What's Happening?
Kaushik Basu, a professor of economics at Cornell University, has raised concerns about the emphasis on self-interest in economic theory, arguing that it rewards a few at the expense of many. Basu highlights the role of neoliberal economics in justifying
greed and extreme inequality, suggesting that the discipline's focus on growth and market freedom often rationalizes actions that offend moral sensibilities. He references Nobel laureate economist Amartya Sen's 'capability approach,' which evaluates economic arrangements based on people's ability to live valued lives, not just material wealth. Basu also cites Kenneth Arrow's critique of neoclassical economics, which envisions a world of total self-interest that would not survive without trust and cooperation. Arrow argued that freedom and equality are closely linked, and institutions leading to gross inequalities undermine human dignity.
Why It's Important?
Basu's critique is significant as it challenges the prevailing economic ideologies that have shaped policies worldwide, often leading to increased inequality. By questioning the moral implications of economic theories, Basu calls for a reevaluation of how economics is taught and practiced. This has potential implications for public policy, as it suggests a need for more inclusive and equitable economic frameworks. The critique also highlights the ethical dimensions of economic decisions, urging policymakers to consider the broader societal impacts of their actions. As economic inequality continues to rise, Basu's insights could influence debates on economic reform and the role of government in addressing disparities.
