Professor Amartya Sen, who was awarded the Nobel Prize for Economic Sciences in 1998, writes on economics with theory and at times philosophy, which helps one understand the subject with amazing lucidity. In 1986, members of the department of economics and philosophy at the University of California at Berkeley, USA, had invited Sen to deliver a series of lectures on the role of ethics in economics. 

The Nobel laureate asserts that a gap has formed between economics and ethics and that has interfered with contemporary economic theory. He has emphasised that economics can be more productive if further focus is directed to ethical considerations. Sen does not imply that they be incorporated willy-nilly into economic literature. Rather, he has advised that ethical considerations be analysed first before introducing such theories into mainstream economics. He identifies for a lay person, the values of this unusual but vital dimension of economics. 

Sen warns that the study of economics concerns “real people” — it mirrors Socrates’ words, “How should one live?” Interestingly, the matter of ethics in economics goes back to the time of Aristotle who related economics to the human factor and humanity&’s concern with wealth. Aristotle defined the matter further by his words, “The end must be good for man.” 

Such thoughts have relevance with the economic policies of nations and Aristotle&’s words translate into the ethical component of economic theory. But the matter cannot stop at achieving the end for one man — it must broaden into a wider spectrum of welfare economics, which is illustrated by moral rights and freedom. Sen states that moral rights or freedom does not receive much importance in modern economics. Rights, he explains, are interpreted as “legal entities” but rights and their consequences can be influenced by social morality. Ethics does demand that people are obligated to do something to stop violators. 

To illustrate this principle let us move our kaleidoscope to Maharashtra, which was in the midst of drought. The Railways had transported 6.20 crore litres of water to the state but they had billed Maharashtra&’s exchequer Rs four crore for transporting the same! 

Be that as it may, we are also confronted with an episode of a Dalit named Bapurao Tajne from Maharashtra, who was prevented from drawing water because he is considered an “untouchable” by others. Tajne had to dig a well in searing heat — it took his family and him 40 days to miraculously hit water at a depth of 15 feet. Village wells are made through government funds but should social prejudice be allowed to transgress into economic policies? A serious ethical issue has arisen. Both the Railways’ bills and Tajne&’s experience in a free country like India are a consequence of narrowly-conceived rational decisions and have made both examples inadmissible in economic evaluation.

Sen laments that with the gulf between economics and ethics has made contradictions crop up. Famines have occurred despite availability of food — patterns of interdependence are studied and the equilibrium theory is in focus when studies reveal that, on occasion, shortage of food had nothing to do with famine. In a brilliant study Sen had explained that the Bengal Famine of 1943 was due to the Japanese moving into Burma during the Second World War — the movement of rice from Burma to Calcutta was seriously disrupted. Since colonial India was not a democracy in 1943, British rulers paid no heed to the woes of the poor. The rulers at the time had obviously distanced themselves from ethics that was desperately needed for feeding the millions of people who were starving in Bengal. Their failure of synchronising arrangements for alternative supplies of rice enunciated a serious disparity between economics and ethics. Rational thinking is another important factor that weaves into every aspect of human behaviour and influences ethics. 

Sen asserts that welfare economics can be enriched by paying more attention to ethics. In turn the study of ethics can also benefit from a closer contact with economics. Bringing ethics closer to economics is not simple — it is the study or exercise of real-life examples that will give us larger rewards.