Amartya Sen, winner of Nobel Prize of Economy 1998 for his contribution to the economics of welfare
- Presentation of PPR and Puma
- Presentation of the operation
- Decision and Executive Summary
For many, development was an economic issue. Therefore, judgmental ethics constituted an intrusion of moral values relevant to judging the effectiveness of a market. It raises questions about the behavior of the individual both to other individuals and the collective, and it answers the question 'how should we live?' Two questions arise from ethics to know what a good society is, and what a just society is. The old theories were religious, while contemporary theories of society reflect on moral concepts. While value judgments are subjective because they answer to the question 'what is right for me?', modern theories of justice attempt to formulate universal principles applicable to society as a whole. These collective principles of justice are in line with personal moral values allowing acceptance by citizens. The court respects the plurality of moral values and ensures compliance by each individual of freedoms at the collective level.
According to Amartya Sen, economy is indeed a moral science, and principles theorized by Smith and Ricardo were only applications to economic principles as applicable to a much wider field. In his book 'Ethics and Economics', Sen distinguishes two sources of the economy: the first is ethical, and the second is 'mechanistic', that is to say, due to 'logistical workings of the economy'. His work did not aim to prove the superiority of one ethical view on a mechanistic conception, but to understand why ethics has disappeared from contemporary economics, and then to prove the interest in reintroducing this sector in the current economy.
Why is the economy not ethical? According to Sen, this distance is a consequence of the interpretation of the theorems of welfare economics. These two theorems state that under certain conditions, "any market equilibrium is Pareto optimal and that, whatever the Pareto-optimal situation is, it is possible to balance the market by choosing an appropriate distribution of resources ". A Pareto optimum is a situation in which the improvement in the situation of an individual involves the deterioration of at least one another. However, it may be several Pareto-optimal situations.
Each therefore requires an allocation of resources more or less equal between the individuals. According to Sen, is the second theorem of welfare economics that would be led to consider the Pareto optimum as social optimality criterion. The successes and failures of the market will therefore be examined according to the criterion of Pareto optimality based on individual utilities. The modern economy does away with ethical issues, assesses the individual's or the group's well being without regard to individual freedoms.
Sen proposes another endpoint using the term "Capabilities". He hopes to evaluate the different characteristics of a person, what it is and what it does, and its freedom of choice. The capabilities to assess the individual well-being in a different way from that based on utility (welfarism). According to Sen, his theories can help understand some forms of inequality, hunger, poverty and development.
Tags: Amartya Sen, unethical economy, welfarism, market equilibrium