Monday, July 06, 2009

Amartya Sen: Exponent of Adam Smith's True Legacy

An editorial in the Times of India is worth reading in full ">HERE:

“In an article, 'Capitalism beyond the Crisis', Amartya Sen has argued that the present economic crisis demands a new understanding of older ideas, such as those of Adam Smith and Arthur Cecil Pigou. He draws attention to the fact that, while Smith showed the market economy's usefulness, his analysis went beyond leaving everything to the market's invisible hand. He viewed the usefulness of capital and markets within their own sphere and at the same time saw, contrary to the popular perception, the need for other institutions, such as sound mechanisms for financial regulations. He was aware, for example, of the need for state regulation to protect citizens from what he called "prodigals and projectors" who took excessive risks in their pursuit of profit.”

Comment
Amartya Sen is always worth reading and I recommend that you follow the link and see how Sen develops his argument by bringing Max Weber into play:

In the last pages of The Protestant Ethic, he notes: "The idea of duty in one's calling prowls about in our lives like the ghost of dead religious beliefs." He adds: "In the field of its highest development, in the United States, the pursuit of wealth, stripped of its religious and ethical meaning, tends to become associated with truly mundane passions, which often actually gives it the character of sport."

Sen writes with surprising agility and deep commitment to social changes within markets where possible and with public funding where necessary.

There is no call to protect Adam Smith’s legacy from economists like Amartya Sen. He embodies Smith’s true legacy in everything he writes.

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5 Comments:

Blogger Leigh Russell said...

This is certainly a time when we need to take a step back and review our ideas on the economy. A step back, but not a step backwards...

8:56 pm  
Blogger Michael Thomas said...

I think that is a great insight. I have long been fascinated by Sen and by Smith. Sen's book Ethics and Economics (from some lectures he gave) is a pretty good way to see the systematic connections he has with Smith.

I certainly think that Smith was onto something with projectors and prodigals, but unfortunately it has not been yet made clear to me what that is. His discussion in book 4 of WN seems to suggest that Columbus was a projector, a prodigal, or both (there is little a quick search of the literature turns up on this point). Surely the mis-allocated investment of the Spanish crown is one of the most interesting mistakes in human history for which Columbus has received his share of approbation. It makes me wonder to what extent Smith had a theory of what is and is not excessive risk. The alternative would be a reading of Smith that highlights him as extremely risk-adverse.

10:06 pm  
Blogger michael webster said...

I believe the Sen article first appear in the New York Review of Books, http://www.nybooks.com/articles/22490

In my view, the most important take away from Sen is this: markets are necessary, but not sufficient.

This simple bit of logic, easily explained by a Venn Diagram, is easy to miss.

When we criticize an institution are we a) saying it is not necessary, or b) that it is not sufficient?

1:03 am  
Blogger J23 said...

In case any others have trouble finding the link to the article, as I did, here it is:

http://timesofindia.indiatimes.com/Opinion/Editorial/TOP-ARTICLE-Lost-Spirit-Of-Capitalism/articleshow/4740975.cms

2:16 am  
Blogger Chandra said...

May be good reading but certainly bad person to compare or to say he is the person who writes about all Smiths ideas!

One has to read the whole or part of Sen's works to say all these words on him.

Sen in fact is not right person to say he is "the exponent of Smith's true legacy"

In sum, Sen is true communist and socialist legacy!

1:28 pm  

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