Sunday, 24 May 2020

A relevant dimension to economics

Updated: August 26, 2016 3:03 pm

Professor Amartya Sen, who was awarded the Nobel Prize, for Economic Sciences, in 1998, writes on economics with theories and at times  philosophies,  which translate into  understanding the subject with amazing lucidity. Members of the Department of Economics and Philosophy, of the University of California at Berkeley, USA,  had invited Professor Sen, in 1986, to deliver a series of lectures which involved the role of ethics in economics. Sen asserts that a gap has formed between economics and ethics which has interfered with contemporary economic theory. He has emphasised that economics can be more productive if further emphasis is directed to ethical considerations that influence human judgement. Sen does not imply that various ethical considerations are incorporated, willy nilly, into economic  literature. Rather, he has advised that ethical considerations are first analysed before utilising these theories into mainstream economics.  This eminent personality identifies for  a student, or even an officer in service,  the values of this unusual but vital dimension which also gives economics depth.

 Sen warns that the study of economics concerns “real people”  which resonates  Socrates words:  “How should one live?” These words are integral to the study of  economics and involves students, governmental employees, business enterprises, et al.  Interestingly, the matter of ethics in economics goes back to the time of Aristotle, who related economics to the human factor and humanity’s concern with wealth. Aristotle defined the matter further by his words, “the end must be good for man.” These thoughts have relevance in economic policies of all nations and “ the end must be good for man” translates into the element of ethics because the human factor is within the realm  of this subject. But the matter cannot stop at achieving the end for one man. It must broaden into a wider spectrum of welfare economics. This is illustrated by moral rights and freedom. Sen states that moral rights or freedom does not receive much importance in modern economics. Rights, he explains, are interpreted as ‘legal entities.’ Rights and its consequences can be influenced by social morality. There may be ‘violators’ or dissent  and ethics does demand that people are obligated to do something, to stop violators. To illustrate this principle let us move our kaleidoscope to Maharashtra which was  in the midst of drought. The Railways had transported 6.20 crore litres of water to this drought affected state. They  have billed the State’s exchequer Rs. 4 crores for the carriage of this water ! Be that as it may, we are also  confronted with an episode of a Dalit, Bapurao Tajne, in Maharashtra, who was prevented from drawing water from a well in his village, because he is considered an ‘untouchable’ by others. Tajne  had to dig a well in that searing heat; it took him and family 40 days to miraculously hit water at a depth of 15 feet. Village wells are made through the  government’s funds. Can social prejudice be allowed to transgress into  economic policies? A serious ethical issue has arisen. Both the 4 crores billing  and Tajne’s experience in a free country, are  a consequence of “narrowly conceived rational decisions” and  have made both examples inadmissible in economic evaluation.

Sen laments that with the distance between economics and ethics, contradictions have arisen. Famines have occurred despite availability of food; patterns of interdependence are studied and the equilibrium theory is in focus when studies reveal that, on occasion, shortage of food had nothing to do with famine. In a brilliant study Sen explained that the Bengal Famine(1943), was also due to the fact that  the Japanese had  moved into Burma during the War;  the movement of rice from Burma to Calcutta was seriously disrupted. Since colonial India was not a democracy in 1943, British rulers  paid no heed  to the woes of  the poor.

28-08-2016

The rulers  at the time had obviously distanced themselves ‘miles  away from ethics which was desperately needed for feeding millions of people who were starving  in Bengal. The ruler’s  failure  of synchronising arrangements for alternative supplies of rice enunciated a serious disparity between economics and ethics. Rational thinking is an important factor which weaves into the aspect of human behaviour and  influences ethics.

Amartya Sen asserts that welfare economics can be enriched by paying more attention to ethics. In turn the study of ethics can also benefit from a closer contact with economics. Bringing ethics closer to economics is not simple. It is the study or exercise  of real life examples which will give us larger rewards,  by living and learning.

By Deepak Rikhye

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