Issue 14: Individual Freedoms vs Economic Transformation?
This week, I dive into the debate between economic growth and individual freedoms, comparing Sen and Chang’s views to argue for a more holistic and inclusive approach to development.
In the winter of 2024, I found myself wrestling with a bold statement:
"Development is no longer about the economic transformation of poor countries, but about expanding individual freedoms."
At first, I understood where this perspective was coming from, but I also knew it was missing something. Development is nuanced and far too complex to be boiled down to a simple either-or. In today’s newsletter, I dive into that complexity.
Back in Issue 4:How to Be an Effective Altruist: Just Give Money to the Poor, I touched on the debate between two major thinkers in development, Amartya Sen and Ha-Joon Chang. Today, we're going deeper. (and if you weren’t already convinced that cash transfers (CTs) are one of the most powerful tools for change, maybe this essay will sway you :) )
The tension between expanding individual freedoms and driving economic transformation has sparked decades of debate. On one side, Sen champions the idea of development as freedom itself; on the other, Chang emphasises the importance of structural economic growth. Both make compelling arguments, and today, we’ll explore how their ideas play out across three critical pillars that I believe sit at the heart of real, lasting development:
1. Growth and redistribution
2. Gender and women’s empowerment
3. The environment and climate change
By the end, I hope you’ll walk away seeing development not just as GDP charts climbing upwards, but as the real, lived expansion of freedom, opportunity, and dignity for people around the world.
Let’s get into it!
Definition
To understand Sen and Chang’s approach, we must first know how they define the word development (I also write about their approaches quite briefly in issue 4!). For Sen, he defines development as freedom, stating that development should be understood as an expansion of human freedom and believes that economic development is not a means to an end (Sen,1999). He explains that he sees economic development as aiding development, but not its sole contributor. On the other hand, Chang believes in the production side of development and states that development is about the transformation of the productive structure (Chang, 2009).
Sen’s freedom as development
Sen's concept of development as freedom is rooted in the notion that actual development involves eliminating all forms of unfreedom. According to him, freedom plays a pivotal role in the developmental process for two significant reasons. Firstly, the elevated reason posits that the evaluation of programs should primarily consider whether people's freedoms are augmented. Secondly, the effectiveness reason asserts that the realisation of development is intricately tied to the free agency of individuals (Sen, 1999).
He argues against a one-size-fits-all approach to development and emphasises the imperative of eliminating unfreedoms. As identified by Sen, these unfreedoms encompass poverty, tyranny, limited economic opportunities, systemic social deprivation, neglect of public facilities, and an oppressive state's intolerance of overactivity (Sen, 1999). Thus, Sen advocates for a comprehensive approach to development.
He emphasises the significance of freedom, stating that it serves as the foundation for assessing success and failure and as a critical determinant of individual initiative and social effectiveness (Sen, 1999). Significantly, He clarifies that while freedom is not the sole means to achieve development, it empowers individuals to actively contribute to and participate in the developmental process, creating a self-reinforcing cycle.
Chang’s transformational development
Chang contends that historical evidence supports the idea that development is realised by enhancing a nation's productive capacities and progressing towards more challenging industries. This progression occurs before the country gains comparative advantages in these new activities, achieved through protective measures, subsidies, and other governmental interventions that shape the market (Chang, 2009). In contrast, Chang acknowledges the potential for individuals to accomplish tasks independently but emphasises the limitation of developing a broad range of productive capabilities at the individual level. He advocates a return to the traditional production approach of early development economics, emphasising the necessity to foster transformative improvements in effective capabilities beyond individual efforts (Chang, 2009).
Growth and redistribution: Individual freedoms vs economic transformation
Regarding growth and redistribution, three-quarters of low-income people live in middle-income countries (UNU-WIDER, 2013). Using the headcount ratio (HCR) in analysing household poverty blurs the unequal income distribution among individuals. This raises concerns as focusing solely on HCR can distort our understanding of poverty. Drawing on Sen's perspective, monetary income is not an end for development (Sen, 1999), implying that income poverty alone does not indicate the reasons behind what leads to poverty.
Viewing development through the lens of freedom, it becomes clear that effective poverty alleviation involves redistribution. Conditional cash transfers (CCTs) are significant in adopting a different approach to development. Molyneux et al.'s paper highlights the positive shifts from widening social protection programs' focus beyond combating income poverty. According to Sen's idea of development as expanding human freedoms, CCTs contribute to program participants' coping strategies, fostering confidence, respectability, and assertiveness (Molyneux, Jones & Samuel, 2016). Recipients affirm that financial stability through cash transfers enhances their independence and life management.
Despite acknowledging the positive impact of CCTs, the authors stress the need for universal success, emphasising the necessity to address the root causes of poverty and inequality. Brazil's Bolsa Família program successfully reduces poverty and inequality while producing positive outcomes in child health, education, women's empowerment, and social cohesion.
In contrast, supporters of Chang's approach argue that the Kuznets Curve supports the idea that economic growth inherently leads to poverty alleviation by reduced inequality over time. But I have to say, Okun's analogy, portraying poverty alleviation as carrying money from the rich to the poor in a leaking bucket (Okun, 1976), challenges the feasibility of redistribution.
On the other hand, Hanlon et al. emphasise the effectiveness of "just giving money to the poor." (read issue 4 for more on this) They debunk the notion that direct cash transfers are ineffective by showcasing their success in getting children off the streets and into schools in Namibia and Brazil. They argue against the misconception that giving money to people experiencing poverty induces laziness, stating that cash transfers aid in autonomy (Hanlon, Barrientos & Hulme, 2010). Thus, to reiterate Sens's idea that tackling unfreedoms is vital in aiding development.
Gender and women’s empowerment: Individual freedoms vs economic transformation
Secondly, in the case of gender and women’s empowerment, economic transformations do not factor in the problem that GDP/ capita poses in all countries. This Income ratio only measures the cash economy and does not factor in the informal economy, specifically the “care economy” (Cook & Kabeer, 2023), as aiding development.
Chang argues that contemporary development involves poverty reduction, meeting basic needs, individual advancement, and sustaining current productive structures, which he contends deviates from traditional notions of development (Chang, 2009, p. 2). This assertion raises a concern for me because while economic transformations contribute to development, they should not be seen as a means to an end, as Sen emphasises. In contrast to Chang's perspective that development is achieved through enhancing a country's productive capacities (Chang, 2009), this notion overlooks the importance of individual empowerment, particularly women's empowerment, which I think is a crucial aspect of development.
Scholars such as Hientz et al. underscore how GDP continues to dominate as the primary indicator for assessing macroeconomic progress, neglecting numerous nonmarket facets of the economy (Hientz, Staab & Turquet, 2021). Kabeer also observes that economic development has not necessarily translated into advancements in gender equality within economic or political spheres (Kabeer, 2020). Thus, the viewpoint that economic transformations are the paramount contributors to development neglects other vital elements, including women's agency and rights in the development process.
Environment and climate change: Individual freedoms vs economic transformation
As defined by the WCED in 1987, sustainable development seeks to meet the needs of the present generation, especially those in poverty, without compromising future needs. This definition gains significance when considering the environmental aspect of development, because it highlights the importance of evaluating both developmental approaches' current and future impacts. Dercon argues that climate change adversely affects the accumulation of productive assets, accelerating the depletion of environmental capital and posing threats such as diseases, water scarcity, migration, and poverty traps. Rising sea levels, for instance, can trigger urban-to-rural migration, potentially marginalising recent poor settlers and hindering their progress (Dercon, 2014).
Zhang argues that industrialisation, aligned with Chang's perspective on development, can be a powerful tool for economic growth and poverty reduction in developing countries, boosting productivity, job creation, and higher incomes (Zhang,2011). However, he warns that industrialisation alone cannot address all the challenges developing countries face. Zhang underscores the importance of complementary development strategies, such as education, health, and infrastructure investment, aligning with Sen's broader development concept. Notably, he highlights that the benefits of industrialisation are unevenly distributed, particularly impacting women and rural communities due to inequalities that economic transformative changes alone cannot resolve (Zhang,2011).
Zhang advocates for developing countries to adopt policies mitigating industrialisation's negative environmental and social impacts. He emphasises the holistic nature of adaptive capacities, containing economic resources, technology, information, skills, infrastructure, institutions, and equity (Zhang, 2011). This approach provides an all-around strategy to address climate change issues in developing nations.
Thus, there is a need for a holistic and inclusive approach to development that is more than just a one-size-fits-all approach. It emphasises not only economic transformations but also individual freedoms and strategies that address poverty, empower women, and alleviate the impact of climate change. Such an approach acknowledges the interconnectedness of various factors and offers a more comprehensive and sustainable path for development in developing countries.
Conclusion
To sum up what I've stated so far, there is a complex argument on whether development is primarily about expanding individual liberties or economic transformation. The discourse's complexity can be shown by analysing the viewpoints of Amartya Sen and Ha-Joon Chang from various angles, including economic development, female empowerment, and environmental concerns. Although both academics provide insightful analysis, this essay emphasises the importance of viewing development as a complex process beyond simple economic change. It is crucial to acknowledge the relationship between economic growth and the expansion of personal liberties when developing comprehensive and efficient strategies promoting sustainable and equitable development.
Now, I’m curious, where do you stand in this debate?
Are you Team Sen (championing individual freedoms), Team Chang (fighting for economic transformation), or, like me, do you think both ideas are essential and deeply intertwined for true development to happen?
Do you agree with the argument I’ve made today, or do you see it differently? I’d genuinely love to hear your thoughts, don’t be shy about sharing opposing views too! Some of the best conversations start from a little bit of disagreement.
Thank you so much for reading this week’s issue of Probably Eating a Croissant. I hope it sparked some new ideas (and maybe even a new favourite thinker) for you. Can’t wait to see you again in the next one!
(P.S. You can now listen to each issue of Probably Eating a Croissant if you have the Substack app downloaded!)
As someone who isn't well-versed in topics like these, it was eye-opening to read and subtly get the idea. I can see how both sides of the argument have something valuable to offer. Sen’s focus on individual freedoms speaks to the humane side of development, as in what’s the point of economic growth if the people don’t have the freedom to live the lives they want? But then Chang’s take makes a lot of sense too, because without actual structural change in the economy, a lot of those freedoms might stay theoretical for many people. I think you’re spot on in saying that both ideas are connected.
So yeah, based on how much I understood from reading this, I’m with you and think it’s not about choosing a side, but about recognising how both perspectives help us build a more complete picture of what true development looks like. Thank you for giving me something to want to go read up more about!!!