The borders of economic freedom
The borders of economic freedom
One of the foremost thinkers of our time, winner of the Nobel Prize for economics in 1998, an intellectual who is particularly sensitive to issues around cultural conflict and modern societies, opens the Festival of Economics and addresses the main theme of this sixth edition. In 2011 the Festival is expanding in time and space, with meetings in Naples and Rovereto, while confirming the Trento agora as one of the major centres for economic thinking.
ladies and gentlemen good evening thank you for this beautiful applause coming here I thought that it is true what is said that is to say that a nice day starts with a beautiful morning this girl's also for our festival because this is a wonderful beginning and thank you for everybody who is here and who has waited patiently for the beginning of this event this testifies to the fact that the formula of this festival is still very valid and good and this year we put together too ambitious word the borders and the freedom and you see we talk here about an opening and if you like this is also festival about opening up to space and time to time because of course we have a preview today and we would like to thank so much of the cooperation movement in Trentino for organizing this event and for joining efforts with a team of people the University of Trento the municipality of Trento clearly the province of Trento and many sponsors and an audience that has always been present and testified to their interest in the festival but we also have a spatial opening in that today we are here in Toronto and on Saturday we will have an additional opening event in Naples so you see we are very ambitious we want to testify to the fact that this festival does not belong to a city one only city but belongs to everybody and then we will come back to Toronto and from the 2nd to 5th of June we will have many events in both Trento and robberies and Teterboro the scientific coordinator of the festival will soon tell you about that but first and foremost I would kindly ask her the president of the Trentino corporation cooperatives at the ago scale fee to address good evening you see normally I speak extemporary of the CAF but this is such an important event such an important place that I want to be cautious and so I will read a speech that I prepared professor Sen the Trentino cooperation movement is honored to welcome you we thank you so much for accepting our invitation and we would like to thank specifically professor domani for favoring this meeting that brings you again to Trento continuing a tradition that started in the period when you were still an Oxford student I would like to thank the province of drain toad and the organisers of this festival for grasping the opportunity of promoting jointly this very prestigious preview event and then I would like also to thank the co-operative consortium that together with their Federation decided to support this initiative we welcome you with a deep sense of gratitude we are very thankful to you professor san for being here and we are due to your very high scientific contribution and this also is in line with the action of so many people who searched through cooperatives to contribute to the development of our community as many aspects in your research and reasoning represent for us a source of learning and that and also provide theoretical and operational foundations to our cooperative activity there are a number of elements that we share and that are very important first and foremost ethics and economics or economy our movement has been existing for over one century and since the very beginning it was inspired by participative organizational and managerial elements that combine ethics and economic aspects all expressions of our cooperation movement basis it's a choices on the values of human solidarity since we are convinced that economy and wealth must be to the service of human development and then capacity and opportunity for essential essentially ethical reasons and due to our way of understanding human and economic development we try and bring together the capacities of people working in cooperatives at all levels with the opportunities that are created constantly in our businesses also in this period which is not easy especially to offer working opportunities to young people the modernization processes of our business networks in all sectors count on the capacity is not only of individuals but also of communities in order to be the protagonists of our time another element is that of Education and democratic participation since the very beginning our movement has been based on heavy strong investment in education and training and on democratic participation on the part of each and every member of cooperatives in the choices made by the business the widespread education of staff and managers and ministers is today one of the activities that peculiar of us also in the national scenario we are convinced as you also say that knowledge is one indeed he sources of the quality of human and economic development then equality and justice your very far-reaching analysis of equality and justice have confirmed I will believe that there can be no development without new attention being paid to social justice and that the principles of the equality of opportunities also of equal opportunities is a value that we have to refer to constantly due to their own structure and managerial criteria that we try and promote our cooperatives tend to constantly link the quality of the working life with economic result and then eternal democracy and international opening one aspect of your research and studies that is very important for us and that helps us really in our work is the attention you pay to the decision democracy and the way of making business both in individual cooperatives and at the central institutions that operate the service of the system so we strive and add to that an international opening which would give the opportunity to our local system to engage in a dialogue in cooperation with other realities around the world and then I would like also to underlying two aspects of the cooperation scenario which we think fit well in our debate today in this autonomous problems the cooperatives that here find their expression so much so that Trentino is a cooperative district our businesses which were created more than 100 years ago and so they both longevity and the sharing of values and they were created not to maximize profit in the short term but to meet the need of communities and to create value in the long medium term as well this is done for instance with the setting aside of profit as a reserve with reference to that please consider that cooperative set aside the reserves for the next generations for an amount of 2.6 billions and we also redistribute through services our profit so we give back to the community what we earn and these are values that are difficult to translate into numbers but we know very well that they have a very strong impact on the life of 20 nor cooperatives please let me tell you that of the cooperation movement nationally and internationally and locally it's not responsible of the economic crisis that started in financial crisis that started in 2008 now I would also like to add the following not only did we not create the crisis or caused the crisis rather in Eaton in Trentino we really got active to solve the problems please let me reiterate the fact that this crisis reflects a way of looking at society and the economy in a utilitarian way and this is different from our approach which is based on the common good the common good is the good of everybody of all people our businesses have maintained and increased the number of permanently employed period and we also increased activities to the benefit of members and communities as well the Rural Bank sir local banks which are cooperatives also in the most difficult moments of the crisis gave loans certain businesses that continued acting long as land Rossum so there is a one key element which is the dignity of the human person which is always to the end never amines profit and efficiency as professor the money constantly tells us our means are not end so emeritus professor Sen due to all these reasons we are very thankful to you thank you for accepting our invitation and being here today and we really feel in harmony with your research and with your thought and analysis which is really among the best efforts being made in trying to understand how we can achieve a better world through human development thank you president ask Elfi with reference to the topic of knowledge I think that also presidental I would have liked to share a few words with us unfortunately due to other commitments commitment he could not join us here today but anyway I would like to invite here at Teterboro area to briefly introduce this topic and specifically to tell us about the formula of the festival this year without anticipating too much because really the enumeration is for and honor the second of June castle well I would like to thank the Trentino cooperatives for making that dream come true and bring a Mattias n to the festival so this festival also given its title is opened at best with the lacteal magic is trolleys by Omar TSN who is one of the very few among modern economists er to pay so much attention to the relationship between freedom and economic theory if we look back at the history of economic thought we find a very important economist so who wrote significant things about it Adam Smith rah okay nyuk so man meal well certainly there are several examples that I could mention but among mod contemporary economies there has not been so much attention to this very important topic why is it so well you see economists took a bit of distance from this topic perhaps due to the fact that it's a political philosophy and law philosophy invested so much in this theme so much so that an economist that wants to investigate these topics has to also invest a lot in adjusting to a terminology to a glossary that has evolved so much over time professor Sen indeed did this investment was a chair of philosophy at Harvard and he was one of the few economists who go to speak with nor take for instance or John Rawls about these topics when I sorted to define the program of the festival of this festival I referred for instance to finality and freedom a volume that really groups together a number of lectures made in Helsinki so on several opportunities professor Sen identified the issue and the problem and you see there are two notions of freedom that are very important to repeat first and freedom as the organization of opportunities and then freedom as a process the first notion pertains to the actual possibility of making a choice what counts is not so much to the fact that you can do something there is something but the fact that you can achieve that an unemployed person can choose to work but unless there is a job this will never come true and then there is the issue of material deprivation of many people in developing countries and those in advanced economies and then there is a second concept freedom is a process and there we have more reference to the libertarian theory that is to say the freedom of expressing and choosing which clashes with dictatorship and constraint economy and the economic thought so economics rather sorted often to use reference to freedom and a rhetoric of the market which was wrong as a matter of fact the economic theory specifically focused on the relationship between market and wealth rather than market and freedom professorson investigating all these aspects provided us with a very important contribution and gave us some keys to understand many phenomena the market per se is not capable of achieving these two freedoms terms of opportunity because often you see the market does not pay attention to distribution and does not refer to the distribution of income and often the market does not is not accompanied by democratic systems and this is something that we also discussed in previous editions of the festival in talking about mark and democracy at a certain point we discovered Chile a country where there is a market that's not a democracy it was a dictatorship but it was an exception and then the was that incredible exception being China a country where indeed there is a market where many sectors are market economies but there is no democracy and this these are the realities we have to to tackle in a way the economists often did not pay much attention to this topic but professorson indeed did so economists often focused on a practical issue on the role of private initiative and the state and the borders between them and the role of a state as well and you see from 2nd to 5th of June we will bring a to train to a number of economists and researchers who focused on these aspects people who analyzed the role of the state as being an investor in some in some domains it has been decided today for instance that a specific Italian fund will financier the purchasing of cruise ships and so we ask ourselves whether that is correct or not or the status and investor should it focus on education and if so to what extent to what extent should students that benefit from these services have also to contribute to this someone will talk about school fees and then there is a function of the state as a regulator of the market we will talk about water we will have a new format proms and homes which is focused on giving the opportunity to people to shape an idea about these important topics so the state has a regulator who regulates these markets who regulate when there are natural monopolies and what about the relationship between private and public utilities for instance and then there is the role of a state being a guarantor of the social cohesion impact and here we have a very important debate also in relation to the recession in that you see we have a very high public debt and all countries are trying to reduce and to diminishing this phenomenon and many estate think that the state should have a lesser role in many domains which were typical of the state in combating poverty in well first aid systems in the project by camera of the big society will find in a way this theory so what are the risk so that we find in this way of real the viewing the borders between private and public if you read through the program of the festival the core part of the orange party you will see that all debates are all discussions and meetings of focus on these issues but without further ado we now really go to the core of our meeting then professor Sen and enjoy the festival thank you thank you so much just a few minutes on my part to introduce a Martius in there's no exaggeration indeed if I say that am artisan is really an extraordinary economist he's an extremely distinguished representative of contemporary economic studies as Keynes and then John Hicks in an essay published in 1941 maintained well both Keynes and this second scholar say that a good economist cannot be merely an economist well this seems paradox today it's used to say that a good economy economy should also a philosopher and as he particularly appreciated Italian literature he maintained that a good economist had to be good literature expert too it is really not possible to sum up the huge scientific contribution provided by professor sense studies but let me just remind some key areas one of these key areas is the theory of social choice well I believe that if this discipline in Economic Sciences has reached the present-day levels much is the result of professor sense studies in 1970 professor Sen published a contribution which then proved to be absolutely decisive referring to the Parisian principle well this essay was extremely intriguing because he showed and he demonstrated in 1970 that there are situations in social life where the principle of democracy may come into conflict with the principle of freedom this was called minimal freedom well this creates a problem in that it means that the institutional set up of a society is called upon to consider these conflicts on the one hand we want democracy and on the other hand we want freedom - and when these two principles come into conflict well that means that there's something wrong in the institutional setup of a given Society well I believe that social social choice is really one of the preeminent areas a professor sin has dealt with underlying the need not to separate the social dimension from the bullets dimension and yet we know that this has substantially been the problem over the past few years at the beginning we used to talk about political economy to refer to a discipline and this term is - it's disregarded today well this means that if we forget the political dimension the discipline we are trying to study completely change changes and there's also a second discipline professor Sen has devoted himself to the study of poverty and inequality well the underlying concept here has was anticipated by other speakers is that poverty is not just the lack of resources or income it is also and particularly lack of freedom and here there's a fundamental distinction to be made between the two kinds of freedom as has already been explained which means that there's a distinction to be made between freedom autonomy and freedom as capability the capability to act and this is the capabilities approach which is by now widely known the underlying idea here is that notion dating back to 1800s actually had got us to be accustomed to the idea that freedom simply meant not been invaded by others actions which means freedom basically as Isaiah said in one of his essays well the freedom has autonomy it's the freedom to do for example what we would like to do but this is not enough it is matched by the capability for example in the lack of adequate purchasing power freedom is not enough as Milton Friedman said in free to choose well I believe that free to be able to choose is the new notion because if I am free to choose but I don't have the capability to choose freedom remains a vague concept and in this context professor Sen provided an extremely valuable contribution particularly considering a series of practical applications of his studies for example the UN Development Index all this shows that these ideas can indeed have very very practical implications also in the sphere of political life but there's a third sphere a third sector in which professor Sen has been instrumental that is to say the very foundations of economic reasoning well for series of reasons professor Sen has told us that economy was actually born out of ethics but this means that a particular application that it is a particular application of the ethical discourse but we know that in time the other another line another approach may be a so-called technocratic approach has prevailed according to which the economic world and the ethical world have nothing in common why that because economy has come to be considered to have its own ethical dimension which means that it doesn't need mix up with ethics what is the foundation of this separation of this distinction well it's an anthropological foundation it is really difficult to find a student today has not learned that an economist is social scientists studying the economic human being and of course the so-called experts of ethics will have to focus upon a different dimension well professor Sen has fought very very hard against this separation there's no sense in separating what is absolutely a unity in human beings unless we risk accepting very negative consequences as we have seen so today we have a new approach which is called experimental economics well at the time when professor been sent first proposed to these these ideas they were we were just in the very early beginnings and this is absolutely significant because good ideas will be confirmed sooner or later or later and professor Sen has made the proposal to enlarge the this economic approach accepting a trade-off between elegant models and their value and significance it's not is not enough and to conclude let me tell you professor Sen has played an absolutely paramount role maybe we do not always agree with him but his word deserves attention and the phears i have referred to are absolutely significant and let me just remind you that there are two lines of thought let us talk for example about a philosopher not just aristotle as' but coat ilya who was actually an expert in metaphysics we try to we tend to underline this but at the same time almost simultaneously in greece and in india similar metaphysical philosophical lines and approaches were developed well there are two kinds of thought the so-called calculating thought and the thinking thought the calculating thought is useful in terms of problem solving and the model of the so called rational choice is exactly based upon this dimension we absolutely need this calculating thought but we also need another kind of thought which is the thinking thought showing us the direction of our lives and also of economic research in this specific instance so let me tell you to conclude that we are extremely grateful to Professor send folks showing us that high economic theoretical reasoning is possible without a separation between the calculating thought and the thinking a thought and we are extremely grateful to him for this personally I learned a lot from him I owe him really a lot thank you very much am i get it no okay well it's a fantastic privilege for me to be here today and I'm very grateful to the organizers of the festival so inviting me including two very and also for the co-operative foundation here the Federation here which is acting as a host and I'm very grateful indeed I mentioned in a in a press interview earlier that I came to Trento for the first time many years ago in fact looking at the audience I would say at the time when most people here were not born I came here in 1954 I was then an undergraduate in Cambridge and I will say the only country in Europe I knew what Britain and after feeling quite cooked up in England for so nine months when the term came to an end I've saved a little money to come to Italy in those days I was very fascinated by Italian Renaissance painting so I went to everywhere I could within my budget namely a Venice Florence obviously and so yeah and all the favorite to win and so with which I could go to what they won out of that other than that was one bit of my political interest and that was Trento which I came as an activist in student politics I knew something about the the co-operative movement but it wasn't I couldn't see so much on the ground at that time I'll definitely two days I stayed at a youth hostel up topper here here and sorry it's a wonderful thing for me to come back again after a gap of what mouth six over sixty years nearly sixty years and see after all see the co-operative movement in action survey grateful for the invitation for the hospitality and for the kindness and also very grateful for the very kind welcoming statements that came from both the co-operators and from Professor voice so thanks very much and of course the funders the money he is too old a friend to be entirely objective so I mustn't take everything he saved so kindly to be exactly true on the other hand I don't protest about that he's always pleasing to hear I'm not a utilitarian but there is a sneaking sympathy I have for wanting pleasure and it's always nice to hear the hanno even when he is being more than kind in in describing my work so thanks very much indeed the title of my talk is the region limit so we can all make freedom so I launched onto that hopefully it would be little time for Q&A at the end not long ago in the 80s and the 90s profit-making capitalism seemed a triumphant businesses are all booming or in old capitalist economies economies in the West as well as in the new centers in the east of China and East Asia was earlier Japan the enemies of the capitalist video ideology were humbled even the welfare state was frequently portrayed as an euphemism for profligate spending and government bureaucrats were accused of con doing hard earned money of the taxpayers in the name of pursuing public welfare the effectiveness of the market economy and the power of capital had become the central message by then even though the American and European economies had many problems in the first half of the 20th century including experiencing the greatest depression they are the Great Depression of the 1930s still the greatest of recent history in the long haul after the end of the Second World War the market economy was exceptionally dynamic generating unprecedented expansion of the global economy over the last 60 years it all seemed to be going nothing up for the market economy which look magnificently grand since then things have certainly changed 2008 of the year of we can only crisis talk the first one in this period but certainly by long margin the most noticeable and large in this post-war period there was first a food crisis it was a 2000 year it was indeed a year of crisis food crisis first and oil crisis later and finally in as the summer months ended came the beginning of a gigantic recession high wild like world capitalist economy seemed to be in something of a free fall with a spiraling rise in unemployment widespread bankruptcy or near bankruptcy of not only banks and industrial enterprises but also individuals with frequent loss of people's homes for failure to pay make mortgage payments these adversities occurred to people even in the richest country of the world namely the United States there were the huge collapse of business confidence as well as the confidence of consumers about their own economic future to stop stop the freefall appeal had to be made to what was seen as quote unquote the old enemy the state and they would need for government finance rescue efforts enjoy can't expel to show up to show up to repair the economies of hard-hit countries and of the world the freefall has certainly stopped I think the big bailouts and powerful declarations by the states of the world that they would not allow the recession put turn into a real Club played a major part at the turning point as we look back was they at the global level was the meeting of g20 countries in London in April 2009 convened by Prime Minister Gordon Brown the economic world is still not back to normality and unemployment continues to remain high particularly in parts of Europe and America and some countries such as Greece Portugal and Ireland are facing persistent threat of possible disasters to come there's little doubt that the prime mover in the economic crisis of the world that has engulfed us since 2008 was irresponsible action particularly in the United States by many financial institutions and businesses which made the pursuit of quick profit take priority over prudence and over security at a time we have to recollect the time of relatively cheap money particularly fed by the shape Chinese trade surpluses which for some reason the Chinese wanted to keep abroad thereby world was off with easy cash the new instruments of electronic trade the various kinds of derivatives and other mechanisms came in lubricated the process of relentless and careless expansion of financial institutions because these derivatives and other instrument made it particularly difficult to pin responsibility and these institutions themselves were shining in the glitter of its imagine of its supposed possibility death free ranging liberties being taken about about trade unregulated trade was helped by fairly comprehensive deregulation that had gone on the United States since the days of President Ronald Reagan but followed by all SEC successive US presidents Democrats as well as Republicans right after Joe W Bush firms exercised unregulated freedom to take economic action even when it endangered their clients as well as ultimately themselves faced with the problems that the world is encountering today there are many questions that come up there are two questions on which I'm going to concentrate which are often asked one concerns capitalism and the other is the idea of economic freedom the first question takes the form of asking what we formed as capitalism need how should we get a new capitalism more study more robust and more efficient and also more caring and humane the second question is about the idea of economic freedom should be not limit economic freedom for the sake of the efficiency and equity and the security of the economic world both the questions are important to consider since the point to really serious issues that seem to make at least apparently some immediate sense however I would argue that both the questions may be rather badly posed and indeed misleading and I have to say economics is not only about answering questions well it's also about asking the right questions so that is the direction in which I shall try to go first even as I try to respond to the reason curiosity that underlined understandable reason curiosity that underlined these rather ill posed questions and begin by asking should we be seeking some new kind of capitalism I even attended a conference two years ago 20 2009 in in Paris organized by President Sarkozy along with Chancellor Merkel and former Prime Minister Tony Blair one difficulty in talking about new capitalism which are also said in the meeting if that is not altogether clear what the essential requirements are for an economy to count as good unquote capitalist if the present economic system is to be reformed what would make the reform system in new capitalism rather than a new something else what are the special characteristics the presence of which makes an economic system indubitably capitalist old or new if you look at textbooks it's clear economic textbook it's clear that relying on the market for economic transactions is meant to be something like a necessary qualification the litmus test for an economy to be seen as capitalist and in a similar way dependence of the profit motive and on individual entitlements based on private ownership as seen as archetypical archetypal features of capitalism however if these are necessary requirements of capitalism the litmus test or the economic systems we currently have for example here in Europe in America genuinely capitalist on affluent countries in the world those in Europe as well as in USA Canada Japan Singapore South Korea Australia and others have dependent for quite some time now on transactions that occur largely outside the market in addition to market transactions such as unemployment benefits public pensions are the features of Social Security the provision of school education some places university education health care and a variety of other services distributed through non-market arraignments the economic entitlement connected with these transactions a way of not placed on private ownership and property rights also the market economy had depended for its own working not only on fiber mat profit maximization but also on many other motivation some of which I have restrained and modified the unrestrained search for profits and there have been also regulatory institutions until from the Reagan administration onward they began to be dismounted in in the United States the creditable performance of the alleged capitalist system in the days when things move forward rather than backwards Bureau on a combination of institutions that went much beyond relying only on profit maximizing market economy and on personal entitlement confined to private ownership underlying this issue is a more basic question where the capitalism with the term that is of particular use today grande labels generate their own excitement and people have stakes in what we call what we may call the Insignia in addition to the ideas with which the insignias are ancestrally associated in origin the idea of capitalism did in fact lay an important role historically but that usefulness may well now be fairly exhausted for example the pioneering works of Adam Smith and we refer to that and it was present in the money's presentation too in the 18th century in support of what came to be called capitalism showed the usefulness and dynamism of the market economy and why and particularly how that dynamism worked it was one of the greatest episodes in economic history of economic ideas Smith causal investigations provided an illuminating diagnosis just when the dynamism of the market economy was powerfully emerging and the contribution that the wealth of nomination published in 1776 made to the understanding of this part of economics among others was absolutely monumental Smith showed how the freeing of trade can very often be extremely helpful in generating economic prosperity through specialization in production and division of labor and in making good use of economies of large scale those lessons remain deeply relevant even today and I will I believe will continue to remain relevant in the future the economic analysis that followed those early expositions of markets and capital in the 18th century have succeeded in solidly establishing the understanding of the rationale of the market system in the corpus within the corpus of mainstream economics however even as the positive contributions of capitalism through the market processes and profit motive we're being - and explicated it's negative sites were also becoming clear often - the very same analyst including Adam Smith well a number of socialist critics most notably Karl Marx influential II would discuss the case for censoring and ultimately supplanting capitalism this would occur in the 19th century as you know even to Adam Smith in the 18th century the ad has met the trailblazing exponent of the rationale of the market economy the huge limitations of relying entirely on the market economy and only on the profit motive we're also absolutely clear indeed early advocates of the use of market including Adam Smith did not take few of market mechanism to be a free-standing performer of excellent nor did it take the profit motive - with all that is needed he did point out the self interest may be sufficient to explain why we seek trade and they're about the faith and heart about the butcher baker and brewer why the Sikh trade which many people who want to read only backwaters mid court and and I admired many ways many things happened in Chicago economic but insofar as we think of it as create essentially narrowly market economic that's the only thing that I've read that seems to be mostly coated or used to be the world is changing someone did well Smith went on to say that while that may be sufficient to seek trade what make trade and business relations sustainable effective and efficient requires other types of motivation to give an example something was quite related to the 2008 crisis when people lost confidence in the financial system and indeed on each other this is what's nature saying in 1776 when the people of any particular country has such confidence in the fortune probity and prudence of a particular banker as to believe he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to him those notes come to have the same currency as gold and silver money from the confidence at such money at any tail time be had for them and Cody Schmidt went on to explain why this not not need not always happen and may not be automatic and he would have found nothing particularly puzzling I would suggest in the difficulties faced today by banks and businesses thanks to the psychology of fear and continuing mistrust of each other that prevented for a long time and is still not fully completed the unfreezing of credit markets and then adequately coordinated expansion of business in many countries of the world which is yet to take place more generally Smita odd that we need a mixture of motivations not yourself interest to suit indeed in many context he argued exactly the opposite of the simulated imagine Smith I quote from Smith while prudence is of all virtues that which is most helpful to the individual we have to look to generosity public spirit and as the qualities most useful to others may straighten the importance of cooperation and this is extremely important to bear in mind in the in the context of debates here in Trentino remain strong even as he was explaining the positive but limited role of self-interest and the positive and limited role of the fuel market mechanism it's also worth mentioning in this context especially since the welfare state that would emerge later in Europe was far away in Smith's own time that in his various writing it's overwhelming concern and why about the fate of the poor and the disadvantaged is strikingly prominent the most immediate raelia of the market mechanism lies in emissions rather than commission the things that the market leaves undone Smith's Economic Analysis went well beyond leaving everything in the hands of the market mechanism he was not only a defender of the role of the state in providing public services such as education and in poverty relief the only thing he disagreed with the four laws he complained that it gave too little freedom to those who receive these benefits under the floral laws they're given draconian some control they can't leave their area can't go anywhere else he was slit for deeply concerned about the inequality and poverty that might survive in an otherwise successful market economy at one stage he says and going on to this crypt here now says that one of our public intervention and then he comes the model of generalization Schmitt like making great generalization he wasn't a very modest speaker he felt strongly and he said well on reflection I come down to the view that nearly every intervention that the state makes in the interests of the four turns out to be right and nearly enter every intervention that the safe lakes in the interests of the rich turns out to be wrong and his main complaint was most of the intervention in his time was in the interests of the rich that was the point he was making he was not making the point that interventions are invariably bad it depends on what you're trying to achieve they start all connected to explicate the contribution to market oh sorry did I gone through it now here bless these issues and calls for different social arrangement and pointed to be importance of motivations other than profit that I said now Smith never used the term capitalism and it would be hard to carve out from his work any theory of the sufficiency of the market economy or the need to accept the dominance of capital capital of which neither of which he believed in the present economic crisis is partly generated by a huge over estimation of the wisdom of the market processes that include rulest over activism in pursuit of business gains and the crisis is now being actively fed by nervousness and anxiety in the financial market and in businesses in general as it happened both these limitations were already identified in the 18th century as I said by Adam Smith this are very old and well as understood thousand even though they have been neglected by those who have been in authority especially in the United States but also in many parts of Europe who have been so busy when it comes to Smith quoting selected passages especially to think about the butcher where Brewer and they and they and the Baker that they haven't had time clearly to read the rest of his writings Smith wanted institutional diversity and motivational variety not monolithic markets nor singular domination of the profit motive market and capital was suing seen as doing good work within their context but they required support from other affirmative institutions for the pursuit of well-being and freedom of the people and second the markets needed restraint and correction from Stila the institution for preventing inefficiency iniquity injustice and in curity Smith talked about the tendency of those whom we call particles and projectors to take excessive risk in pursuit of quick profit and while Jeremy Bentham will argue with him when Smith said that leaving borrowing and lending entirely in the hands of the market is a mistake he was in favor of intervention there's a very funny episode where Bentham world to submit explaining to the principal economists of his time and possibly of all time how the market economy works there the political philosopher barely educated in economics a good political philosopher University College writing to the primary economists in the world on how the market economy work and Smith didn't reply but said we're kind things I think he goes to someone that he writes in such a kind way to me how can one get in angry and went I was so happy or agreement he said I take that to mean that he agrees with me because he said nothing of the kind he said he was not going to rebut the charges that all he said but here was Smith are going for intervention Bentham telling if the market is always right and in this respect Ronald Reagan was following Jeremy Bentham not Adam Smith so the right way of thinking of the question is not to conclude their advice analysis of the first question not what kind of a reform capitalism is needed don't ask a question about capitalism don't try to define it as it follows read don't even the world what kind of a balance between institutions and the market institutions of the market and those of the state and those of cooperation should we be seeking walked out that's the question and if it goes against ideologue so either capitalism or socialism not to be able to identify it with one of the cysts well that's unfortunate but the real questions are about the balance of institutions not the name by which you would like to call it there's a similar need for reexamining and reformulating the second question that about economic freedom on with the lessons of our experience do we really want to argue against the importance of economic freedom since the business houses and the banks taking too much economic freedom has messed up the world or alternatively demand a fuller understanding of freedom in general and economic freedom in particular I would argue strongly for the second approach any fetal centred approach must be concerned with the importance of the life that we lead if our concentration has to be on the actual lives of people the question that immediately arises is how to understand the richness and poverty of human life days there is a powerful case for attaching important that freedoms that people human beings actually enjoy very much in line with both adam smith concern with the real opportunity that we have and also with the kind of free life that attracted clearly attracted karl marx so much so strongly right from his early work in the economic and philosophical an earthquake of 1844 what are the things we are really free to do and free to be these are the central question what are our real capabilities and in my work particularly well going back but in development of freedom that also interview in my last book the idea of justice both of which is published by mondadori they're available in English translation I think my publisher was very upset that the only English title was given the other Italian translations were mentioned but not the one the double translation and since I would like you to see the book I'm not necessarily asking who devised the cheapest way of getting a book is to voice from the library I would like you to know that there is an Italian translation of most of my books and that applies to development is freedom and the idea of justice as well and adequately capacious understanding of freedom and justice differs sharply from many other approaches to narrower views of freedom and from assessing the demands of justice in an over restricted framework the latter may take us towards for example the fulfillment of certain formal lie right certain formal permissions and freedoms that people should have on with institutional libertarians focus whether or not these rights can be actually exercised are you prevented from doing it if you're not well then you're free to do it libertarian thinking thinkers a very tempted by this limited approach many of the libertarian rights can of course have an instrumental role in advancing more free social life that we mustn't deny being allowed to do what you want to do is a very important thing but the facility of justice can hardly stop there it is for example to give a rather extreme example it's like not nice and reassuring to know that the state would not prevent a destitute from going to Capri or Acapulco to have a good holiday no matter how implausible it might be even to consider that possibility what prevents the person from doing that is not that anyone is trying to stop you but that you don't have the positive ability to do it the society has to go a bit beyond securing the individual's right to do what they can do on their own without interference or help from others the state has to consider what the society and the state can reasonably do to facilitate the freedom of the people to do what actually they have reason to value I think this connection to complementarity between individuals between individual freedom and state was the subject of a talk I had to give in to end actually more than 15 years ago when I got the onion fries in and modern ethics I think it came out as a volume as a article body an early foundation but also not AIT's I had to collect I think a two paper collection in which that's one of them and I discussed why state has a role in cultivating individual freedom in particular it's not to think of individual versus society with a great mistake having the freedom to be educated to escape hunger to avoid poverty to get medical attention when it is needed to have different job to other such affirmative opportunities a masters of freedom and even of economic freedom freedom cannot partly important in any people center social analysis but it has to be taught in an adequately broad way so I think the wrong reaction to the libertarians attempt to capture the whole of the idea of freedom is to say economic freedom is not all that important it's quite the contrary it's very important but the the permission to do things is not the only component of freedom in pursuing the perspective of freedom there of course many difficulties to be addressed and problems to be resolved some of which I do discuss in my book the idea of justice freedom indeed has many aspects many faces professor Zamani discuss some of them he also kindly refer to an early paper of mine which I was always embarrassed me because it's about a three page paper and generated about five hundred papers in response I got certainly huge bump for my per line but that was also about a conflict I will put it slightly differently from the summary statement that the money did but basically that's correct too namely democracy in terms of the exercise of political freedom and unanimity in terms of your utility could conflict but utility and facility of happiness is also a freedom so there is a kind of conflict that we are looking at and freedom has many of them we have there's no way of avoiding them they are all part of the story economics will be very uninteresting subject if all it dealt with we're things that all go together the interesting questions arise when they do not and will get our help from different theories including from libertarian theory for example in dealing with the issue of torture and its unacceptability at the means to other allegedly more important end pursued in the contemplative world by some of the leaders of the global establishment in the name of security in raising one's voice against freedom or against torture what would be particularly important is to see the relevance here in this case of classical libertarian aspects of freedom our going for immunity of every human being from forcible infliction of pain and humiliation by others including by the state John Stuart Mill's on Liberty will be very clearly important here as will be Hayek's constitution of Liberty there's a greater relevance of other aspects of freedom when the focus is instead on issues of economic and social advantage and in general on the inequality of the life the different people are able or not able to lead in a society these aspects of freedom can be captured better by a fuller assessment of what had now come to be calling than even literature capability with which I have been very much associated and my first paper on that in 1979 and capability reflects the actual opportunities a person has to do this or be that things that he or she may value doing again I don't claim don't tape originality in this idea of capability I try to refine it and clean it up but the idea goes back to Aristotle goes back to in India to a show cut IDI edict you referred to four century BC Indian technical till this is third century BC when he is talking about the importance of what you can actually do and which is also why he was trying to set up hospitals and and and and school which in the third century BC with reflects a I mean he was a Buddhist Emperor by the way which reflects the actual opportunities a person has has to do this would be that think that he or she may value doing or being obviously the things we value most are particularly important for us to able to achieve but going beyond getting what we value most the bay idea of freedom being able to choose also reflects our being free to determine what we want what to value ultimately what we decide to choose I had to say since I see myself as a part of less than politics that I was always very shocked when I found that there's an attempt that freedom of choice is not important at all it's not at all the case it's never win so my complaint about Milton Friedman's book about free to choose isn't that free to choose is unimportant but he doesn't discuss it basically he translates into a utility problem you have to look at Hayek a mill to understand what free to choose really is and not to Milton Friedman who remains the crypto right-wing utilitarian rather than a libertarian in the Cystic not at all a libertarian in fact I would say there is a room in all this for celebrating the importance of being free actually free not just having the permission to be free and that's the big distinction if there is one distinction between the left and right between the right libertarian and the left supportive freedom bill that's the distinction to do what we have reason to do even to change our pursuit and reason suggest that but that does not in any way reduce the importance of the freedom of choice in Karl Marx's defense of the importance of individual freedom of choice this comes not from the 1844 manuscript or their passages there too but it comes from the German ideology jointly written with Frederick Engels mark sagas I quote from him the conditions are was for the condition for the free development and activity of individuals being under their control in another passage he talks about it is to make the individual master over chance rather than chance master over the individual Marx goes on to note this is his view of an idea like very romantic life as much as well it's a very romantic passage i'ma try and close from Marx then it is possible for me to do one thing today in another tomorrow to hunt in the morning fish in the afternoon real cattle in the evening criticize after dinner just as I have in mind without becoming hunter fisherman Shepherd Oh critic uncle lovely passage also brings out how much of an urban intellectual marks wolves I think rearing cattle in the evening might defeat many cattle go us including those who produce much of the milk I gather in cantina namely the cooperative the marks were very much more in his element in when he talks about criticize after dinner there were definitely his territory but what you're seeing here is not a celebration only a variety but also of the choice that he could choose and here actually I'm going out of the script here he is taking up attention in Smith and I'm really completely out of this clip but I can't resist it Smith discusses the enormous benefit of specialization the economies of scale he explains whole of the trade in terms of specialization his belief that everyone has very same skill their specialization and he was a great nurturer is not a naturist everyone has the same skill education makes a different learning by job this makes it different and if you specialize in different things you get very good at it and that's how we have become phosphorus but then he's very wise but then when you specialize you may end up doing the same thing again and again some of whom who have might have seen Charlie Chaplin's movie called modern times may remember the same person doing tightening of the boat the first person to discuss that it's met in the wealth of nations that he knows people who does nothing other than doing something to the head of his crew throughout his life every day from morning till evening she leaves it there because he shows that there is a real problem to be addressed he was basically asking here for a valiant division of labor specialization will raise with activity but also dementia life what should we do and what Marx is doing here is elaborating on that Smitty Smitty and thought pointing us why doing different things is important but the freedom of choice itself is also very important I'd like to conclude therefore that the main task is not to limit our freedoms in any way but to expand them as much as possible for everyone the celebration of freedom is an immensely important cause for all of us but what we have to do is to liberate the idea of freedom from being imposed in a narrowly political view of freedom as permission there is much to discuss in defense of freedom and I would do much to fight for even today thank you thank you well the person who was supposed to take the floor now is actually has actually become sort of an director of an orchestra well I thought we would have a debate now so if there are any questions please be brief and professorson will be delighted to answer them could we have a microphone please yes thank you very much you made a series of historical references you've made reference to some important theoretical and referred to the limitations of market economy what do you think what is your view about present the present-day debate in Italy about the possibility of changing article 41 in our Constitution it is one of the basic rules for our economic system it was created to enable our society 60 years ago to create a balance between economy social choices and interventions on the part of public institutions perhaps this debate is one of the frequent strategies at the time to conceal an attack against our institutions please bear with me if I make reference to such a specificity in Italy but don't you believe too that the time has come to put an end to this attempt for destroying the heritage we received from previous generations thank you you know I'm not going to answer a question specifically about article 41 because I haven't even read it there is a statement that development economist I've heard one development economist tell another you can't write about a country unless you have flown above it in broad daylight at least once so I think you have to have some acquaintance of the of the thing to be able to comment but you ended with a very general point is it very important to respect the heritage which was born for freedom in the world in which Italy played a very big part my own father-in-law my late wife father Eugenio Kalani was killed in that as a member of the resistance when you were editing the underground Avanti and I'm very well that people gave their life for freedom and for liberty of various kinds and these are important things so I'm very much with you in preserving this heritage on the other hand I am NOT and let me make it clear I don't want to see a headline tomorrow morning in the paper saying I said something logical 40:41 I have said nothing on article 41 other than saying I will say nothing on article 41 any other questions past few years we have been witnessing information chaos an incredible increase of information to the extent so the crisis was exploding and we realize it we have a serious information problem in this country because we have substantial economic problems and information is fiction between these two notions able to comment on whether any notion of mine was adopted or not adopted because you know and most things that I say are not adopted anyway anyway so I'm quite realistic on that but I don't want to be megalomaniac and seeing as really serious issue that you're raising in terms of myself so what about this issue of flow of information including I would characterize some of thought what you described as in information which proved to be false I would describe as misinformation but the question is what's the remedy of misinformation the remedy of misinformation is more information surely it's not that we are blinded by information test that we are deceived by economic use of information and by distortion so I think I've been a fighter from more freedom of information more freedom of the media lack of said actual of censorship and and in the context of the country which efficiently citizen namely in India we have made a reasonable amount of progress the Right to Information Act led by owner way great visionary activist she didn't let that movement for decades with small people like me joining and supporting her the Parliament passed a bill whereby which is playing an enormously important part at this now at this time now with these trials connected with corruption India had a lot of corruption at many countries I had the privilege to work at there one of the advisers to be anti mafia Commission here which mister the allanté was then chairing and I did see some of the evidence of corruption here too but one of the great aim has been the Freedom of Information Act and particularly when it comes to government corruption because any individual has a right to seek the background to to do those things which are not protected on grounds of national security and then the court has a role to judge whether it is indeed should be so protected Oh No so I think these are early days but my prejudice is and I'm delighted you asked the question my prejudice is to argue for more information not to withdraw anything I said in 1999 book development of freedom but to argue that the problem of misinformation is lies in seeking more information less restriction by the government by others now not all restrictions come from the government sometimes the new papers may have hesitation carrying the news I think that problem is exaggerated but it does exist and then we have to see closer the new channels now this should again a cooperative movement can play a hugely important part in in making more news available without being dependent on one business house or another so I would say that in every way the broader we can make the informational base more fortunate we are in pursuing economic and social argument that's the direction I tend to go that there could have been a longer answer to that but given the nature of time and the fact that maybe are the questions I think I must stop there yes no good I don't know much about it you know I think I'm only surprised when I'm asked questions about someplace which have just come to and about with their great expert sitting in the room and I would like to know more about it so I make a request you send me some material and a Crusader and I'll read it okay and then maybe you and I will have a cup of coffee together and sat on that thank you Rayo actually actually professor Sen my question is related to DeGroat the croissants so my I wonder what's your opinion on what will the future of our ability freedom to choose be in respect to a shrinking degree of freedom that our environment gives us in the future can you elaborate yeah so I'm theoretically able to choose and there are many possibilities I can choose to fly to London by plane or I can choose to go there by train which is quite right but in the future I expect that these choices will be more and more limited because of the effects that the environment is posing and etc etc so I wonder what's your take on this he had a much more complicated on train line and my answers you know I think that two things to say on this one is that we do know that freedoms of various kinds may sometimes conflict with each other we're very lucky when they don't and then we can go wholeheartedly for it but sometimes they do the freedom of taking individual action and sometimes go against the interests of others Oh classic cases shouting fire in a theater like this may announce your freedom to freedom of speech on the other hand reduce the freedom of survival of many people here so you're thinking of one freedom against another that's the Territory in which we live the environmental reasoning to the extent that they are plausible plausible because the environmental irresponsibility and environmental decline and non sustainability reduces our freedom dramatically especially of the people coming in the future given that we are trying to preserve that freedom and if that requires less freedom of a certain kind like your freedom to travel by train or by airplane you have to balance which way to go do I know if there a general formula which was tell us how to judge no because there are complex considerations complex benefits complex valuation that people have to look at and I think what we are looking for I appreciate your question very much because I would like to think you and others to think about it but I don't think it's a question that admits of a formulaic answer to do this I'll do that my second point is that I had a teacher called piero sraffa from italy who was quite important in my book in the idea of justice also it was important in my work and one thing he told me when I first arrived he was my first director of study it must have been oh but first month or so I was sitting not quite at his feet but sitting almost happy free intellectually in his room and if we were tacking talking but he was very interested in what I studied in Calcutta and so on he did invent curiosity and then he said look I asked him are there some things I mean I'm excited about coming to Cambridge learning you know it what should I know and then he laughed for a while and he said you know you have to recognize one danger is that you've come to the city where no one is content with the economic theory until that economic theory had been converted into a slogan and I think it gave me a great insight into not only cable economic but a lot of economics too and I'm not going to give you a slogan in response to the conflict of freedom I think we have to examine and that's the theory that they can conflict they can affect the lives of different people to different extents for different reasons and any the reason the the particular argument for public reasoning which is the main thing that I celebrate in my book idea of justice is that these you cannot sort out without the public reasoning you have to know who would be affected by how much and so on and to the extent that you cannot guess this uncertainty as there is in the case of environment what's the best guess was of the circumstances you take into account and then in the case of environment not only the best guess what kind of catastrophe may follow if you get it wrong all these questions come into rational thinking not rational choice theory which you rightly denounced rational thinking about people freedom so what I am recommending is public reasoning about freedom not a formula that I can share or slogan because I don't believe the days that if Logan and such a formula you know I think the only thing in stephan1 is over time and presentation I don't totally acknowledge is that it is a con I can see that it could be seen as a conflict with democracy and freedom justice Kenneth I was impossibility theorem sometimes we've seen is the impossibility of democracy but I think that's the that's the immediate thought there and ultimately that's not the conflict democracy is about I think as john scott reil did more than anyone else to make us understand his government by discussion office there's a long tradition in different parts of the world which I discussed fairly extensively in my book the idea of justice and democracy is not the same thing as the unanimity of self-interest there is a conflict between unanimity of self-interest and the freedom of people and the particular example I gave was a conflict between unanimity of self-interest on one side and libertarian freedom of repression now in some way that was extending John Stuart Mill's point John Stuart Mill has discussed it extensively and brilliantly in his book on Liberty that even the majority decision may not be justified if it violates the very important rights of minorities so that is a conflict between Liberty and democracy in the sense of majority vote what I was showing and it may appear and it's not a complex technical thought that it was not only go against majority unanimity including the same person could Liberty is being violated not judge in terms of what he or she would like to see done but in terms of her self-interest so that there is a conflict between unanimity of self-interest on one side and the unite and the unanimity of political agreement which is democracy on the other side so I wouldn't say this as a conflict between democracy and freedom and I'm ready to argue with Stefano as to which of these two perspectives make sense and I would argue for mine but they I think we shouldn't really think about that other question you're raising was really important namely that the barriers involved and to the extent that you think of national democracy the pursuit of freedom across the world and the pursuit of what the population of a certain nation wants could go against and that is a conflict between democracy and global well-being and there's nothing surprising in that I think the key the the issue there is not in my judgment to get imprisoned as John Rawls does I believe in giving the idea of justice a a legitimacy only within the context of a nation and look for other concerns like humanitarianism basic decency for other things because I think confronts of justice I also involved in issues of global injustice that doesn't mean there's no distinction between one citizen and another citizen or one country in another and indeed no economic system with revival if that distinction didn't exist on the other hand I believe Schmitt is right which is why I miss ritchi and rather than a Hobbesian social contract that you have to not only see what it looks like to people around you but also what a person faraway will think of that to both avoid being too self-centered and also being too parochial because your own culture may make you insensitive to certain things which you know it is very very important Americans don't want European West reference to Europe when it comes to capital punishment and Justice Scalia of the Supreme Court if famously on record and having said that why should European argument affect our decision as to whether capital punishment is right or wrong now that's a position which is directly opposed to the corinthian point of view that if there is a good reason coming from elsewhere we have to listen to if you are really interested in that particular aspect I do have a paper which was my lecture in the Oxford law faculty called them Herbert hat lecture and it's called rights rights language and word and is coming out in the Journal of Oxford Journal of Legal Studies in September but I think there are all kinds of conflicts of this kind that are present but my sympathy is basically which met which is neither to say take a global social contract which some people have tried to go for the whole school well social contract theorists I think that really I'm realistic and the social contact approach in my judgment isn't the right approach anyway but that's not an argument for not listening to a point of view coming from L Claire you have to then judge how much important you want to attach are you ashamed to do what you're doing or are you not the same these are the issues to the ways so I mean have a public discussion on that and that is not a barrier that had to go across a debate between democracy and freedom that is democracy and that is the pursuit of freedom maybe among other thing the freedom to discuss to freedom to consider argument freedom to decide what you would like to see ultimately as thinking human being we're interested in the reasoning and ultimately as social human being we are interested in reasoning of other people and would like to know would like to think about them and then decide what I want to know that's what my book the idea of justice that's what the problematic of the book is eckle no string controller jungle terminal so you see painting the Parisien criteria not written those thank you so much Omari thank you again