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Amartya Sen reading Adam Smith.

Abstract: Amartya Sen drew upon Adam Smith's rich and nuanced understanding of human behaviour in the construction of his own economic framework and, in the process, challenged the narrow interpretation of Smith's representation of human behaviour that is traditionally advanced by neoclassical economists. In this paper I analyse the relationship between the views of Sen and Smith to develop a deeper understanding of Sen's theory of economic behaviour and his 'capability approach'.

1 Introduction

Human behaviour has been predominantly interpreted as self-interested within orthodox economic models, especially prior to the rise of behavioural economics and its allied fields. Economists have often referred to the writings of Adam Smith, particularly The Wealth of Nations, when defending this notion of 'homo economicus' and his egoistical motivation. Today, however, the common view is that Smith's theory of behaviour is much richer than this so-called 'mechanistic rational model'. Amartya Sen, in particular, has both vehemently criticised the standard economic account of self-interested human behaviour and justified this criticism with references to Smith. Sen's aim in referring to Smith throughout his work is twofold. First, his objective is to criticise mainstream welfare economics and its narrow model of human behaviour by contrasting it with what he considers to be the real Adam Smith. Sen (1987, 1994, 2002a) contends that the latter can be found in Smith's rich analysis of human nature in both The Theory of Moral Sentiments and The Wealth of Nations, and, to this end, he dwells on, amongst other matters, Smith's belief in the importance of general rules of conduct and social institutions. Second, Sen seeks to integrate Smithian elements into his own theoretical approach to provide an alternative approach to economics and human behaviour. An example of this is his incorporation of the theoretical notion of 'sympathy' (Sen 1977), in which he explicitly refers to Adam Smith and attempts to establish a relationship with what he considers to be Smith's holistic account of human motivation. Sen also patently draws upon Smithian ideas in the development of his concepts of commitment, meta-preferences and capabilities, and, further, deploys modernised versions of Smithian concepts, such as the 'impartial spectator' and 'general rules of conduct', at strategic points in his work.

My central contention in this paper is, in short, that Sen's view of man, as well as his holistic views on the economy and human development, which figure in his well known 'capability approach', have been strongly inspired by Smith's philosophical and economic work. There are four main sections to the paper. In section one I introduce the general context for Sen's and Smith's understanding of the notion of self interest by analysing Smith's often cited passage devoted to the motivations of the butcher, the brewer and the baker. In section two I present the central elements of Smith's moral philosophy. In section three I delineate the links between Smith's and Sen's concepts of rationality in several sub-headings labelled A through to E. In section four I provide some concluding remarks.

2 The Butcher, the Baker and Smith

Sen's understanding of the concept of self interest, as well as the role it plays in Adam Smith's work, is most easily introduced by considering the passage from The Wealth of Nations (WN) that originally inspired Smith's reputation as a vehement advocate of self-interest as a source of wealth:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Smith (1776 [1986], I.2.2, p. 17)

Sen has made a major contribution to the rediscovery of Smith as a moral philosopher by challenging those economists who provide a narrow interpretation of the human nature that is displayed in this passage. At the same time, he discounts a reduction of Smith's writings to this passage. Sen shows that under specific circumstances, such as, for example, exchange relations, the pursuit of self-love could be reasonable (Sen 1986, p. 28). However, many economists tend to use the 'butcher-baker' example to explain the unintentional results of the pursuit of self-interest in a market economy. Sen's response to this practice is to argue that there is nothing mysterious about unintended results, and that this example cannot generally explain anything. 'The butcher et al', as he puts it, 'wanted to make money and so indeed they did. We intended to have dinner, as indeed we did. There is nothing startling or deeply illuminating in the recognition that not all the results were part of the design of every agent' (1984, p. 93).

Sen considers this narrow 'egotistical' view of Smith's broad analysis of human behaviour to be one of the biggest deficiencies of contemporary economic theory (1987, p. 28). He believes that Smith's writings on the economy and society, which place an emphasis on the necessity of sympathy and the role of ethical considerations in human behaviour--in particular rules of conduct--have been ignored in economics. The fact that Smith is not an advocate of a merely egoistic principle is indeed now commonly accepted by historians of ideas. It is interesting, however, to observe exactly how little Smith attributes observed human behaviour to the specific human motivation of self-love. In fact, in the seventh book of The Theory of Moral Sentiments (TMS) he criticises systems that define self-love as a principle of moral approval, and, in the process of delivering this critique, makes reference to Thomas Hobbes, Bernard Mandeville and Samuel yon Pufendorf. His view is that those who define self-love in this way misunderstand systems based on sympathy, as sympathy can never be interpreted as an egoistic principle:

But though sympathy is very properly said to arise from an imaginary change of situations with the person principally concerned, yet this imaginary change is not supposed to happen to me in my own person and character, but in that of the person with whom I sympathise. (Smith 1790 [2002], p. 374)

This Smithian vision diverges markedly from modern economic representation of human motivation, in which individual utility is deemed to be the basis of every action (see, for example, Becker 1976). Furthermore, it exposes the fact that 'modern' economists have seemingly not stated anything astonishingly new since the work of Hobbes. According to this traditional economic interpretation, Smith believed that under certain circumstances self-interest might have positive social effects. This is indeed the logic behind the 'butcher-baker' passage. However, what exactly is self-interest, as understood by Smith? First and foremost, it means that each individual is interested in improving his own economic lot--a disposition of which Smith approved. Furthermore, through continued efforts, he believed that self-interest can contribute to the development of the productive economic forces of a country. Smith's system is, however, one in which there is a balance between conflicting human motivations. In addition to aspiring to wealth, for example, Smith also considers man to be highly dependent on social acknowledgment. Accordingly, the principle of sympathy and its reciprocity also discipline man's egoistic motivations. Without overestimating the moral nature of man in practice, Smith argues that human aspirations to achieve power and acknowledgment can be opposed with other controlling authorities such as 'general rules of conduct'. 'Those general rules of conduct', Smith argues, 'when they have been fixed in our mind by habitual reflections, are of great use in correcting misrepresentations of self-love' (Smith 1790 [2002], p. 186). In addition to these rules, however, a specific system of positive laws representing justice can be integrated into a society. Finally, in the WN we also find a fourth barrier to exaggerated self-love, namely 'economic competition' (Patzen 1991, p. 45), which means that the competitive economy itself marks the frontiers within which some degree of self-interested maximisation takes place.

I would argue--and this is also the basis of Sen's view of man--that the concept of self-interest in Smith's work stands on an equal footing with other motivations. Each human being is equally motivated by social and selfish interests. In a similar vein, Patricia Werhane argues that, although one might have genuine interests in others, 'these may not be entirely benevolent interests' (1991, pp. 260. The point here is that self-interest is not 'necessarily evil and benevolence is not the only virtue' (ibid.). We find evidence of this crucial point in Smith's work when he declares 'that we are as naturally a social being as a selfish one and that we cannot derive one set of passions from the other' (ibid.). Finally, in Smith's view, self-interest is partly relevant because it favours personal progress and personal care. In this way, self-interest becomes important for our own protection (Smith 1790 [2002], pp. 256f).

The key point, as emphasised by Wilson and Dixon (2004, p. 133), is that, while Smith does not deny the possibility of egoistically motivated behaviour, what he does deny is 'that people can and do sometimes act according to ego alone, because [...] acting according to pure ego is just not possible'. The authors show that, for Smith, selfhood is far more complex 'than conventional economic analysis has been able and/or willing to admit' (ibid., p. 121).

Now, as stated in the introduction, my aim is to reconstruct the richer and more complex version of Smith's framework--both of the human being and of the economic system as driven by human action--to show the way in which Sen drew upon Smithian principles to construct his own economic framework. It is to this task that I now turn.

3 Central Elements of Smith's Moral Philosophy

In his introduction to the new edition of the TMS, Knud Haakonsen (2002) notes that the so-called 'Theory' may cause confusion today, as the expectations of a modern reader are likely to be formed by today's, rather than Smith's, notion of moral philosophy. In fact, Smith's understanding of moral philosophy has nothing to do with a search for universal normative doctrines or a theory of goodness. In his view, the function of the discipline is to explain practices that are commonly considered 'moral'. Smith therefore sought to identify elements of human reason and forms of human interaction that lead to moral practices (Haakonsen 2002, p. viii). The central theme of TMS is, in other words, 'morality as a social phenomenon' (Raphael 1985, p. 5). It was within this context that Smith and other near contemporaries, such as his friend David Hume, set out to prove that human nature is essentially good and hence that human interest would not result in a 'war of everyone against everyone', as asserted by Hobbes in Leviathan (1651) and Mandeville in The Fable of the Bees (1714). (1) Smith, and particularly Hume, wanted to show that man had a 'moral sense' or, as described in Smith's writings, a 'psychological moral'. This can, for example, be observed in one person's concern for another person's well-being. According to Smith and Hume, amoral act cannot be derived from reason, but must instead be explained with sentiments.

Smith describes a kind of fellow-feeling as the 'original passion' (1790 [2002], p. 54) of human nature. Clearly, principles can be found in human nature to explain man's interest in the fate of others. Smith calls one of these principles 'sympathy'. He goes on to say that this principle should not, however, be equated with 'compassion'. 'Though its meaning was, perhaps originally the same', Smith argues, sympathy 'may now, however, without much impropriety, be made use of to denote our fellow-feeling with any passion whatever' (1790 [2002], p. 13) and can be interpreted as what we call 'empathy' (Alvey 2007, p. 71). As the ability to place one's self in the position of others, sympathy constructs the social bounds of a society. Through sympathy, people comprehend the sentiments of others as praiseworthy or reprehensible, appropriate or inappropriate. The approbation of an action is explicitly distinguished from the formal principle of sympathy (Trapp 1987, p. 66), which itself has no theoretical content. From this point of view, moral approbation consists of a consciousness of accordance with the persons concerned. However, judgment about what is adequate cannot be derived from mere emotions; it must be linked to rational considerations. Our understanding of what is 'right' reflects Smith's emphasis of the 'adequate' as an essential element of the good. The 'adequate' can only be characterised by reason and in relation to a situation (Macfie 1959, p. 214). Sympathy, or the corresponding affection of the observer, can thus be interpreted as the 'natural and original measure' (Smith 1790 [2002], p. 361) of the adequate degree of all our affections. Alexander Macfie points out that sympathy makes reason humane and powerful. He adds, however, that, without the concept of the impartial spectator, sympathy would be an unrewarding concept. 'It is therefore unfruitful', he states. '[I]t alone could not search out the "many inventions" of social institutions or of justice and economy. Alone it could merely feel' (ibid.).

Whether our behaviour can be approved of or not depends on the adequateness or inadequateness of affection in relation to its object. Some economists emphasise the significance of imagination as 'crucial to an understanding of Smith's notion of sympathy and indeed of his whole moral psychology' (Werhane 1991, p. 33). According to Raphael (2007, p. 13), imagination plays a dual role, as 'we have to imagine what spectators would feel if they imagined themselves in our situation; and, while sympathy [...] comes into the picture in characterizing the feeling of the spectators, that feeling is an imagined feeling'. Sympathy, therefore, is the source of moral and practical reason and a 'prerequisite for moral judgment' (Alvey 2007, p. 73). It is therefore also determined by the distance which the imagination has to bridge. It is the standard by which the adequateness or inadequateness of sentiments can be judged: 'And as we assess others, so too, they assess us' (Evensky 2005, p. 114).

The reciprocity of sympathy results from the human desire to be acknowledged as a human being. Reciprocal compassion and empathy are important affirmations of one's existence. The desire for mutual sympathy is the most important principle of human nature, as we are very much pleased 'in knowing that our sentiments either reflect or are reflected by the sentiments of other people' (Otteson 2002, p. 84). It gives us the chance to understand ourselves as 'good' people. As such, we can integrate ourselves into the social structure, which is especially important for the foundation of our society.

At the same time, Smith's 'impartial spectator' constitutes an unconditional supplement to the principle of sympathy. He is the fiction of the just judge, who decides on the moral approval of an action or a sentiment. As Peter Ulrich puts it, Smith has illustrated the universal viewpoint of a moral judgment as the imaginary position of an 'uninvolved' and 'impartial observer': we try to examine our behaviour as any just and impartial observer would examine it (1997, p. 63) and can therefore state that we ourselves are the impartial spectator, 'though in the character of an imagined spectator, not in the character of an agent' (Raphael 2007, p. 35). James Otteson, however, opposes the view of the impartial spectator as a perfect ideal and takes the position that he represents 'any informed, but impartial, person' (2002, p. 8; pp. 42-64). In the same way that we judge others' behaviour based on the principle of sympathy, the impartial spectator focuses on us. A change in perspective is brought about. In a passage on resentment as representative of a special kind of passion, Smith emphasises the importance of the impartial spectator as a judge of the propriety of our sentiments:

There is no passion, of which the human mind is capable, concerning whose justness we ought to be so doubtful, concerning whose indulgence we ought so carefully to consult our natural sense of propriety, or so diligently to consider what will be the sentiments of the cool and impartial spectator. (Smith 1790 [2002], p. 47)

Here, the impartial spectator judges an action in terms of its intention--an aspect implicitly embedded in Smith's concept of sympathy. Thus, his concept of the impartial spectator is rooted in empirical reality and has the function of a social mirror. Bring a human into society, Smith writes, 'and he is immediately provided with the mirror which he wanted before' (p. 129). He is also, Smith continues, 'placed in the countenance and behaviour of those he lives with' (ibid.). Thus, the adequateness of one's own behaviour definitely stands in relation to society, as it is reflected by this society. Smith himself repeats several times throughout the TMS that this spectator must be interpreted as an individual who is able to use his imagination to change positions and examine the self through the eyes of idealised others who share similar values and conventions (ibid., p. 145). James Alvey (2007, p. 75), however, notes that, while Smith refers to the concept of the impartial spectator, his theory relies on the presence of actual spectators. Smith uses the 'society as mirror' metaphor, as he considers society to be 'the "natural" source' of moral judgments (Dickey 1986, p. 601 cit. in Alvey 2007, p. 75). Therefore, judgments about our own actions are a reflection of how the confident moral mechanism of society sees us (Raphael 1985, p. 34; Dwyer 1987, p. 170).

Smith's impartial spectator is the one virtual character from whose position we try to judge whether our own sentiments and motivations merit approval. He establishes social sanctions of morality, which, as such, are a source of conscience. Unlike normative principles that can be derived a priori, the impartial spectator is part of human nature. He may be called an 'anthropological condition' or 'a mental reflection mechanism' (Patzen 1991, p. 29) and he expresses a universal standpoint, as he is 'representative of any observer with normal human feelings' (Raphael 2007, p. 34; pp. 32-42) (2). In Smith's writing the spectator's position is the main criterion for morality.

4 From Smith to Sen

Sen is a normative economist or, as Vivian Walsh asserts, his 'works form a massive monument to the successful and sustained entanglement of fact, convention and value' (Walsh 2003, p. 344). Coming from a background in growth theory and cost-benefit analysis, which he dealt with in his dissertation (1960), Sen became increasingly interested in problems of welfare and social choice during his studies at the Delhi School of Economics (1963-1971) (Basu 1999, p. 43). In his work, he contributed significantly to the rapprochement of welfare economics and philosophy. Using the tools of social choice theory, he analysed ideas such as liberty, fairness and justice (ibid. p. 45). For Sen, the purpose of economic science was not only to examine abstract mechanisms of market economies, but also to propose alternative and better social and economic arrangements, favouring the realisation of the social and personal self. In his opinion, economic theorists should be keen to model this self in such a way that it allows insight into the complex human motivational structure. Otto Kallscheuer (2000, p. 144) emphasised the role of the individual self-evaluation of economic subjects and the ability to express, realise and change their needs in the social space in Sen's work. Sen advocates a complex living standard concept, which encompasses the individual and social capabilities of human beings. His main argument in criticising neoclassical economics is that relevant questions relating to the weight of the different economic needs are not asked within its theoretical space (ibid., p. 147). This is the utilitarian 'informational base' of neoclassical economics, which Sen considers insufficient 'to ground ethical or socially rational evaluations' (Anderson 2007, p. 304). In his construction of a highly conceptualised alternative to this approach, Sen is much inspired by the classical economists, in particular by Adam Smith, whom he finds very much abused in mainstream economics where he is used to underpin a one-dimensional 'homo economicus'. Sen counters this view by showing that Smith's concept of human nature is much more complex. Smithian presuppositions appear particularly frequently in Sen's capability approach and his general view of human behaviour. He believes that both self-interest and sympathy must be taken into account in order to understand better the 'relation between economic success and moral sentiments', which 'is indeed a crucially important practical matter across the world' (Sen 1994, p. 10).

Sen, who started his academic career at Presidency College in Calcutta in 1951, soon came into contact with the writings of the classical economists. As he mentioned in an interview with Arjo Klamer, classics 'had a great influence on most Bengali students studying in Calcutta, Dhaka and elsewhere' (Klamer 1989, p. 136). Although most Indian colleges taught standard neoclassical economics at this time, an inter-disciplinary interest in other theories was widespread among the economics students. Politics, society, history and literature were passionately discussed and economic curiosity went beyond the standard literature: '[t]here was also a great deal of interest in the older classics, by Smith, Ricardo, Mill and others' (ibid.). After receiving his bachelor's degree, Sen went to Trinity College at Cambridge University in 1953 to continue his studies. There, he also met Joan Robinson, who supervismoderns PhD thesis. Against her advice to keep away from 'ethical rubbish', Sen increasingly felt 'the need to return to the traditional concerns of economics with human welfare and social evaluation' (ibid. pp. 139f). His general interest in Smith took shape in his own work at a point when he had come to the conclusion that the focus of modern economics was too narrow:

Most of modern economics tends to concentrate on very narrow things, leaving out enormous areas of what are seen as political and sociological factors on the one side, and philosophical issues on the other. But these issues are often central to economic problems themselves. [...] After all, the subject of modern economics was in a sense founded by Adam Smith, who had an enormously broad view of economics. (ibid., p. 140f).

As a consequence, Sen put forward his own economic approach which stood in line with his consistent critique of standard economics. During his years at the London School of Economics (1971-1977) he published several papers in which he challenged central standard economic axioms, such as 'revealed preferences' (for example, Sen 1971, 1973), considering them to be based on too narrow a view of human action. Sen's more explicit references to Adam Smith occurred when he engaged in problems of rationality and assumptions of human motivation in economic theory (1977, 1985a, 1985c), and when he began advocating closer contact between ethics and economics (1986, 1987). The rhetorical impact of Sen's deployment of Smith against the concept 'homo economicus' was considerable due to the neoclassical economists' reduction of Smith to an advocate of this view of man. (3) Although Sen was confronted with Smith's work from the beginning of his academic life, a line of growing influence can be drawn from the end of the seventies to its climax in 1999 when Sen published Development as Freedom.

Indeed, one authority described this book as 'well written, quite comprehensive in terms of its coverage, and certainly "Smithian" in character' (Batabyal 2000, p. 228, italics added). This Smithian character is reflected in Sen's concept of rationality, which is the first of a series of concepts in Sen's works that I wish to consider.

A Sen's View of Rationality

The object is to understand, explain and predict human behaviour in a way such that economic relationships can be fruitfully studied and used for description, prognosis and policy. The jettison of all motivations other than the extremely narrow one of self-interest is hard to justify on grounds of predictive usefulness, and it also seems to have rather dubious empirical support. To stick to that narrow path does not seem a very good way of going about our business. (Sen 1987, p. 79)

Sen is an explicit opponent of the narrow view of human motivation commonly espoused in economics. His point is that 'sticking entirely to the narrow and implausible assumption of purely self-interested behaviour seems to take us in an alleged "short-cut" that ends up in a different place from where we wanted to go' (1987, p. 79). According to Sen, both of the notions of rationality, which he identifies in standard economics (4)--that is, rationality as maximising one's self-interest or rationality as acting consistently with reference to one's choices--lack an empirical link. As he points out, human beings commit errors in their actions, undertake experiments and get confused. Therefore, aside from the intelligent and systematic pursuit of given aims, we need a supplementary criterion for rationality--unless the sniper's behaviour of maximising the number of his arbitrarily chosen victims should be interpreted as perfectly rational (Sen 2002, pp. 37-42). Sen claims to scrutinise preferences and objectives both accurately and critically. He also believes those values and priorities which are not directly captured by explicit objectives should be examined. We find such an implicit view in Smith's virtue of prudence (see also Sen 1986). Prudence is a complex concept. Pratap Bhanu Mehta notes that prudence 'directed us to care for ourselves' (2006, p. 259). Its central element is the individual ego and the ego's well-being in society. This ego, however, should not be interpreted as separate from the society in which it acts. Prudence goes beyond the mere self-interested maximisation of utility. Smith actually argues that prudence is the union of 'reason and understanding' on the one hand and 'self-command' (1790 [2002], p. 220) on the other. Although 'it demands a certain cold esteem, but seems not entitled to any very ardent love or admiration', prudence can be 'combined with many greater and more splendid virtues' and 'supported by a proper degree of self-command' to 'superior prudence' (Smith 1790 [2002], p. 253). This difference, as Sen (1986, p. 31) puts it, is crucial to an analysis of Smith's understanding of social behaviour and its political implications. As previously mentioned, Smith highlights the importance of 'general rules of conduct'. These have a strong influence on human action and play a positive role in society. In Smith's understanding, rational actions are clearly reflected, prudent actions, which might be linked to virtues, conventions or the principle of sympathy.

Rationality thus not only requires an evaluation of our objectives but also of our values, which are not directly linked to these objectives, in order to withstand accurate examination and assessment. Moral conviction may also lead to self-imposed restrictions (Sen 2002b, p. 42), indicating a contradiction with instrumental rationality. Smith explicitly made this point, as he considered moral sentiments and ethical considerations to be important drivers of motivation. According to Smith, choices of action are very much influenced by what we morally approve of and how we are exposed to public opinion (Witzum 2005, p. 1027).

Neither the concept of self-interested utility maximisation nor that of consistent choice adequately describes human action, as neither of these sufficiently and explicitly considers the role of reason. Reason requires more than mere consistency. On the other hand, there is not a single convincing argument, in Sen's view, for why the rationality of a person should exclusively consist of her own interests. For Sen, '[t]he internal consistency approach can bring in reasoning only indirectly--only to the extent (and in the form) that is allowed by the nature of the consistency conditions imposed' (1985a, p. 110). The self-interest approach, on the other hand, 'refuses to admit reasoned choice in pursuit of any goals other than self-interest' (ibid.) In Steven Pressman's words, however, '[...] Sen [...] proposes a pragmatic view of rationality. Being rational has to do with reflecting on one's options and the consequences of one's actions, and having good reasons for one's choices. Having good reasons for one's decisions is the essence of rationality for Sen' (2002, p. 122). This view of rationality corresponds with the view which Sen himself (and Emma Rothschild) assigns to Adam Smith, as:

[...] in the Smithian perspective, rationality does not consist of falling into line with any pre-selected motivation, such as self-interest maximization which is often defined as rational behaviour in parts of modern economics [...]. Rather, rationality is seen as reasoned reflection on the nature of the processes involved and the consequences generated in the light of valuations one has reason to accept. Rationality is an exercise of reasoning, valuation, and choice [...]. (Rothschild and Sen 2006, p. 358)

Sen raises awareness of the fact that, with its axiomatic language, modern economics has lost its connection to the real world and moved far away from empirical reality--and this is one of the most valuable contributions of his work. His critique of instrumental rationality must be understood as a frontal attack against the technical approach to economics, which had vastly 'rationalized away' ethical components. In this approach, the individual being is completely isolated in his privacy and knows 'self-centred welfare' as his only goal. For Smith, however, rationality is a fundamentally social concept and 'in Smith the others are an essential part of what constitutes rational, or prudent, behaviour' (Witzum 2005, p. 1030). As will be shown in the following section, Sen very much sticks to this view and introduces consideration for others as a central element of our lives in order to open up the narrow structure of instrumental decision-making.

B Sympathy, Commitment and Identity

Sen proposes considering two motivational dimensions in order to broaden the 'homo economicus' framework: 'sympathy' and 'commitment'. This conceptual choice is a clear reference to Smith. Sympathy 'corresponds to the case in which the concern for others directly affects one's welfare' (Sen 1977/1982, p. 91). If a person feels bad because she knows that a friend has been tortured, one speaks of sympathy. If a person does not feel bad personally, but thinks it should not have happened and is 'ready to do something to stop it, it is a case of commitment' (ibid.) or, as Philippe Pettit says, '[w]here sympathy transforms the motor of self-interest, tuning it to the welfare of others, commitment puts another motor in its place' (2005, p. 17). (5)

In Sen's interpretation, 'sympathy' is equal to the notion of compassion in a narrower sense. It means that knowing of someone else's suffering provokes a sense of malaise. Although 'sympathy' is therefore a principle that relates to self-interest, it must be seen as a broader notion of self-interested motivation. In this feeling, 'one's sentiments resonate in common with others so that in acting on the basis of those sentiments one naturally takes account of the welfare of others' (Pettit 2005, p. 17). However, Sen notes that there is a difference between being self-interested, which would involve sympathy, and being self-centred, which would not, as this only refers to one's own welfare (2002a, p. 31). In Sen's usage, sympathy differs from Smith's notion, where sympathy is the ability to imagine what one would feel in another's shoes. While Smith's sympathy has the function of judging behaviour, Sen's concept describes the psychological dependency of the individual's well-being on the well-being of others. Here, sympathy is a link between the well-being of different people, whereas commitment links a choice to anticipated levels of well-being. Why does Sen then choose this term? He does so, from my point of view, in order to show, as Smith did, that self-interest need not merely be self-centred. At the same time, he definitely establishes a Smithian connection to his theory. Although Sen's concept of sympathy is not as broad and complex as Smith's notion, the point is that the motivational structure of man is, if not determined, strongly socially influenced. However, as noted, there are concerns which are not 'well-captured by such notions of sympathy' (Hausman and McPherson 1993, p. 687).

Commitment, however, has stronger content. One way of defining it 'is in terms of a person choosing an act that he believes will yield a lower level of personal welfare to him than an alternative that is also available to him' (Sen 1982, p. 92). Another definition is that '[c]ommitment adds a recognition that individual choice is not always governed by a concern for one's own advantage' (Hausman 2007, p. 58). How would such a notion point toward Smith? Sen complements self-interest with an antipode by showing that an action on grounds of commitment may contradict personal well-being. As such, commitment displaces personal goals with the goals of others. There is, however, also a form of goal-modifying commitment, which makes a person alter her goals 'without undergoing the transformation of sentiment that sympathy would involve', due to the recognition of potentially negatively affecting other people's goals (Pettit 2005, p. 18). Behaviour motivated by commitment is based on sentiments of justice, morals or even conventions. Hence, it can be said that the concept is related to the 'impartial spectator', which also represents a barrier to self-love and can be interpreted as a concept of duty. As Sen puts it, 'the action is chosen out of a sense of duty rather than just to avoid the illfare resulting from the remorse that would occur if one were to act otherwise' (1982, p. 92). Both the impartial spectator and commitment point to codes acknowledged by people as binding. A reference is also made to the general rules of conduct, which provoke a feeling of duty and thus may influence behaviour. Sen argues that 'the acceptance of rules of conduct toward others with whom one has some sense of identity is part of a more general behavioural phenomenon of acting according to fixed rules' (Sen 2002b, p. 217). The most interesting element here is that, in doing so, we do not act according to the logic of maximisation.

Sen (2004b) develops both concepts with an eye on modern Rational Choice Theory. Smith's theory of behaviour and his TMS serve as a useful instrument for attacking the behaviouristic model of Rational Choice. Sen modernises the Smithian approach in order to be able to integrate it into formalised modelling. Smith's point that our choices often reflect the belief that certain actions need to be avoided (general rules) could be formally represented by considering 'a different structure from choosing a maximal element, according to a comprehensive preference ranking (incorporating, inter alia, the importance of choice acts), from the given feasible set S (allowed by externally given constraints)' (Sen 2002a, p. 189). A person could instead limit the alternatives available and take a tolerable subset K(S), which represents the person's self-imposed constraints. Then, the elements in this subset can be sought. Smith's (ibid., p. 190) argument 'that many behavioral regularities can be explained better by understanding people's attitude to actions, rather than their valuation of final outcomes' can be formalised in this way. (6)

Sen (1987, p. 93) notes that 'commitment does involve, in a very real sense, counter preferential choice, destroying the crucial assumption that a chosen alternative must be better than (or at least as good as) the others for the person choosing it, and this would certainly require that models be formulated in an essentially different way'. Daniel Hausman (2007, p. 57) adds that Sen's commitment can be easily misread if one does not know what Sen means by 'preference'--that is, 'expected advantage' in this case. Commitments can therefore be seen as normative reasons 'that have force independently of one's inclinations and that quite often do not allow maximizing one's personal interests' (Pauer-Studer 2007, p. 75). At this point, Smith's notion of 'general rules of conduct' is again of relevance, representing more or less the conventional code of a society. Sen (2005, p. 10) also emphasises that commitment is therefore 'not only important for characterizing the demands of rationality, but also for explaining behavioral variation between different societies and over time'. In introducing motives such as sympathy and commitment, he intends to release the economic-rational agent from his 'privacy', as the standard approach of individual rational behaviour is not only empirically unrealistic, but also theoretically misleading. He believes that distinct aspects of privacy, which are differentiated imprecisely in standard economics, have to be distinguished (Sen 1985b, pp. 348).

Within this context, Sen also deals with the question of identity. According to Hans Schmid (2007, p. 217), in introducing the concept of identity, Sen addresses the question of what people actually do when their behaviour violates self-goal choice. It can hardly be denied that social identities influence individual behaviour. Social norms, cultural rules and conventions shape the individual's structure. The community and the people a person identifies with not only form her knowledge and understanding, but also her ethics and norms, playing a crucial role in her life. Sen is interested in this social identity's authority and how it arises. He rejects the idea of a group identity preceding reasonable reflection (Sen 1998, pp. 17ff) and argues that our way of reasoning can clearly be influenced by 'our knowledge, by our presumptions, and by our attitudinal inclinations regarding what constitutes a good or a bad argument' (ibid., p. 23). As a consequence, Sen questions the notion that we are only able to reason within a specific cultural decision, 'with a specific identity' (ibid.). He sticks to his approach of rationality and does not cancel it by introducing a dominant concept of identity. Personal identity means self-awareness (Pauer-Studer 2006, p. 365) and demands a reflective evaluation of our choices. Commitments and general rules could form the basis of this effort. Even if particular cultural attitudes influence reasonable reflections, Sen argues, this does not mean that they also determine them. Rational decisions and considerations are influenced in numerous ways. Doubt remains an instrument of rationality or, as Sen puts it, we are not deprived of the ability to doubt and to question (Sen 2007, p. 49). Even if the environment does not always promote it, doubt remains the one factor that makes us human beings. This view of identity, I would argue, is Smithian in its core, as it has its roots in reflection on the propriety of action and is concerned with the manner in which we judge others and ourselves.

Finally, the entire construction of human motivation, as Sen conceives it, turns out to be highly Smithian in thought. The fact that Sen continues to use the traditional instruments of welfare economics can, however, be criticised. Concepts such as preference and choice are still central to Sen's model of behaviour. The adequacy of the 'homo economicus' model itself is not fundamentally questioned; he merely asserts that it is insufficiently structured.

C Preferences

A human being, from both Sen's and Smith's perspective, is not merely a 'rational fool' and her behaviour cannot be interpreted as the sum of rational mechanical maximisation decisions. A person might also act in a different way than to 'maximally satisfy her preferences', and might act on a principle other than that of maximising her utility (Anderson 2007, p. 303). Sen himself, however, does not see the problem in the maximising framework itself. Instead, he believes it lies much more in the characterisation of such a framework, which can be developed 'with much greater parametric flexibility' and can incorporate concerns other than that of mere utility maximisation, such as 'taking note of process considerations in general and the nature of the act of choice in particular' (2001, p. 57). Putting man in the corset of analytical rational choice means he cannot differentiate between such clearly distinct questions as: 'What best serves my own interest?', 'What are my objectives?' or 'What shall I do?'. The rational fool has to answer all of these questions identically. 'Commitment [...]', as Sen puts it, 'drives a wedge between personal choice and personal welfare, and much of traditional economic theory relies on the identity of the two' (Sen 2002a, p. 6). It therefore admits the inclusion of so-called meta-preferences (7) in the existing individual preference ordering. In economic utility theory it is presumed that each person has one preference ordering only, which represents her welfare and her general opinion of 'what should be done', and which describes her actual choice of behaviour. Meta-preferences shed light on the black box of the preferential structure used in mainstream economics. Here, preference is no longer identified with choice and integrates various motivations into the analysis. This approach is also used to explain apparent anomalies of decision-making behaviour. To provide an example, consider a person who admits herself into a drug rehabilitation clinic and so restricts her own freedom of movement (cf. Whitman 2004). Meta-preferences are preferences for one's own preferences. They express the preference to have a different preference-ordering.

The concept allows for a distinction between moral and actual rankings, and corresponds much more with human nature than the assumption underpinning the theory of revealed preference, as put forward by Paul Samuelson (1938), in which the action chosen identifies and maximises well-being. However, Sen rejects a simple dualism of 'moral' vs. 'immoral', instead favouring 'staged preferences' that admit a structure of moral levels. In this manner, a moral ordering of preference orderings becomes possible: '[a] particular morality can be viewed, not just in terms of "the most moral" ranking of the set of alternative actions, but as moral ranking of the rankings of actions' (Sen 1982, pp. 100f). The meta-ranking then includes the 'most moral' as well as different levels of preference rankings in terms of morality, as actual behaviour can also consist of compromises between claims of moral behaviour and other goals a person might have. As a consequence, we receive relative moral orderings that are not the most moral ordering (Sen 1997, pp. 99ff). Meta-ranking can be used as a method of different interpretations. Ideologies, political priorities and conventions can be illustrated in this way. Meta-preferences are a modern instrument for returning to a discussion of Smith's theory of (moral) behaviour and sentiments. It is an instrument that is used to show that human beings often find themselves confronted with a dilemma between self-interest and a sense of duty to general rules of conduct or moral conventions, or, as Smith states:

Those general rules of conduct, when they have been fixed in our mind by habitual reflection, are of great use in correcting the misrepresentations of self-love concerning what is fit and proper to be done in our particular situation. (Smith 1790 [2002], p. 186)

Meta-rankings offer a way to integrate Smith's system of virtues into a modern approach. They are a useful concept, as they 'formalized the ancient philosophical idea of a critical analysis and ranking of rival moral concepts. This shows how one might embed Smith's hierarchy of virtues in a present-day choice theoretical model, of the sort that Sen has made his own' (Walsh 2000, p. 22).

Traditional economic theory is based on an identification of personal choice and personal well-being. When commitment is accepted as the possible content of choice, the fundamental difference between 'choice behaviour' and 'welfare' becomes evident. Anderson comments that 'committed action turns out to be action on principles (reasons) that it is rational for us [...] to adopt' (2007, p. 305). The belief that, as free and rational agents, individuals are able to act on motives other than the pursuit of self-interest was vehemently defended by Adam Smith, as well as other classical and neoclassical authors, such as John Stuart Mill, William Stanley Jevons and Alfred Marshall.

D Capabilities

Sen favours a holistic conception of an economic theory, anchored in the tradition of his classical predecessors. He therefore tries to renew the old connection between ethics and economics, and to integrate it into a modern approach. As Sen (1987, p. 2) notes, ethics is, in fact, one of the roots of economics. Yet it is not only this historical relation which justifies the reintegration of an emancipated science into its old corset. In fact, this is about the enrichment of one discipline with the fruitful aspects of another. Both have the same objective of cognition, as seen in man and his course of action. A separation of both disciplines would mean dividing the individual himself. Modern economics pretends to describe human motivation and to make predictions on these grounds. Ethics, however, dares to go beyond description and to propose how man should act. Furthermore, ethics raises general questions about the valuation of social achievements. When economists emphasise the significance of ethics, they do so because in their view economics without ethics represents an unbearable reductionism or a 'false dualism'(see Sen 1987). Sen refers not only to Smith but to Aristotle, who established ethics as a realm in which man could find himself as a complete being. Consequently, analysis that only focuses on economic behaviour proves dull by comparison. For Aristotle, life is a principal contribution to the 'polis', which stands for a social ideal. In the Nicomachean Ethics, when he writes about man acting in the most complete way, it is evident that, for him, these actions are naturally good (Aristotle 1962). The question of commitment, however, is not answered: what should man himself adhere to? Although Smith does not answer this question directly, he draws a picture of the moral nature of man. His pluralistic view of both man and his various motivations is what interests Sen.

As Walsh (2000, p. 6) notes, Sen heralds the second phase of the revival of classical economic theory, which began with a reappraisal of David Ricardo and has since turned to Smith. Like Smith, Sen advocates a differentiated normative analysis of human nature in order to gain further insight into human action and to be able to evaluate the achievements of society more efficiently. Sen neither accepts a positive economic analysis based on escapist assumptions relating to human behaviour, nor favours a normative welfare-economic approach that has rid itself of ethical 'ballast'. Sen grounds his economic analysis on a broad informational basis and argues, in doing so, against the strong utilitarian influence in standard economic analysis, which measures social states on the basis of abstract utility units only. In order to take into account a holistic understanding of man, along with his needs and possibilities, Sen introduces the concepts of 'functionings' and 'capabilities'. While a 'functioning' is 'an achievement of a person: what he or she manages to do or to be' (1985c, p. 10), 'capabilities' reflect 'the person's freedom to lead one type of life or another' (1992, p. 40). Sen also advocates a positive notion of freedom that opens a space of options. As Robert Sugden (1993, p. 325) notes, 'for a given individual there can be a range of different rankings of options, each of which corresponds with a different but equally valid conception of her good'. (8)

Sen's approach integrates Aristotelian and Marxian elements that have been discussed elsewhere (see Crocker 2007; Nussbaum 1988). In this context, however, I am particularly interested in Smith's influence on Sen's concept of capability. In order to explore this, we should glance at Smith's interpretation of poverty. Smith shed new light on the concept of poverty by adding the notion of the 'necessary' to the traditional defining notion of material deprivation. This idea very much inspired Sen in shaping his theory of capability. According to Smith, 'necessaries' are to be understood as the core elements of human life, although the commodities required to satisfy them may vary from society to society:

By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. (Smith 1776 [1986b], V.2.148)

The distinction between commodities and necessaries is fundamental to Smith's complex view of society and human nature. However, the general concept of poverty at the end of the eighteenth and beginning of the nineteenth century, as reflected in Jeremy Bentham's (1798 [2001]) proposals for the reform of the 'Poor Laws' differs significantly from the vision articulated by Smith. (9) In comparison, Smith's 'penetrating analysis of poverty' (Rothschild and Sen 2006, p. 359) seems more like a modern understanding of the poverty problem. According to Geoffrey Gilbert (1997, p. 273), Smith's views on poverty have been unjustly overlooked, as Smith was 'too often stereotyped as the great visionary of capitalist abundance' and 'has been much less appreciated for his commentary on poverty'. Similarly, Getraud Himmelfarb (1984, p. 46) highlights that the WN was 'genuinely revolutionary in its view of poverty and its attitude towards the poor'. According to Smith, poverty should be interpreted as the inability to fulfil basic needs or a 'form of certain basic "unfreedoms"' (ibid.). While the fundamental necessaries remain the same, the commodities required to satisfy these needs or grant such freedoms may differ from society to society. As in Sen's favourite example, human beings wish to be able to appear in public without shame or, more abstractly, to have the freedom to lead a valuable life. Yet this idea directly reflects the content of the word 'capability', as it involves freedom of choice and the possibility of agency. As Rothschild and Sen state, 'a capability-based approach of poverty and deprivation can draw substantially on Smith's pioneering analysis' (ibid. p. 360). Indeed, Smith's point reflects the central idea of capability:

The capability he [Smith] was referring to was the one of avoiding shame from the inability to meet the demands of convention. [...] As we consider richer and richer commodities, the commodity requirement of the same capability--avoiding this type of shame--increases. [...] In the commodity space, therefore, escape from poverty in the form of avoiding shame requires a varying collection of commodities--and it is this collection and the resources needed for it that happen to be relative vis-a-vis the situation of others. But in the space of capabilities themselves--the direct constituent of the standard of living--escape from poverty has an absolute requirement, to wit, avoidance of this type of shame. Not so much having equal shame as others, but just not being ashamed, absolutely. (Sen 1984, p. 335)

Sen's opinion of poverty as an absolute concept becomes clear in the above passage. He interprets poverty as relative to the society in which it occurs and, above all, as a deprivation of resources and income. According to Sen, poverty, like human development in general, must be valued in reference to the capabilities an individual is able to generate. The constituting element of the standard of living should not be seen as the commodity itself or its function, but the capability to realise various goals. With respect to capabilities, poverty is an absolute concept. With respect to commodities, however, it becomes relative (Sen 1983a, 1985c). As Sen (2006, p. 36) himself frequently notes, this view of an absolute notion is essentially provoked by 'Smithian reasoning', which 'indicates why poverty is hard to eradicate just by raising the average level of income, without also addressing issues of inequality of incomes'.

Sen also argues against a view of poverty as a value judgment, as the exercise of defining poverty itself is not a prescriptive one. At the same time, he believes we should take note of prescriptions and standards prevailing in society. He argues that the action of describing a prevailing prescription 'is an act of description' and is crucial for analysing poverty, 'for this determines the minimum income a person may need to be capable of certain basic functionings' (Rothschild and Sen 2006, p. 360). 'For the person studying and measuring poverty', he continues, 'the conventions of society are a matter of fact (What are the contemporary standards?), and not issues of morality or of subjective search (What should be my values? How do l feel about all this?)' (1981, p. 17). This insight into Smith is a core element of Sen's capability approach.

In Smith's writings we also find the problem of the impoverishment of capabilities. Even though the division of labour is a driving mechanism of economic growth, it also has severely negative consequences. Individuals lose their holistic view, which leads--as Marx would later call it--to alienation. A worker 'whose whole life is spent in performing a few simple operations [...] has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur' (Smith 1776 [1986b], V.I. 178, p. 366). Such a man 'naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become' (ibid.). The power of this argument, according to Himmelfarb (1984, p. 55), lies in the paradox of the division of labour. On the one hand, the division of labour is crucial for a progressing economy and, hence, the only hope for the working class. On the other hand, it is also the probable cause of the mental, intellectual and even physical decay of this class. Smith contended that public education was the most important remedy against the social impoverishment of the masses through the principle of the division of labour, believing that this should help individuals participate in social life. He developed the concept of enabling individuals to enhance their opportunities or potentials--an idea that anticipates Sen's concept of capability to function.

In my understanding of Sen, it is the human being that stands at the centre of any social and economic conception. It therefore follows that it must be the aim of an economic system to provide individuals with the possibility to live the one life they have--upon reflection--reason to choose:

The capability perspective involves, to some extent, a return to an integrated approach to economic and social development championed particularly by Adam Smith (both in the Wealth of Nations and in The Theory of Moral Sentiments). [...] [T]he development of human capability in leading a worthwhile life (as well as being more productive) is quite central to Smith's analysis of the 'wealth of nations'. (Sen 1999, pp. 295-6) This so-called integrated approach is the subject of the following section.

E An Integrated Approach

Smith and Sen share the opinion that free competition can only have a positive effect within a specific institutional and social order. As Sen (2009, online issue) recently noted, 'Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions [...] and values other than pure profit seeking, and second, they needed restraint and correction by still other institutions [...]'. In such a system, government has particular significance, as it is responsible for the balance between economic progress and social needs in a society. Government-imposed 'restraint and correction' are what prevent inequity, injustice and instability. When the state enables its citizens and secures their development opportunities, a competitive market is more effective at achieving desired outcomes. In his recent and most explicit writing on Smith, Sen once again argues against the popular view of Smith as an advocate of a laisser-faire economy. According to Sen, it is neither acceptable to derive the idea of a general competitive equilibrium, 'in which the outcome of self-interested actions of individuals is a system or order of maximal efficiency' (Rothschild and Sen 2006, p. 363) from Smith's approach, nor true that Smith advocated a strict principle of non-interference. The invisible hand 'in its twentieth-century sense was quite un-Smithian' and the simple system of natural liberty from his point of view 'was no more than a guide to policy. It was to be implemented with the greatest circumspection' (ibid.). In contrast to mainstream economists, Sen reads Smith as a social liberal searching for the mechanism of opulence and placing himself on the side of the poor and weak. Smith saw the liberal system as an instrument with which to protect the general public from 'bad institutions' that 'obstruct public opulence' (ibid. p. 325) and from grabby merchants (both the 'heart of Smith's economic thought' and 'at the same time its sneaking hypocrites' (p. 328)), 'who have generally an interest to deceive and even to oppress the public' (Smith 1776 [1986], I.11.264, p. 317) and who are 'engaged [...] in pursuing their own interests by seeking to influence government officials' (Rothschild and Sen 2006, p. 346). According to Sen, faith in the market economy's capacity to correct itself 'tended to ignore the activities of prodigals and projectors', while Smith believed in protecting citizens from such actors by means of state regulation (Sen 2009).

Markets, Sen asserts, mainly serve to generate freedom, and their efficiency has to be valued in terms of this generating process: 'Combining extensive use of markets with the development of social opportunities must be seen as a part of a still broader comprehensive approach that also emphasizes freedoms of other kinds (democratic rights, security guarantees, opportunities of cooperation and so on)' (Sen 1999, p. 127). This can be read as a critique of measuring market achievements in terms of the utility-based Pareto criterion. In Sen's view, such a utility-based approach is reductionist because the challenges that a market system has to cope with have to be related to problems of justice in the distribution of substantial freedoms. Compared to a welfare-economic perspective, a freedom-related understanding of market efficiency has the crucial advantage that 'the idea of freedom involves several distinct issues, including processes and procedures as well as actual opportunities that people have to live the way they would choose' (Sen 1993a, p. 538).

The premise of welfarism, based on which individual preferences and acts of choice should be interpreted in terms of personal well-being analysis, emerges as essentially irrelevant, 'not only to the process aspect of freedom, but also for efficiency results in terms of opportunity-freedom' (ibid). The freedom-related approach, however, admits a perspective change from technical-economic analysis towards an integrated approach of specific ethical and political elements. Thus, Sen summarises what we can learn from Smith's integrated approach as follows:

The lesson to draw from Smith's analysis of the market mechanism is not any massive strategy of jumping to policy conclusions from some general 'pro' or 'anti' attitude to markets. After acknowledging the role of trade and exchange in human living, we still have to examine what the other consequences of market transactions actually are. We have to evaluate the actual possibilities critically, with adequate attention being paid to the contingent circumstances that may be relevant in assessing all the results of encouraging markets, or of restraining their operation. (Sen 1999, p. 126)

Sen believes that the market mechanism is the one institution that is capable of quickly generating development and freedom, in addition to guaranteeing them. Despite its deficiencies, the market can deliver groundbreaking successes. In his opinion, the capitalist system also succeeds in generating ethical behaviour. In this context, general rules of conduct play a decisive role. They are inevitable for the institutional development of a society, as institutions are based on interpersonal arrangements (cf. Sen 1994). A shared comprehension of common behaviour patterns, reciprocal confidence and reliance on ethical principles builds the crucial element of economic success (10). Nonetheless, it may be impossible to completely understand the far-reaching role of the phenomenon of common rules of behaviour. 'Sen's general message is', as Geoffrey Brennan (1995, p. 298) puts it, 'that moral codes represent an important piece of social capital'--and that the successful operations of an exchange economy depend (for example) on mutual trust and implicit norms. Sen wants to argue against an utterly partial reading of Adam Smith.

Finally, an integrated approach requires a broader philosophical framework that can be found in Smith's and Sen's shared affiliation to the classics. Sen's recourse to Aristotle has been indicated above. He focused, in particular, on the philosopher's 'investigation of the "good of man" in terms of "life in the sense of activity"' and his examination of 'the political and social implications of concentrating on well-being in this sense, involving "human flourishing"' (1992, p. 39). Smith was also attracted by Aristotle's idea of 'the good' as related to proper human functioning. As Calkins and Werhane note, 'Smith's notion of human flourishing differs very little from Aristotle's', since it must also be seen in accordance with specific standards (1998, p. 50). Here, Smith's use of Aristotle differs from Sen's, as Sen considers Aristotle's view of the human good to be 'explicitly linked with the necessity to "first ascertain the function of man"' (1993b, p. 46). According to Martha Nussbaum, Sen 'has argued, like Aristotle, that we cannot properly estimate the worth of distributable goods until we have an account of the functionings towards which these goods are useful' (1988, p. 11).

Sen and Smith have also been influenced by the social dimension of Aristotle's ethics. For Aristotle, virtuous behaviour meant carrying out civic duties (1962, pp. 311-13), an element that Sen considers central to a developed society. Smith, at the same time, agrees with Aristotle in seeing 'acting well with others' as a core element of virtue, and he shares the Greek's concept of virtue as lying 'in a kind of middle between two opposite vices' (1790 [2002], p. 321). 'It is unnecessary', Smith adds, 'to observe that this account of virtue corresponds too pretty exactly with what has been said above concerning the propriety and impropriety of conduct' (ibid.). (11) To conclude, we find much evidence of underlying Aristotelianism in both Smith's and Sen's integrated approaches. This reveals continuity between the two authors' philosophical frameworks, pointing toward a connection between Smith and Sen on yet another level.

5 Concluding Remarks

The Smithian spirit can be found throughout Sen's work. As Alvey (2000, p. 1234) observes, 'during the twentieth century, Smith has been interpreted by positivists who seek to find in his work what they themselves believe, and not surprisingly they find there a value-free science, which is based on the "fact" that humans behave in a rationally self-interested manner'. Sen has both actively fought against such an interpretation and implemented many Smithian ideas in his own economic account. Smith's moral system is the benchmark for Sen's analysis of behaviour and his effort to extend the concept of 'homo economicus'. Sen is aware of the fact that it is not sufficient to sketch Smithian concepts in order to persuade mainstream economists of the errors of their approach. In his effort to broaden the scope of economics, he tries to reach mainstream economists by using their own rhetoric, employing terms such as 'preference', 'choice' and 'welfare'. Sen is familiar enough with the tools and techniques of standard economics to make himself heard in the economics community. However, in his work it soon becomes clear that he does not accept the tradition of ignoring the empirical human constitution for the benefit of an over-engineered economic model of behaviour. In insisting upon the importance of the complexity and pluralism of human agency, as Smith also did extensively, Sen raises awareness of the fact that the standard approach has lost its link to the real world, ignoring these aspects with its axiomatic language. According to Sen, rationality is more than an instrumental mechanism of maximising self-interest. By including commitment as a rational but non-egoistic motivation, Sen renews the Smithian claim to see rationality as reasoned reflection and an exercise of valuation.

Furthermore, Sen builds his approach of capabilities along Smithian lines. As demonstrated, Smith's theory of necessaries marks a starting point for Sen's capability perspective. Sen also incorporates Smith's insights into the destructive power of capitalism and its driving principle, the division of labour. Sticking to this critical view of a market economy, Sen insists, as shown, that economic progress must be balanced with social needs. In Sen's understanding, the market's function is the creation and generation of social progress, freedom and the precondition of enhancing capabilities. He believes, like Smith, that this can only happen within a carefully designed institutional system, which strives toward a fair and equal distribution of these capabilities. This goes back directly to Smith's (1776 [1986], I.8.35, p. 96) view that '[n]o society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable'.

Overall, in his direct references to Smith's holistic approach, Sen (1987, p. 8) supports the need to maintain economics in the moral tradition and to reverse the substantial impoverishment of economics, which has distanced it from its origins. This clearly shows that Sen stands firmly in the Smithian tradition of political economy and appears to believe, as Alvey (2000, p. 1247) notes, 'that economics can be a mathematical and a moral science'.


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(1) Hobbes (1588-1679) prepends his conception of a natural state with the appellative quotation 'homo homini lupus' from the Roman poet Plautus (ca. 250 BC--ca. 184 BC). In Hobbes's natural state, a war of everyone against everyone (bellum omnium contra omnes) prevails. According to Hobbes, society is a population beneath an authority, to whom all individuals in this society covenant just enough of their natural right for the authority to be able to ensure internal peace and a common defence. This sovereignty--whether it takes the shape of monarchy, aristocracy or democracy should be a Leviathan (1651), an absolute authority.

(2) In contrast to the common view of Smith as an opponent of Immanuel Kant and a follower of Anglo-Saxon empiricism, as defended by Horst Recktenwald (1974), Peter Ulrich speaks of a Kantian soul in the breast of Smith. In the impartial, uninvolved spectator, Ulrich finds a deontological concept of ethics. He places the ethical primacy on moral attitude, whereas utilitarians are mainly interested in the consequences of an action. See also Fleischacker (1991; 1996).

(3) As Sen explains: 'The defenders of the former approach seem to refer frequently to remarks of Adam Smith on the so-called economic man, but then one overlooks much of Adam Smith's other writings including The Theory of Moral Sentiments, and, indeed, a good part of The Wealth of Nations, where Smith took a broader view of human motivation in society and did not see self-interest pursuit as uniquely rational' (Klamer 1989, p. 141).

(4) Putnam (2002) identifies at least six concepts of economic rationality.

(5) For a critical reflection of the distinction between 'sympathy' and 'commitment', see Brennan (2007).

(6) Similarly, Brennan and Pettit (2004) argue for including esteem, in the sense of 'people's desire to be thought well of by others' (p. 33), as a form of social discipline in economic theory and for establishing an economy of esteem on this basis.

(7) The first author to develop the concept of preferences that involve second order or meta-preferences was H. G. Frankfurt (1971).

(8) Technically, Sen's broader notion of freedom, as shown by Pettit (2001, pp. 1-20), is based on the so-called 'enjoyment preference'. This means that the agent's disposition to choose determines the results. Pettit adds, however, that decisive preference necessitates more than mere satisfaction of preference: '[i]t must be that my preference is satisfied because it is my preference, and not for any other reason. It must be that my preference is in control, so that what I get is robustly connected, not just connected by chance, with what I prefer' (ibid., p. 4). See also Sugden (1981) and Sen (1983b).

(9) Bentham proposed locking up poor people in so-called industry houses, where they could contribute to the national welfare. Bentham's proposals reflect the image of the poor as blameful beings without rights and dignity, whose work force should be used to achieve at least some positive social results. This solution would also spare society the unacceptable sight of poor people in the streets.

(10) Sen refers to Japan and the 'Japanese ethos' as an example of a capitalist society that runs on these 'moral codes'. He believes that selflessness and rule-based behaviour, as well as specific ethical norms, are responsible for the economic success of this nation.

(11) See also Vivenza (2001, pp. 46-50) and Berns (1994).

Franz F. Eiffe, Institute for Social Policy, Vienna University of Economics and Business, NordbergstraBe 15, 1090 Vienna, Austria. Email:
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