Sen has confessed that he doesn't actually know Econometrics. It turns out that he is also ignorant of Game Theory and Fair Division and Volatility as a driver for Liquidity and therefore Market Dynamics.That's why his oeuvre has no informative content from the point of view of Economics.
Consider the following random extract from 'Identity and Violence'
The issue of fairness in a world of different groups and disparate identities demands a fuller understanding.
No. Any existing uncoercive exchange is fair enough. Feelings of unfairness may block some such exchanges but then they are replaced by others which are unfair in a different way.
The big problem with 'fairness' is Trust. Everybody will claim to give you a fair deal. But who can actually make good on their promise? Underdevelopment can be a function of lack of Trust between agents. Everybody may be perfectly fair but some may not be able to do what they promised.
When there are gains from cooperation, there can be many alternative arrangements that benefit each party compared with no cooperation.
Not really. There are a lot of 'concurrency' related constraints on feasible time paths. At the margin there is flexibility. But regimes as a whole will see discontinuous tipping points which might feature intense conflict and much greater unfairness.
The division of benefits can widely vary despite the need for cooperation (this is sometimes called “cooperative conflict”).
Theorists may think so. But theorists are stupid. Indian mathematical economists got so exercised over the question of how to divide up the cake that no cake was baked.
For example, there may be considerable gains from the setting up of new industries,
by shrewd industrialists. There will be considerable loss if an industry is set up by a bunch of bureaucrats who listen to Sen-tentious theorists.
but there still remains the problem of the division of benefits between workers, capitalists, sellers of inputs, buyers (and consumers) of outputs, and those benefiting indirectly from the increased income in the localities involved.
There is also the problem of respiration and defecation. How should we allocate breathing and shitting rights in a world of multiple identities? Furthermore, we must show sensitivity to the needs of the sodomite and strangler communities.
The divisions involved would depend on relative prices, wages, and other economic parameters that would govern exchange and production. It is appropriate, therefore, to ask whether the distribution of gains is fair or acceptable, and not just whether there exist some gains for all parties in comparison with no cooperation (which can be the case for a great many alternative arrangements).
But first we must address the question of whether it is fair that some people should defecate while others are having difficulty even with respiration because of the stinky shit coming out of the former's assholes.
As John Nash, the mathematician and game theorist (and now also a household name thanks to the enormously successful film based on Sylvia Nasar’s wonderful biography, A Beautiful Mind ), discussed more than half a century ago (in a paper published in 1950, which was among his writings cited by the Royal Swedish Academy in awarding him the Nobel Prize in economics in 1994), the central issue is not whether a particular arrangement is better for all than no cooperation at all, which would be true of many alternative arrangements. Rather, the principal question is whether the particular divisions to emerge, among the various alternatives available, are fair divisions, given what could be chosen instead.
This is wholly false. Nash's contribution had to do with strategic independence, non-transferable utility and the zero-sum restriction in Von Neumann. Fair division dates from the work of Steinhaus, Knaster and Banach. It is not essentially strategic. 'Nash social welfare'- i.e. the geometric mean of agents' valuations for their assigned bundles- is quite separate from Nash equilibrium which can be based on threats or empty promises.
Nash showed there every finite game of a particular type has solution involving mixed strategies. Aumann correlated equilibrium is a better solution concept for cooperative games. Public signals can be impartial and improve on the 'bourgeois strategies' dictated by uncorrelated asymmetries. What's more, they have value under Knightian Uncertainty where no mixed strategies can be computed. This is where 'Fairness' or 'Niceness' or other such normative stuff can come into its own. Sen, it turns out, was wholly ignorant of both Econometrics and Game Theory. What did he actually know? Nothing at all.
A criticism that a distributional arrangement that goes with cooperation is unfair (whether aired in the context of industrial relations or family arrangements or international institutions)
can be rebutted by taking up the much greater unfairness involved in the denial of rights of defecation and respiration to dead people. Furthermore no argument
cannot be rebutted by merely noting that all the parties are better off than would be the case in the absence of cooperation
But this is also true where someone or other claims to be worse off iff they would have incurred greater loss had the cooperative solution not been implemented
(well reflected in the supposedly telling argument: “The poor benefit too—so what’s the gripe?”).
Sen and his ilk only exist to fuck up the poor. They derive a rent from an interessement mechanism based on holding up development in the name of a fairer deal for those who suffer most by the stalemate.
Since this would be true of very many—possibly infinitely many—alternative arrangements, the real exercise does not lie there,
But that is the 'real exercise' involved in the Capabilities approach
but rather in the choice among these various alternatives with different distributions of gains for all of the parties.
Which can't be known because of Knightian Uncertainty.
The point can be illustrated with an analogy. To argue that a particularly unequal and sexist family arrangement is unfair,
is what little kiddies do when they demand to stay up late watching TV rather than doing their homework and going to bed.
it does not have to be shown that women would have done comparatively better had there been no families at all (“If you think that the ongoing family divisions are unfair to women, why don’t you go and live outside families?”).
Why not try having a baby without involving any woman? Why pretend women would die of grief if they don't get regular access to dick? On the other hand babies need Mummies, which is why they should not be allowed to set up their own totalitarian state.
That is not the issue—women seeking a better deal within the family are not proposing, as an alternative, the possibility of living without families.
Some Lesbians do set up families. They acquire sperm easily enough. Their kids do fine. The fact is, Society needs women more than it needs men.
The bone of contention is whether the sharing of the benefits within the family system is seriously unequal in the existing institutional arrangements, compared with what alternative arrangements can be made.
Men should bear half the kiddies and suckle them. Also they should have smooth cheeks and melodious voices and smell nice. That way babies would prefer Daddy to Mummy-
The consideration on which many of the debates on globalization have concentrated, to wit, whether the poor too benefit from the established economic order, is an entirely inadequate focus for assessing what has to be assessed.
Very true. First we must assess nutrition and defecation under multiple identities while consulting impartial spectators from other galaxies.
What must be asked instead is whether they can feasibly get a better—and fairer—deal,
Not if they listen to Sen-tentious shite.
with less disparities of economic, social, and political opportunities, and if so, through what international and domestic rearrangements this could be brought about. That is where the real engagement lies.
It is not an engagement. It is mental masturbation
The Possibility of More Fairness There are, however, some preliminary issues to be discussed first.
But before they can be discussed we must ask whether there is any point doing so. When even basic questions of equitable defecation have not been resolved, how can we move on to issues regarding the utility or fairness of protocols of discussion?
Is a fairer global deal possible without upsetting the globalized system of economic and social relations altogether?
To be part of a deal you have to bring something to the table. Charity has nothing to do with fairness. Some may indulge in it while more mean spirited savants prate of Justice.
We must ask, in particular, whether the deal that the different groups get from globalized economic and social relations can be changed without undermining or destroying the benefits of a global market economy?
That deal is being changed by what people are bringing or taking away from the table.
The conviction, which is often implicitly invoked in antiglobalization critiques,
is that they guys doing it can make a bit of money, or gain a reputational benefit, by doing so.
that the answer must be in the negative has played a critically important part in generating gloom and doom about the future of the world with global markets, and this is what gives the so-called antiglobalization protests their chosen name.
No. Anti-globalization protests were fun. That's why they happened. A few may have made a bit of money from them but most had a good time- which is the important thing.
There is, in particular, an oddly common presumption that there is such a thing as “the market outcome,” no matter what rules of private operation, public initiatives, and nonmarket institutions are combined with the existence of markets.
This follows from the presumption that there is such a thing as 'the outcome' no matter how it comes about. If markets allocate resources, the outcome is the market outcome. If fairies do it, it is a fairy-tale outcome.
That answer is, in fact, entirely mistaken, as is readily ascertained. Use of the market economy is consistent with many different ownership patterns, resource availabilities, social facilities, and rules of operation (such as patent laws, antitrust regulations, provisions for health care and income support, etc.).
But the market outcome is determined within a time period when these are fixed. For longer period we can distinguish outcomes associated with particular ownership or technological regimes.
And depending on these conditions, the market economy itself would generate distinct sets of prices, terms of trades, income distributions, and, more generally, very different overall outcomes.
Sen does not understand that the price vector can change quickly. Institutional and Social factors change very slowly. However, markets themselves can speed up such changes. That's not always a good thing. Social mechanisms need to be robust. Thus the role of markets is constrained to a greater or lesser degree. Thus stable societies might appear to give a bigger role to markets precisely because they don't actually do so at all.
For example, every time public hospitals, schools, or colleges are set up, or resources transferred from one group to another, the prices and quantities reflected in the market outcome inescapably alter.
Sen is merely saying that non-market activities affect market activities and vice versa. But this is true of any type of activity. Defecation affects non-defecation. You shit so you can do things other than shitting.
Markets do not—and cannot—act alone.
Only in the sense that nothing can act alone.
There is no “the market outcome” irrespective of the conditions that govern the markets, including the distribution of economic resources and ownerships.
There is no 'outcome' irrespective of the factors that determine that outcome. What a great discovery! There is no 'shitting outcome' irrespective of the conditions that govern the production of shit.
Introduction or enhancement of institutional arrangements for social security and other supportive public interventions can also yield significant differences in the outcome.
But such 'enhancements' can cause wider entitlement collapse. Look at Venezuela.
The central question is not—indeed cannot be—whether or not to use the market economy.
No. The central question is mechanism design. Non-market institutions can do better using shadow price vectors in some circumstances. However, one way or another, 'discovery' is necessary. The central question has to do with the volatility surface. Sen was talking bombastic bollocks while other Economists were discovering this from the Seventies onward. But businessmen already had that intuition.
That shallow question is easy to answer. No economy in world history has ever achieved widespread prosperity, going beyond the high life of the elite, without making considerable use of markets and production conditions that depend on markets.
Also, respiration and defecation are a must. However,
It is not hard to conclude that it is impossible to achieve general economic prosperity
unless very poor people stop having babies who are bound to grow up very poor.
without making extensive use of the opportunities of exchange and specialization that market relations offer.
Not really. The fact is things like a 'one child policy' and beating parents who keep their kids out of school and forcing people to attend Church, or 'consciousness raising' sessions, where the fear of God, or the Gulag, is put into them, are what enabled some nations to rise. Markets are great only if there are pre-existing 'Tardean mimetic effects' of a salutary kind.
This does not deny at all the basic fact that the operation of the market economy can certainly be significantly defective under many circumstances, because of the need to deal with goods that are collectively consumed (such as public health facilities) and also (as has been much discussed recently) because of the importance of asymmetric—and more generally imperfect— information that different participants in the market economy may have.
These are problems only for the theorists. They aren't problems for anybody else. Club goods we have always had with us. There have always been mechanisms to deal with information asymmetry in actual markets.
For example, the buyer of a used car knows far less about the car than the owner selling it does,
which is why there is a class of intermediaries or else a mechanism where bad actors are penalized.
so that people have to make their exchange decisions in partial ignorance and in particular with unequal knowledge.
So what? Businessmen understand these things. Mathematical economists are still playing catch up.
These problems, which are significant and serious, can, however, be addressed through appropriate public policies that supplement the working of the market economy.
They were addressed by businessmen who also created the Public institutions which Sen-tentious fools think they can influence.
But it would be hard to dispense with the institution of markets altogether without thoroughly undermining the prospects of economic progress.
Don't kill businesspeople. Be nice to them.
Indeed, using markets is not entirely unlike speaking prose.
Except you can't buy shit without money. You can prose away without a dime in your pocket.
It is not easy to dispense with it, but much depends on what prose we choose to speak.
Not really. Money talks. Bullshit walks. Shite like this-
The market economy does not work alone in globalized relations—indeed it cannot operate alone even within a given country. It is not only the case that a market inclusive overall system can generate widely different results depending on various enabling conditions (such as how physical resources are distributed, how human resources are developed, what rules of business relations prevail, what social insurances are in place, how extensively technical knowledge is shared, and so on), but also these enabling conditions themselves depend critically on economic, social, and political institutions that operate nationally and globally.
Why did Sen get paid for this retarded shite? The answer is he was brown and hailed from a Commie shithole. He was getting 'intellectual affirmative action' coz it was really inspiring to see a little brown dude who finally gets that 'market' does not mean the place where darkies get sold to slave-traders. Also, some 'public institutions' can exist which don't involve Thugee or Suttee or incessant Buggery. Say what you like, them Bengalis are scary smart. A mere seventy years after the Brits left, some of them have even managed to enter, intellectually speaking, the second half or the Eighteenth Century. True Sen doesn't understand that when Adam Smith said Asians and Africans were savages, he wasn't paying them a compliment. Still, it would be a shame to shatter the little darkie's illusions.
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