Nobel laureate Amartya Sen’s book Development as Freedom argues that one needs to look beyond the growth numbers and economic indicators like gross domestic product, per capita income to understand the economic development of a country. This book won him the Nobel Prize and rightly so since it, for the first time, mainstreamed human aspect into development. To many, his book and approach is the standard for ethical economics and he seems to set the goals for development economics toward the right trajectory, which no previous economist did.
In chapter two, The Ends and Means of Development, Sen argues that freedom should be the primary element of development. Sen gives two reasons why it should be so: first, the only acceptable evaluation of human progress is ultimately the enhancement of freedom and second, the achievement of (economic) development is dependent on the free agency of people. In other words, expansion of freedom can be viewed as both the primary end and the principal means of development. He goes on to call these two the “constitutive role” and the “instrumental role”.
In the constitutive perspective, development involves expansion of basic freedom like being able to avoid deprivations like starvation, undernourishment, illiteracy, lack of political participation etc. Most people agree with this first view on expansion of freedom. The second reason is what Sen elaborates in this chapter since it is not what many economists propagate, in fact, they tend to condemn it, arguing that poor economies cannot afford such expenditures and that (economic) development must precede social welfare initiatives by the state.
Sen argues that expansion of freedom can play an instrumental role in economic development and need not succeed economic growth. In this context, Sen highlights five distinct types of instrumental freedoms: (1) political freedoms, (2) economic facilities, (3) social opportunities, (4) transparency guarantees and (5) protective security.
Political freedoms include the political entitlements associated with democracies in the broadest sense (encompassing opportunities of political dialogue, dissent and critique as well as voting rights and participatory selection of legislators and executives).
Economic facilities refer to the opportunities that individuals respectively enjoy to utilize economic resources for the purpose of consumption, or production, or exchange. The increase of national income along with how it is distributed amongst the members of the country plays a key role in this.
Social opportunities refer to the services that society provides for education, health care etc., which influence the individual’s substantive freedom to live better. These facilities are important not only for the conduct of private lives, but also for more effective participation in economic and political activities.
Transparency guarantees deal with the need for openness that people can expect. the freedom to deal with one another under guarantees of disclosure and lucidity. These guarantees have a clear instrumental role in preventing corruption, financial irresponsibility and underhand dealings. It entails the presumption of trust in some sense in the society.
Protective security is needed to provide a social safety net for preventing the vulnerable population from being deprived even further. The domain of protective security includes fixed institutional arrangements such as unemployment benefits and statutory income supplements to the indigent as well as ad hoc arrangements such as famine relief or emergency public employment to generate income for the destitute.
Sen states that these freedoms have strong interlinkages and the process of development is strongly influenced by such interconnections that supplement each other.
Entitlements such as basic education are catalysts for economic growth. Sen talks about how the provision of social opportunities like health and education can contribute to economic growth by making the labor force more productive and employable. For example, Japan, China and East Asian countries like Taiwan and South Korea that emphasized basic education gained high economic growth. He compares this to the case of India (except in the state of Kerala) and Brazil, which did not focus so much on basic education and despite opening up their markets, like the East Asian countries (China and Japan), could not achieve similar growth rates. His argument is that the people of Japan and East Asian countries could fully utilize the opening up of markets by seizing the economic opportunities offered by the market system. Sen further argues that entitlement to economic facilities, which raise private incomes, can also make it possible for the state (through taxes) to finance protective securities and social services.
Political freedoms are a vital element of development. Citing the case of China, Sen argues that in none of the democracies, a famine as bad as China’s in the late 1950s has occurred simply because of the power of media, and the threat of being voted out in the next democratic election; the governments in other countries are accountable and try to prevent any such instances.
After making a compelling case of how these freedoms and their interlinkages aid economic growth, Sen goes on to support his claim that economic growth need not be the first step and these social freedoms can be enhanced prior to or during economic development. Many economists argue that socially important investments need be postponed, as poor countries cannot afford these and hence they need to come after the country becomes rich. Sen says that these social services are very labor intensive and thus are relatively inexpensive in poor and low wage countries. He says:
“A poor economy may have less money to spend on health care and education, but it also needs less money to spend to provide the same services, which would cost much more in the richer countries. Relative prices and costs are important parameters in determining what a country can afford.”
Sen supports his argument by taking the example of Sri Lanka, pre-reform China and Kerala- an Indian state. These economies were able to improve their health and education without much success in achieving economic growth. Sen says that it was possible for these economies to do so due to a support led process- where the state provided tremendous social support.
Sen then contrasts this with the case of Taiwan and South Korea, where immense improvements in health and education took place, but along with those, there was high economic growth. He calls this kind of improvement in social freedoms growth mediated processes. Unlike Brazil where only economic growth took place, these countries were able to utilize the enhanced economic prosperity to expand the relevant social services.
Growth mediated and support led processes lend support to the fact that a country need not wait until it is rich to embark on the basic expansion of social services.
After reading Sen, I think that the road for future development lies in including these instrumental freedoms along with the goals of economic freedoms, especially for countries like India, where the economic growth rate is high, but basic human development indices are in a poor state. Basic health and education facilities are lacking and as per 2011 census data, in 7-16 age group 11.7% are illiterate and over all age groups only 5.63% have attained education levels of graduation and above. In countries like Nigeria and Pakistan, neither are the economic growth rates that high, nor are there entitlements such basic education and health for all. For all such countries, enhancement of human freedom- apart from being the main objective- can be the primary means of development. Both the ends and means of development require keeping the notion of freedom as the focal point and people need to be actively involved in enhancing their own capabilities through freedom expansion, rather than being passive onlookers of economic development.