THE UNBRIDLED capitalism of the last three decades needed to be replaced by a system that went beyond the market and the profit motive, Prof Amartya Sen of Harvard University and winner of the Nobel Prize for Economics said in a lecture at Trinity College Dublin last night.
In his lecture, entitled “On Global Confusion”, he said that, in the 1980s and 1990s, free-market capitalism seemed triumphant. Businesses boomed in the capitalist countries of the West and East. The Soviet Union and associated communist states went into a deep decline.
But those days had come to a halt. Last autumn saw the beginning of a “huge global economic downturn” which gathered momentum as time progressed.
Governments had made “gigantic” efforts to shore up capitalism but the patient seemed resistant to recovery. Now the debate focused on the need for a “new capitalism”.
The crisis had been made much worse by bad governance, particularly in the US. But if a system was so vulnerable to greed, wasn’t it time we gave up capitalism altogether? However, Soviet-style socialism could hardly serve as a model. “Where then do we look?”
The greatest theorist of capitalism was meant to be Adam Smith (1723-90) but Prof Sen pointed out: “Smith never used the term capitalism in any of his writings.”
Although Smith was seen as the great champion of the profit motive, he wrote at the start of his very first book in 1759: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”
Smith had defended the role of the state in providing universal education and relief from poverty.
Prof Sen said that today we needed “a generally plural system of diverse institutions” and it did not matter much what we called such a system.
“We have to go beyond the market and the profit motive,” he said. There must be proper regulation and the “development of a sharing ethic”.
Prof Sen’s lecture was jointly sponsored by Concern Worldwide, Trinity College Dublin, the Royal Irish Academy (RIA) and The Irish Times. The lecture was chaired by the chancellor of TCD and former president Dr Mary Robinson. Today, Prof Sen is to receive an honorary doctorate from TCD, as well as becoming an honorary member of the RIA.