PDF Summary:Development as Freedom, by Amartya Sen

In Development as Freedom, Nobel Prize winning economist Amartya Sen calls for a radical rethinking of the way we view poverty and economic development. Pulling from more than five decades of his own research, Sen argues that economic development goes beyond increasing wealth—it’s about expanding freedom.

In this guide, we examine the five types of freedom that Sen argues are integral to development. We explore how empowering women helps communities, how democracy prevents famine, and how capitalist values lead to the greater good.

This guide explains Sen’s reasoning—from what it means to be poor to his idea of justice and the role that markets play in development. Additionally, we examine different perspectives on the substance and practicality of Sen’s “development as freedom” approach.

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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.

Ethical Guardrails

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.

Safety Nets

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.

Sen’s Idea of Justice

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.)

Building on Rawlsian Justice

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.

The Role of the Market in Development

Sen identifies two reasons why free markets are integral to development:

• They are a means to economic growth and progress.
• They are a fundamental freedom that people have reason to value.

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.

Capitalist Values

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.

Development as Freedom in Practice

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.

Women and Development

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.

Women’s Agency

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.

Preventing Famines

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.

1. Private markets provide incentives for people to produce and distribute food.
2. Free trade allows people to convert their labor power into food.
3. Government support enables famines to be avoided by offering supplemental assistance when there is a recession, natural disaster, or price shocks.

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.)