Marcus Sen is the winner of the 1998 Nobel Prize in economics. He was given the award for, quote, restoring an ethical dimension to the discussion of economic problems. His writings have revolutionized the theory of development by focusing on the importance of freedom over wealth.
In his new book, Development as Freedom, he allows economics to address the social basis of the well-being of the individual. I am pleased to have him on this broadcast, as we always are, to have someone here who brings piercing insight into the world of economics. issues that are part of not only the discussion in the United States, but the world. Welcome. Thank you very much.
This notion of how you feel about markets and democracy and how you feel about growth economics working best in an economic environment that is in a political environment that's a democracy or a political environment that is a totalitarian state. Yes. Well, I think what I'd like to think of in this context is to go a bit behind the institutions.
And the main approach, which actually the book actually also does pursue, is that the very basic thing which leads to social change and progress is ultimately individual freedom. But individual freedom, of course, is also conditional on certain social opportunities being available, political opportunities, economic opportunities. And my claim is that the freedoms of different kinds complement each other.
Just as I was mentioning in the case of the riots, communal riots, the people didn't have economic freedom, had to go into hostile areas and got killed. So economic freedom gives you more liberty also. Similarly, I think political freedom gives voice to democracy, civil rights, open media, public discussion like we are having now.
gives voice to the people who are deprived. And you make the point, well taken it seems, that at a time of a famine, a democracy is more likely to put a brake on a famine than a totalitarian state. It's not only more likely, that's radically so. There has never been a famine in a democratic country, even very poor ones like Zimbabwe, Botswana, India.
India continues to have famine, right up to independence, which is the last one that occurred, which I saw. as a child, I was mentioning. But if you look at the famines today, they're all in countries that are totalitarian. If you think of North Korea, Sudan, if you think of the past, the biggest famine in record history, China, 58, 61, 30 million people dead, Soviet Union in the 1930s, military dictatorship, one kind or another, Ethiopia, Somalia, Mozambique, Angola, one after another. And it happens because in a democracy, the protests, the...
public voice would not allow and tolerate? Yeah, I would say that there are two things, that you may be very lucky and may have no democracy and still have no famine, but if a famine were to develop, democracy provides a guarantee for stopping it, because famines are extremely easy to stop. And this was one of my earlier works.
I did a book published in 1981 called Poverty and Famines, showing why famines occur because of really decline on the fortunes with a small group of people. of people, maybe millions, but still proportionately very small. And you can very easily stop it, even without getting any kind of assistance from abroad.
And if a government has an incentive to do it, it can always stop a famine extremely easily. So that led to the second part. How can it do it if it has an incentive?
Well, if it doesn't have an incentive, then it couldn't do it. But what I was saying, that if it did have an incentive to do it, then it can carry it out very easily. So the economic analysis led me to the political one, and it was quite clear that in a democracy, if you have to fight another election, and not like being criticized by opposition parties and not like being hoisted up by newspapers and the media, you would actually do something about preventing famine. And that's extremely easy to do. And that's why, you know, even though China was in many ways doing better than India right from the beginning, from the middle of the century, nevertheless, India was much better able to stop famine than China because when the famine occurred in about 10 years, 10 million people were dying in China each year through that period after the Great Leap Forward failed.
There was no criticism of the government. There was, in fact, no news coverage of the famine at all. People didn't even know that people were dying in such numbers.
We now know from demographic statistics of the Chinese themselves. Another aspect of this, obviously, which you have talked about and written about, is whether you look at Singapore as one example of an economic crisis. Yes.
And a different political system. ...structure. And then you look at some democracies, likewise, in Africa, where the most progressive economic growth has taken place in a democratic establishment.
So what rule do we bring out of that? I think, you know, those who have studied these kind of issues, like Robert Barrow, my old colleague from Harvard, and others, Frisowski, Limoges, and others, find that actually, as far as economic growth is concerned, there is no connection one way or the other very much about democracy. It's much more concerned with the friendliness of the economy.
climate rather than harshness of the political climate. But if you go beyond economic growth and think of development in terms of human security, then I think democracy has a role. I mean, one good example would be that East Asian, South Korea, Indonesia, Thailand, Southeast Asia, they were all doing terribly well, and people somehow didn't miss democracy at that time when everything seemed to be going up and up together. But, of course, when the came, divided the fell. And when that happened, the lack of voice of the underdog, because in the absence of a democracy, were badly felt.
And naturally, in South Korea and Indonesia, these became the big moments of democratic movement, and not surprisingly at all. Explain this to me, and you will understand this much better. And I've never quite understood the reasons why.
Here in this United States, we have a booming stock market. We are creating enormous wealth for a certain percentage of the people. of people. The notion is that the rising tide raises all boats, yet we have a growing disparity.
between wealthy and poor, an income inequality. How is that possible? Charlie, can I go beyond that?
Yes. Not only income inequality, that could be bad enough, but I think that's not where the real problem is. The real problem is the inequality of basic freedom to live in a way that you would like to live.
And that includes living long, living a life without illnesses, living in a peaceful, happy surrounding. and so on. And if you think about that, you see the lack of health care in the United States, the lack of insurance about health care, despite the richness of the country. I mean, it's coming back to the political discussion right now. It's actually scandalous, you know, whether 43 million people not having medical insurance, whether that's an exaggeration or not, certainly a very large number of people are.
And sometimes it's our good, but in fact, it doesn't make any difference. But if you look at the mortality differences between different regions. of the country and between different classes and between different races.
African-Americans, for example, as a group have a lower chance of reaching any kind of age beyond 15 than the Chinese or the Indians in Kerala or Sri Lankans and so on. And why is that? Well, I think to some extent lack of medical insurance plays a part, educational failure plays a part, and sometimes it's thought that this is all connected with violence and indeed, that violence is high and that's That's also a social malaise.
And family structure and lots of other things. Lots of things. But actually, in the book, I study and go beyond that. Even if you take beyond age of 35, then death from violence is no longer a factor.
And look at women. You see similar deprivation. And, you know, the overall impact is just radically different from what the picture on income comparison would look like.
That is, if you take, say, African-Americans, it's quite often said African-Americans are relatively deprived compared with American whites. But they're not absolutely. nor are they relatively deprived compared to the third world. Now that's true in terms of income.
They may have income 30, 40 times the Chinese or the Indian. On the other hand, the life expectancy of African Americans in this city, in New York or in San Francisco or in Washington, is several years lower than that in India or Pakistan on an average. And if you took those... Life expectancy in the inner city of New York in many cases is lower than the life expectancy in the inner city of New York.
African American, I'm talking about. No, no, African American in the inner city primarily. And the male African American rates are very low, like 58 years. And that's dramatically low in comparison with income.
And you have to ask the question, what's gone wrong? And I think here, it's not just a question of having a democracy, but also what kind of issues could be forcefully practiced. That's why I'm so delighted that to some extent, this issue is returning back into American. electoral politics.
Because without that, you won't have any change, really. Because I think the... Wait, let me interrupt you. What's the evidence that's reintroducing itself into American politics?
I'm probably just a bit too awful for it. I thought that in the discussion of both Gore and Bradley, at least... You're right, it is.
Senator Bradley is trying to raise some information. I think it's wonderful if you can bring those issues into the story. But you know, each area, it's peculiar. I think in Europe, you could not have survived with the kind of health care situation.
No government would have the chance of winning an election. All right, but that's what I want to get at, too, because for a second, if you look at the economics and the reality of health care and those kinds of numbers, rather than income equality, it's much more dramatic. blatant and powerful as a condition. Why do you think, even though your expertise and your scholarly work is economics and not politics, why do you think the body politic allows that in this country?
Because I would like to believe, naively, that we are a good people who care about our neighbors. Well, I think that's an extremely interesting question, and you're quite right. As an economist, I hesitate to speak on it.
But... But I must say the political analysis of it requires to go much deeper into this because there are peculiar arbitrariness. In America, you can get by without health insurance being a political issue in the way you can't in Europe. In Europe, you can get by with double-digit unemployment levels, which no U.S. government could have survived on. In India, you cannot afford to have a famine, but you can survive with a regular undernourishment of a kind.
which is very peculiarly strong. So every nation... And it's changed.
You could get away in India on gender inequality. It wasn't politicized. But thanks to the feminist movements and others now and a general political change, women's inequality has become a big politicized issue. So I think it's a question of really the opportunity of the political leadership and the vision of the political leadership to see some of these issues. And I think if the medical care issue is strongly politicized, I think you'd get the kind of response that you would get in Europe.
And that's why I remain ultimately very hopeful on that. But you can't really do a certain change without at the same time affecting public opinion and public discussion. And then you can get to the interesting debate of how to do something about it.
And therefore, you know, honorable people can differ over how to treat the illness, but once they've got to make a commitment that there ought to be, it's unacceptable. Yes. in terms of health care, in terms of education, in terms of children's nutrition, in terms of all those things that affect life expectancy.
Yes. Oh, absolutely. And I think there's no substitute to having active public discussion. I mean, so far as my book is trying to do anything, it's trying to draw public attention to certain, you know, certain things which we do know on the basis of economic, political, social analysis. And it's bearing and development is interpreted here very widely, it's like Seneca.
applies to Europe as well as to India and China and Africa and Latin America. So it's really in some ways the centrality of public discussion, which is really the main thing that the book is trying to present in terms of identify the various kinds of unfreedom. It could be political unfreedom, it could be social opportunity unfreedom, and so on.
Development as freedom. There are many people I know who I respect and admire for their achievements who believe that freedom and free market are the same thing. markets are one and the same thing.
I think that's just nonsense. I mean, free markets are quite an important contribution to development. I mean, even somebody like Karl Marx in the capital thought that the American Civil War was the most important event of his time on grounds that it got people out of slavery into a market economy, into a great economy.
And yet, you need to supplement the market economy by so many other things, democracy, public expenditure, great gurus. of market economy, Adam Smith goes on and on on the need for public education, need for poverty relief in fact. So I think in many ways one has to place the market economy as one institutional aspect of a multi-institutional world. And anyone who wants to identify free market with freedom is as mistaken as someone who would take the view that you can dispense with market in the pursuit of freedom.
You need to see it. in a much wider context. I fear asking this, but I'm tempted to anyway, and generally I follow temptation. What's the best idea you ever had? Oh, good God.
I don't know. I think probably some of the ideas that I would be more pleased with are rather more technical and easy to discuss. You know, I mentioned that the Nobel was connected with social choice theory.
There was issues of aggregate. segregation and so on. And there were these, Kenneth Arrow had an impossibility theorem showing why you cannot and your decision leads to inconsistencies. And really the hard work to a great extent was how you can broaden the informational input into the social analysis. I think to some extent that has played a part in all these things.
The need to have a much wider informational structure, to know much more, not just one small thing, not just income. but also how people's lives go, their longevity, their health care, their educational arraignment. These turn out to be quite crucial in both the technical mathematical problems in dealing with impossibility as well as in terms of public discussion problems in making a change in the world in which we actually live.
These ideas and others are discussed in this book, Development as Freedom, winner of the 1998 Nobel Prize in Economics. Thank you for joining us. See you next time.