Philosophical Issues in Economics

Let us assume that we have £1000 to distribute among the four to alleviate their hunger. The sum can only be distributed in discrete increments of £100. The following conditions are in force. Pedro and Nabaneeta have no change in their respective utilities with any additional sum of money. Their utilities are indifferent to increases in income, as the consequence of this additional amount of income does not affect their choice.

Chang gains 800 units of utility with the first £100, since it helps him buy a kilo of rice (rice is sold at the rate of £100/kg only; water, salt and fuel are freely available, as is the utensil and gas stove). After the initial £100, every additional £100, increases his utility by 100 units. Because, he has inexpensive tastes in food. And once he has rice, he tends to save the additional amounts, which give him a diminished utility gain. George gains 900 units of utility with the first £100, since he can now indulge his tastes in champagne and caviar. With every additional £100, George’s utility increases by 900 units, since he continues to indulge his appetite for champagne and caviar.
How would we distribute this money, using the criterion of utility maximisation, given this situation? Well, we give it all to George: the aggregate utility gain would be maximum - 9000 units – then. Since, “utilities of different people are summed up to get their aggregate merit, without paying attention to the distribution of that total over individuals,”¹⁵ utility considerations would let Chang starve, rather than let George forego the consumption of champagne. This is, by any standard of human decency, clearly unacceptable.
Bentham: Ah, but only under the conditions which you have conjured Mr. Sen. Reality is not a matter of conjecture.
Sen: I totally agree. But the inability to measure mental states, by itself, warrants such conjectures. Or we may have to abandon your theory completely. Even your most prodigious student conjectured when he said: it is better to be a Socrates dissatisfied, than a fool satisfied, did he not?¹⁶
Bentham: Psshaw…(that is all Bentham could say, when Samuelson interjected).
Samuelson: The “cardinalists” may let you get away with this paltry example, but you have yet to overcome the other manifestation of utility: revealed preference satisfaction. We may not be able to measure the mental states of people. But we can infer their preferences by the choices they make, which we do by observing their behaviour.
Using that case, we would not have to conjure up hypothetical examples and utility sums. Preferences reveal all! Given Chang’s condition if he could afford to buy food, he would buy and stop starving. And if George wants to eat caviar and drink champagne, he can do the same; let him make the choice.
Sen: That is all good Paul. We can have a formal debate about the merits of the revealed preference approach again, elsewhere. Given the confines of our example here, revealed preference theory may explain Chang’s behaviour by his choice due to his seemingly objective condition (starving) – he chooses to buy food when he can afford it (behaviour), because he is starving (objective condition). But what do we do if he cannot afford to buy food during famine?
Also, what about the case of Pedro and Nabaneeta, who reveal their preferences for fasting and under-nourishment respectively? According to your theory, they are both hungry by choice, which reveals their preferences. That is the end of it. But surely Nabaneeta’s choice is a product of social conditioning. This choice may not reflect her actual preferences. It surely does not increase her well-being, when well-being constitutes the achieved functioning of being well-fed. Her case differs from Pedro’s conscious choice of fasting for religious purposes, for a limited time: he gains spiritual well-being, by foregoing food for a limited time period, which does not negate his well-being in the sense of being well-fed. If he is an overweight priest, it may even increase his well-being health-wise!
Samuelson: You have done more research on what happens during famines, so I’ll leave it to you to prescribe policy options for what to do when ordinary people cannot afford to buy food during a famine.
But as to the latter case, differentiating Nabaneeta underfeeding herself because of social conditioning and Pedro’s fasting as a case of conscious choice for religious purposes, is a subjective matter. Even your theory of capabilities – substantive freedoms – cannot state otherwise. Who decides which choices are products of social conditionings, and which are not?
Sen: That is precisely what I want economists to realise. That rather than think about distributional issues as scientific matters, which can be resolved by narrow metrics, we need a multi-dimensional approach. And this approach may – nay, must – involve subject value judgments.
But these judgments can be fair and just, if they are a product of due deliberation – public deliberation – within a specific culture, polity, society.¹⁷
Nozick: Aren’t you being a fetishist here? After all, that is what you accused our friend here (point to Rawls, who has lost his voice) when he made a similar claim as to the critical nature of political liberties to pave the way for a liberal conception of justice.¹⁸
Even if you do not agree with my claims about the almost absolute primacy of certain entitlements – a term which we both use in radically different ways – you are still stating that the primacy of political liberty – manifested in public deliberation, freedom of speech – is a prior condition for any just scheme to work out.
Sen: I realise that. But the difference between us lies in the fact that you assume that political liberties automatically guarantee personal advantages to individual human beings, while I do not make that claim. I state that the political advantage is there, but not the personal one.¹⁹ That is how I limit my fetish for liberty.
Mill: Well, I have been pleased with Mr. Sen thus far. His approach seems to be provisional and adapts to changing circumstances. He grapples with most issues that we struggled with, and continue to struggle with. It may serve him well to continue focus attention on the “internal culture of the individual” and the “orderings of outward circumstances”²⁰ simultaneously. His theory, insofar as it is a theory, has some contradictions, just like all our theories; the question is will these contradictions prove fatal?²¹ Time will tell, but we need to end our talk here. It is getting late; Minerva’s cuckoo heralds dusk!
[Rawls passed a note to Sen, which Sen mistook for a napkin given to wipe the “damnation latte” he had just spilt. Instead of reading it, Sen used it to wipe off the spilt coffee. Eklavya, a worker at the Café found it later. It said the following.]
(III)