If he were alive, he’d have you shot.

Thanks for your comments on my blog. I appreciate your input, and I have read Sen’s book. As you might have noticed, I have also worked in international development a bit myself, so I’m not unfamiliar with many of the issues he raises. I actually like the book, although my comments that I raised above relate to his piece on NYRoB and not necessarily that of Development As Freedom.

I’m not sure what about my comments you find ‘disturbing,’ nor do I understand why you seem to think I’m obligated to subscribe to Sen’s opinions if I’m interested in sustainable development. Sen is a very smart man, but his ideas is hardly the god particle of development economics.

I understand Sen’s emphasis on creating effective institutions, but his seeming reliance on state-led models for ‘development’ (and not growth) is laudable but introduces conditions that will, to channel the late Mancur Olson, calcify political power among the elite and their selected interests, mitigating growth and, indeed, development.

Of course, Sen is a Nobel Laureate and I’m just a country economic developer.

Thanks.

Debt is there!

And health care?

Nowhere!

Capitalism without moralism is maoism.

Yeah.

Sen macht Sinn (means sense).

At the same time, Easterly’s allusion to trust is an interesting one. It’s not incorrect to say that Sen is essentially calling for an economic culture that is founded on elements of trust – as the institutions that are supposed to facilitate that trust have been largely discredited. The problem is that Sen’s solution is to further empower these institutions, essentially suggesting that larger staffs and a broader mandate would somehow reinvigorate confidence and be more adept at catching the next problem.

I’m not convinced. If anything, there are compelling cases to be made that the influence of distorting government policies – the CRA, the ‘ownership society’ phenomena, and the Fed’s inner sanctum come to mind – directly contributed (partially, at least) to the bubbling of the bubble while mitigating the effects of market self-correction. Cavalier interest rates and a persisting weak dollar policy made short-term market correction nearly impossible; in that sense, the current crisis IS the markets self-correcting.

I also mention the five freedoms again because they are essential to understanding Sen’s articles. Sen argues in essence that greater recognition of their importance — and especially of the social opportunities of universal health care — could have mitigated the harmful effects of the current crisis.

“Was Mao intending to build the social foundations of a market economy and capitalist expansion (as he certainly did succeed in doing)? That hypothesis would be hard to entertain. And yet the Maoist policies of land reform, expansion of literacy, enlargement of public health care and so on had a very favorable effect on economic growth in post-reform China. The extent to which post-reform China draws on the results achieved in pre-reform China needs greater recognition. The positive unintended consequences are important here.”

Elsewhere in Development as Freedom, Sen writes:

“The Chinese famines of 1958-1961 killed, it is now estimated, close to thirty million people – ten times more than even the gigantic famine in British India. The so-called Great Leap Forward initiated in the late 1950s had been a massive failure, but the Chinese government refused to admit that and continued to pursue dogmatically much the same disastrous policies for three more years”

You’d have to be pretty desperate to call that a ringing endorsement of Maoism. What Sen is saying is that a system that was generally malign can have positive UNINTENDED consequences. I don’t think he’s the first to point this kind of thing out, either. Why that means he deserves furious, red-baiting denunciation of the kind you’re doling out is beyond me.

-sporadically holding development research accountable to reality since the other day

Wouldn’t your proposal that trust COULD arise out of PURE self-interest presuppose that society is a closed system inhabited by immortals? By recent, I don’t suppose you mean the 70’s – Richard Titmuss’ gift relationship or Gary Becker’s exchange theory???

I haven’t read all zillion articles on trust, norms, formal- and informal institutions, social capital *sigh*, etc. but my conclusion so far is more along the lines of ‘trust’ as distributed and maintained in multiple forms and levels, highly entangled in power structures, varying according to the matter of interaction, sensitive to tiny variations in history …… Actually, any talk of (multiple) equilibria seems more confusing than helpful.

You also misrepresent his article about being all about ‘trust’, which it plainly is not. He is very clear that the current crisis was in large part brought about by a failure to regulate markets, a failure directly linked to the ideological promotion of the self-regulating market as the embodiment of ‘freedom’ and ‘liberty’. I’m not surprised you want to deflect attention away from that part of his argument, though.

First, pursuant to your comment about “sermonizing to those (probably nonexistent) economists who didn’t know you need trust as well as the profit motive”, Sen’s articles are NOT directed at economists with excellent knowledge of how capitalism works best and how it must be supplemented by public goods etc. (you are definitely included in this group). Sen’s articles are ostensibly targeted towards those who have taken on a more myopic, market fundamentalist belief. More specifically, Sen is challenging those who don’t recognize the extent to which all of the five major freedoms identified in Development As Freedom are integral for a functioning welfare state – one which is not only based on the capitalism derived from the butcher-baker-brewer principles of Adam Smith.

Second, although it is difficult to discern from these two articles, I believe your mention of trust does not fully encompass what Sen is trying to allude to. In my view, Sen is trying to underscore the extent to which “transparency guarantees” and one’s ability to participate in the market (see Development As Freedom) were undermined by those who allowed a myopic belief in butcher-baker-brewer-capitalism to flourish. Sen explains this well in the NYRB article by mentioning the failures to regulate the practice of subprime lending and the proliferation of derivatives which fueled the latter.

Third, Sen cogently explains your concerns about the Cultural Revolution and the Great Leap Forward in Development As Freedom. I won’t try to summarize his elegant argument in this forum.