Nobel Laureates In Economics

"Well, I certainly was not going to study physics, and I knew I was not going to study biology, but I could have become a sociologist or an anthropologist. However, I found sociology a little soft. I think that somewhere in my mind, I probably already had the notion – which turned out to be right – that if I was going to be a social scientist of some kind, I would like a rigorous social science. The analytical aspect of economics already appealed to me. That must have been so. It was not really a matter of chance. But if my wife had said ‘oh, no, economics was terribly boring’, I would probably have found something else to do."

"If you see something that needs doing, do it. It is not easy for me to explain what I mean by this guideline, but I think it has been deeply ingrained in me for a long time. I rather believe that I was once promoted to Acting Corporal at the age of 19 because of this trait. I suppose that it entails a partial contradiction of the conventional injunction to get your priorities straight before acting. To my mind, the priorities are not so certain that one ought to pass up any opportunity to get something useful done. Perhaps it also reflects my belief that much more good is done by tinkering than by starting over from scratch. I claim for this approach that it fits in with the Hippocratic injunction to the doctor to "do no harm" and that gradient methods are a good all-purpose method for local optimization. What about global optimizations? Good point. I suppose I worry that enthusiastic seekers after global maxima run the risk of falling off steep cliffs. On the bad side, I know I sometimes find myself doing meaningless busywork when I could presumably spend my time at something more useful. My wife reminds me that once, when we discovered that the automatic wake-up mechanism in our hotel room was not working, I spent an hour and a half trying to fix it. (I got it to work. Once.) No recipe for coping is perfect."

"Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I'm getting tacitly drawn into the game that he is Napoleon Bonaparte. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous – that is, by laughing at it – so as not to fall into the trap of taking it seriously and passing on to matters of technique."

"The case for combating debilitating inequality in India is not only a matter of social justice. Unlike India, China did not miss the huge lesson of Asian economic development, about the economic returns that come from bettering human lives, especially at the bottom of the socioeconomic pyramid. India’s growth and its earnings from exports have tended to depend narrowly on a few sectors, like information technology, pharmaceuticals and specialized auto parts, many of which rely on the role of highly trained personnel from the well-educated classes. For India to match China in its range of manufacturing capacity — its ability to produce gadgets of almost every kind, with increasing use of technology and better quality control — it needs a better-educated and healthier labor force at all levels of society. What it needs most is more knowledge and public discussion about the nature and the huge extent of inequality and its damaging consequences, including for economic growth."

"Smith had no illusion that this would be easy to do, nor did he suffer from the delusion that such an exercise would, in any sense, be perfect. But he did have the conviction that the exercise could still be very useful, and the best should not be made into an enemy of the good."

"Smith distinguishes with great sophistication the different kinds of reasons people have in taking an interest in the lives of others, separating out sympathy, generosity, public spirit and other motivations. Even though he acknowledged the role of mental attitudes and predispositions, he went on to discuss how reasoning, which is at the heart of rationality, must have a big role in preventing us from being – consciously or unconsciously – too self-centred, or thoughtlessly uncaring."

"The approach presented in my book The Idea of Justice shares the general Enlightenment interest in relying on reasoning in general and public reasoning in particular, and in this respect there is something very substantially in common between the two alternative disciplines of reasoning that emerged from the intellectual climate of the Enlightenment period, that is, between the Hobbesian and Kantian reasoning (with its successors today, such as the Rawlsian social contract approach) and the reasoning of Smith and Condorcet (with its successors today, such as normative social choice theory)."

"Central to the Smithian approach is our willingness to see critically what we observe around us. The sense of comfort that is often associated with being content with the world as it is can seriously hamper the pursuit of justice. This understanding goes strongly against a line of thought that was powerfully presented by Friedrich Nietzshe. ‘The Christian resolve to find the world ugly and bad has made the world ugly and bad’, said Nietzshe. I think I can, with some effort, understand what Nietzsche meant, but it is hard for me, even with a lot of effort, to see that Nietzshe’s hypothesis helps us to understand the causation or resilience of the nastiness of the world in which we live. Nor, I must insist (this I do as a thoroughly unreligious person), does it offer any obvious insight into the lives and achievements of Martin Luther King, or Mother Theresa, or Desmond Tutu, who have tried to reduce injustice in the world and have done so with non-negligible success."

"That austerity is a counterproductive economic policy in a situation of economic recession can be seen, rightly, as a “Keynesian critique.” Keynes did argue—and persuasively—that to cut public expenditure when an economy has unused productive capacity as well as unemployment owing to a deficiency of effective demand would tend to have the effect of slowing down the economy further and increasing—rather than decreasing—unemployment. Keynes certainly deserves much credit for making that rather basic point clear even to policymakers, irrespective of their politics, and he also provided what I would call a sketch of a theory of explaining how all this can be nicely captured within a general understanding of economic interdependences between different activities... I am certainly supportive of this Keynesian argument, and also of Paul Krugman’s efforts in cogently developing and propagating this important perspective, and in questioning the policy of massive austerity in Europe. But I would also argue that the unsuitability of the policy of austerity is only partly due to Keynesian reasons. Where we have to go well beyond Keynes is in asking what public expenditure is for—other than for just strengthening effective demand, no matter what its content. As it happens, European resistance to savage cuts in public services and to indiscriminate austerity is not based only, or primarily, on Keynesian reasoning. The resistance is based also on a constructive point about the importance of public services—a perspective that is of great economic as well as political interest in Europe."

"Ambedkar is my Father in Economics. He is true celebrated champion of the underprivileged. He deserves more than what he has achieved today. However he was highly controversial figure in his home country, though it was not the reality. His contribution in the field of economics is marvelous and will be remembered forever..!"

"The global reach of Smith's moral and political reasoning is quite a distinctive feature of his thought, but it is strongly supplemented by his belief that all human beings are born with similar potential and, most importantly for policymaking, that the inequalities in the world reflect socially generated, rather than natural, disparities. There is a vision here that has a remarkably current ring. The continuing global relevance of Smith's ideas is quite astonishing, and it is a tribute to the power of his mind that this global vision is so forcefully presented by someone who, a quarter of a millennium ago, lived most of his life in considerable seclusion in a tiny coastal Scottish town. Smith's analyses and explorations are of critical importance for any society in the world in which issues of morals, politics and economics receive attention. The Theory of Moral Sentiments is a global manifesto of profound significance to the interdependent world in which we live."

"When Hobbes referred to the dire state of human beings in having ‘nasty, brutish and short’ lives, he also pointed, in the same sentence, to the disturbing adversity of being ‘solitary’. Escape from isolation may not only be important for the quality of human life, it can also contribute powerfully to understanding and responding to the other deprivations from which human beings suffer. There is surely a basic strength here which is complementary to the engagement in which theories of justice are involved."

"When we try to determine how justice can be advanced, there is a basic need for public reasoning, involving arguments coming from different quarters and divergent perspectives. An engagement with contrary arguments does not, however, imply that we must expect to be able to settle the conflicting reasons in all cases and arrive at agreed position on all issues. Complete resolution is neither a requirement of a person’s own rationality, nor is it a condition of reasonable social choice, including a reason-based theory of justice."

"The force of a claim for a human right would indeed be seriously undermined if it were possible to show that it is unlikely to survive open public scrutiny. However, contrary to a commonly offered reason for scepticism and rejection of the idea of human rights, the case for it cannot be discarded simply by pointing to the fact – a much-invoked fact – that in repressive regimes across the globe, which do not allow open public discussion, or do not permit free access to information about the world outside the country, many of these human rights do not acquire serious public standing."

"Rather, it is the firmly ‘open’ outlook, which Smith’s ‘impartial spec tator’ invokes, that may be in some need of reassertion today. It can make a substantial difference to our understanding of the demands of impartiality in moral and political philosophy in the interconnected world in which we live."

"To ask how things are going and whether they can be improved is a constant and inescapable part of the pursuit of justice."

"Rawls’s analysis of fairness, justice, institutions and behaviour has illuminated our understanding of justice very profoundly and has played – and is still playing – a hugely constructive part in the development of the theory of justice. But we cannot make the Rawlsian mode of thinking on justice into an intellectual ‘stand-still’. We have to benefit from the richness of the ideas we have got from Rawls – and then move on, rather than taking a ‘vacation’. We do need ‘justitia’, not ‘justitium’."

"No less importantly, intellectual probing is needed to identify deeds that are not intended to be injurious, but which have that effect..."

"Reasoning is a robust source of hope and confidence in a world darkened by murky deeds – past and present. It is not hard to see why this is so. Even when we find something immediately upsetting, we can question that response and ask whether it is an appropriate reaction and whether we should really be guided by it. Reasoning can be concerned with the right way of viewing and treating other people, other cultures, other claims, and with examining different grounds for respect and tolerance."

"Being smarter may help the understanding not only of one’s self-interest, but also how the lives of others can be strongly affected by one’s own actions."

"Hugely engaging as this longing is for hope and history to rhyme together, the justice of transcendental institutionalism has little room for that engagement. This limitation provides one illustration of the need for a substantial departure in the prevailing theories of justice. That is the subject matter of this book."

"To what extent reasoning can provide a reliable basis for a theory of justice is, of course, itself an issue that has been subject to controversy."

"Even though in the approach presented here principles of justice will not be defined in terms of institutions, but rather in terms of the lives and freedoms of the people involved, institutions cannot but play a significant instrumental role in the pursuit of justice."

"...a theory of justice that can serve as the basis of practical reasoning must include ways of judging how to reduce injustice and advance justice, rather than aiming only at the characterization of perfectly just societies – an exercise that is such a dominant feature of many theories of justice in political philosophy today."

"What moves us, reasonably enough, is not the realization that the world falls short of being completely just – which few of us expect – but that there are clearly remediable injustices around us which we want to eliminate."

"Democracy has to be judged not just by the institutions that formally exist but by the extent to which different voices from diverse sections of the people can actually be heard."

""Where is the railway station?" he asks me. "There," I say, pointing at the post office, "and would you please post this letter for me on the way?" "Yes," he says, determined to open the envelope and check whether it contains something valuable."

"Libertarian logic for non-interference, when consistently exp­lored, can have extraordinarily stern implications in invalidating the right to assistance from the society when one is hit by self-harming behaviour. If that annulment is not accepted, then the case for libertarian “immunity” from interference is also correspondingly undermined. We should not readily agree to be held captive in a half-way house erected by an inadequate assessment of the demands of liberty."

"I agree with Mr Wolf that freedom is centrally important. But how should we see the demands of freedom when habit-forming behaviour today restricts the freedom of the same person in the future? Once acquired, the habit of smoking is hard to kick, and it can be asked, with some plausibility, whether youthful smokers have an unqualified right to place their future selves in such bondage. A similar issue was addressed by the leading apostle of liberty, John Stuart Mill, when he argued against a person’s freedom to sell himself or herself in slavery. […] Another question to ask is: who exactly are the “others” who are affected? Passive smokers are not the only people who might be harmed. If smokers are made ill by their decision to go on smoking, then the society can either take the view that these victims of self-choice have no claim to public resources (such as the National Health Service or social safety nets), or more leniently (and I believe more reasonably) it could accept that these people still qualify to get social help. If the former, we would live in a monstrously unforgiving society; and happily I do not see Britain or France going that way. If the latter, then the interests of “others” would surely be affected through the sharing of the costs of public services."

"People's priorities and actions are influenced by many different affiliations and associations, not just by their religion. For example, the separation of Bangladesh from Pakistan was connected with loyalty to Bengali language and literature, along with political - including secular - priorities, not with religion, which both wings of undivided Pakistan shared. Muslim Bangladeshis - in Britain or anywhere else - may indeed be proud of their Islamic faith, but that does not obliterate their other affiliations and capacious dignity. Multiculturalism with an emphasis on freedom and reasoning has to be distinguished from "plural monoculturalism" with single-focus priorities and a rigid cementing of divisions. Multicultural education is certainly important, but it should not be about bundling children into preordained faith schools. Awareness of world civilisation and history is necessary. Religious madrasas may take little interest in the fact that when a modern mathematician invokes an "algorithm" to solve a difficult computational problem, she helps to commemorate the secular contributions of Al-Khwarizmi, the great ninth-century Muslim mathematician, from whose name the term algorithm is derived ("algebra" comes from his book, Al Jabr wa-al-Muqabilah). There is no reason at all why old Brits as well as new Brits should not celebrate those grand connections. The world is not a federation of religious ethnicities. Nor, one hopes, is Britain."

"Given what can be achieved through intelligent and humane intervention, it is amazing how inactive and smug most societies are about the prevalence of the unshared burden of disability."

"Our debt to Hayek is very substantial. He helped to establish a freedom-based approach of evaluation through which economic systems can be judged (no matter what substantive judgments we arrive at). He pointed to the importance of identifying those services that the state can perform well and has a social duty to undertake. Finally, he showed why administrative psychology and propensities to corruptibility have to be considered in determining how states can, or cannot, work and how the world can, or cannot, be run."

"I am not persuaded that Hayek got the substantive connections entirely right. He was too captivated by the enabling effects of the market system on human freedoms and tended to downplay - though he never fully ignored - the lack of freedom for some that may result from a complete reliance on the market system, with its exclusions and imperfections, and the social effects of big disparities in the ownership of assets. But it would be hard to deny Hayek's immense contribution to our understanding of the importance of judging institutions by the criterion of freedom."

"John Kenneth Galbraith doesn't get enough praise. The Affluent Society is a great insight, and has become so much a part of our understanding of contemporary capitalism that we forget where it began. It's like reading Hamlet and deciding it's full of quotations."

"Globalization is not in itself a folly: It has enriched the world scientifically and culturally and benefited many people economically as well."

"It is arguable that a closer contact between ethics and economics can be beneficial not only to economics but even to ethics. Many ethical problems have what we have been calling 'engineering' aspects, and some of them do, in fact, involve economic relations."

"While this discussion has been rather critical of economics as it stands, it is not my intention to suggest that these problems have been very satisfactorily dealt with in the existing ethical literature, so that all that would need to be done would be to incorporate the lessons from that literature into economics, by, getting it closer to ethics. This, alas, is not the case. In fact, it is arguable that some of these ethical considerations can be helpfully analysed further by using various approaches and procedures utilized in economics itself."

"The impoverishment of economics related to its distancing from ethics affects both welfare economics (narrowing its reach and relevance) and predictive economics (weakening its behavioural foundations)."

"The enormous standing of Pareto optimality in welfare economics, as was argued earlier, relates closely to the hallowed position of utilitarianism in traditional welfare economics (before questions were raised about the possibility of interpersonal comparisons of utility). If interpersonal comparisons of utility are dropped, but nevertheless utility is regarded as the only thing of intrinsic value, then Pareto optimality would be the natural surviving criterion, since it carries the utilitarian logic as far forward as possible without actually making any interpersonal comparisons of utility."

"The position of welfare economics in modern economic theory has been a rather precarious one. In classical political economy there were no sharp boundaries drawn between welfare economic analysis and other types of economic investigation. But as the suspicion of the use of ethics in economics has grown, welfare economics has appeared to be increasingly dubious, It has been put into an arbitrarily narrow box, separated from the rest of economics."

"The methodological strategy of using the concept of rationality as an 'intermediary' is particularly inappropriate in arriving at the proposition that actual behaviour must be self-interest maximizing. Indeed, it may not be quite as absurd to argue that people always actually do maximize their self-interest, as it is to argue that rationality must invariably demand maximization of self-interest. Universal selfishness as actuality may well be false, but universal selfishness as a requirement of rationality is patently absurd."

"People's identities as Indians, as Asians, or as members of the human race seemed to give way — quite suddenly — to sectarian identification with Hindu, Muslim, or Sikh communities."

"Since the conception of human rights transcends local legislation and the citizenship of the person affected, it is not surprising that support for human rights can also come from anyone—whether or not she is a citizen of the same country as the person whose rights are threatened. A foreigner does not need the permission of a repressive government to try to help a person whose liberties are being violated. Indeed, in so far as human rights are seen as rights that any person has as a human being and not as a citizen of any particular country, the reach of the corresponding duties can also include any human being, irrespective of citizenship."

"I personally have great skepticism about the theories extolling the wonders of "Asian values." They are often based on badly researched generalizations and frequently uttered by governmental spokesmen countering accusations of authoritarianism and violations of human rights (as happened spectacularly at the in Vienna in 1993)."

"The behavioral foundations of capitalism do, of course, continue to engage attention, and the pursuit of self-interest still occupies a central position in theories about the workings and successes of capitalism. But in these recent theories, interests are given a rather different—and much more "positive"—role in promoting efficient allocation of resources through informational economy as well as the smooth working of incentives, rather than the negative role of blocking harmful passions."

"The Passions and the Interests does not have the policy urgency that a contribution to public decisions may enjoy (as Hirschman's The Strategy of Economic Development eminently does), nor the compulsive immediacy that the exigencies of practical reason generate (as Exit, Voice, and Loyalty superbly portrayed). What then is so special about this book? […] The answer lies not only in the recognition that Hirschman makes us see the ideological foundations of capitalism in a fresh way, but also in the remarkable fact that this freshness is derived from ideas that are more than two-hundred-years old. The basic hypothesis— the articulation and development of which Hirschman investigates—makes the case for capitalism rest on the belief that "it would activate some benign human proclivities at the expense of some malignant ones.""

"Even when altruism is allowed (as, for example, in Gary Becker's model of rational allocation), it is assumed that the altruistic actions are undertaken because they promote each person's own interests; there are personal gains to the altruist's own welfare, thanks to sympathy for others. No role is given to any sense of commitment about behaving well or to pursuing some selfless objective. All this leaves out, on the one hand, the evil passions that early theorists of capitalism contrasted with self-interest and, on the other, the social commitments that Kant analyzed in The Critique of Practical Reason and that Adam Smith discussed in The Theory of Moral Sentiments."

"Amartya Sen converted Nalanda into a club that promotes a certain variant of a modern political agenda in the service of a political party."

"For Sen is an example of the Indian who becomes famous in the Great World and who wants to make sure that he can never be accused of what in India is called “communalism,” but which really means all those Hindus who are aware of their being Hindus, and aware too of what Islam did to India’s civilization of Hinduism, a way of life and thought rather than a religion as we understand it in the West."

"Amartya Sen is not Indian. He had lost his Indian-ness after he left his Bengali ex-wife and married two foreign females. He has lived abroad and only visits the country for a couple of months, which cannot make you Indian."