The term “human capital” refers to these differing levels of abilities that each worker possesses.
Following Becker’s lead, many economists also make the case that in addition to individual gains in productivity from better human capital, there are social gains as well. In their view, these gains justify the government providing education, because the benefits exceed the costs.
According to Sen, ethical guardrails include the “right to disclosure,” or public “right to know,” as well as other components of business and contract law. Ethical guardrails create openness and trust in social interactions (especially commerce) and are necessary to prevent government corruption, crooked business practices, and other unethical behavior.
(Shortform note: “Right to disclosure” refers to rules like the SEC’s requirement for publicly traded corporations to release pertinent information about their businesses—such as balance sheets, income statements, and statements of cash flows.)
The Role of Law in Economic Development
While praising the role of markets in economic development, Sen emphasizes that properly functioning government institutions are necessary for effective markets. These ethical guardrails help fortify the public’s trust in commercial exchange.
Similarly, in The Law-Growth Nexus, law professor Kenneth Dam explains how legal institutions affect economic development. Dam argues there are three components to “the rule of law”: enforcement, contracts, and property rights. He argues that failure to establish the rule of law in developing countries is a significant obstacle to growth.
Social safety nets guard against severe suffering. They include fixed institutional arrangements, such as supplemental income and unemployment benefits, and ad hoc arrangements like disaster relief or emergency public employment. Sen believes both types are important components of development.
Two Views on Safety Nets
Safety nets remain a contentious subject among economists and policymakers. Sen argues safety nets are necessary to combat poverty and misfortune, while others argue they provide disincentives to work and fail to improve social mobility for the poor.
During the Great Depression, the federal government established America’s first safety net programs, which have since been expanded. Sen considers these programs “fixed institutional arrangements,” and argues they are fundamental to freedom because they enhance people’s capabilities. Currently, some of the United States’ largest safety nets include: Social Security, Medicare and Medicaid, unemployment insurance, food and monetary aid, and the Earned Income Tax Credit.
Having redefined poverty and development, Sen turns to the idea of justice. Sen’s view of justice is part of his broader case for freedom-centered development, because “just” (or equitable) opportunity is essential to increasing the five types of freedom discussed earlier.
Harvard philosopher John Rawls, whose ideas Sen echoes, argues that justice requires more than personal freedom. Similarly, Sen argues freedom requires more than just negative rights. Sen’s freedom also requires a set of positive rights in order to ensure that the disadvantaged have opportunities to develop their potential. His belief in positive rights compels him to include public provisions and safety nets among his five types of freedom.
(Shortform note: By “negative rights,” we mean the rights of a person to be free from external violations of liberty, such as coercion. By “positive rights,” we mean people’s claim to entitlements in order to secure a baseline level of welfare.)
In Sen’s interpretation, the idea of Rawlsian justice (laid out in A Theory of Justice published in 1971) is to allow individuals a better chance to pursue their objectives. To attain their objectives, they need “primary goods.” These primary goods include rights, freedoms, opportunities, and income. Together, they provide people a fair chance to succeed or fail on their own merits.
Rawls also values freedom for its own sake (what he calls the priority of liberty). However, Sen goes further in arguing that for very poor nations, the “priority of liberty” can overemphasize freedom and overlook the basic economic needs of the poor. Therefore, Sen also champions positive rights like safety nets and public health programs that he deems vital to freedom.
Economics and “Distributive Justice”
For Rawls, justice is based on what he calls the “difference principle,” which has these components:
Each person has equal claim to a set of rights and liberties.
In order for social and economic inequality to be just, it must satisfy two conditions.
First, unequal outcomes are acceptable when everyone has an opportunity to attain them. For example, if someone becomes rich by becoming a famous musician, this is considered just because everyone has an opportunity to do so.
Second, inequality can be tolerated if it benefits the least advantaged members of society. For example, if an entrepreneur builds a fortune by inventing a new technology, his greater income can be tolerated if that technology improves conditions for the disadvantaged.
If inequality fails to satisfy these two conditions, then Rawls believes in redistributing resources to improve conditions for disadvantaged people, as long as it doesn’t infringe upon anyone’s basic liberties.
Sen identifies two reasons why free markets are integral to development:
Sen acknowledges that free markets can increase economic growth and overall economic progress. However, Sen says free markets are much more important than just as a means to improve prosperity. Independent of its impact on economic growth, the freedom to exchange goods and services is a basic part of social interaction, and thus it’s valuable as its own kind of freedom.
Adam Smith on the Role of the Market
Sen relies heavily on the work of Adam Smith to support his philosophical and practical case for freedom. Some scholars call this Smith’s “presumption of liberty.”
Smith generally thought that an undisturbed market was the best engine for progress and liberty. However, he did acknowledge that there are circumstances when the market fails to provide socially preferable results. In such cases, he believed it was just to prioritize the public good. He specifically mentioned the government’s role in national defense, enforcing the rule of law, and in providing public works like roads and bridges.
In Development as Freedom, Sen follows a similar line of reasoning. He views freedom as important and useful to the public good but identifies some areas where the government can improve general welfare.
Sen argues that in order to flourish, capitalism requires a set of values and norms. A combination of legal institutions and social mores is crucial to economic functioning. These capitalist values are part of the ethical guardrails Sen refers to throughout the book, and they help combat greed and corruption. The three values that he focuses on are trust, sympathy, and commitment.
The first value, trust, is crucial to economic exchange. Only in a system where mutual trust is routine can trade occur.
Sympathy, too, is a capitalist value. Sen agrees with Adam Smith’s view that there are many situations where self-interest compels a person to help others. If we suffer when someone else suffers, this is sympathy. This natural human drive persists even in a capitalist system dominated by self-interest.
Sen contrasts sympathy with another capitalist value: commitment. Sen defines commitment as a person’s desire to help others—not to alleviate their own “sympathetic suffering,” but because of a larger commitment to justice.
Sen believes these values help explain the sustained success of Western economies, and that cultivating these values in developing nations is crucial to development.
Imposing Capitalist Values
In The White Man’s Burden, economist William Easterly agrees with Sen that there is a set of capitalist values that makes free enterprise work. Easterly specifically highlights the importance of trust in enabling capitalism to flourish.
However, Easterly also argues that these capitalist ethics must develop organically, and can’t be imposed on a nation or culture that’s unfamiliar with them. This is why attempts to bring capitalism to countries with long histories of other economic systems usually fail.
For example, the effort to rapidly turn former Soviet satellites into capitalist systems following the collapse of the Soviet Union in 1991 was largely a failure. This “shock therapy” was meant to deliver the economic success of the West, but it had the opposite effect. Easterly argues this was because these nations had yet to develop capitalist values on their own.
Now that we’ve explained Sen’s philosophical case for freedom-centered development, we’ll analyze some of the most urgent issues plaguing underdeveloped nations and discuss how a development as freedom model would mitigate them. First, we’ll look at gender bias and how empowering women can spur growth. Then we’ll discuss food scarcity and how to ensure that there’s enough to eat in a world of 7 billion people.
Sen identifies bias against women as a major obstacle to growth in developing countries. This bias deprives women of basic rights in areas such as political participation and family planning. It also ignores the economic impact of women in the workforce. By empowering women, Sen argues, not only are women better off, but their communities become safer and more prosperous.
Sen argues that the most effective way to empower women is to increase literacy. Research shows that increases in female literacy are strongly associated with a reduction in child mortality. The knowledge women gain through education allows them to better care for their children.
According to Sen, female literacy and labor force participation have a positive effect on fertility rates. In this case, “positive” refers to having fewer babies. Around the globe, a greater recognition of women’s rights usually leads to a reduction in fertility rates (the average number of children born per woman).
In many developing societies, women have little choice in family planning. But education gives women greater knowledge about family planning, and work outside the home often gives them more options, too.
Advances in Female Literacy and Reductions in Fertility Rates
Since Development as Freedom was published in 2000, women’s literacy rates have continued to improve. In 2000, female literacy in the Least Developed Countries (LDCs, as classified by the United Nations) was 44%. As of 2020, it has risen to 59%. School enrollment is up for girls, and literacy rates among young women in poor countries are nearly on par with those of young men.
A similarly positive trend has happened to women’s average number of births. In 2000, the fertility rate in LDCs was 5.2. In 2020, it was down to 3.9. Sen would likely attribute this reduction to educational empowerment, greater recognition of women’s rights in family planning, and increased access to contraception. Also, improved health care has helped reduce infant mortality, which allows women to bear fewer children to achieve their desired family size.
In addition to the problems resulting from disempowering women, famine can also be a problem in developing countries. Sen identifies three ways that freedom-centered development can prevent famines: private markets, free trade, and government support.
Sen also believes it’s not difficult or expensive for governments to prevent famines, and he says societies can guard against them through economic growth and famine relief (such as income transfers to buy food).
Sen contends that no famine has occurred in a functioning democracy because democracy provides an incentive for government officials to take the steps necessary to alleviate food shortages.
(Shortform note: While Sen puts the responsibility for famine relief on the affected country, the charitable organization Oxfam has a five-step plan to prevent famine that includes outside help. It includes providing clean water, encouraging proper sanitation, emergency food and cash assistance, supplying seeds for farming, and government accountability. This kind of private intervention can help prevent famine when government dysfunction is the cause.)
Development as Freedom by Nobel Prize-winning economist Amartya Sen argues that economic development goes beyond increasing wealth—it’s about expanding freedom.
Sen, an Indian economist and professor, believes the definitions of poverty and development should be broader.
This guide explores the roots of Sen’s reasoning, from what it means to be poor, to his idea of justice and the role that markets play in the process of development. Additionally, we examine different perspectives on the substance and practicality of Sen’s “development as freedom” approach.
Amartya Sen is a professor of economics and philosophy at Harvard University. He was born in Santiniketan, India in 1933, and was a child when the Bengal Famine ravaged much of his homeland. Sen went on to earn his Ph.D. from the University of Cambridge in 1959, and he has taught in the United Kingdom at the London School of Economics and Oxford University, in addition to his native India. In 1998, Sen was awarded the Nobel Prize in Economic Sciences for his “contributions to welfare economics” including his work on poverty, famines, and social choice.
Sen has written or edited more than 20 books and 200 scholarly articles, primarily in philosophy and economics. Sen has also served as president of the Indian Economic Association, the American Economic Association, and the Econometric Society.
In addition to his Nobel Prize, Sen also received the National Humanities Medal, the Edinburgh Medal, and the George Marshall Award, among other accolades.
Connect with Amartya Sen:
Development as Freedom was published in 1999 by Alfred A. Knopf and Oxford University Press.
Development as Freedom is based on a series of five lectures Sen delivered to the World Bank in 1996.
Sen has devoted his career to the study of poverty. Development as Freedom reflects Sen’s interest in both economic philosophy and empirical research, and combines moral and economic arguments.
Portions of Development as Freedom are a response to two of the 20th century’s most influential books on political philosophy, Robert Nozick’s Anarchy, State, and Utopia (1974), and John Rawls’ A Theory of Justice (1971).
Sen draws on portions of these and other works to articulate his “development as freedom” approach.He also relies on his and his colleagues’ decades of empirical analysis of global poverty, famines, and women’s issues. He uses this evidence to show the practical importance of freedom to social progress.
To make his case that we should define development as expanding freedom, Sen draws heavily on Adam Smith’s The Wealth of Nations (1776), in addition to Smith’s earlier writings on moral philosophy. Sen invokes a wide range of scholars—from Karl Marx to F.A. Hayek—in his efforts to bridge typical ideological divides and establish his holistic approach to development as freedom.
For a work of scholarship, Development as Freedom has been unusually influential. The Guardian called Sen a rare scholar to have “a major effect on politics” because he changed the way many policymakers look at poverty. For example, Sen helped the United Nations design the Human Development Index (HDI), a more comprehensive measure of welfare than standard per-capita income.
Sen has also ushered in an era of 21st-century economists who have focused on measures of social progress rather than simple economic growth.
In his native India, Sen is well-known and celebrated as “the Mother Teresa of economics.”
Development as Freedom was generally well-received, both by critics and the general public, and it’s often regarded as a more humane approach to economics. Kofi A. Annan, then the Secretary-General of the United Nations, said Sen had “revolutionized” the way economists approach development, calling him an insightful champion for the world’s poor.
Fellow Nobel Laureate Kenneth Arrow, whose work on social choice Sen criticizes in his book, was nonetheless positive, calling it “ a forceful and rigorous analysis” of the symbiotic relationship between freedom and development.
The World Bank even integrated much of Sen’s view of poverty as “capability deprivation” into its own definition.
However, there also have been criticisms from across the ideological spectrum. Some progressives think Sen emphasized individualism too strongly, at the expense of collective interests. They also think Sen overlooked the destabilizing effects of globalization and free trade on developing economies, and he neglected proper attention to the role colonialism has played in the problems of poor nations.
From a free-market perspective, some have criticized Sen’s support of a “positive rights” view of liberty, one that considers government entitlements as integral to human freedom.
The Economist, while praising the “great attractions” of the book, criticized Sen for ignoring the motivations of government action and the problem of rent-seeking—public officials pursuing their own interests above the public interest.
While Sen says in his introduction that Development as Freedom is geared toward a general audience, many parts of the book are esoteric. Readers lacking a basic background in economics and political philosophy will likely have trouble following some of the more abstract concepts Sen covers, such as utilitarianism and social choice theory.
Development as Freedom is part philosophy and part research. Sen relates many of his ideas back to various philosophers, Enlightenment thinkers, and early economists. Aristotle, Confucius, Montesquieu, Adam Smith, Mary Wollstonecraft, and Karl Marx all make appearances, among many others.
Sen supplements these philosophical discussions with the presentation of empirical research. In the chapters on famine and women’s agency, Sen cites much of his own research. Sen takes care to cite his sources, and there are approximately 50 pages of notes and references at the back of the book.
Development as Freedom consists of an introduction and 12 chapters. Because of the range of topics covered, and because the book is not divided into parts, it often lacks a coherent organization.
Sen devotes the first few chapters to laying out the philosophical case for why economic development focused on income alone is insufficient, and why development as freedom offers a more useful alternative. In the latter half of the book, each chapter covers a more specific topic of development (chapters focus on democracy, famines, and women’s rights, for example).
Because of this structure, many sections overlap, with Sen reiterating the role of freedom as both the principal means and purpose of development in each chapter.
Helpfully, each chapter has a brief conclusion, covering the main points, and connecting them back to Sen’s thesis.
Our guide reorganizes Development as Freedom into three parts.
This guide also presents supporting and alternative approaches to Sen’s themes. Additionally, we update the data where appropriate to reflect significant changes since the book’s publication in 1999.
In Development as Freedom, Nobel Prize-winning economist Amartya Sen draws on the works of moral philosophers and economists, from Aristotle to Adam Smith, to argue that economic development is about more than increasing wealth—it must be about expanding freedom.
In redefining development as freedom, Sen takes a holistic view of poverty and characterizes it as impeding people’s ability to lead the lives they want.
Most definitions of poverty are based only on level of income. However, Sen’s approach to understanding poverty is more nuanced. He believes income alone does not tell the story of well-being.
Sen contends that income and wealth are only important as a means to something else, not for their own sake. As such, poverty is about more than low income; it’s about a lack of opportunity. Conversely, development is about more than simply increasing wealth; it’s about increasing opportunity.
Sen contends that poverty is harmful and unjust because it deprives people of the ability to lead the lives they want, and development is valuable because it allows people to improve their lives as they see fit.
Sen and the Human Development Index
Sen’s work on redefining poverty has had practical implications for policy-making. With Sen’s help, the United Nations established the Human Development Index, which provides a more comprehensive metric of welfare than just income. The index is composed of three parts:
Life expectancy at birth
Years of schooling per adult and expected schooling of children
Gross National Income per capita
Each part is indexed on a scale from 0 to 1, and the three scores are then averaged to get a single score from 0 to 1. The UN believes this “capabilities approach” to development offers a more useful metric than GDP or GNI because health and education affect development as well.
By utilizing the Human Development Index, Sen hopes to provide a clearer picture of advances in developing nations, as well as to identify the areas that still require improvement.
Sen defines poverty as “capability deprivation,” (he also refers to it as “unfreedom”)— which means hindering people’s chances to improve their station in life. There are two main benefits to viewing poverty in this way:
Sen explains that forms of capability deprivation and unfreedom include the processes and opportunities that affect a person’s welfare. For example, violations of human rights and civil liberties are one form of unfreedom, because they disrupt the process of free decision-making. Famines, poor sanitation, and the threat of disease (such as malaria in sub-tropical climates) are another form, because they diminish opportunities.
(Shortform note: Sen takes issue with all definitions of poverty that use income as the sole metric. There are multiple income-centered definitions:
Sen argues all of these ignore factors that affect a person’s capabilities, such as access to education and health care.)
Sen defines development as the process of expanding the freedoms that people can exercise.
In contrast, most of modern economic literature takes the “income-centered approach” to poverty and economic development. Most analyses by economists and policymakers view per-capita income and GDP growth as the keys to prosperity. However, Sen argues this approach is actually a deviation from the emphasis early economists put on a more holistic approach to development.
Aristotle stated that wealth is only valuable insofar as it could be used to achieve other objectives, such as “capacity” and “flourishing.” Adam Smith, considered the founder of economics, often prioritized living conditions rather than mere income. The pioneering work of economists and mathematicians like Sir William Petty and Joseph-Louis Lagrange paid similar attention to what could be achieved with income.
In line with this classical view, Sen makes both a philosophical and empirical case for why poverty and development ought to be considered through a freedom-focused approach.
Where Does GDP Come From?
In Development as Freedom, Sen is critical of the narrow criterion of GDP as the metric of economics. While Sen and other economists recognize the value of accounting for the size of aggregate and per capita income, Sen also points out the flaws with the GDP approach.
For more than a century, economists and policymakers have debated the best way to measure prosperity. Gross Domestic Product—the total market value of all goods and services produced within a specified period—has been the predominant metric.
Economist and author Diane Coyle explains how the British scientist and political economist Sir William Petty “invented” GDP in 1665: The British government enlisted his services to calculate the fundamentals of the British economy during the Second Anglo-Dutch War. In this sense, GDP was popularized not because it was the ideal metric of human welfare, but because it provided governments with information to decide the best way to finance their military excursions.
Sen gives two reasons why defining development as freedom is better than other definitions of economic development: freedom’s value and its efficacy.
Other definitions of development (such as GDP) only focus on the means of development, thereby missing the crucial point that the reason we value means such as GDP growth, industrialization, technological progress, or other aspects of modernity is that these things allow people the freedom to better achieve their desires.
In other words, according to Sen, they are merely instruments for achieving the higher objective of attaining what we want: human flourishing and happiness. But freedom is an essential ingredient in achieving our objectives—in fact, enabling freedom is the purpose and value of economic development.
Milton Friedman on Economic Freedom
Before Sen, economist Milton Friedman also made freedom central to his vision of economics. In his 1964 book Capitalism and Freedom, Friedman argues that only in a nation with economic freedom can citizens have political freedom as well. This is because political freedom and economic freedom are inextricable. In nations lacking economic freedom, the government controls the exchange of goods and services, as well as the exchange of political views via the printing press, internet, and other means of expression.
While Sen values other forms of freedom beyond economic, Friedman argues that all other freedoms come from the ability to engage in voluntary transactions. Therefore, capitalism is the only economic system that enables the other forms Sen desires (described in the next section.
Achieving progress individually and as a nation depends upon people having the ability to make their own decisions. Sen says having free agency is the most effective way for people to attain the things they value (like happiness)—even more than simply attaining wealth.
(Shortform note: Sen is not presenting an either/or choice between freedom and increased affluence. Rather, he argues that freedom is the best way for people to achieve their potential. In later chapters, Sen presents empirical evidence that freedom enhances people’s ability to lead long and happy lives in ways that higher income alone does not.)
Foreign Aid and Economic Development
Sen argues that the single best way for poor nations to develop is through the expansion of freedom. In this sense, reforms within a country are sufficient to lift a nation out of poverty. However, some development scholars argue that outside assistance is needed, especially in a global economy.
Prominent development economist Jeffrey Sachs argues that poor nations are usually stuck in a poverty trap, and require a “big push” in the form of foreign aid to get out of this rut. Once out, they can develop further on their own. If they aren’t provided this aid, Sachs says they will continue to suffer from material poverty, irrespective of how much freedom may be expanded.
While the US and western European nations didn’t rely on aid to overcome their initial poverty, scholars like Sachs believe the disadvantages poor nations face in a more competitive global economy hinder their ability to compete.
Now that we’ve established the basis for redefining poverty as deprivation of opportunities and development as freedom, we’ll examine what specifically Sen means when he refers to freedom. Sen’s is a more expansive view of freedom than traditional definitions, including both negative rights (such as freedom from coercion) and positive rights (such as the right to education and health care).
Sen argues that these freedoms are both the primary purpose of development, as well as the most effective means of development.
Sen cites five types of freedoms that advance a person’s potential:
We’ll examine these five freedoms individually and examine how each reinforces the others.
(Shortform note: Sen’s list of five freedoms is similar to the four freedoms that Franklin D. Roosevelt laid out in a famous speech in 1941. Roosevelt argued the four fundamental freedoms were: freedom of speech, freedom of worship, freedom from want, and freedom from fear. Like Sen, Roosevelt believed it was the government’s obligation to provide material support and national security to people, in addition to securing their individual liberties.)
Sun explains that democratic rights (or political freedoms) are mostly synonymous with the typical civil rights of a liberal democracy. They include:
A Critique of Democratic Rights
Not all economists believe in prioritizing democracy as much as Sen. In The Bottom Billion, Paul Collier argues that democracy is a hindrance to economic development in poor nations flush with natural resource revenue. Collier says this is because politicians, unlike dictators, fixate on pandering to win elections rather than pursuing long-term policies like investments in education.
Also, many poor democracies are rife with corruption. Politicians often buy votes and intimidate their opponents. If checks and balances are weak, this malfeasance is often ignored. Collier argues poor nations would benefit more from strengthening an independent judiciary and fighting corruption than focusing on voting.
By commercial liberties, Sen means the freedom of individuals to produce, exchange, and consume their choice of goods and services. Here, Sen focuses on the ability to engage in economic activity free from arbitrary constraints, such as government price controls and forced labor. The right to access financial institutions and credit is also part of economic freedom. This access is crucial because it gives low-income people a chance to earn interest through savings, or to receive loans for new business ventures.
Is Economic Freedom Essential?
Sen’s assertion that economic freedom is essential to other freedoms is part of a long intellectual tradition. In his Second Treatise of Government, John Locke made the philosophical case that property rights—the ability to enjoy the fruits of your own labor—are natural rights that should be protected by the government. Locke also argued against slavery—on the grounds that it is a violation of basic liberty, including the right of a person to freely choose how to use their labor.
Communists, however, have differing views on economic freedom. The central tenet of Marxism (at least when Marx and Engels wrote The Communist Manifesto) was the abolition of private property.
The socialist magazine Jacobin argues that “Capitalist Freedom Is a Farce.” In this view, unregulated economic freedom leads to monopoly, which allows capitalists to exploit their employees and force workers to tolerate low wages, poor conditions, and controlling bosses; all of which, they argue, are antithetical to freedom.
On this issue, Sen aligns more with Adam Smith. Both regard freedom of production and exchange as valuable for its own sake. Additionally, both think that competing for employees encourages businesses to improve wages and conditions as best they can while still making a profit.
To them, reducing the influence of individual firms like Amazon would likely require more economic freedom, by way of lowering barriers to entry or repealing excessive licensure requirements. Sen laments the “license Raj,” which used to rule India, where governments required multiple permits for nearly every economic activity. This stifled would-be entrepreneurs and prevented economic growth.
Public provisions refers to having access to services that enable people to live better—such as education and health care. These provisions allow people to better enjoy other freedoms. For example, access to an education provides literacy, which is crucial to exercising political freedoms because it allows citizens to make more informed decisions; good health is important to commercial freedom because it allows people to be more productive workers.
Gary Becker and Human Capital
Throughout Development as Freedom, Sen stresses the importance of the public provision of education, putting an economic emphasis on people rather than things. Fellow Nobel laureate Gary Becker also oriented economic theory around people with his human capital theory. Becker argued that understanding economic development requires differentiation among people based on their knowledge and abilities, rather than lumping all workers together under the banner of “labor.”
The term “human capital” refers to these differing levels of abilities that each worker possesses. Following Becker’s lead, many economists also make the case that in addition to individual gains in productivity from better human capital, there are social gains as well. In their view, these gains justify the government providing education, because the benefits exceed the costs.
Sen and Becker both point to Korea and Taiwan as examples of nations that benefited from government investments in their citizens’ education.
Ethical guardrails create openness and trust in social interactions, especially commerce. According to Sen, ethical guardrails include the “right to disclosure,” or public “right to know,” and other components of business and contract law necessary to prevent government corruption, crooked business practices, and other unethical behavior.
(Shortform note: “Right to disclosure” refers to rules like the SEC’s requirement for publicly traded corporations to release pertinent information about their businesses—such as balance sheets, income statements, and statements of cash flows.)
The Role of Law in Economic Development
While praising the role of markets in economic development, Sen emphasizes that properly functioning government institutions are necessary for effective markets. These ethical guardrails help fortify the public’s trust in commercial exchange.
Similarly, in The Law-Growth Nexus, law professor Kenneth Dam explains how legal institutions affect economic development. Dam argues there are three components to “the rule of law”: enforcement, contracts, and property rights. He argues that failure to establish the rule of law in developing countries is a significant obstacle to growth.
Social safety nets guard against severe suffering. Sen distinguishes between fixed institutional arrangements and ad hoc arrangements. Fixed institutional arrangements are programs such as supplemental income and unemployment benefits. Ad hoc arrangements include disaster relief or emergency public employment. Sen believes both types are important components of development.
Major Safety Net Programs in the US
Safety nets remain a contentious subject among economists and policymakers. Sen argues safety nets are necessary to combat poverty and misfortune, while others argue they provide disincentives to work and fail to improve social mobility for the poor.
During the Great Depression, the federal government established America’s first safety net programs. Since then, programs have been designed or expanded to broaden their reach. Sen considers these programs “fixed institutional arrangements,” and argues they are fundamental to freedom because they fortify people’s capabilities.
The Social Security Act: Passed in 1935, the Social Security Act provides unemployment compensation and is a major source of income for the retired, unemployed, and people with disabilities. It’s currently the largest safety net program in the US, serving about 62 million Americans.
Head Start: Established in 1964, Head Start is a pre-kindergarten education program designed to reduce disparities in educational attainment between rich and poor children. It currently serves around 900,000 primarily low-income kids.
Supplemental Nutrition Assistance Program: Also established in 1964, the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as “food stamps,” provides food vouchers as a means of fighting hunger and food insecurity.
Medicare/Medicaid: In 1965, the US government established Medicare, which provides health insurance to people 65 and over, and Medicaid, which provides coverage to low-income Americans. Combined, more than 100 million people are enrolled in these programs.
Federal Pell Grant Program: In 1972, the Federal Pell Grant Program became law. It provides tuition and other assistance to low-income college students.
Earned Income Tax Credit: The Earned Income Tax Credit (EITC), established in 1975, is a tax credit available to working people of modest income. In 2015, nearly 50 million taxpayers received benefits through the EITC.
The Affordable Care Act: Passed in 2010, the Affordable Care Act subsidizes the private health insurance of low-income people. It also expands Medicaid by offering matching federal funds to states.
In addition to these programs, others provide unemployment insurance, monetary aid to poor families, and children’s health insurance.
Now that we’ve covered why Sen defines development as freedom, and we’ve explained what constitutes freedom, we’ll move on to some of the practical problems of the income-focused approach Sen wants to replace.
Sen contends that focusing on income to assess development doesn't fully reflect people's welfare or well-being and that consideration of freedom provides a more well-rounded picture.
Sen views income-centered development as inadequate because it overlooks aspects of welfare that people value. Here are three oversights of the income approach:
We will consider each of these in turn, providing examples Sen uses to support each claim.
Often, income alone doesn’t tell the full story of well-being. For example, Sen notes that African Americans have per capita incomes much higher than the average person living in developing countries like Sri Lanka, Costa Rica, or Jamaica. However, African Americans have lower life expectancies (a measure of well-being) than people in each of these three nations.
Therefore, the mere fact that they’re wealthier doesn’t necessarily translate to better standards of living. By focusing more on the five freedoms outlined previously, (democratic rights, commercial liberties, public provisions, ethical guardrails, safety nets), we can better understand the causes of the disparities between income and welfare.
Specifically, Sen argues that improving income alone doesn't raise life expectancy. For example, Sri Lanka and Namibia each have a GDP per capita of around $4,000. However, Sri Lankans have a life expectancy of 77 years compared to 63 years in Namibia, likely because of their health care system.
Another key contributor to life expectancy is public expenditure, specifically on health. Sen explains that increases in per capita GDP are correlated with increased life expectancy—but only when that new wealth is used to eradicate poverty and improve health care.
Comparing GDP and Welfare
Sen emphasizes that income statistics can be misleading because of the way income is distributed. This can lead to poor health and lower standards of living than average income might indicate. For example, as of 2020, African Americans had life expectancies of 77 years with per capita incomes of around $22,000. This is the same life expectancy of Costa Ricans—despite the fact that their per capita income is just over $12,000. In Sri Lanka, where income is below $4,000 per person, life expectancy is 80 years.
Increasing people's income through government programs doesn't necessarily improve their well-being because it often doesn't address social problems. For example, Sen explains that many European nations, which typically have unemployment rates above 10%, generously supplement the incomes of unemployed people. But research indicates there are numerous social costs associated with being unemployed, including negative effects on physical and psychological health, as well as social ostracism.
Sen argues that European unemployment subsidies don’t increase overall well-being because they fail to account for these residual costs. Helping the disadvantaged requires more than just subsidizing their incomes, it requires expanding their opportunities.
(Shortform note: Research suggests that unemployment has a substantial negative effect on individual health. Sen argues many of these negative effects aren’t considered in economic metrics like GDP, nor can they be fixed through income transfers alone. Unemployed people often suffer a host of psychological impacts, like an increased risk of depression and lower levels of marital satisfaction.)
The sizable impact of the forces just discussed raises an important question for policy makers: Should countries focus first on increasing GDP as a means to eradicate poverty and prioritize health care? Or should they focus first on devoting their modest resources to these public provisions?
Sen says poor nations shouldn’t wait for economic growth to provide social services. The reason has to do with the relative costs of poor nations making such investments. Because social services like education and health care are labor intensive (they rely much more on people rather than technology), the costs of providing them sooner are lower, too.
If a nation waited to get wealthier before making these investments, that wealth would increase the costs of these investments. According to Sen, this happens because jobs in social services demand higher wages when overall incomes rise.
To illustrate this point, Sen compares China and India in the latter part of the 20th century, when both nations transitioned from centrally planned economies to market-oriented ones. Both nations were similarly poor. However, China has been far more successful at raising incomes and eradicating poverty.
This is because prior to its transition (and unlike India) China already had a relatively robust infrastructure for education and health care. These investments, made when China was still extremely poor, allowed them to take better advantage of economic growth when it did come, because its people were better educated and healthier.
Effect of Public Health on Economic Growth
Some researchers argue that money spent on health care is an investment in the productivity of workers. Economists at the National Bureau of Economic Research discovered that good health has a sizable positive impact on productivity. According to their research, increasing a population’s life expectancy by one year was associated with a 4% increase in GDP.
This finding is consistent with Sen’s view that poor nations can benefit substantially by investing in social services like health care.
Having laid out new definitions of poverty and development, Sen turns to analyzing the competing theories of justice prevalent in economics: utilitarianism, libertarianism, and Rawlsian justice. Sen incorporates their positive aspects, such as the importance of valuing both freedom and its consequences, into his own view of justice. Justice is integral to his broader case for freedom-centered development, because “just” or equitable opportunity is essential to increasing the five types of freedom discussed earlier for all people.
Articulated by British philosopher Jeremy Bentham in the 19th century, utilitarianism is an ethical theory that prioritizes doing the greatest good for the most people. It became the predominant theory of ethics throughout the late 19th and 20th centuries, and was adopted, in different variations, by prominent economists such as John Stuart Mill and William Stanley Jevons.
(Shortform note: In this context, “utility” refers to a measure of happiness or satisfaction. The theory is based on the idea that rational people seek to increase their utility or happiness, and that public policy should seek to do the same for society.)
Sen sees two main virtues of this approach. First, utilitarianism is focused on outcomes, meaning the results of policies are more important than processes. Sen believes results must be part of the calculus. Second, the welfare of people is the primary consideration.
Sen identifies four problems with utilitarianism.
In Defense of Utilitarianism
Some researchers take issue with Sen and other scholars’ interpretations of utilitarianism, arguing they mischaracterize its main tenets. Writing “In Defense of Utilitarianism,” Professor Peter Bowden argues that modern utilitarians do value freedom, and that the kind of model expressed by John Stuart Mill in Utilitarianism provides a practical approach to decision-making.
Regarding freedom, if an individual values freedom inherently (as Sen says all people do), then violating their freedom reduces their utility. This fact prevents utilitarians from overlooking freedom, as Sen claims they do. And since in addition to his work on utilitarianism, Mill literally wrote the book On Liberty, Bowden argues that it’s misguided to act as if he didn’t value freedom for its own sake.
As for practicality, although it’s difficult to make utility comparisons between people, Sen’s preferred method of using democratic means to decide the proper size and scope of positive rights (like social safety net programs) is similarly hard.
Libertarian theory, as expressed by Robert Nozick in Anarchy, State, and Utopia, focuses on maximum individual liberty with minimal government intervention in personal affairs. In libertarian theory, the parties involved in a transaction determine what constitutes a just or fair exchange rather than the government.
(Shortform note: Opposition to minimum wage laws is an example of applying the libertarian “justice as consent” model. If an employer wants to pay a worker $5 an hour, and the worker is willing to accept this, libertarian theory considers this transaction consensual and therefore just. Libertarians aren't concerned with whether any outside party considers this exploitative—what's important is the mutual consent of the parties involved. In fact, libertarian theory considers minimum wage laws themselves unjust, because they essentially give the government power to veto an otherwise mutually agreed-upon transaction.)
Sen notes only one key benefit of libertarianism: Unlike utilitarianism, libertarian theory does value freedom inherently.
Sen warns that libertarianism prioritizes freedom from government intervention above results, meaning it’s willing, in theory, to accept poor outcomes for some people as long as respect for everyone’s rights is maintained. If freedom results in unemployment, for example, the government has no obligation to help the unemployed.
(Shortform note: Proponents of libertarianism would likely claim that in practice, indispensable freedom leads to improved conditions for all people. Sen, however, argues that libertarianism insufficiently protects the most vulnerable people. Widespread human suffering (such as famines) has occurred in places where people’s rights were fully protected in ways consistent with libertarian theory.)
In A Theory of Justice, published in 1971, Harvard philosopher John Rawls presents a moral model, “justice as fairness,” which tries to reconcile notions of liberty and equity.
In Sen’s interpretation, the purpose of Rawlsian justice is to allow individuals a better chance to pursue their objectives. To attain their objectives, they need “primary goods.” These primary goods include rights, freedoms, opportunities, and income. Together, these primary goods provide people a just or fair chance to succeed or fail on their own merits.
Rawls values freedom for its own sake (what he calls the priority of liberty). Rawls also values other primary goods, meaning that he considers more than freedom in his evaluations. Sen agrees with Rawls that primary goods—aside from liberty—are vital as well.
Sen argues that for very poor nations, the “priority of liberty” can overemphasize freedom and risk overlooking the basic economic needs of the poor.
While Sen values negative rights, he also champions positive rights like safety nets and public health programs he deems vital to his idea of freedom. For example, Sen would likely favor progressive tax rates to redistribute some of the highest earners’ income to poorer people.
(Shortform note: By “negative rights,” we mean the rights of a person to be free from external violations of liberty, such as coercion. By “positive rights,” we mean peoples’ claim to entitlements in order to secure a baseline level of welfare.)
Economics and “Distributive Justice”
Each theory of justice Sen addresses seeks to address a fundamental question of economics: How should resources be distributed within a society? The arguments about which arrangements are morally preferable fall under the category of “distributive justice.”
For Rawls, justice is based on what he calls the “difference principle,” which has these components:
Each person has equal claim to a set of rights and liberties.
In order for social and economic inequality to be just, it must satisfy two conditions:
Unequal outcomes are acceptable when everyone has an opportunity to attain them. For example, if someone becomes rich by becoming a famous musician, this is considered just because everyone has an opportunity to do so.
Inequality can be tolerated if it benefits the least advantaged members of society. If an entrepreneur builds a fortune by inventing a new technology, his greater income can be tolerated if that technology improves conditions for the disadvantaged.
If inequality fails to satisfy these two conditions, then Rawls believes in redistributing resources to improve conditions for disadvantaged people, as long as it doesn’t infringe upon anyone’s basic liberties.
Markets are integral to Sen's theory of development because they afford basic freedoms and spur economic growth. Sen argues that markets have both intrinsic and instrumental value, but also shortcomings. He explores both benefits and flaws in this chapter.
Sen identifies two reasons why free markets are integral to his view of development:
1. As a means to economic growth and progress: Sen acknowledges that free markets can increase economic growth and overall economic progress. However, Sen says free markets are much more than just a means to improve prosperity.
2. As a fundamental freedom that people have reason to value: Independent of its impact on economic growth, the freedom to exchange goods and services is a basic part of social interaction and is valuable as its own kind of freedom.
Nonetheless, Sen takes care to enter into his calculus the aspects of free markets, such as income and gender inequality, that may contribute to the systematic exclusion of some marginalized groups. He also favors government intervention like social support and regulation when they can improve overall welfare.
Adam Smith on the Role of the Market
Sen relies heavily on the work of Adam Smith to support his philosophical and practical case for freedom. Some scholars call this Adam Smith’s “presumption of liberty.”
Smith generally thought that an undisturbed market was the best engine for progress and liberty. However, he did acknowledge that there are circumstances when the market fails to provide socially preferable results. In such cases, he believed it was just to prioritize the public good. He specifically mentioned the government’s role in national defense, in enforcing the rule of law, and in providing public works like roads and bridges. Smith also advocated imposing restrictions on the levels of interest rates banks can charge, although many economists disagree with his reasoning.
In Development as Freedom, Sen follows a similar line of reasoning. He views freedom as important and useful to the public good but identifies some areas where the government can improve general welfare.
Sen notes that the liberal, “laissez-faire” bent of classical economists like Adam Smith and David Ricardo was first and foremost about freedom, and only secondarily about the efficiency of markets.
However, in modern economics, there’s been a shift away from a freedom-focused defense of markets toward a utilitarian one, which focuses on doing the greatest good for the most people.
The utilitarian approach focuses on results—however, Sen advocates focusing equally on results and process. By “process” Sen refers to a person’s ability to exercise freedom. He presents two examples to show why thinking about markets in this way addresses well-being to a greater extent than does the utilitarian approach.
First, Sen offers a hypothetical to show the importance of process: Consider two economies, one that is decentralized, with resources allocated by market mechanisms; the other, a centrally planned economy in which resources are allocated by the decisions of a dictator.
If both economies achieve the same economic results, despite their differing processes, both are equally valid from a utilitarian perspective. However, in Sen's view, the market economy would clearly be superior because of its process—allowing people the freedom to make economic choices enhances individual and societal well-being. In contrast, the centralized economy's process inflicts a social cost.
The second example demonstrates why it’s necessary to focus on process as well as results by comparing forced labor and free labor.
Sen cites empirical evidence showing that the compensation of American slaves (measured in terms of the goods they consumed) was similar to that of free laborers. Additionally, American slaves had life expectancies that were higher than those of industrial workers in the United States, and on par with the nations of France and Holland.
From a utilitarian perspective, focusing only on the outcomes of compensation and life expectancy, forced labor has a higher utility than free labor and is therefore the better option. But, this utilitarian perspective, which analyzes only the results of slavery, overlooks entirely its deprivation of freedom, which every person has reason to value.
By emphasizing its processes, the true cost of forced labor—whether slavery or other forms of bondage—can be fully considered.
East Berlin vs. West Berlin
A comparison of East and West Berlin provides a practical example of Sen’s dual values of economic freedom: its intrinsic and instrumental values. In 1960, Indian economist Bellikoth Shenoy published an article detailing his travels to the two Berlins. West Berlin, which was controlled by Western allies during the Cold War, bore the hallmarks of a free society, while the Soviet Union controlled communist East Berlin.
First, Shenoy details how East Berlin felt like “a prison camp.” There was a heavy police and military presence on the streets, and natives were reluctant to interact with foreigners. On the other hand, West Berliners were eager to converse, and the city was full of art and culture rather than communist propaganda. The fact that nearly all immigration (done underground and at the risk of persecution) was from East to West Berlin highlights Sen’s argument that people value freedom in itself.
Additionally, the West Berlin economy outperformed that of the centrally planned city of East Berlin. GDP in West Berlin grew at an annual rate of 17% during the 1950s, and wages grew by 90%.
Sen advocates a return to a freedom-focused understanding of markets, rather than a strictly utilitarian one. However, he believes that achieving this requires government intervention because of several market shortcomings.
Specifically, he focuses on unequal opportunities and the issue of “public goods,” both of which inhibit development, if the government fails to intervene.
While praising the efficiency of markets, Sen also expresses concerns about the distribution of opportunities. Sen explains that everyone doesn't have the same freedoms or same ability to make use of them.
Sen makes a distinction between income-earning ability and income-using ability. For example, some people (such as those with disabilities) have more difficulty converting income into well-being.
For example, if a blind man earns the same income as his seeing neighbor, the blind man’s income likely won’t go as far, since he has to incur extra expenses to accommodate his disability. This results in a practical disadvantage that both the income approach and the market ignore.
Additionally, while a seeing person has the freedom to choose between driving a car or taking public transportation, for example, the blind person is deprived of this choice. This limits opportunities, potentially skewing the relationship between income and welfare.
(Shortform note: Organizations like the Inclusive Policy Center share Sen’s concerns about the effect of disability on income, arguing that disabilities put people at a unique economic disadvantage. Some researchers believe the cost of disability amounts to about one-third of income.)
The second reason Sen advocates intervention is that free markets neglect "public goods.” Sen believes that government intervention is the proper way to address this market shortcoming.
Environmental protection and public health are two prime examples of public goods the market neglects. When the air is polluted, everyone pays the price—not just the person whose actions led to the pollution. Sen believes that the government has a role to play in rectifying these “market failures.” A carbon tax, for instance, could address air pollution by imposing a price on carbon that equals its social cost to the environment.
Public Goods Have Both Individual and Collective Benefits
Public goods in economics refers to products or services that are consumed collectively rather than individually. For example, military defense spending is a public good because one person’s “share” of defense doesn’t leave less defense for others, and because a person who doesn’t pay for their share can’t be deprived of the benefits of defense.
Public goods usually have social costs or benefits not included in their market price, thus obscuring their true costs and benefits.
Education is also a “semi-public good.” Even though the primary beneficiary of an education is the person being educated, there are social benefits as well. Countries in North America, Europe, and East Asia have all benefited by adopting public education programs even prior to widespread affluence, which Sen considers a productive use of government.
Sen argues that current definitions of poverty and economic development are inadequate. He chooses to view poverty as “capability deprivation” and economic development as expanding freedom.
After reading this section, what do you consider to be the benefits of these new definitions for poverty and development?
In your opinion, what are the drawbacks?
Do you think the Human Development Index is a better measure of welfare than GDP? Why or why not?
Now that we’ve explained Sen’s philosophical case for freedom-centered development, we’ll analyze some of the most urgent issues plaguing underdeveloped nations and discuss how a development as freedom model would mitigate them.
First, we’ll look at how democracy influences development and how authoritarianism holds economies back. Next, we’ll look at gender bias and how empowering women can spur growth. Finally, we’ll discuss food scarcity and how to ensure that there’s enough to eat in a world of 7 billion people.
The role that democracy plays in development has divided policymakers around the globe. First, we’ll examine the arguments against establishing democracy in nations that are comparatively underdeveloped. Then, we’ll explain Sen’s argument for why democracy is a fundamental freedom that ought to be pursued by all nations.
Sen identifies two common arguments against democracy in poor nations, which he considers to be misconceptions:
Some opponents of democracy in developing countries echo the “Lee thesis,” named for former Prime Minister of Singapore, Lee Kuan Yew, which states that authoritarian regimes are better at enriching poor nations than democracies.
Proponents of the Lee thesis attribute this to an authoritarian focus on economic development rather than on freedom, which is seen as unnecessary to eradicating poverty. For example, Singapore, South Korea, and China achieved higher growth while under authoritarian governments than did democracies like India, Costa Rica, and Jamaica.
However, Sen states that the Lee thesis is based on faulty evidence. Empirical studies reveal little relationship between authoritarianism and economic growth. By contrast, democratically-oriented policies are proven growth drivers.
Examination of the “East Asian Miracle” economies (such as Japan, Singapore, Taiwan, and South Korea), which achieved rapid economic growth in the 20th century, suggests the following policies are most helpful:
Sen argues all of these helpful policies are compatible with democratic rights. Additionally, many authoritarian regimes that have failed to adopt these policies have remained poor. Therefore, the assertion that authoritarianism is either necessary or sufficient to achieve economic growth is false.
The Benefits and Drawbacks of the Reign of Lee Kuan Lew
The “Lee Kuan Yew Conundrum,” or the ability of Singapore’s authoritarian regime to govern effectively, provides a rebuttal to Sen’s view that democracy is an essential part of development.
Since 1965, Singapore’s per capita income has grown from $500 to $55,000. Bloomberg ranks Singapore as the healthiest nation in the world. It’s also considered one of the least corrupt, and its crime rates are substantially lower than those in the US.
Singapore has managed to accomplish these advances despite its poor record on democratic rights and civil liberties. While some contend that Singapore shows that democratic rights and civil liberties are overrated, Sen argues that the policies Singapore adopted to prosper are consistent with freedom and democracy, and that the people of Singapore would be even better off if democracy were established.
Another argument made against democracy is that most people in underdeveloped nations don’t want it: They’re too concerned with putting food on the table to worry about voting rights or other tenets of democracy.
However, Sen contends that it’s hard to tell what average people in authoritarian regimes desire, since they lack the means of expressing their honest opinions without the freedom of speech and a free press. When people in poor countries do have the means to give their opinions honestly, Sen contends they opt for democracy.
In India in the 1970s, this is exactly what happened. Voters rejected Prime Minister Indira Gandhi’s emergency declaration, which would have suspended basic political and civil rights in response to widespread anti-government protests. Sen concludes that although they’re among the poorest on Earth, the people of India demonstrated that they value democratic rights.
(Shortform note: Afrobarometer, a pan-African research network that conducts public polling in Africa, revealed that 69% of Africans pick democracy as their preferred form of government. Higher percentages reject other forms of government, such as dictatorships or military juntas. Africans also support democratic institutions such as elections (73%), legislative oversight of the executive branch (67%), and presidential compliance with court decisions (77%).)
As Sen has explained, democracy has both intrinsic value and instrumental value. As social creatures, humans place value on the ability to express their views and participate in the social and political activities of the community.
We also value democracy as a means to economic and social development as well as an instrument to improve national welfare. For example, democratic leaders must respond accordingly to public opinion or risk electoral defeat, while authoritarians are insulated from the pressures of public opinion. In other words, democracy aligns the interests of government decision-makers with the majority of the population.
This dynamic, according to Sen, explains a historical fact: No democracy has suffered a famine. Famines have happened in tribal communities, monarchies, technocratic regimes, imperial colonies, and under many other forms of government—but not in any place with free and fair elections and a free press.
(Shortform note: Frances D’Souza, writing in the Journal of Peace Research, argues that preventing famines has more to do with freedom of the press than democratic elections. Since there are nations that hold democratic elections but control the media, they may still be susceptible to famine. On the other hand, there are countries where regime change is rare, but where a free press still plays the role of watchdog.)
Sen identifies bias against women as a major obstacle to growth in developing countries. This bias deprives women of basic rights in areas such as political participation and family planning. It also harms economic development by failing to tap into the productive capacity of women by excluding them from education and the workforce. By empowering women, Sen argues, not only are women better off, but their communities become safer and more prosperous.
Sen notes that bias against women has resulted in a troubling trend that highlights the harms of misogyny on public health and development. One manifestation of this bias is a phenomenon of “missing women” in developing countries.
In most of the Western world, South America, and Sub-Saharan Africa, there are slightly more women than men. This is due to factors such as:
However, in some parts of the world, such as China, India, and parts of the Middle East and North Africa, there are more men than women. Considering that the factors above apply to these places as well, this finding needs explaining.
Sen’s research suggests the explanation is anti-female bias. In these regions, girls are neglected more than boys, especially in early childhood. This neglect comes in the areas of health care and nutrition, with many poor families choosing to invest more in boys, whom they consider more “valuable.” This leads to more girls than boys suffering from malnourishment and other health problems that reduce life expectancies.
Anti-female bias also comes in the form of sex-selective abortion, especially in China, where the government implemented a “one-child policy” around 1979 in an attempt to combat overpopulation. (Shortform note: China has since adopted a “two-child policy.”) These forces have led some nations to have populations with approximately 0.05-0.10% fewer females than males.
This may seem like a small difference. However, it amounts to around 60 million to 100 million fewer women, as a result of social bias. This means there are fewer women to contribute to the economy and worse health for children.
(Shortform note: According to a 2020 report, there are now nearly 150 million missing women. China and India account for nearly all of this demographic disparity. It was Sen’s own research on the subject in 1990 that brought this issue to many policymakers’ attention, and his work has helped galvanize support for women’s rights in these two nations.)
Effect of Missing Women on Crime Rates
While Sen addresses the moral implications of “missing women,” researchers have discovered that China’s one-child policy may also be contributing to the nation’s six-fold increase in crime.
Young unmarried men commit more than two-thirds of violent and property crime in China. There are currently around 120 men for every 100 women in China, making it difficult for many to find a wife. Researchers found that this skewed male-to-female ratio accounts for a 34% increase in violence.
Given the relative scarcity of Chinese women, it has also become customary for men to provide a sizable cash offering to the bride’s family, which researchers believe has encouraged men to commit more financial crimes.
Additionally, research indicates that when boys grow up in male-heavy environments, they have a greater propensity to commit acts of violence. This impact on crime rates is one more effect of the phenomenon of “missing women” that Sen helped identify through his research.
Sen says the fix to gender bias is to improve women’s agency (their ability to make their own decisions in pursuit of their goals).
When women are free to choose whether to pursue an education, enter the workforce, or have children, they usually make choices that benefit not only themselves, but their families and communities. This is because they are better equipped than the government to understand the implications of these choices on the people around them. When afforded the same opportunities as men, Sen contends that women become agents of change who can transform communities and societies for the better.
Prioritizing Women’s Rights
Sen argues that higher incomes don’t necessarily lead to advances in women’s rights. Research from the Word Bank group supports Sen’s belief and indicates that higher incomes were not associated with more women’s rights in the areas of property ownership or legal agreements.
However, two social factors were associated with improved women’s rights. Adopting international human rights agreements and having more women in political office were linked to women’s rights of other kinds. These findings appear to corroborate Sen’s view that proactive measures must be taken to expand freedom for women, rather than relying on economic growth.
Sen argues that the most effective way to empower women is to increase literacy. Research shows that increases in female literacy are strongly associated with a reduction in child mortality. This is because the knowledge women gain through education allows them to better care for their children.
In addition to reducing overall child mortality, female literacy (and female labor force participation) is also associated with closing the gap in mortality rates between boys and girls.
Other factors, such as male literacy and urbanization, weren’t associated with such reductions. This dynamic highlights Sen’s point that traditional methods of development don’t always lead to the desired results.
In this case, overall economic development was not enough to reduce child mortality, but women’s literacy was. For example, one study in India showed that a 50% reduction in the overall poverty rate made almost no difference in under-5 child mortality rates, but an increase in female literacy from 22% to 75% reduced child mortality rates from 156 per thousand births to 110 per thousand births.
The benefits of female literacy and labor force participation have a similar positive effect on fertility rates. Around the globe, according to Sen, a greater recognition of women’s rights usually leads to a reduction in fertility rates (the average number of children born per woman).
In many developing societies, women have little choice in family planning. Education gives women greater knowledge about family planning, and work outside the home often gives them more options, too.
Advances in Female Literacy, Reductions in Fertility Rates
Since Development as Freedom was published in 2000, women’s literacy rates have continued to improve. In 2000, female literacy in the Least Developed Countries (LDCs, as classified by the United Nations) was 44%. As of 2020, it has risen to 59%. School enrollment is up for girls, and literacy rates among young women in poor countries are nearly on par with those of young men.
A similarly positive trend has happened to women’s average number of births. In 2000, the fertility rate in LDCs was 5.2. In 2020, it was down to 3.9. Sen would likely attribute this reduction to educational empowerment, greater recognition of women’s rights in family planning, and increased access to contraception. Also, improved health care has helped reduce infant mortality, which allows women to bear fewer children to achieve their desired family size. This provides more evidence that coercive population control measures are not needed in order to cut fertility rates.
Another problem that developing countries face is hunger and famine. Sen explains these problems, what's wrong with current approaches, and how his approach to development addresses a rapidly growing population and food supply issues.
Sen argues the answer to the pressures of a rapidly growing population lies in expanding freedom, not restricting it. Many poor nations with rapidly growing populations have adopted freedom-restricting policies on the basis of a now-debunked population growth model developed by Thomas Malthus in the 19th century.
According to Malthus, because population grows exponentially while food supply grows linearly, famines are unavoidable. When the population grows too large for the food supply to sustain, he argued, people will starve. In order to prevent this, Malthus thought the only remedy was for the government to adopt policies of population control.
The Malthusian model has been roundly refuted by modern economists for ignoring technological innovations, which have enabled sizable increases in food production. Despite this, there are still concerns about the impact of a rapidly growing population on food supply, because the logistics of getting food where it’s most needed remains a challenge.
(Shortform note: When Development of Freedom was published in 1999, the world population was slightly more than 6 billion people. As of 2022, there are more than 7 billion people on Earth, with most of this population growth happening in developing nations. East Asia and the Pacific and Sub-Saharan Africa are the two regions where population growth has increased most rapidly since 2000.)
Given the pace of global population growth and the prevalence of hunger in the world, many people have speculated that there simply isn’t enough food to go around. But in Sen’s view, hunger is not a consequence of limited food supply.
Sen shows that food production per capita has increased substantially since the 1970s in every region of the globe except Africa. What’s more, the largest increases came in China and India—the two regions that have experienced the most rapid population growth over the period.
So despite their growing populations, China and India have managed to increase the food available to their people.
As for Africa, which saw a reduction in food production per capita, Sen argues this problem is part of a much larger issue of political and economic mismanagement and not about food production itself.
In addition to there being more food to go around, Sen notes that food is more affordable as well. Compared to 1950-1952, the prices of four staple crops (wheat, rice, sorghum, and maize) have all decreased by at least 60%.
Despite occasional fluctuations, the general trend has been for food prices to drop, meaning even the poor have more access to food than they did previously.
(Shortform note: Since 2000, global cereal production has increased by around 44%, and the percentage of underweight children in Sub-Saharan Africa has fallen from 25% to 17%. The world has enough food to go around, and it can be imported in places where changes in climate or economic arrangement have made growing food more challenging.)
Despite an increasing food supply, some nations have resorted to population control as a response to rising population growth rates.
In judging the effect of coercive population control, Sen asks three questions:
Sen’s preferred idea of justice considers both the intrinsic value and the instrumental value of freedom. Therefore, he weighs the freedom of families to choose how many children to have as well as the impact of that decision on society.
Sen believes the right of couples to choose the size of their family is a freedom people value for its own sake. Government responses to violations of coerced family planning policies also violate other freedoms.
In one example from China, Sen says the family planning police pulled a family from their home then blew up the home with explosives. Next to the rubble, the officials painted a warning to others to obey the government policy.
India, too, has pressured citizens to comply with population targets. For example, in order to receive some public benefits, recipients had to agree to be sterilized. In some areas, citizens with more than two children were barred from running for local office.
Coerced Sterilization in Modern India
Although many of India’s more draconian family planning policies have been abandoned, some are still in effect. Sterilization camps, where women are “herded like cattle” and surgically sterilized, are still common. Although these procedures are nominally voluntary, there’s often intense public pressure for women to undergo them.
Health activists argue that pressuring women in this way reflects regressive attitudes toward women’s role in family planning. They blame poor education and lack of access to contraceptives on the current predicament, and they encourage the Indian government to prioritize family planning education.
Sen says that China has become worse off due to its one-child policy. Since China’s implementation of its “one-child policy” in 1979, its fertility rates have dropped considerably. By 1999, the rate was 1.9, slightly below the replacement level of two children per couple. By contrast, India’s was 3.1, while the average among other low-income countries was 5.0.
However, Sen argues the one-child policy had unforeseen negative consequences as well. China’s infant mortality rate is much higher than that of the Indian state of Kerala, despite both places having similar rates when China enacted its policy in 1979. Sen believes this is because the “one-child policy” in China, which has an anti-female bias, caused neglect of female babies. Additionally (as mentioned in Chapter 7), sex-selective abortion increased substantially under the one-child policy.
China’s One-Child Policy
Designed to combat a rapidly growing population, China’s one-child policy has had far-reaching ramifications. While the policy was in effect between 1980 and 2016, China contends it prevented 400 million births.
Although population growth slowed, the policy also caused a host of demographic consequences. Because of the social preference for males, the one-child policy led to sex-selective abortion and abandonment and neglect of baby girls. As a result, the male-to-female ratio has become skewed, with about 34 million more men than women in the country.
As Sen notes, the Chinese government often used force to ensure compliance with the policy. To circumvent this, many children born in violation of the policy were kept undocumented.
Sen argues that social development, like education and increased women’s agency, is more effective in slowing population growth than coercive population control policies.
Similar economic and social development occurred in Bangladesh, where the fertility rate dropped from 6.1 to 3.4 in only 16 years, without an official population control policy. In Kerala, India, fertility rates dropped more quickly than in China—despite having some of the least restrictive family planning policies in India.
As nations develop economically and socially, it’s typical for fertility rates to fall on their own, for two reasons:
Because of this, and their violation of freedom, Sen believes coercive population control measures are futile.
The Demographic Transition Model
The demographic transition model provides an explanation for how fertility rates naturally decline as people become richer, rendering population control measures unnecessary. There are five stages, which track changes in birth rate and mortality rates of a population.
Stage 1: Birth rates and mortality rates are both high, leading to a relatively stable population. This stage applies to hunter-gatherer societies.
Stage 2: Modern medicine reduces mortality rates, especially among infants and children, while birth rates remain high. This leads to rapid population growth. Most of the least developed nations fit this category.
Stage 3: Birth rates gradually decline as a result of access to contraception, enhanced women’s rights, and economic growth. Many developing countries are currently in stage 3.
Stage 4: Birth and mortality rates are both low, and population size stabilizes. Most developed nations fall into this category.
Stage 5: Birth rates fall substantially below replacement level, and the elderly population increases relative to the working population. Nations like China, Japan, and the US are at or nearing this level, although migration (which is not included in the model), also has an impact on population.
Sen believes all famines are avoidable. Rather than an imbalance between population and food supply, sudden food insecurity is a result of government failure to respond to fluctuations in the supply or price of food.
In order to reduce the effects of famines, Sen says it’s vital to understand three truths about how and why they occur:
A New Cause of Famine?
Sen argues that all famines are preventable. However, when Development as Freedom was published in 2000, the only cause of current famines was violent conflict. Since then, the famine in Madagascar has changed traditional thinking about what leads to famine.
Madagascar is the only country whose famine is not caused by conflict. Instead, it’s generally understood that climate change has contributed to the current four-decade drought currently experienced by the island nation. The UN calls it a “climate-change” famine, and food prices have soared as a result. Although Sen didn’t mention the impact of changing climate on famine, he would likely argue that the government must intervene to ensure Madagascar is able to avoid further suffering.
Sen identifies three keys to preventing famines: private markets, free trade, and government support.
Sen also says it’s not difficult or expensive for governments to prevent famines, and he identifies three ways societies can guard against them.
First, if a famine affects 10% of the population (which would be very high), it would take only around 3% of the Gross Domestic Product (GDP) for the government to supplement the full incomes of the people affected. Even in the Indian famine of 1344-1345, the emperor was able to successfully implement a famine relief program by replacing incomes.
Second, overall economic growth is a much better way to prevent famines than increased food production. Japan, South Korea, and Singapore all experienced substantial drops in per-person food production as their economies grew and switched to manufacturing, yet their populations remained well-fed, as they could afford to import food. Also, if food supply dwindles too much, rich nations with strong industrial bases can import food to compensate for the relative reduction in their agricultural sector.
Third, no famine has occurred in a functioning democracy. Democracy provides an incentive for government officials to take the steps necessary to alleviate food shortages.
Sen blames government mismanagement for the Chinese famine that occurred during the Great Leap Forward of 1958-1961, in which around 30 million suffered from starvation and related illnesses. Sen argues that the widespread mismanagement that caused the suffering simply wouldn’t have been tolerated in a democracy. Democracy makes people aware of the extent of the damage (through a free press) and gives the people a means for addressing it (through elections).
(Shortform note: While Sen puts the responsibility for famine relief on the affected country, the charitable organization Oxfam has a five-step plan to prevent famine, including outside help. It includes providing clean water, encouraging proper sanitation, emergency food and cash assistance, supplying seeds for farming, and government accountability. This kind of private intervention can help prevent famine when government dysfunction is the cause.)
Sen argues that when the government is alienated from the people it serves, this can lead to (or exacerbate) famine, because the government isn’t as likely to intervene on their behalf. The Irish Potato Famine serves as an illustration.
Sen says the Irish Potato Famine could have been prevented through British intervention, but a British sense of superiority led them to neglect the Irish people.
The famine decimated Ireland in the 1840s, when food production fell dramatically because of a potato blight. Despite widespread hunger, Ireland continued to export food. Market forces directed much of the available food in Ireland to where it could be purchased at the highest price: in this case, England, which was relatively richer.
When the famine occurred, Ireland was still part of the British Empire. While mainland Britain had social safety nets in place that provided assistance to the unemployed (known as the Poor Laws), Ireland’s version of these programs was watered-down and did little to help.
Sen says this unequal treatment stemmed from British disdain for Ireland. Many in Britain attributed poverty in Ireland to laziness and incompetence. British officials also blamed the Irish for their overdependence on potatoes as a staple crop. This kind of “blaming the victim” is common when famines occur in colonized areas, such as India under British rule. Such a posture prevents governments from taking decisive action to relieve the suffering of their subjects.
Legacy of the Great Famine
The potato famine that struck Ireland from 1846 to 1851 has had lasting implications on its demographics and culture.
Prior to the famine, Ireland had a population of around 8 million. Because of the widespread suffering and emigration the famine caused, by 1911 its population dropped to 4.4 million. Even today, Ireland’s population has yet to reach its pre-famine levels. Most of those who left Ireland came to the US, which now has around 32 million people who identify as having Irish heritage.
This emigration caused a cultural consequence as well: At the time of the famine, about half of the Irish population spoke Gaelic. By 1891, there were fewer than 700,000 Gaelic speakers in Ireland, as English became the predominant language.
Sen says all people deserve the right to elect their leaders democratically, and he argues that democracy facilitates economic development.
Do you think prioritizing democracy in poor nations is the best way for them to develop? Why or why not?
Would you be willing to tolerate an authoritarian government like Singapore’s, if it managed to achieve sustained economic growth? Why or why not?
Do you think foreign nations or international organizations are right to try to impose democracy on poor countries that are currently authoritarian? Why or why not?
In the final chapters, Sen rebuts some common criticisms of his freedom-centered approach to development; among them, the claim that freedom and human rights are Western ideas that don’t translate to other cultures. He also tries to refute the idea that devising social policy to promote freedom and achieve progress is impractical.
Sen's critics take issue with his emphasis on the importance of human rights, saying it’s biased toward Western cultures.
This critique argues that the concept of human rights is a quintessentially Western idea, and that it doesn’t apply to non-Western (especially Asian) cultures. Therefore, “human rights” are simply an invention of Western civilization, which has its roots in ancient Greece and Rome, and they were devised more specifically during the Enlightenment in Western Europe.
In contrast, Eastern cultures have their own ethical frameworks, which prioritize honor and obedience above liberty and individuality. These cultures are better off adhering to their own traditions, and they don’t need Western values foisted upon them.
The United Nations and Human Rights
In 1948, the United Nations adopted the Declaration of Human Rights. The agreement established a set of fundamental rights and freedoms belonging to all people of all nations. Like Sen, the declaration also takes a “positive rights” view, including economic entitlements to their list. The rights include, among others:
Freedom of speech
The right to own property
The right to privacy
The right to due process
Freedom from slavery and torture
Protection against unemployment
The right to leisure and paid holidays
Provision of social security in the event of unemployment or disability
While Sen champions these kinds of economic rights, critics argue these aren’t human rights at all, and that governments can’t enforce them with any degree of consistency. For example, a paid holiday, however desirable, is not an inalienable right granted to all people at birth—it’s a perk that private businesses or governments offer to workers.
Despite such qualms, the vote in favor of the declaration was unanimous, with a handful of countries abstaining. It was regarded as a global commitment to a set of rights that transcend ideology and offered a blueprint for national laws to protect individual freedom.
In response to the Western bias critique, Sen contends that many “Asian values” are compatible with freedom and human rights.
First, Sen cites the tremendous diversity of Asia. Asia comprises approximately 60% of the world's population, so claims of a monolithic set of values for the region or its people are misguided. Various religious, cultural, and literary traditions have been practiced across China, Japan, India, and many other regions.
Sen acknowledges there are aspects of Asian cultural traditions that are hostile toward freedom and individuality. He also says many Western traditions are similarly hostile. For example, Aristotle’s defense of slavery and aristocracy reveals aspects of the Western tradition that have been replaced by freedom and democracy. To Sen, the question is whether or not pro-freedom aspects are present in Asian heritage in addition to authoritarian ones.
Confucius on Obedience and Collectivism
Sen takes issue with the notion that “Asian values,” especially as articulated by Confucius, downplay human rights and personal freedoms.
However, many scholars trace the East’s apparent elevation of obedience and collectivism to the writings of Confucius. They argue these teachings are the bedrock of Chinese culture and permeate every aspect of Chinese society.
On obedience, many scholars point to the five relationships delineated by Confucius. The first relationship is that between ruler and subject. Confucius says that subjects must show loyalty to the guidance of the ruler and pay deference to his judgments. In return, the ruler must set a proper moral example.
On collectivism, they point to the set of Confucian virtues: Ren, Yi, Li, Zhi, Xin, and Xiao. These translate to benevolence, righteousness, propriety, wisdom, fidelity, and filial piety. More specifically, Confucius explained propriety to mean respect for traditional customs and mores and filial piety to reflect the importance of accepting one’s position in the social hierarchy.
While some argue this shows a disregard for individual rights in the name of the greater good, others underscore the similarities between Confucian virtues and the classical Western virtues of prudence, justice, fortitude, and temperance. Also, many modern “Western values” have changed. Aristotle endorsed slavery and criticized democracy, for example, and yet liberty and representative government are regarded as pillars of modern Western values.
Sen argues it’s wrong to view the Confucian tradition as incompatible with human rights and liberal democracy and says the East is a diverse region whose intellectual influences are too varied and nuanced to be pigeonholed.
Confucius said the proper way to serve a prince was to be honest, even if it would offend him. He also recognized that some values, like family loyalty, could supplant the notion of total obedience to the state.
The Indian Emperor Ashoka, who ruled in the 3rd century BC, wrote extensively on the importance of tolerance. According to Ashoka, all sects deserved respect, and criticizing them unduly only hurt one’s own sect.
Sen argues that cultural exchange has been happening for more than 2,000 years, and that this kind of cross-pollination enriches, rather than harms, humanity. Many critics, however, see this as a major threat to the preservation of traditional cultures.
Sen notes that in a globalized world, Western culture dominates. For example, American fast food chains can be found on each inhabited continent, and television stations from the US are viewed in nearly every nation around the globe.
In response to the fear of culture erosion, Sen makes two points:
China Cracks Down on Western Cultural Influences
In recent years, the Chinese government has been cracking down on Western-inspired cultural trends that it considers to be harmful to public order. Some experts say the government has renewed the narrative of “China vs. the West,” and nationalism is on the rise. China has restricted social media, e-commerce, and private education.
China is increasingly concerned with the influence of private enterprises like Tencent, a tech company, and Alibaba, a giant of e-commerce.
The government is also cracking down on celebrity culture, which often focuses on idolizing individuals rather than on the common good. Social media accounts have been closed, celebrities have been chastised for vulgarity, and video game access to minors has been restricted.
Aside from cultural criticisms, Sen acknowledges that his freedom-centered approach presents several challenges because of the nature of democracy and capitalism:
We’ll discuss each criticism in detail.
Sen advocates a coherent, strategic approach to social policy. However, critics argue that, in a democratic system, one approach isn’t feasible because people have so many different values and preferences.
Because of this variety, they contend that devising a single socially just framework will necessarily violate some people’s versions of justice.
Sen makes two counterarguments:
Social Choice Theory
In Development as Freedom, Sen criticizes fellow Nobel laureate Kenneth Arrow’s work on social choice theory, which pertains to the way societies make collective decisions based on individual preferences.
Arrow’s theorem shows mathematically how consensus can’t be reached when decisions are based on majority rule and there are at least three options to choose from. He calls this “social intransitivity.”
While Sen doesn’t dispute Arrow’s findings, he argues that majority rule requires compromise, and while consensus may not arise, people can still be made better off through collective decision-making.
Some critics also oppose Sen’s advocacy of a government role in crafting social policy because governments’ attempts are often counter-productive.
Many policies that tried to help people directly have backfired. As noted earlier, China’s “one-child policy” was supposed to address the problem of overpopulation by reducing fertility rates. In practice, however, it led to increased mortality rates for women and girls, sex-selective abortion, and an imbalance in the ratio of males to females. Despite these criticisms, Sen believes policymakers can craft policies that work as intended. Sen cites a national focus on literacy and health care systems that have worked in many East Asian countries, as well as programs to eradicate infectious diseases.
Sen makes a distinction between unintended consequences and predictable consequences. While many policies may have unintended results, if these results are predictable, they can guide policymakers in the right direction. For example, while governments can’t determine the exact benefits of investing in health care, they can determine more generally that the benefits are usually worth the investment.
Unintended Consequences: The Great Leap Forward
Some of Sen’s critics argue that governments are not nearly as adept at predicting the outcomes of public policy as Sen says they are. One famous case of unintended consequences is the “Great Leap Forward,” the initiative that the Chinese Communist Party undertook as part of its second five-year plan in the late 1950s and early 1960s. While it was meant to modernize China’s economy and allow it to compete with or exceed those of Western capitalist countries, the results were catastrophic for the Chinese people. The communal ownership of farmland and rigid central planning of economic activities led to tens of millions of deaths from starvation and related illnesses.
When evidence showed the unfolding crisis, the political leaders blamed it on a failure to properly implement their dictates, indicating the inability of the government to predict the consequences of its actions and/or an unwillingness to rectify its mistakes by changing strategies.
A third challenge to Sen’s approach is balancing self-interest with collective interests in a democracy. Sen explains how the pursuit of individual interests can promote economic development.
In market economies, Sen (agreeing with Adam Smith) says most people, whether producers or consumers, seek to satisfy their own desires. However, this pursuit of personal gain often leads to unintended positive results for the economy, because the interests of producers and consumers are often complementary.
Sen invokes Smith’s famous “butcher, brewer, and baker” example. All three provide their services to customers out of their personal desire to make a profit, not as an act of charity. Yet, when a customer decides to buy a product, the customer becomes better off, as do the producers. It’s this process of mutual benefit that drives economic progress in the capitalist system.
Examining the Butcher, the Brewer, and the Baker
There are generally two ways to interpret the butcher, brewer, and baker example. Some see it as evidence that free enterprise promotes greed above benevolence, and is therefore a fundamentally immoral system.
Others interpret it as evidence that free enterprise encourages people to sympathize with others, by trying to understand how we can satisfy their needs and wants. Entrepreneurs get what they want (more wealth) by designing goods or services that best suit the desires of consumers. Although their goal may be profit, their means of attaining it is by better understanding the people around them.
Sen also makes a broader point: To flourish, capitalism requires a set of values and norms. A combination of legal institutions and social mores is crucial to economic functioning. We’ll refer to these values as capitalist values, which are part of the ethical guardrails Sen refers to throughout the book, and they help combat greed and corruption.
The first value, trust, is crucial to economic exchange. Only in a system where mutual trust is routine can trade occur. Part of this trust can be provided by institutional measures, such as contract law, which give confidence to all parties that their agreements will be respected. Another part, however, is more implicit, and has to do with the natural cultivation of social norms that give people confidence in the commitments of others.
Sympathy, too, is a capitalist value. Sen agrees with Adam Smith’s view that there are many situations where self-interest compels a person to help others. If we suffer when someone else suffers, this is sympathy. This natural human drive persists even in a capitalist system dominated by self-interest.
Sen contrasts sympathy with another capitalist ethic: commitment. Sen defines commitment as a person’s desire to help others, not to alleviate their own “sympathetic suffering,” but from a larger commitment to justice.
These values, Sen believes, allow capitalism to flourish, and they provide a means of achieving even more progress. Sen believes these values help explain the sustained success of Western economies, and that cultivating these values in developing nations is crucial to development.
Imposing Capitalist Values
In The White Man’s Burden, economist William Easterly agrees with Sen that there is a set of capitalist values that makes free enterprise work. Easterly specifically highlights the importance of trust in enabling capitalism to flourish.
However, Easterly also argues that these capitalist ethics must develop organically, and they can’t be imposed on a nation or culture unfamiliar with them. This is why, Easterly argues, attempts to bring capitalism to countries with long histories of other economic systems usually fail.
For example, the effort to rapidly turn former Soviet satellites into capitalist systems following the collapse of the Soviet Union in 1991 was largely a failure. This “shock therapy” was meant to bring to the region the economic success of the West, but it had the opposite effect. Easterly argues this was because these nations had yet to develop the capitalist values that he and Sen deem vital to capitalism’s success.
Sen argues that all nations can benefit by adopting freedom and human rights.
What do you think is the best way to promote freedom and human rights in developing countries?
Do you agree that economic rights such as unemployment insurance and paid holidays are human rights as well? Why or why not?
Do you think it’s more important to help a poor nation that respects human rights achieve economic growth, or ensure a prosperous nation that violates human rights is held accountable? Why?