Philosophical Issues in Economics

Capabilities: good descriptions or descriptions that are good?²²

Dear Amartya,
Well, it seems that the capability approach relies on the fetishism of liberties as much as, if not more than, my primary goods approach. You have not been able to delineate the exact circumstance in which political liberties may be sacrificed. In-fact you need them as the legitimising basis for the exercise of valuing “substantive freedoms,” by stating that public deliberation best determines the outcome of such valuation.²³ You cannot skirt this issue by simply stating that liberties may not be able to increase an individual’s own personal advantage, while they increase his political advantage (your emphases, in Sen 1999, p 65).
On a more philosophical level, how do you expect to frame the distributional consequences of your evaluative approach, without providing any aggregate base for your theory of justice?²⁴ Any attempt at providing an aggregate base would require some inviolable metrics – like Nussbaum’s list of basic, intermediate and combined capabilities;²⁵ and some essentialism,²⁶ which make your theory Aristotelian in nature, and not quite in consonance with the modern project of liberalism.²⁷ Having decent skills in philosophy, I see a conflict here that is irreconcilable, and I would appreciate if you chose one side, like Nussbaum, instead of remaining ambivalent on this aspect.²⁸ Because otherwise, you will let incompetent people determine the future of your approach in ways that you hadn’t even imagined. You don’t want to end up, following Marx’s example,²⁹ saying: “Sen is not a capability theorist!”
And finally at a more concrete political level – in the sphere of policy-making – I cannot see how you can operationalise your approach.³⁰ The amount of information required for implementing the “freedoms based” approach would be tremendous – infinite in theory. Even if at a practical level this information could be reduced to manageable proportions, collecting this information would require resource expenditure. Could we not utilise these resources for more pressing needs? Do we wait to undertake an evaluation of conversion factors like “environmental diversities and variations in social climate” when a region has been hit by a severe drought and famine, or a tsunami? Or do we distribute food and aid on the basis of limited information? How is one to determine when to use what sort of information? How do policy-makers prioritise development concerns on the basis of your approach? Even Annapurna cannot make her choice on the basis of your “quality of life” approach³¹ and broader informational base, so how do you expect Manmohan Singh³² to arrive at a policy decision affecting the lives of a billion human beings?
Your evaluative framework of substantive freedoms – capabilities – is indeed a better description – more accurate in its estimate of people’s present well-being. But it is not always, nor in most cases, the best description to give – in terms of prioritising development concerns, spending resources under the assumption of scarcity, and in mitigating the ill-effects of disasters – for development.
I hope I am wrong in my assessment,
Best regards from a dumb – literally so today! – friend,

John.
[I too seem to have these Rawlsian doubts about your framework Prof. Sen. I hope my essay does not appear eristic in tone. My humble attempt, here, is to address some pertinent issues in a dialectic manner. As you appreciate the Vedantas, I guess, you will view this attempt at dialogue somewhat favourably. Perhaps, we can all agree that you broke eggs but ended up without making an omelette;³³ your critiques of past theories are powerful, and the constructive alternative you propose is excellent in theoretical terms, but quite difficult, if not impossible, to implement practically. A good description, in this case, is not a description that is good to give.]

(IV)

Sen in a state of Zen

Sen completed reading the essay submitted by Eklavya, a student in his economic philosophy course. He seemed intrigued by the dialogue format of the essay at first. But after reading the whole paper, he smiled. That smile could be most accurately described as epitomising a state of Zen (which would also be a good description to give of a man who has formulated one of the most extensive and “humane theories”³⁴ of our time).

In the comments section, Sen wrote: “I understand that breaking eggs does not necessarily make an omelette – exposing critical faults in past theories of justice like Utilitarianism, Libertarianism, Rawlsian primary goods approach, does not automatically ensure that my theory of capabilities is comprehensive, or without faults. I acknowledge that my approach may be relatively limited in evaluating practical problems.³⁵ But I find that expanding the informational base for evaluation helps throw a light on unwarrantedly neglected aspects ‘underdevelopment and development’ issues, and that my ‘general approach can be used in many different ways, depending on the context and on the information that is available.’³⁶ I may have ended up with scrambled eggs instead of an omelette – a provisional and open evaluative framework. But I have no regrets, I started out expecting that.³⁷ In-fact, I like scrambled eggs better than omelettes, so my achieved functioning is optimal!”

Selected Bibliography
Bentham, J. 1822. “Of the Principle of Utility.” in Glover, J. (ed.) Utilitarianism and Its

Critics. London: Macmillan Publishers, 1990. p 9-14.
Mill, J. (1861). “Higher and Lower Pleasures.” in Glover, J. (ed.) Utilitarianism and Its

Critics. London: Macmillan Publishers, 1990. p 61-65.
Mill, J. (1873). “A Crisis in Mental History.” in Glover, J. (ed.) Utilitarianism and Its

Critics. London: Macmillan Publishers, 1990. p 66-71.
Nozick, R. (1977). “The Experience Machine.” in Glover, J. (ed.) Utilitarianism and Its

Critics. London: Macmillan Publishers, 1990. p 58-60.
Nussbaum, M. (1988). ‘Nature, Functioning and Capability: Aristotle on Political

Distribution’, Oxford Studies in Ancient Philosophy, Supplementary Volume:

p 145-184.
Nussbaum, M. (1992). “Human Functioning and Social Justice: In Defence of

Aristotelian Essentialism.” Political Theory. Vol 20. No 2. (May 1992). p 202-

246.
Pogge, T. “Can the Capability Approach be Justified?” Unpublished Manuscript.

Available at: http://www.fas.harvard.edu/~freedoms/manuscripts.html .

Rawls, J. (1988). “The priority of the Right and Ideas of the Good.” Philosophy and

Public Affairs. Vol 17. No 4. (Autumn, 1998). p 251-276.
Rawls, J. (1999). Theory of Justice. Harvard: Harvard University Press [1971(1999)].
Robeyns, I. (2004a). “The capability approach: a theoretical survey.” Working Paper.

Available at: www.ingridrobeyns.nl .

Robeyns, I. (2004b). “Justice as Fairness and the Capability Approach.” Working Paper.

Available at: www.ingridrobeyns.nl .

Sen, A. (1979). “Equality of What?” Tanner Lectures on Human Values. Available at:

http://www.tannerlectures.utah.edu/lectures/sen80.pdf last accessed on 10 Feb

2005.
Sen, A. (1980). “Description as Choice.” Oxford Economic Papers. Vol 32. No 3.

(Nov, 1980). p 353-369.
Sen, A. (1999). “Freedom and the Foundations of Justice” in Development as Freedom.

Oxford: Oxford University Press. p 54-86.

Srinivasan, T. (1994). “Human Development: A New Paradigm or A Re-invention of the

Wheel?” American Economic Review, Vol 84. No 2. (May 1994) p 238-243.

Sugden, R. (1986). “Review of Commodities and Capabilities by Amartya Sen.” The

Economic Journal. Vol 96. No 383. (Sep, 1986). p 820-822.
Sugden, R. (1993). “Welfare, Resources, and Capabilities: A Review of Inequality

Reexamined by Amartya Sen.” Journal of Economic Literature. Vol 31. No 4.

(Dec 1993). p 1947-1962.


Essay 3 (Response to 2b)

(by John Ssegendo)

1.0 Introduction
Sen developed the Capability approach due to apparent weaknesses inherent in the earlier approaches to evaluating well-being. The Utilitarian approach is associated with a narrow focus on maximising pleasure and can be held to be indifferent on the distribution of happiness or desire fulfilment in the population. On the other hand, primary goods focus on income and opportunities, they neglect the conversion factors between resources and individual achievement and the freedom of individuals to live a life they choose to. Sen devised the Capability approach in light of the weaknesses he saw of the earlier approaches; an approach which centres on substantive freedom – to choose a life that one has reason to value (capabilities yielding a choice of actual functionings).
2.0 Basis of the Capability Approach
a) Weaknesses of Utilitarianism

Utility in a classical form is defined as pleasure or happiness or satisfaction or anything that turns on these mental achievements. In modern forms of utilitarianism, it is seen not as pleasure or happiness but as fulfilment of desire or some kind of representation of a person’s choice behaviour (Sen 1999). However utilitarianism is associated with several shortcomings. Most significantly, utilitarian calculus concentrates on total utility of everyone and is generally understood as ignoring inequalities in the distribution of happiness. Then the utility of individuals in general may be improving but with rising inequalities in the population which makes it an inappropriate evaluative space.

Similarly individuals do not necessarily choose goods that maximise their satisfaction or pleasure (because for instance of inadequate information); neither do they achieve utility independent of goods desired but out of reach. According to Sen (1985), individuals derive utility both from the range of options in the choice set as well as the possibility to perform the act of choice themselves, and this tends to be neglected in the standard utilitarian calculus.
Utilitarianism even in its modern form doesn’t solve the problem of indifference to freedoms, rights and liberties and other non utility concerns that is a characteristic of utilitarianism in general. Claims of rights and freedom are valued only indirectly and only to the extent to which they influence utilities. Also, our pleasure or desire taking abilities adjust to circumstances especially to make life bearable in adverse situations. For example the perennially oppressed minorities in intolerant communities and hopelessly subdued wives in severely sexist cultures come to terms with their deprivation because of the shear necessity of survival, and they may, as a result, adjust their expectations to what they unambitiously see as unfeasible (Sen 1999). Utility calculus by focusing on pleasure alone would be unfair to these disadvantaged individuals who could be happy having adjusted to the lack of opportunity to lead a life they would like.
It is more practical to speak of freedom to become what one chooses to than aggregating happiness when there are problems of adaptive preferences. In this regard, failure to take into account individual rights and freedom produces a very limited informational base and this pervasive insensitivity is a limitation of utilitarian ethics.
b) Primary Goods

Primary goods are general purpose means that help anyone to promote his/her ends and include rights, liberties, opportunities, income, wealth and the social bases of respect. Primary goods relate to the individual advantages in terms of opportunities the individual enjoys to pursue their respective objectives. The objectives are viewed as the individual “conceptions of the good” which would vary from person to person.

For example if given the same basket of goods, an individual ends up less happy say because of expensive tastes, then no injustice needs to be involved in this inequality in the utility space (Sen 1999). But though Rawls broadens the informational focus from just income to primary goods, the approach does not explore all important variations in the relationship between income and resources on one hand and wellbeing and freedom on the other. In as much as income and opportunities may be availed to people, there is need to understand the conversion process, and the freedom individuals have to become what they choose to or actually become.
There are personal characteristics that govern the conversion of primary goods into a person’s ability to promote her ends. It is this deficiency in Rawls’ primary goods approach that provides the basis for Sen’s capability approach with the emphasis on promoting freedom to choose….as the appropriate evaluative space.
c) Capability Approach

Capability refers to alternative combinations of functionings that are feasible for one to achieve. The functionings reflect the various things that a person has value doing or being. Capability is therefore a kind of freedom: the substantive freedom to achieve alternative functioning combinations. The approach emphasises the need and role of freedom to choose; in a sense that while the combination of a person’s functionings reflect his actual achievements, the capability set represents the freedom to achieve the alternative combinations from which a person can choose (Sen 1999, Robeyns 2004). Taking the example of food, this provides nutritious capacity which is converted into ‘being well nourished’ depending on the physical circumstances such as the metabolic rate and presence of parasites. The individual’s capability includes then the freedom to either be well nourished’ or to fast for religious reasons or to go to a hunger strike for another’s sake (Sen 1985).

3.0. Problems that might arise in Making Capabilities the Evaluative Space
Functionings, Capability and Capabilities

There is an obscurity that surrounds the use of the three key terms in the capability approach. The use of these terms is sometimes overlapping and confusing. Capability has an everyday meaning: capacity, skill, ability, and attitude which Gasper (1997) has called the S-capability (S, for skill and substantive). This is what O’Neil (2000) relies on when she talks of ‘capabilities for action’, ‘capacities for reason ‘, commercial, cognitive and social capacities. Sen however takes on a more technical meaning of capability to mean: the set of life-paths attainable to a given person which Gasper (2002) calls O-capability (O for option or opportunity, ‘option;’ seems aptest and suitably economic). While Sen dropped the term ‘capabilities approach’ in favour of ‘capability approach’, he still uses ‘capabilities’ in more everyday ways and when referring to sub-sets or particular attainable functionings in the capability set, or to the options to achieve them (Gasper 2002).

The word ‘capabilities’ comes in routine use to cover anything a person can do, be or have; in which case it loses distinctiveness. This situation leads to blurring between O and S capabilities, options and capacities; and capabilities and functionings. For example the 1996 Human Development Report speaks of ‘such capabilities as health, self respect, health, nutrition, seen as ends in themselves. In normal language, these are functionings (or in the case of knowledge, an S-capability) not opportunity sets in HDR’s own definition. Nussbaum (1990, 2000) distinguishes between O-capabilities which she calls ‘external capabilities’ and notes that S-capabilities are derived from ‘basic’ capabilities through training and learning.
Further still, the capability concept rests on the concept of ‘functioning’ that sounds like ‘activity’; doing, being, operating and disconcertingly, covers outcome of the activity. Functioning has varied meaning to include; an achieved state, an action to achieve it, internal body processes/ activities and activities consequent of the achieved state. Further still, the achieved state can have a concept of being a capability! (Gasper 2002). Given this ambiguity in meaning of the terms, the usefulness of the capability approach is somewhat undermined. In my view the capability approach is still evolving; the problem is that it has achieved more publicity and perhaps consequent rigidity than is required if any meaningful adjustments are to be made to improve its applicability now and more importantly in the future. There is therefore need for allowing scope for development and clarification.
Weighting Problems
Sen (1999) notes that that the interpersonal comparisons of overall advantages also require “aggregation” over heterogonous components. The capability perspective is inescapably pluralist. First, there are different functionings, some are more important than others. Second, is the issue of what weight to attach to substantive freedom (the capability set) vis-à-vis the actual achievement (the chosen functioning vector). There is no convergence over the weighting of capabilities, ranking and most arguably whether to have a list of capabilities that would guide evaluations. The problem is that emphasising the listing of capabilities runs one into the dilemma of restricting the freedom people have to choose a life that they value; which is the essence of the capability approach. However not having a listing of capabilities makes evaluation and comparison of capabilities in different societies difficult.

If we are to take the view that capabilities should be localised and specific, it would require that we think of a framework that would enable us to compare functionings across societies given the unprecedented interest in global inequality, without restricting the freedom individuals have to live a life they value.

4.0 How Far I agree with Sen’s Claim
Sen has a broader conception of welfare than that considered by the other approaches combined which centred on people’s incomes, preference satisfaction and opportunities. There are many aspects of people’s welfare that cannot be reduced to market terms including their rights and freedoms which Sen incorporates in his approach. In as much as Rawls drew our attention to the need to consider not only income but also opportunities, Sen goes further to emphasize the need for conversion factors. I believe that having a theoretical opportunity does not necessarily guarantee one a choice of means towards an end that he esteems. Similarly the fact that people undergo different influences and are exposed to a market with information imperfections, people fare differently with the opportunities available to them, so I agree with Sen’s critique of alternative theories.
As to his constructive theory, Sen considers freedom to choose a life one has reason to value at the centre of the approach. He also respects the value that people attach to their wellbeing. People ought to make a choice of a life they want to lead and this is more meaningful than income. Development is the process of enlarging human choices, declared the first Human Development Report (UNDP 1990) and several successors. In line with this, the capability approach advocates that we leave people able to decide for themselves.
The capability approach has a strong theoretical framework. It is clear that most of the work done on capabilities has concentrated on measuring functionings (what people actually are). For this is understandable given the fact that functionings can be measured unlike capabilities which are implied to a large extent. For evaluative purposes say of existing policies or programs, it is plausible that we focus on functionings. Capabilities are appropriate and relevant when applied to policy formulation and planning when we inquire from the people about a life they want to live and have reason to value.
The state can then make policy options that are in people’s interest, extend the options and opportunities and the freedom to enable individuals pursue the means towards an end they desire. Functionings and capabilities are therefore complementary, so that once given interest in choice sets which reflects alternative functionings we can after some time evaluate what people over time have actually become. The capability approach in its current state is incomplete and as it evolves, ambiguities in the key concepts and problems associated with weighting of capabilities ought to be clarified. The approach remains a main step towards formulating the appropriate evaluative space of individual welfare and social states.
Bibliography
Gasper. D. 2002. “Is Sen’s capability approach an adequate basis for considering human development?” Review of Political Economy. Volume 14. pp. 435-460.
Kuklys and Robeyns. 2004. Sen’s capability approach to welfare economics. Cambridge Working Papers in Economics, http://www.econ.cam.ac.uk/dae/repec/cam/pdf/cwpe0415.pdf
Nussbaum, M. 1990. “Aristotelian social democracy.” Liberalism and the Good, ed. Douglass et al, New York. Routledge.
-----, 2000. Women and human development. Dehli: Kali for women, Cambridge: Cambridge University Press.
O’Neil, O. 1996. Towards justice and virtue – A constructive account of practical reasoning.
-----,. 2000. Bounds of justice. Cambridge. Cambridge University Press.
Sen. 1999. Development as freedom. Oxford University Press.
UNDP. 1990. Human development report. New York. Oxford University Press.

III. Liberty and Equality
‘A society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality’ (Friedman, M. and R.). ‘A large measure of equality, so far from being inimical to liberty, is essential to it’ (Tawney). Discuss what these writers mean by the terms ‘equality’ and ‘freedom/liberty’. Analyse and comment on the relationships they see between these concepts. Is it possible to draw any moral about the requirements for a ‘free’ society?

Essay 1

(by Mariah Mansvelt Beck)

Berlin’s “Four Essays on Liberty” introduces a discussion about public and private schools, which are more expensive and often have a higher level of education (Berlin 1969:1vi). Is this situation acceptable since the expense of private schools cannot be regarded as an obstacle if society provides everyone the opportunity to make enough money by, for example working harder or choosing a different profession? Or is this an obstacle and should the system therefore be altered to enhance equality of opportunity even though this would infringe upon some people’s liberty to choose?
These questions illustrate some of the dilemmas concerning the relationship between equality and liberty as discussed by philosophers and economists such as Tawney and the Friedmans.³⁸ An essential question that the differences between Tawney’s and the Friedmans’ equality and liberty beg is what actually constitutes freedom? Is someone free merely to the extent they can choose or should freedom imply the actual ability to act upon (some of) those choices? To understand their views and how they affect society a clear definition of their concepts of equality and liberty must be set out as I have done and will refer back to through out this essay, as the following:

Liberty formal	Ability to choose as one likes, without interfering with others ability to do so.
Liberty principle	Ability to do or refrain from doing definite things in regard to ones basic needs.
Equality limited opp.	Situation in which birth, nationality, colour, religion, and sex do not prevent people from achieving the positions in life they want and meet their talents.
Equality extended opp.	Situation in which the above as well as class, economic, and social position do not prevent people from achieving the positions in life they want and meet their talents.
Equality outcome	Situation in which everyone has the same level of living and income.

THE FRIEDMANS

Liberty _formal (or formal liberty): The Friedman’s define liberty (in my terms, liberty _formal) as the ability to choose as one likes, to shape ones life in line with ones values, limited only by those choices acted upon that would limit others ability to do so (Friedmans 1980: 129-30). The Friedmans believe that society should aim to attain the highest level of liberty possible. Hence people should have as many potential alternatives to choose from as feasible.
Equality _{limited opp.} or (limited equality of opportunity): The Friedmans define equality as a type of equality of opportunity such that no arbitrary obstacles should prevent people from achieving those positions for which their talents fit them and for which their values lead them to seek. The Friedmans define ‘arbitrary obstacles’ as birth, nationality, colour, religion and sex. They do not consider class, economic, or social position to be an obstacle since a society that promotes liberty (liberty _formal) enables people to overcome these conditions (Friedmans 1980:132-34). In this sense and in comparison to Tawney’s definition of equality of opportunity the Friedmans employ a limited definition.
The Friedmans contrast equality _{limited opp.} with equality of outcome (equality _outcome), which implies that everyone should have the same level of living and income (Friedmans 1980: 134-40).


Liberty _formal and Equality _{limited opp.}

The Friedmans argue that by increasing liberty _formal a ‘happy by-product’ will be more equality _{limited opp.}. They emphasis that a free society in the sense of liberty _formal will be creating an environment characterized by mobility and diversity (Friedmans 1980:148-49). Liberty _formal prevents people from arbitrarly supressing others and enables people to pursue their own objectives within their ability. “It preserves the opportunity for today’s disadvantaged to become tomorrow’s privileged and, in the process, enables almost everyone, from top to bottom, to enjoy a fuller and richer life” (Friedmans 1980:149).

A society that puts equality _outcome first, instead of liberty _formal, will need government intervention or ‘force’ to implement measures needed to promote equality of outcome (Friedmans 1980: 135). Since, they argue, it is against human nature to voluntarily give away a portion of ones income or assets to benefit strangers, some people will have an unequal share of power so as to impose these measures. This creates a situation in which these people could use their position to pursue their own interests. Hence a society that promotes equality _outcome above liberty _formal will end up with greater inequality and will infringe upon liberty _formal since people will now no longer be able to live as they choose (Friedmans 1980:144-45).
The Friedmans’ analysis jumps from their preferred situation in which the promotion of liberty _formal will create the ‘happy by-product’ equality _{limited opp.}, to the undesirable situation in which equality _outcome is promoted to the detriment of both liberty _formal and equality _{limited opp.}. They do not consider anything in between their equality _{limited opp.} and equality _outcome or any type of liberty different from their liberty _formal.