George Stigler described Adam Smith’s The Wealth of Nations as a “stupendous palace erected on the granite of self-interest” (Stigler, 1982, p. 136). Indeed, no assumption has been more central to the development of modern economic theory than this one, and in the eyes of many of its detractors, as well as its supporters, this assumption has come to define the discipline. As Prof. A.K. Sen has pointed out, however, there is nothing intrinsically “econonomic” about the assumption of selfishness and there is no reason why the study of the allocation of scarce resrouces could not start from a richer representation of the complexity of human nature (Sen A. K., Rational Fools: A Critique of the Behavioural Foundations of Economic Theory, 1977; Sen A. K., Equality of What?, 1979; Sen A. , Rationality and Freedom, 2002, p. 21; Sen A. K., Choice, Welfare and Measurement, 1997). Sen’s point poses a fundamental challenge, not only for mainstream neoclassical economists, but also for proponents of his own so-called “capability approach”, as it calls for the reconstruction, from sounder foundations, of an edifice that could rival the internal coherence and solidity that has been achieved by classical and neoclassical theory through more than two centuries of theoretical refinement.
Download Full PDF Version (Non-Commercial Use)