'A new economic model' by Amartya Sen
In the opening pages of his essay "A new economic model", Amartya Sen points out the contrast between the unprecedented affluence in today's world and the extreme poverty that characterizes a large proportion of human populations.
Amartya Kumar Sen, an Indian economist, was born in 1933. He won the Nobel Prize in Economics in 1998 while trying to give an ethical perspective of economic analysis, quite contrary to its academic definition that limits the scope for efficiency. His essay illustrates a new business model.
Sen envisages the development process at an angle not quantitatively, like the growth rate or level of wealth, but in a qualitative way; he associates it with the concept of freedom. Can a development model based on ethics be tough economically?
In defining development as the "process of expanding the real freedoms that people enjoy," Sen made freedom the ultimate end of development, which gives an immense intrinsic value. This freedom is first of all a process leading to free choice, on the model of voting. But Sen goes beyond this narrow definition of freedom, characteristic of libertarians. It overlaps with the concept of freedom in a range of freedoms corresponding to the real possibilities (possibility of access to education, health care, shelter ).
These non-formal freedoms may be designated as the "capacity" to implement "functions", in other words to use its freedom of initiative. This broad definition makes a lawyer Sen's economic well-being. The ability to have access to food, which depends on the endowment income of individuals, agricultural production and distribution, as well as terms of trade (or not access to the labor market), is a good example of these freedoms, that are non-formal.
Political freedoms (free speech and elections). They enable people to become truly involved in development. It is an essential element in the process of "rational social progress" designed by Sen. According to him, without ignoring the greed inherent in human nature, one must not forget the influence of values, such as the "work ethic", which allows social progress.
Hence the importance of political freedoms, which create the conditions for public discussion prior to the consideration of these values in public policy. Here one can criticize a little blind trust made to reason, a concept that is not without its critics.
Thus, according to Sen, to analyze the development one must focus on the substantive freedoms, rather than on income and wealth. Indeed, in contrast to the conquest of freedom, getting more income does not ensure the well-being. For example, low income does not explain illiteracy, even if they are participating.
It is also found that life expectancy does not depend on the GDP of a country or level of wealth of the human group in question (the old black Americans live less than people in many Third World countries).
Tags: Amartya Sen- A new economic model; development freedom; non formal freedom