Development as Freedom (62 page)

23.
Ronald Dore, “Goodwill and the Spirit of Market Capitalism,”
British Journal
of Sociology
36 (1983), and
Taking Japan Seriously: A Confucian Perspective on Leading Economic Issues
(Stanford: Stanford University Press, 1987). See also Robert Wade,
Governing the Market
(Princeton: Princeton University Press, 1990).

24.
Masahiko Aoki,
Information, Incentives, and Bargaining in the Japanese Economy
(Cambridge: Cambridge University Press, 1989).

25.
Kotaro Suzumura,
Competition, Commitment, and Welfare
(Oxford and New York: Clarendon Press, 1995).

26.
Eiko Ikegami,
The Taming of the Samurai: Honorific Individualism and the Making of Modern Japan
(Cambridge, Mass.: Harvard University Press, 1995).

27.
Wall Street Journal
, January 30, 1989, p. 1.

28.
See the proceedings of the conference on “Economics and Criminality” in Rome in May 1993, organized by the Italian Parliament’s Anti-Mafia Commission, chaired by Luciano Violante,
Economica e criminalità
(Roma: Camera dei deputati, 1993). The text of my contribution, “On Corruption and Organized Crime,” analyzes, with particular reference to the Italian situation, some of the issues briefly touched on here.

29.
See Stefano Zamagni, ed.,
Mercati illegali e Mafie
(Bologna: Il Mulino, 1993). See also Stefano Zamagni, ed.,
The Economics of Altruism
(Aldershot: Elgar, 1995), especially his introduction to the volume; Daniel Hausman and Michael S. McPherson,
Economic Analysis and Moral Philosophy
(Cambridge: Cambridge University Press, 1996); Avner Ben-Ner and Louis Putterman, eds.,
Economics, Values and Organization
(Cambridge: Cambridge University Press, 1998).

30.
For general analyses of the role of trust, see the essays included in Diego Gambetta, ed.,
Trust and Agency
(Oxford: Blackwell, 1987).

31.
On this see my “Isolation, Assurance and the Social Rate of Discount,”
Quarterly Journal of Economics
81 (1967), reprinted in
Resources, Values and Development
(Cambridge, Mass.: Harvard University Press, 1984; reprinted 1997); and
On Ethics and Economics
(Oxford: Blackwell, 1987).

32.
On the nature and importance of this interconnection in general, see Alan Hamlin,
Ethics, Economics and the State
(Brighton: Wheatsheaf Books, 1986).

33.
Wealth of Nations
, volume 1, book 2, chapter 4.

34.
Jeremy Bentham,
Defense of Usury. To Which Is Added a Letter to Adam Smith, Esq., LL.D
. (London: Payne, 1790).

35.
I have discussed the distinction more fully in “Rational Fools: A Critique of the Behavioural Foundations of Economic Theory,”
Philosophy and Public Affairs 6
(summer 1977); reprinted in
Philosophy and Economic Theory
, edited by Frank Hahn and Martin Hollis (Oxford: Oxford University Press, 1979); in my
Choice, Welfare and Measurement
(1982), and in
Beyond Self-Interest
, edited by Jane Mansbridge (Chicago: Chicago University Press, 1990). See also my “Goals, Commitment and Identity,”
Journal of Law, Economics and Organization
1 (fall 1985); and
On Ethics and Economics
(1987).

36.
In Gary Becker’s important and influential “economic approach to human behaviour,” adequate room is made for sympathy, rather than for commitment (
The Economic Approach to Human Behaviour
, Chicago: Chicago University Press, 1976). The maximand that the rational person pursues can include concern for others; this is quite a significant and momentous broadening from the standard neoclassical assumption of self-centered individuals. (Some further broadening of the framework of behavioral analysis can be found in Becker’s later book,
Accounting
for Tastes
[Cambridge, Mass.: Harvard University Press, 1996].) But the maximand is also seen in this Beckerian framework as reflecting the person’s self-interest; this is a characteristic feature of sympathy—not of commitment. It is, however, possible to retain the maximizing framework and still accommodate, entirely within the discipline of maximization, values other than the pursuit of self-interest (by broadening the objective function beyond the notion of self-interest); on this and related issues, see my “Maximization and the Act of Choice” (1997).

37.
Smith,
The Theory of Moral Sentiments
(revised edition, 1790; republished, 1975), p. 191.

38.
Smith,
The Theory of Moral Sentiments
, p. 191.

39.
Smith,
The Theory of Moral Sentiments
, p. 190.

40.
George J. Stigler, “Smith’s Travel on the Ship of the State,” in
Essays on Adam Smith
, edited by A. S. Skinner and T. Wilson (Oxford: Clarendon Press, 1975).

41.
Smith,
Wealth of Nations
(1776; republished 1976), pp. 26–7.

42.
Smith,
The Theory of Moral Sentiments
, p. 189.

43.
See my “Adam Smith’s Prudence,” in
Theory and Reality in Development
, edited by Sanjay Lal and Francis Stewart (London: Macmillan, 1986). On the history of misinterpretations of Adam Smith, see Emma Rothschild, “Adam Smith and Conservative Economics,”
Economic History Review
45 (February 1992).

44.
John Rawls,
Political Liberalism
(New York: Columbia University Press, 1993), pp. 18–9.

45.
For examples of different types of reasoned connections, see Drew Fudenberg and Jean Tirole,
Game Theory
(Cambridge, Mass.: MIT Press, 1992); Ken Binmore,
Playing Fair
(Cambridge, Mass.: MIT Press, 1994); Jörgen Weibull,
Evolutionary Game Theory
(Cambridge, Mass.: MIT Press, 1995). See also Becker,
Accounting for Tastes
(1996); and Avner Ben-Ner and Louis Putterman, eds.,
Economics, Values, and Organization
(Cambridge: Cambridge University Press, 1998).

46.
Immanuel Kant,
Critique of Practical Reason
(1788), translated by L. W. Beck (New York: Bobbs-Merrill, 1956); Smith,
The Theory of Moral Sentiments
and
Wealth of Nations
(1776; republished, 1976).

47.
See Thomas Nagel,
The Possibility of Altruism
(Oxford: Clarendon Press, 1970); John Rawls,
A Theory of Justice
(Cambridge, Mass.: Harvard University Press, 1971); John C. Harsanyi,
Essays in Ethics, Social Behaviour, and Scientific Explanation
(Dordrecht: Reidel, 1976); Mark Granovetter, “Economic Action and Social Structure: The Problem of Embeddedness,”
American Journal of Sociology
91 (1985); Amartya Sen,
On Ethics and Economics
(1987); Robert Frank,
Passions within Reason
(New York: Norton, 1988); Vivian Walsh,
Rationality, Allocation, and Reproduction
(Oxford: Clarendon Press, 1996), among other contributions. See also the collection of papers in Hahn and Hollis,
Philosophy and Economic Theory
(1979); Jon Elster,
Rational Choice
(Oxford: Blackwell, 1986); Mansbridge,
Beyond Self-Interest
(1990); Mark Granovetter and Richard Swedberg, eds.,
The Sociology of Economic Life
(Boulder, Colo.: Westview Press, 1992); Zamagni,
The Economics of Altruism
(1995). For the rich history of psychological literature on this subject, see particularly Shira Lewin, “Economics and Psychology: Lessons for Our Own Day from the Early Twentieth Century,”
Journal of Economic Literature
34 (1996).

48.
On this see my
On Ethics and Economics
(1987), and my foreword to Ben-Ner and Putterman, eds.,
Economics, Values and Organization
(1998).

49.
On this, see Smith,
The Theory of Moral Sentiments
, p. 162.

50.
We can, however, also be led astray by “herd behaviour,” on which see Abhijit Banerjee, “A Simple Model of Herd Behaviour,”
Quarterly Journal of Economics
107 (1992).

51.
Frank H. Knight,
Freedom and Reform: Essays in Economic and Social Philosophy
(New York: Harper
&
Brothers, 1947; republished, Indianapolis: Liberty, 1982), p. 280.

52.
Buchanan, “Social Choice, Democracy and Free Markets” (1954), p. 120. See also his
Liberty, Market, and the State
(Brighton: Wheatsheaf Books, 1986).

53.
Kautilya,
Arthashastra
, part 2, chapter 8; English translation, R. P. Kangle,
The Kautilya Arthashastra
(Bombay: University of Bombay, 1972), part 2, pp. 86–8.

54.
See Syed Hussein Alatas,
The Sociology of Corruption
(Singapore: Times Books, 1980); also Robert Klitgaard,
Controlling Corruption
(Berkeley: University of California Press, 1988), p. 7. A payment system of this kind can help to reduce corruption through its “income effect”: the officer may be less in need of making a quick buck. But there will also be a “substitution effect”: the officer would know that corrupt behavior may involve serious loss of a high-salary employment if things were to “go wrong” (that is, go right).

55.
See
Economica e criminalità
, the report of the Italian Parliament’s Anti-Mafia Commission, chaired by Luciano Violante.

56.
Smith,
The Theory of Moral Sentiments
, p. 162; emphasis added. Skillful use of social norms can be a major ally of nonprofit enterprises that call for committed behavior. This is well illustrated by active NGOs in Bangladesh, such as Muhammed Yunus’s Grameen Bank, Fazle Hasan Abed’s BRAC and Zafurullah Chowdhury’s Gonoshashthaya Kendra (Center for People’s Health). See also the analysis of governmental efficiency in Latin America by Judith Tendler,
Good Government in the Tropics
(1997).

57.
English translation from Alatas,
The Sociology of Corruption
(1980); see also Klitgaard,
Controlling Corruption
(1988).

58.
I have tried to discuss these diverse issues in a number of papers included in the collection
Resources, Values and Development
(1984; 1997).

1.
I heard this account from Isaiah Berlin. Since these lectures were delivered, we have lost Berlin, and I take this opportunity of paying tribute to his memory and recollecting how very much I have benefited over the years from his gentle critique of my rudimentary ideas on freedom and its implications.

2.
On this subject, see also my “The Right Not to Be Hungry,” in
Contemporary Philosophy
2, edited by G. Floistad (The Hague: Martinus Nijhoff, 1982); “Well-Being, Agency and Freedom: The Dewey Lectures 1984,”
Journal of Philosophy
82 April 1985); “Individual Freedom as a Social Commitment,”
New York Review of Books
, June 16, 1990.

3.
See my “Equality of What?,” in
Tanner Lectures on Human Values
, volume 1, edited by S. McMurrin (Cambridge: Cambridge University Press, 1980), reprinted in my
Choice, Welfare and Measurement
(Oxford: Blackwell; Cambridge, Mass.: MIT Press, 1982; republished, Cambridge, Mass.: Harvard University Press, 1997); “Well-Being, Agency and Freedom” (1985); “Justice: Means versus Freedoms,”
Philosophy
and Public Affairs
19 (1990);
Inequality Reexamined
(Oxford: Clarendon Press; Cambridge, Mass.: Harvard University Press, 1992).

4.
The principal issues in characterizing and evaluating freedom—including some technical problems—are considered in my Kenneth Arrow Lectures, included in
Freedom, Social Choice and Responsibility: Arrow Lectures and Other Essays
(Oxford: Clarendon Press, forthcoming).

5.
Development is seen here as the removal of shortfalls of substantive freedoms from what they can potentially achieve. While this provides a general perspective—enough to characterize the nature of development in broad terms—there are a number of contentious issues that yield a class of somewhat different exact specifications of the criteria of judgment. On this, see my
Commodities and Capabilities
(Amsterdam: North-Holland, 1985);
Inequality Reexamined
(1992); and also
Freedom, Rationality and Social Choice
(forthcoming). The concentration on the removal of shortfalls in some specific dimensions has also been used in UNDP’s annual
Human Development Reports
, pioneered in 1990 by Mahbub ul Haq. See also some far-reaching questions raised by Ian Hacking in his review article on
Inequality Reexamined:
“In Pursuit of Fairness,”
New York Review of Books
, September 19, 1996. See also Charles Tilly,
Durable Inequality
(Berkeley, Calif.: University of California Press, 1998).

6.
On this see my
Commodities and Capabilities
(1985);
Inequality Reexamined
(1992); and “Capability and Well-Being,” in
The Quality of Life
, edited by Martha Nussbaum and Amartya Sen (Oxford: Clarendon Press, 1993).

7.
See John Rawls,
A Theory of Justice
(Cambridge, Mass.: Harvard University Press, 1971); John Harsanyi,
Essays in Ethics, Social Behaviour and Scientific Explanation
(Dordrecht: Reidel, 1976); and Ronald Dworkin, “What Is Equality? Part 2: Equality of Resources,”
Philosophy and Public Affairs
10 (1981). See also John Roemer,
Theories of Distributive Justice
(Cambridge, Mass.: Harvard University Press, 1996).

8.
This is discussed in my
Inequality Reexamined
(Oxford: Clarendon Press, 1992; Cambridge, Mass.: Harvard University Press, 1992), and more fully in my “Justice and Assertive Incompleteness,” mimeographed, Harvard University, 1997, which is a part of my Rosenthal lectures at Northwestern University Law School, given in September 1998.