Sen-Bhagwati Debate: When Social Contract is Imperative

The recent war of words involving two leading luminaries of modern day economics - Jagdish Bhagwati and Amartya Sen - reminds me of a story we were told during the very first lecture on Economics. The story goes like this: A physicist, an engineer and an economist were taken to an empty island and shown a sealed container. They were asked to open the container but no tools or devices were available.

The physicist said he would apply heat but no source was available to generate it. The engineer suggested that he would use a lever but there were no tools in the island. With no chances of opening the sealed container, the economist retorted, "Let us assume that the container is open."

It might seem like a warming up joke, but assumptions are very important in Economics. Unlike natural sciences controlled experiments are rarely possible in social sciences and hence the importance of assumptions. The much talked about book written by arguably the most influential economist of the 20th century John Maynard Keynes, The General Theory of Employment, Interest and Money, is considered a seminal work because the author's assumptions regarding the traits of human behaviour turned out to be very close to reality. Similar is the case with Adam Smith's The Wealth of Nations. How one analyses and interprets an issue depends on the inherent assumptions being made.

Whatever I have understood from the verbal duel, apart from the personal acrimony, is that Bhagwati is all for higher growth with the basic assumption that the increased income will then be utilised, among many other things also for the social sector (Trickle Down Hypothesis). Sen on the other hand argues, as he has been doing for quite some time, that growth in itself is not enough, and countries like India should also focus on areas like health and education.

Those who understand the arithmetical terminology of 'average' will very well recognise the inadequacy of growth (change in national income and also per capita income) as an indicator of social well being as it doesn't ensure equitable distribution of resources and stops short of identifying people's entitlements. Here the significance of allocating resources for social areas like health and education becomes important. Sen has been harping this issue ever since he formulated "Sen's Poverty Index P (also referred to as the Poverty Gap Index)", in place of the usual "Head-Count Ratio" used for measuring the intensity and extent of poverty.

The responsibility of allocating resources for the social sectors lies mostly with the government of the day. The inherent argument behind such redistribution, as I understand, is that it will work towards creation of a more egalitarian society and restrain social instability. However, such redistribution can only take place when a certain level of growth is achieved, which justifies Bhagwati's argument. At the same time Sen is also correct in saying that one should not be complacent only with the growth figures. So I am not surprised when one of Sen's many students Dr Kaushik Basu argues (Dr Basu is quoted in the attached link) that both the scholars are actually saying the same thing but from different points of views, which I think are guided by their underlying assumptions and political philosophies.

So the bottom line is that growth is necessary but in a country like India it is not sufficient for balanced and equitable social development. If read between the lines and beyond the egotist rhetoric one will find that both Bhagwati and Sen are arguing the same thing but from their own standpoints. The irony is that the Indian media is making a big fuss out of it, by linking it with the real politics of the day, and the reason being that social issues are less 'sexy', if I may borrow the word from Manu Joseph of the OPEN  magazine, than the animosity between the BJP and the Congress and its unsophisticated manifestation. The other reason being that it is much easier to get away from the intellectual aspect of the debate by linking it with the worldly politics.

However, this over simplification by (half-baked) journalists overlooks a much bigger issue which poses an equally bigger threat to India as a nation, and that is the failure of the government in redistributing resources in an equitable way. Some would blame it on Neoliberalism, while others would put the onus on failed governance, lack of accountability of the politicians and others at the helm, and indifference of the middle class towards social and economic menace gripping India. One would argue that rising social tension and increase in heinous crimes like rape, murder, gender violence are a fall out of the deficits in equitable redistribution and the failure in making the people aware (and also ensuirng) of their entitlements.

While the media and its consumers are talking with much interest about the Bhagwati-Sen tussle, they are totally indifferent on this issue and it points towards a dangerous trend as far as social sensibility is concerned. One could argue that a social contract is essential to get the Indian society out of this mess. By social contract I mean that the relatively well off in the society will take collective responsibility for the social and economic betterment of the impoverished. After all, one has to accept that even if the middle class confines itself within the walled and guarded compounds they can't remain totally insulated from the outside world.

One can expect that the social contract will have multiple benefits. Firstly, it will relieve the government from the arduous task of redistributing resources, and hopefully this will act as a detriment to rampant corruption in public life. Secondly, the relatively well off will realise for themselves the danger of unilateral concentration of wealth, and thirdly, it will develop a sense of belonging for the impoverished.

If we consider the classical definition of civil society as the intermediary between the state and the individual, then they can play an effective role in introducing the social contract and sustaining it. However, a majority of the current breed of civil society activists are so partisan, following favours dished out by the powerful, and here I don not refer to only the politicians, that they often fail to distinguish between the good, bad and the ugly. So the members of the civil society should be made aware of their pivotal role at a time of serious political, economic and social predicaments.

Without a viable social contract, neither Sen's nor Bhagwati's prescription will be effective in bringing about any positive change in a complex society like India.

Tirthankar Bandyopadhyay is a journalist and media consultant. 
He can be contacted at tirthankarb@hotmail.com 

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