Book Review: Collective Choice and Social Welfare (2017), Amartya Sen

1 NATIONAL HUMAN RIGHTS COMMISSION (Summer Internship Programme, 2017) Book Review Amartya Sen, (2017) Collective Choice and Social Welfare Submitted by Antara Chakrabarty Development and Labour Studies JNU, New Delhi Dated: 16th June, 2017 2 Contents Page nos. 1. Introduction 3 2. Review of Collective Choice and Social Welfare, 3 Amartya Sen, 2017, Penguin Books: New Delhi 3. Social Welfare Function 4 4. Maximal or optimal? 5 5. The critique of Utilitarian thought: 6 6. Rawls and distributive Justice 6 7. On the lines of human rights 7 8. Consensus: A collective action? 8 9. Conclusion 8 3 If preventing the burning of Rome would have made Emperor Nero feel worse off, then letting him burn would have been Pareto-optimal. In short, a society or economy can be Pareto-optimal and still be perfectly disgusting. (Sen, 1970: 69) 1. Introduction How does a society function? On moral sentiments or pure rational judgements? The above quote has been used in the outset top set the floor of varied interpretations ajar. The conceptions that the refered quote relate to can be juxtaposed to the present day understanding of ‘logic’ and ‘morals’. Old parochialism, reasoning, collective choice and social welfare, these terms seem to be related in the context in which Amartya Sen decided to write the book on the analysis of human reasoning. Not long ago, Sen came up with the book entitled Collective Choice and Social Welfare in 1970 which sought to reopen the Arrovian economics on the Impossibility Theorem. Not just this, but the book also sought to correlate the concepts with Condorcet’s derivations too. Having said this, the book remains to be outstanding mainly for two reasons. First, the debates and discussions in the book have been equally spread over in two parts, namely mathematical derivations for the economists and philosophical interpretations for the social scientists. Sen seems to have been obsessed with the idea of neglecting a large mass of people who do not really connect to economics directly, hence he did justice to it by making it lucid in grave terms. Secondly, the book not just dates back to the 20th century, but has also been updated in 2017 in its expanded form where Sen has added a few more chapters to add to the book and the debates which had been explained in the erstwhile edition. 2. Review of Collective Choice and Social Welfare, Amartya Sen, 2017, Penguin Books: New Delhi Being a non-economics student, the review has been made on the basis of the chapters which has extended the format in the philosophical interpretation. And hence, the review too will not reflect any mathematical derivation and so on. To start with the basic idea that captures the main essence of the book is in three parts. First, the values possessed by the rational beings of the society, second, the rational beings themselves and thirdly, the preference of their opinions mainly in the form of majority and minority principles. To cut it shorter, the book aims to look at the society and 4 understand its dynamics in which the aggregates of it could have been de-classified. On the later parts, Sen has also added his early works on capabilities, understanding poverty as a capability deprivation and not as solely an economic denominator. He starts by elucidating on some basic choice based individual preferences which he rather imbibed on the basic conception of ‘pure’ systems. He then goes on to explain Kenneth Arrow’; well known ‘social welfare function’ in four assumptions that the theory already holds in. The main debate talks about the social assessment of the aggregates which has to be formed socially diverse group. In this trend, will the aggregate even reflect what the individual preferences were? Therefore, he says, Problems of social choice arise in many different ways, from electing national governments and holding referendums on public policies facilitating people’s economic and social opportunities and safeguarding the rights and liberties of individuals and minorities. (Sen, 1970: x) 3. Social Welfare Function Social welfare function as he says is nothing but the functional relation between individual values and social choice.1 To explicate this thesis, both Arrow and Sen take the instance of Voting of an example as voting is the best example of understanding majoritarianism, social agglomeration of choices in the aggregate form separating majorities and minorities. Sen then begins by showing that it is possible to construct a “social decision function” which guarantees that there will be a chosen alternative from every environment and which meets the Arrow conditions by introducing the less demanding condition that social preferences should merely satisfy the condition of “quasitransitivity” or the still weaker condition of “acyclicity.” He repeatedly then refers to the work of James Buchanan who talked about the Arrovian thesis being depended on artificial use of a transitive ‘social welfare’. The voting too cannot be taken as the last resort of social welfare function as Sen talks about two situations. First, what if the people have the right to vote but choose not to exercise it in his/her life. A large section of the society would then will not vote. Secondly, even if they do, how can one assume that the result is actually reflecting the aggregate demand? For an instance, Sen takes the example of the US President election of Trump and Modi’s victory where they were actually not the majority vote winners but just because the opponent was weak, 1 The social choice theory can contribute substantially to older debates on rights and entitlements by clarifying the need for freedom inductive evaluation of capabilities. 5 the vote share became important and maximal. The only point of contention is the fact that in the example that Sen takes, if a cake is divided into hundred pieces, then only justice can be met. But this is not true. What if the division is so immense that it loses its charm and existence which will cross the saturation point? This can be a flaw in the understanding of the text. 4. Maximal or optimal? The next departure comes in with the introduction of the concept of partial orderings. He goes on to explain this concept with the mention of two prime concepts. First, the optimal (the best alternative) and second, the maximal understanding of the standard choice theory, which also is formally defined as one which is not worse than or at least not known to be worse than the other. He illustrates this interesting dichotomy with the help of Buridan’s ass who could not choose between two bags of haystack in terms of its quality and hence died of starvation. This is the example of optimal reasoning where the ass actually overlooked the reasoned maximal choice within the haystacks. This can be taken into the account of democracy where collective choice can be interpreted as a ‘government by discussion’.2 Sen moves to Condorcet’s voting paradox and frames it within the time frame of the General Possibility framework (Impossibility theorem) of Arrow. The social orderings are mostly the interpretations of the transitivity within the larger frame. However, Condorcet’s public debates have not been paid much attention. This alternative approach is often called the ‘public choice theory’.3 The basic assumptions in the characterizing the social welfare functions as he notes down are:  The Unrestricted domain (U) that the social welfare function mist work for every profile of individual preferences (that is, generate a social ordering for every cluster of individual  preferences—one per person). Independence of irrelevant alternatives (I) requires that the social ranking of any pair of alternatives must depend on the individual rankings only over that ‘relevant’ pair. 2 This theory can also be extended to what Habermas calls a participative democracy rather than a mere representative one. 3 This was particularly led by James Buchanan. He also went ahead later to term the rationality of humans in terms of ‘homo economicus’. 6   The most important, the Pareto Principle (P) instructs that if everyone strictly prefers some alternative x to another alternative y, then social ordering too must place x strictly above y. Lastly, is the theorem of Non-Dictatorship (D) demands that there should be no dictator, i.e., no person such that whenever that person strictly prefers any x to y, then society must invariably place x above y. 5. The critique of Utilitarian thought: Sen starts with the flaws in the understanding of the Utilitarian school which was mainly propounded by Jeremy Bentham which sought the society in terms of the ‘happiness of the greatest number.’4 His concern was with the total utility of the community which also meant the aggregate of the people’s aggregates of happiness. The focus was on the total sum of utilities rather than the distribution of the total, and in this we can see the blindness of considerable ethical and political concern. (Sen, 1970: 10) He further explains it by saying that what if a person has considerable amount of income but cannot convert the income into utility due to a kind of physical handicap that he/she shares. Therefore, the epistemic foundations of the utilitarian school has been found to be incurably defective. He therefore concentrates on choice systems with partial interpersonal comparison, partial cardinality, and incomplete social preferences to show that in certain circumstances we can still reasonably say that total economic welfare would be increased by a more equitable distribution of income, allowing for the uncertainty about the precise correspondence between different individuals and different units of welfare. The utilitarian school was therefore indifferent to distribution and only looked at the sum-total of it. 6. Rawls and distributive Justice John Rawls5 have been mainly known for his path-breaking theory on justice which lays down its basis mainly on two assumptions. Out of the two, the last principle talks of the Difference Principle 4 Bentham interpreted the happiness of the society in terms of the maximum number of people being happy on a particular subject. This happiness compiled the pleasure and rejections of pain as well. This school too relied on the majoritarian conceptions of the society, leaving the minority behind. 5 He is among the ones who discussed about the objectivity of ethical and political claims which shall be ultimately survived in an unobstructed discussion. 7 where the justice as fairness can be taken back to what Sen too talk of as ‘basic needs’ and what Rawls talks of as ‘primary goods’. Sen’s capability approach runs parallel to attempts to see human beings well-being in terms of their fulfillment of basic needs. Sen extends this theory later to what he calls the Capability approach to development where the individual can finally convert the commodity bundles to functionings on the basis of entitlements and capabilities.6 7. On the lines of human rights As the French declaration goes, ‘men are born and remain free and equal in rights’, is not what the present day picture has to talk about. Talking in terms of Bentham’s idea of nonsensical interpretation of natural rights, we cannot really do away with the misinterpretations of the utilitarian school. He takes in interesting turn by questioning the human rights whether they are ideally legislated or legally? While we start with the capability deprivation theory, one cannot neglect how Sen refers to Deaton’s7 intellectual involvement what he calls the ‘great escape’ as the subject matter of the social choice. This section has to be understood on better lines as there lies a clear distinction between what is meant by ‘right’ and what is meant by ‘obligation’. Kant on the other hand talks of certain rights as ‘perfect obligations’. There of course is a vast difference between natural rights and legislative rights. Sen also talks about Adam Smith and his interpretations on the concept of ‘self-love’ and ‘selfinterest’ which one sacrifices for the welfare of the state. Here, in this case, the structure of the state also allows sacrifice of the basic rights for the betterment. Smith’s advocacy of bringing in perspectives from a certain distance in making reasoned social choice in any countries in the world…. Smith pointed out that even Plato and Aristotle did not depart from expressing approval of the barbaric practice commonly accepted in the local culture. (Sen, 2017: 468) This work has also been largely influences by Martha Nussbaum’s contributions who talked of the normative capabilities and theories. 7 Angus Deaton too is one of the leading economists who has talked of the basic rights of humans on the lines of developmental lines. 6 8 Self-love hence was a mesmerizing force used to apprehend the self-love concept which limited the locally confined reasoning of the people. 8. Consensus: A collective action? Does consensus always have to mean unanimity? As seen earlier, Arrow’s quasi ordering has been contrasted sharply with the unanimity rule put forth by Buchanan and Tullock (1962). The unanimity per se is not a problem but the very fact that there are situations when perfect unanimity is hard to achieve. Sen introduces the idea of status quo when there are situations of non-unanimity. First, it should not be over-emphasized that all people have relative bargaining power. Sen takes the example of a poor labourer in a monopsonitic market where even if he wants, he cannot really do anything about the low minimum support prices. Therefore, this problem can rather be thought as an universal endorsement. 9. Conclusion Sen's strongest criticisms are, however, reserved for the Pareto principle.8 He objects to it because it neglects the problems of income distribution and exalts considerations of productive efficiency above considerations of equity and justice. He argues that the objection to inter personal comparison of utility which reinforces this tendency is based on an unreasonable requirement of total comparability and complete cardinal utility. Sen also attempts to show that in certain circumstances a rigid adherence to the Pareto principle may conflict with the condition of “minimal liberalism” allowing individuals to satisfy some of their personal preferences without interference from others. Arrow on the other hand was mostly involved with Social Welfare Function (SWF) and not Collective Choice Rule (CCR). Sen uses examples based on individual preferences with strong externalities and “excessive nosiness about what is good for others” to obtain his results. It may be questioned whether this is quite a fair method of criticizing the Pareto principle. For most economists, the attraction of the weak Pareto principle is that it ensures unanimity among 8 Pareto optimality can be understood an ambiguous understanding. Sen talks about it as in a given choice situation, consider the set of alternatives X, from which one has to make the choice. An alternative x belonging that set will be described at Pareto-optimal if there is no other alternative in the set which is Pareto wise better than x. That is, x is Pareto optimal if we cannot choose an alternative that everyone would regard as something at least as good as x or better than x. 9 individuals with given preferences (without strong externalities) through an outward shift in the potential utility function for everyone in the group. The Pareto principle is also the main safeguard of individuals against arbitrary interferences by “society” as a collective personality which is excluded in Sen's analysis. Sen concludes by saying how Wollstonecraft 9 made a pioneering attempt by recognizing the rights of the women and of course of men. This rights can be achieved not just by the laws of the nationstate but the extra legal means including active public discussions and exchange of news as well as views within and across the boundaries of the state. Along with this Rawlsian ‘original position’ was actually an incompleteness where one is therefore negligent. **** 9 Mary Wollstonecraft is one of the leading radical feminists who has not only contributed in the realms of structural feminism and rights which promotes the capabilities and understanding of justice. For further information, refer to Mary Wollstonecraft’s A Vindication of the Rights of Woman: with Strictures on Political and Moral Subjects (1792)