Knowledge that Transforms

Nobel Prize winner Amartya Sen's first great book, now reissued in a fully revised and expanded second edition 'Can the values which individual members of society attach to different alternatives be aggregated into values for society as a whole, in a way that is both fair and theoretically sound? Is the majority principle a workable rule for making decisions? How should income inequality be measured? When and how can we compare the distribution of welfare in different societies?' These questions, from the citation by the Swedish Academy of Sciences when Amartya Sen was awarded the Nobel Memorial Prize in Economics, refer to his work in Collective Choice and Social Welfare, the most important of all his early books. Originally published in 1970, this classic work in welfare economics has been recognized for its ground-breaking role in integrating economics and ethics, and for its influence in opening up new areas of research in social choice, including aggregative assessment. It has also had a large influence on international organizations, including the United Nations, particularly in its work on human development. In its original version, the book showed that the 'impossibility theorems' in social choice theory-led by the pioneering work of Kenneth Arrow-need not be seen as destructive of the possibility of reasoned and democratic social choice. Sen's ideas about social choice, welfare economics, inequality, poverty and human rights have continued to evolve since the book's first appearance. This expanded edition, which begins by reproducing the 1970 edition in its entirety, goes on to present eleven new chapters of new arguments and results. As in the original version, the new chapters alternate between non-mathematical chapters completely accessible to all, and those which present mathematical arguments and proofs. The reader who prefers to shun mathematics can follow all the non-mathematical chapters on their own, to receive a full, informal understanding. There is also a substantial new introduction which gives a superb overview of the whole subject of social choice.

2 Of the many frustrations of any editor, surely, avoidable delay is the greatest. And this frustration is almost infinitely compounded when in the interim an unexpected death occurs. Professor Ferguson sent this manuscript as a draft; certain questions which he raised in the accompanying letter would normally have been resolved in the exchange of two or three letters or 'phone calls. I placed one call to learn he was ill; rather than press the query, I delayed. When next I 'phoned, I was shocked to learn of his completely unexpected and therefore all the more untimely death. Because the draft he sent contains so much of his own style and vigor, I have elected to print it in this incomplete form. The points he raised in his letter remain unclarified. In the face of this series of events, I have asked Professor Nell to undertake the task initially given to Ferguson. The two rarely saw things in the same way. Thus, the choice of Nell was not intended to finish Ferguson's incomplete assessment. I mention the foregoing simply to explain the unique treatment in these review essays. Of Charles Ferguson's death so little can be said-he was an ebullient souil, and a man of significant originality. -M. P.

IT IS CURious how in scientific disciplines very similar results of investigations into problems appear to emerge at the same time. It is as if the essential reality of a situation comes into increasing conflict with accepted ideas until, at a certain point, reality cannot be gainsaid. From various quarters attacks begin to mount and we begin to wonder why we were so simple-minded as to accept uncritically earlier concepts. Even so, we do not lightly reject these other views because, after all, a good deal of intellectual energy has gone into their formulation and propagation. We wait to be convinced; each new, available piece of research is scanned to see whether it supports the tenets of the old doctrine, or whether it adds to the growing swell of disillusionment. Finally, if we are honest, we are forced to admit that reality has not been explained by our older notions-there are too many discrepancies between facts and theory-and we embrace the new approach. These reflections are engendered upon reading three books published at the end of 1970 or the beginning of 1971.1 All deal with the results of many years of development efforts by developing countries and all are critical of present policies. Broadly speaking, we may say that the LittleScitovsky-Scott book concentrates its criticisms on policies of import-substittiton whilst the ILO and Turnham books focus upon the failure of policies to obviate growing unemployment. Let us look at the Little-Scitovsky-Scott book first. This is an interesting example of what can be achieved by teamwork in economic research. The book was based on researches undertaken in various countries (Brazil, India, Pakistan, Mexico, Philippines, and Taiwan) by those who had extensive knowledge of the countries concerned. Their individual contributions were analyzed by the three authors (who also incorporated material on Argentina). The result is a well-documented multiple casestudy of development, with theoretical iinplications far beyond the particular countries covered.2 Little-Scitovsky-Scott3 concern themselves first with a consideration of the factors which have led to the growth of import-substitution. One factor was the de-

AXEL LEIJONHUFVUD has recently provided us with an insightful and refreshing reappraisal of the so-called revolution in his On Economics and the Economics of Keynes [8, 1968]. In light of the significance and importance of this book, it is disappointing that, although the reviewers have been very complimentary, the published discussion seems to have offered little in the way of critical evaluation of Leijonhufvud's arguments. This paper attempts to remedy this situation. Leijonhufvud argues convincingly that popular Keynesianism, as well as its offspring, the so-called neoclassical synthesis, does not have an adequate choice-theoretic, i.e., microeconomic, basis. This view seems to be finding wide and warranted acceptance. In addition, Leijonhufvud argues that, although this defect pervades popular Keynesianism, it does not characterize Keynes' own writings. Leijonhufvud suggests that Keynes himself would have been unsympathetic with the development of popular Keynesian macroeconomic theory. This paper argues, to the contrary, that this latter contention is not consistent with a complete and careful reading of the General theory. My analysis will suggest that Keynes' thinking was both substantially in accord with that of his popularizers and similarly deficient. Leijonhufvud's argument emphasizes the interpretation of the consumption function developed by R. W. Clower in his The Counter-Revolution: A Theoretical Appraisal [3, 1965]. I certainly accept Leiionhufvud's contention that Clower's conception, which is discussed more fully below, provides the choice-theoretic basis for macroeconomic theory, which popular Keynesianism lacks.' However, Leijonhufvud also suggests that Clower's conception may be attributed to Keynes himself.2 This latter is the hypothesis at issue. Leijonhufvud can point to no specific content in Keynes' writing which explicitly supports this attribution. His argument (pp. 91-102) seems to amount to the following: Keynes' discussion is dreadfully confusing, but Clower's interpretation offers the only conceivable way to make sense of it.3 Therefore, Keynes must have had Clower's idea in mind. My analysis will focus upon Keynes' treatment of the demand for labor services, a part