Amartya Sen on Markets & Freedom

 Why, to the Western mind, are Markets and Freedom linked? The answer is historical. Markets had their own law- 'the law merchant'- and sovereigns who wanted to borrow money or increase the tax base created enclaves- 'liberties'- which were autonomous and regulated by some variant of law merchant.

What was distinctive about this type of law was that there was greater economic freedom. This meant people could look at the 'opportunity cost' of what they were doing or whom they were buying and selling from. If the 'opportunity cost' was higher than their earnings they switched to doing something else or contracting with other people. This enabled general purpose productivity to rise because people got into the habit of constantly making comparisons between themselves and those, in similar circumstances, who were achieving more. By switching to the new technique or product they themselves achieved more. The Latin word for accomplishing something is efficiens. Efficiency rose because general purpose productivity rose because a mimetic habitus of evaluating opportunity cost and thus seizing new opportunities spread across the population. This was the opposite of what was happening to the serf who was told what to grow and where to grow it and how to grow it. Naturally, productivity (and intelligence and enterprise) sank where human beings were used as donkeys. It grew where people were always on the look out for new opportunities- which raised the opportunity cost of what they were doing and thus motivated them to become more efficient. 

I want to emphasize that 'opportunity' to do what is most remunerative doesn't mean you will be well rewarded. A monopsonist may confiscate your 'surplus'. What matters if that you have an almost as good alternative. This is the 'opportunity cost'. No one can exploit you in one occupation because you can switch to another occupation. That is why it is important to raise 'general purpose' productivity. It is the 'regret-minimizing' course because, even if there is no exploitation today, it may come into existence tomorrow. Being free means having a 'fall back plan' such that you remain free even when circumstances change. There is no free lunch not does freedom ever come for free. 

 This was well understood by merchants who knew that without a strong King, the country could be invaded and they themselves enslaved. Thus, in parts of Western Europe, over time, more and more market towns promised to pay more in tax in return for, in effect, becoming 'liberties' (in medieval law, these were designated people or areas that had special freedoms from royal authority) till finally, the moneyed class gained ascendancy over the crown through Parliament (which claimed the monopoly of taxation. This is where the cry 'no taxation without representation' comes from). Liberalism became the creed of an expanding middle class till it became safe to extend the franchise to the upper working class. After the Great War, universal suffrage was attained in many places though this could cause a political problems as demands for the redistribution of wealth conflicted with military requirements and also shook business confidence.

 However, after the Second World War (during which most economies became 'Command' economies in all but name) there could be a new consensus whereby, thanks to 'over-full' employment, even unskilled private sector workers made great gains in terms of material living standards while 'liberties' of a personal type were maintained in a manner reassuring to the upper class. This was a period when economic freedoms were not fully restored (the ban on owning Gold, like foreign 'exchange control' was only fully lifted in the Seventies) but political and personal freedoms burgeoned. Sadly, this consensus depended on, among other things, the Bretton Woods strait jacket which collapsed once the Oil Sheikhs demanded better terms of trade and more and more globally investible funds escaped Government control. Finally, retiring workers- who were net savers- wanted better returns from the Institutional Investors who managed their funds and this opened the door to the Plutocrat who tamed Unions and took an axe to overpaid, 3 Martini luncheon, executives, in the name of maximizing 'shareholder value'. 

 More recently, 'liberty' has come to mean the right of babies to have gender reassignment surgery and the social ostracism of anybody who dares to use the wrong pronoun to a person who claims to be transgender. Nobody wants this shite. But they do still like buying cool shiny stuff on open, global, markets. Things may change if Trump takes a dirigiste road and resurrects Industrial policy and Manpower policy and so forth alongside optimal tariff theory. This may reduce liberty to trade and invest but, if it means we don't have to worry about being called a TERF or a Nazi, maybe we will put up with it. 

Turning to a paper Amartya Sen wrote in 1993 titled 'Markets & Freedom' we find a very different understanding of how these two concepts are linked. Perhaps this was because Sen came from Nehruvian India where there was much individual freedom but little economic freedom. It was obvious that there was no necessary connection between the two. Indeed, the opposite appeared to be the case. Liberals could enjoy personal liberty provided they did not challenge 'Socialist, Secularism' by demanding economic freedom or even (for the Hindu Right) cultural freedom. 

Market mechanisms were viewed with suspicion by much of India. Consider the farmers' agitation in the late Eighties which was more recently repeated, spearheaded by the son of the original leader, and which gained international attention. It appears farmers were afraid that as agricultural markets were opened up, the class of intermediary 'arhatiyas' would be eliminated. True, economic freedom might increase and the more productive would gain, but perhaps the political power and social prestige of farmers, as a group, would decrease. This showed that in India, as elsewhere, there was fear that economic freedom would be corrosive of what Polyani called 'social embeddedness'. In other words, just as 'one man, one vote' was corrosive of traditional hierarchies, 'voting with money' in free markets appeared a threat to the social order.

Sadly, these are not issues Amartya Sen takes up. He, as in the rest of his oeuvre, misinterprets mainstream economic theory, so as to say nasty things about it, and then pours that old wine into new bottles by substituting words he takes exception to - e.g. utility- and relabelling the thing as 'opportunity freedoms' or 'capabilities'. This is a merely cosmetic change and not insightful or helpful in any way. 

This may seem bizarre. Markets were 'Liberties' where the Law Merchant, not the writ of the sovereign, ran. They grew and grew till Kings became mere figureheads who reigned but did not rule. Parliament, whose original purpose was to provide money for the King, had usurped his power. People were free to choose what they wanted to buy and sell and were welcome to emigrate if they thought that would make them better off. 

By contrast, non-market economies gave people little choice in what they could buy or sell. On the other hand, it was often mandatory to vote for the only one candidate on the ballot paper. 

Sen ignores the fact that 'the mechanism of competitive markets' is about entrepreneurs finding out what consumers want and then supplying it. Equally, people can find out who will pay the best price for what they have to sell and thus do better for themselves.  Sen confuses a certain, very stupid, very abstract, mathematical model with the actual mechanism at work in Capitalist Societies. Friedman wasn't referring to this 'Arrow-Debreu' model when he said free markets are great. He was referring to actual markets- like the market for oranges or apples. Moreover, like Hayek, Friedman was saying if you permit the undermining of market freedom, you are on a slippery slope to not having free elections or free speech or any other 'liberty'. This is isn't necessarily true. Churchill was wrong to say that the Labour party's policies would inevitably result in the rise of a new Gestapo. Still, if you like economic freedom, you have the political freedom to say everybody who thinks otherwise is a fucking Nazi. They, in their turn, are welcome to say the same about you. That's how free speech works though, sadly, it may end in a free for all of a very violent type. This is one reason an authoritarian State which preserves economic freedom may be preferable.

Can open markets promote 'individual freedoms'? No. They also can't fight crime by putting on a Batman costume. What they can do is allocate goods to those willing to pay the going rate for them. It may seem a damning indictment of the vegetable market that I can buy loaves of bread there and I can buy peas there but I can't buy love or peace. Indeed, I can't even purchase the basic dignity, owed to each and every one of God's creatures, to fart the National Anthem without shitting myself. 

Sen's mistake is to think that the fundamental theorems of Welfare Econ have lie at the foundation of the justification for the Free Market. The truth is these theorems were only formulated by Ken Arrow in 1963 and were proved to be foolish or useless in 1973. The claim that they are founded in the earlier work of Pareto does not hold up since Pareto himself soon introduced sociological notions of 'Residues and Derivatives' as having greater salience than some theoretical abstraction of the market process

Consider what Wikipedia says of that abstraction-

A Walrasian auction, introduced by Léon Walras, is a type of simultaneous auction where each agent calculates its demand for the good at every possible price and submits this to an auctioneer. The price is then set so that the total demand across all agents equals the total amount of the good. Thus, a Walrasian auction perfectly matches the supply and the demand.

Walras suggested that equilibrium would always be achieved through a process of tâtonnement (French for "trial and error"), a form of hill climbing. In the 1970s, however, the Sonnenschein–Mantel–Debreu theorem proved that such a process would not necessarily reach a unique and stable equilibrium, even if the market is populated with perfectly rational agents.

This result depends on the notion that there are at least as many agents as commodities. This is nullified if 'who gets what' itself generates utility or if 'nosy preferences' exist (e.g kids should not get porn) or some commodities (e.g. kiddie porn) are repugnant. This is the case even absent externalities, non-convexities, information asymmetries etc. Why? What appears the same commodity when it is produced- e.g. Pizza- is a completely different commodity when given to different people. This is certainly the case with medical pills. Their cost may be low but the service of the prescribing Doctor is high. Even a Pizza slice becomes different when eaten by a hungry person rather than a person allergic to pizza who will die if he eats it. This can be extended to our wanting a cruel paedophile with an allergy to die and not wanting that to happen to an innocent child with the same allergy. Actually, I don't know if it is best I eat this Pizza though I am hungry and not allergic to it. It may be that if I go out just now to get a burger I will meet the love of my life. We get married and have a kid who discovers the cure for Socioproctological stupidity. 

Obviously, if we assume that agents are identical, this problem goes away. But, in that case, why bother with markets? A Command economy can do a better of job of providing what people want without the inconvenience of anybody having to go shopping.

Indeed, there is no way of ruling out some non-market process which creates a superior allocation which is unique- e.g. an omniscient Benthamite planner. Equally, new 'reputational' or 'prestige' based goods could be created. Consider China's Social Credit System. It could create a caste system based on whether a person is doing things which the Party approves of or if the person is a pariah in the eyes of the Party. Equally, organized Religion could introduce ontologically dysphoric goods and services (e.g. public signals that this person is 'saved' while that person is 'damned' ) -and this might promote a better   Aumann correlated equilibrium than could be achieved in a competitive, or Nash, equilibrium. 

Returning to Arrow's supposedly fundamental theorems of Welfare Economics, we find they are making the rather modest claim that iff various highly unrealistic conditions are met then the competitive equilibrium would not be inferior to the outcome in a Command economy. This is scarcely triumphalist. It is nothing like the claim of the Mount Pelerin Society that markets spur productivity growth- and thus affluence- through innovation and competitive practices which drive down costs. At the same time, there is greater pressure for increased personal, political, religious and artistic and cultural freedom. People are freer, happier, and flourish by pursuing that which they themselves find best for themselves. 

In this context, it is crazy of Sen to think of the fundamental of theorems of Welfare Econ as part of the ideology of the Free Marketeers. It was merely a variety of mathsy masturbation which lost salience very soon after its first formulation because of the 'anything goes' Sonnenschein–Mantel–Debreu theorem .

When I was born, many economists believed living standards were rising more rapidly in some Communist countries than in their Capitalist neighbours. True, the variety of goods might be inferior but it was claimed that quality was better and that working people were better off in, for example, North Korea than South Korea. In this context, the advocates of free enterprise changed tack. They acknowledged that a 'Nanny State' might ensure the people were well fed and warmly dressed and had decent employment. What was missing, however, was the opportunity to stand out on the basis of greater individuality and purely personal preferences and choices. Consider the manner in which the Beatles reinvented themselves on the basis not of commercial calculation but their own search for what they considered valuable. It was the superior opportunity to pursue what you considered good, by your own lights, which represented the true justification for Free Enterprise and Open Societies.

A Nanny State may ensure higher Welfare, but Free Markets gave individuals greater opportunities to develop their own individuality. Sen, with typical perversity, takes the opposite view. 

Suppose your wife is unjustly imprisoned by the Sheriff. Do you go to the market and say 'could I please purchase a writ of habeas corpus'? No. You go to a lawyer who goes to court and gets the relevant writ. Freedom is a legal concept and the place where legal remedies are available is the Law Court. It isn't the market. 

Does freedom have anything to do with 'substantive opportunities'? No. I am free but contractually bound not to take advantage of certain 'substantive opportunities'- e.g. selling confidential information in a manner detrimental to my client or employer. What about 'process considerations'? These arise in actions for negligence. You may be required to show you followed a course of conduct approved by people with expert knowledge regarding proper processes or procedures. What of 'decisional autonomy'? Slaves may have it, if the Sultan delegates it to them. Fee people may or may not have it. This is a justiciable matter. Generally speaking, so long as no tort arises, I have it in my private sphere or else by express delegation from my Client or employer. In law, I have a number of  Hohfeldian immunities but all are defeasible. 

Sen has no knowledge of any market mechanism- e.g. the Stock exchange- which ever existed. He is merely talking of a silly mathematical model which can't exist in the real world. 

Sen quotes Hicks

Hicks was wrong. Before there was Hutcheson, there was the Salamanca School and before that there was the notion that the 'spontaneous order' created by the 'Law Merchant'- with which the Sovereign interfered at his peril (because his tax revenue might fall)-  was a foreshadowing of God's 'mysterious economy' or invisible hand. The problem was that, for abstruse theological reasons, authors had to substitute something like utility for 'synderesis'- i.e. the in-born inclination to choose that which is good for us. That's it. That's the whole story. 

It is important to remember that before there was Scripture, there were markets and a system of law used to adjudicate contracts. Thus, theological language draws on legal and commercial terminology. The Paraclete started off humbly enough as an Athenian ambulance-chaser. Even the eschatological notion of a tally book recording good and bad actions which will be brought forward on the day of judgment, was the offspring of some dusty Sumerian or Egyptian market-place. 

When was the connection between economic freedom and efficiency made? The answer is, it was made by the first 'Stationary Bandit' who saw that creating 'Liberties' fattened his purse and enabled him to buy weapons and mercenaries to expand his territory. Thus the 'efficient cause' of this bandit turning into a King or King turning into an Emperor was the encouragement of free markets which yielded more and more in tax. Efficiency was about accomplishing things. 

Hicks witnessed two world wars. Britain was unprepared for both. Why? Transitioning to full democracy meant there was a 'guns vs butter' problem. The Left pretended that only the rich, for some wicked reason, wanted wars. If they stopped being so wicked, wars couldn't happen. Thus every penny spent on guns was depriving widows and orphans of bread and butter. 

Hicks was wrong. What would have been efficient was for the UK to have had an offensive doctrine frontloading pain on an aggressor. Instead, what British military and diplomatic doctrine accomplished was the reverse. This was stupidity on the part of the 'Establishment'. It had nothing to do with the market. 

Market mechanisms involve defective processes which is why fraud is always a problem. Still, they are relatively cheap to run and those who dislike the risk or inconvenience they represent can use an intermediary. The one big advantage of putting up with the noise and the smell of the market-place is that you become aware of all sorts of opportunities of a novel kind. True, some may turn out to be fraudulent or foolish. But, sometimes, you can literally strike gold by having a flutter. 

Sen, as usual, gets hold of the wrong end of the stick. He is like the mathematical economist who was walking down the road when he saw a gold sovereign lying on the pavement. His wife, who was with him, said 'bend down and pick it up. I can't do so  because my skirt is very short and if I bend down people will see I'm not wearing any knickers'. The economist refused to do so. He explained that if there really was a gold sovereign lying on the pavement, then- since gold is non-satiable for all agents- someone else would have picked it up already. Ergo, the opportunity to pick up gold did not exist. 

There is no opportunity aspect to freedom. Opportunities offer themselves to slave and free man alike. But opportunities are epistemic or ethical. I am legally free but consider myself not free to pick up the gold coin because my creed is to reject unjust enrichment. Let some crook pick it up. Alternatively, I am a slave but I pick up the gold coin and hide it. Maybe I can use it to escape my master.  

Sen pretends that 'opportunity-freedoms' are commodities which can be bought and sold. They aren't. They are things people believe will be advantageous or disadvantageous to them. Moreover, there is no 'budget constraint'. One can pursue all opportunities simultaneously provided you think they don't preclude each other. Thus, my Vicar may say to me 'Fool! You should have picked up the gold coin and dropped it in the poor box. You passed up a Heaven sent opportunity!' Equally, the slave's master may say to him 'I thought you were an honest fellow and was planning to grant you your freedom and to employ you as my agent. I set a test for you. Would you bring me the gold coin or keep it for yourself? You kept it for yourself. You have thrown away a grand opportunity. I will now sell you as a galley slave. Your life will be nasty, brutish and short.' 

Firstly, the opportunity to achieve is not itself an achievement and is not related to other  achievements. It is merely a belief about what will happen. If you believe there is a gold sovereign lying on the pavement, there is an opportunity. If you don't, there isn't.  Secondly, there is no 'set of achievements' because achievements are epistemic and thus are an intension whose extension changes as the knowledge base changes. It can't be a set because it is not well defined. You can't evaluate what does not exist. Finally, achievements are things which are done and dusted. They can't be sold. Why evaluate them? Do you really want to be the guy who keeps thinking of all the marvellous things he achieved in High School with the result that he neglects to do anything with his life and is still living in his parent's basement forty years later? 

It is a different matter that you may try to evaluate the likely outcome of what appear to be different opportunities lying in front of you. You have an offer from Wharton. Should you take it because you are likely to end up making a lot of money if you do? You also have the opportunity to pimp your sister to this guy you met on the dark web and to use his cash to buy drugs. Should you take it because you are likely to end up making a lot of money as a drug addicted pop star? Yes. That way, you'll get pussy for free. As for your sister- maybe you could pay for her therapy. Fuck that. She isn't letting you play with her Barbie dolls. She deserves a fate worse than death. 

In the above scenario, though the evaluation of the achievement set was in line with economic theory, the problem of Knightian Uncertainty wholly vitiated it. Turns out guys on the Dark Web offering cash for kiddies, are actually FBI agents. The guy who could have gone to Wharton has achieved getting cornholed in a Federal penitentiary instead. 

An individual's preferences determine what is or isn't an opportunity for them. I see X talking to a drunk and very promiscuous girl. She likes him. He has the opportunity to sleep with her. But he doesn't think so. He is gay. This isn't an opportunity. It is a fucking nuisance.

Sen, who for some bizarre reason is pretending that 'opportunity freedom' means the same thing as 'commodity' (which you can always sell if you don't want it whereas X can't sell you the opportunity to sleep with the girl who fancies him) asks a singularly stupid question- 

values

  Arrow was talking about preferences or values people have regarding different social states- e.g. wanting to live in an Islamic Society rather than a Marxist one. This has nothing to do with consumer preferences or what are perceived to be opportunities. I might say 'true freedom is found only when we overcome materialistic cravings and turn solely to Allah. In an Islamic Society I will have more opportunities to grow in my Faith. Hence I vote for the establishment of an Islamic Emirate. ' You might say 'true freedom can only be found after the end of Scarcity. I want to live in a Marxist society which will hasten the coming of that glorious day which, I hope, my descendants will see.' 

Is this what Sen is talking about? Consider Sen's axiom

Sadly, since 'opportunity' is epistemic and 'in the eye of the beholder', there can't be a set A or B because the intension 'opportunity' has no well defined extension. 

Consider the gold coin lying on the pavement. Suppose we are foolish enough to say that this represents. for the person who spots it, the set (opportunity to pick it up and keep it, opportunity to display virtue by not picking it up, opportunity to pick it up and piously put it into the Poor Box while giving thanks to God) This set seems superior to set B which is (opportunity to pick it up and keep it while farting, opportunity not to do so while farting, opportunity to fart the National Anthem) If farting is considered inconsequential while gold coins matter as little as copper pennies then it is perfectly possible that some say A offers just as much opportunity freedom as B. But, if, as Martin Luther said, farts drive away the Devil and gold is the devil's dung, then B is clearly superior. Moreover the same person may hold different views at different times, or, indeed, at the same time. My point is that mention of farting changes the naive opportunity set. Indeed it may make it impredicative and indeterminate- i.e. an element in it changes because of a change in something else in the set or even its own self-definition). Consider the opportunity to not pick up the coin while farting. We may come to see this as a sublime way of combining virtue with a humble appearance of fallibility such that people say 'the Bishop was about to pick up the gold coin but became embarrassed because he farted which is why he fled the scene. This enabled an orphan to pick up the coin which he would not otherwise have noticed. Truly, God works in mysterious ways'. In other words, because 'opportunity' is epistemic, the more we think about it, the more we may re-examine our values and change our preferences. That's why we can't use math or logic with epistemic objects without committing the intensional fallacy. 

Consider the Bishop's opportunity set which for religious reasons is only (opportunity to not pick up the coin while farting). It is inferior to (opportunity to not pick up the coin while farting). Why? Surely the two are identical? The answer is that there was also the option (opportunity to not pick up the coin while farting while also grasping that the action was imperfect because it did not fully affirm God as the only efficient cause). This is inferior to (opportunity to not pick up etc. while grasping that grasping an action is imperfect is itself to cast doubt on God as the efficient cause) which is why this is inferior to (not pick up while farting) which isn't the same as what we started off with precisely because of the theological tour assessing it caused us to take. 

How is all this relevant to 'market mechanisms'? The answer is it isn't. Sen is thinking of the two fundamental theorems of Welfare Economics. Sadly,  neither assumes the existence of an equilibrium. In other words, they aren't about markets which actually clear thanks to some internal process- e.g. Walrasian tatonnement. They are about what happens if the price vector is exogenous and, by some magic, markets happen to clear. In that case, since markets have cleared and there are no externalities and there is complete information, we can say 'under this magical arrangement, no two or more agents can profitably trade.' Sadly, if magical price vectors don't exogenously appear, the two theorems are meaningless. One might as well have a theorem about the conditions under which unicorns turn into leprechauns though neither unicorns nor leprechauns are 'compossible' with this Universe. Thus, they don't and can't exist. 

Economic freedom and political freedom are not related in any way. Some benefit from economic freedom. But this may reduce the political freedom of others. Consider Amartya Sen's own East Bengal. Economic freedom might enable evil kaffirs to get rich. They would then be able to employ armed guards who prevent jihadis from raping and killing them. This could seriously impair the political freedom to establish a Caliphate which would revive the salutary institution of slavery. 

25 years ago, Sen wrote an article for the Guardian titled 'Freedom's market'. 

In his essay on The Advancement of Learning, written nearly 400 years ago, Francis Bacon argued that 'the registering and proposing of doubts has a double use'.

Only with respect to what is observable or that which is proposed as an explanation for changes in what is observable. In other words, systematic doubt is useful in the natural sciences and purely empirical matters. It may be highly mischievous, when it is not useless, in other contexts.  

Aside from its obvious use in helping us to guard 'against errors',

in empirical contexts 

doubts can contribute to broadening an investigation.

into an investigation into whether it really is an investigation rather than a type of fart 

Issues that 'would have been passed by lightly without intervention,' Bacon noted, end up being 'attentively and carefully observed'

only if they are actually observable 

precisely because of the intervention of doubts.

Doubts are not observable. There is little point doubting whether your doubts regarding the weather forecast isn't actually the fart of an invisible leprechaun. 

This second use is very important to bear in mind as we try to assess the critiques of globalisation that have been recently aired in different forms.

People observed that globalisation helped poor countries which embraced open markets to rise up. What few at that time understood was that China could rise up so rapidly as to pose a challenge to the USA.  

The importance of these challenges lies, I would argue, not so much in the 'theses' that are presented as simple slogans on posters and placards, but in the 'themes' that they bring forcefully into global discussion.

Sen is talking about 'challenges' which weren't important at all. They were street theatre merely.  

Demonstrations have recently occurred not only at the venues of international financial gatherings (for example, in Seattle where the WTO were to meet), but also, in the form of less organised but intense protests, in different national capitals, all the way from Jakarta and Bangkok to Abidjan and Mexico.

They had zero impact.  

These doubts about global economic relations continue to come from different ends of the globe, and there is reason enough to see these doubts about globalisation as a global phenomenon as well. They are, in this sense, 'global doubts' - not just an ad hoc assortment of localised opposition.

These weren't doubts. They were public displays of stupidity and impotence.  

However, the significance of this phenomenon does not undermine the economic case for global trade and worldwide use of modern technology and finance.

For the same reason that farting does not undermine actuarial science. The two things aren't related in any way. 

Indeed, that case is, I believe, very strong. And nevertheless, these disputations can have a very positive role in broadening our investigation of economic and financial relations in the world and in forcing attention to issues that could have been otherwise neglected.

No such thing happened. Anyway, Sen was too ignorant and stupid to engage in any such thing.  

We have to distinguish the distinct issues involved.

No we don't. Globalization meant that some people selling at a low price in a national market could sell at a higher price on a global market. They were the winners. The losers were those who sold at a high price in national markets but who went out of business when cheaper goods flooded in from abroad. In poorer 'labour surplus' countries, there was a net gain from globalization reflected in much higher GDP growth. Capital exporting countries too could gain but, it may be, there would be a price to be paid in terms of a decline in 'hegemony' and a 'hollowing out' of the middle class. 

Sen comes from a part of the world where 'globalization', somewhat coercively accomplished,  undermined traditional, indigenous, aristocracies while enabling the rise of a bildungsburgertum- or 'class which rose through education'. As in late eighteenth/nineteenth Germany, there was a 'beamtenliberalismus' or 'top-down' liberalism of the officials. It is from this obsolete perspective that Sen utters his Sen-tentious bromides. He and his ilk were supplanted by people like Purnendu Chatterjee who, in the Seventies, preferred O.R to Social Choice theory and quickly became a billionaire creating thousands of well paid jobs in highly utile industries- e.g. Haldia Petrochemicals in West Bengal. There was a time when the average Bengali would have sided with the Government against 'Capitalist vulture' Chatterjee. But long experience of corrupt and incompetent Leftist Governments caused Bengalis to cheer for Chatterjee when he prevailed. People now understand that it is better to have a profitable industry which produces useful things rather than a bankrupt plant rotting away under Government control. 

It is a fact that if general-purpose productivity rises, there will, at least initially, be greater inequality. This is a good thing. It motivates 'Tardean mimetics'- i.e. imitating what the more successful are doing. Economic freedom means bigger mimetic effects of this sort and thus a more rapid spread of a habitus associated with higher general purpose productivity. This, by itself, can create a virtuous circle of 'endogenous' growth. 

What has Sen to say about inequality in this connection? Returning to his paper on Markets & Freedom we find this-

Sen's mistake is to think of 'opportunity-freedom' as reducible to buying or selling a commodity. This isn't the case. You may have the opportunity to prevent someone else being productive. This isn't a commodity but it can gain you a pay-off. A check on processes which create more inequality is the 'countervailing power' of those who can prevent that process from operating unless they are paid off. The reverse is also the case. Power and wealth may accrue to those who get rid of 'countervailing' power so that productivity enhancing processes can burgeon. Those who wield such power may go in for 'welfare'. This may involve co-opting those who claim to be fighting them with might and main. Sadly, under the guise of 'welfare', rent-extraction may be occurring. 

Opportunities, in economic contexts, aren't commodities. Speaking generally, we only speak of an option as an opportunity if there is some 'rent' or surplus associated with it. Continuing to work at minimum wage is not an opportunity. Finding out your Boss is cheating on your wife creates an opportunity to get a promotion in return for keeping his secret. My point is, work is not an opportunity. Blackmail is. 

Another mistake of Sen is to think a pre-existing medical condition or fact of nature or nurture, reduces opportunities or capabilities whereas, it is merely the case for such people that, to their best knowledge, neither fucking exist. Equally, some people may be better off believing, or merely pretending to believe, they have no capabilities or opportunities. My point is that not only are opportunities and capabilities epistemic, they are also strategic. One immediate consequence is that hysteresis will prevail over ergodicity in any process unless this is swamped by Tardean mimetics. This is a good reason to defund and get rid of such Paretian 'residues and derivatives' as senile, Sen-tentious, academo-bureaucratic citation cartels continue to represent. 

Ultimately the challenge markets for Social Science theories must face is that of defunding senile stupidity in a timely manner such that there is a greater equality of pedagogical outcomes with respect to general purpose productivity.