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ethical ˜feelings™? It would no doubt violate the neutrality principle
and provide a way out of Arrow™s paradox, but who is to make the
comparisons and why should anyone trust the person making
them? It seems to me, we simply have to live with Arrow™s theorem
and do the best we can. Let us then say that a voting rule works well




Social well-being and democratic government
for a class of rankings of candidates if it satis¬es the four ethical
axioms when all voters™ rankings belong to that class. It can be
shown that whenever a voting rule works well, so does the simple
majority rule. Furthermore, the simple majority rule works well in
some cases in which other voting rules do not. Condorcet™s paradox
notwithstanding, the simple majority rule would appear to be the
most robust of all voting rules. So, one compromise that suggests
itself is to adopt the simple majority rule; with the proviso that, if no
candidate in an election obtains a simple majority against all
opponents, then among those who defeat the most opponents in
head-to-head comparisons, the winner is the one with the highest
rank-order score.

Just as circles can™t be squared, ideal voting rules don™t exist, ideal
markets are a pleasant myth, and ideal governments can™t be
conjured up because governments are run by people. If all this feels
overly depressing, let us acknowledge that the human losses we see
round us aren™t due to any of these analytical dif¬culties. Stunted
and wasted lives aren™t caused by the ˜impossibility theorems™ I have
reported in this monograph. They happen because people have yet
to learn how to live with one another.



157
Epilogue




I have used Becky™s and Desta™s experiences to show you how it can
be that the lives of essentially very similar persons can become so
different and remain so different. Desta™s life is one of poverty. In
her world people don™t enjoy food security, don™t own many assets,
are stunted and wasted, don™t live long, can™t read or write, aren™t
empowered, can™t insure themselves well against crop failure or
household calamity, don™t have control over their own lives, and live
in unhealthy surroundings. Each deprivation reinforces the others,
so that the productivity of labour effort, ideas, manufactured
capital, and of land and natural resources are all very low and
remain low. Desta™s life is ¬lled with problems each day.

Becky suffers from no such deprivation. She faces what her society
calls challenges. In her world, the productivity of labour effort,
ideas, manufactured capital, and of land and natural resources are
all very high and continually increasing. Success in meeting each
challenge reinforces the prospects of success in meeting further
challenges.

We have seen, however, that despite the enormous differences
between Becky™s and Desta™s lives, there is a uni¬ed way to view
them, and that economics is an essential language for analysing
them. It is no doubt tempting to pronounce that life™s essentials
can™t be reduced to mere economics, but I hope I have convinced

158
you that economic reasoning is essential if we are to make sense of
the bewildering variety of ways people everywhere try to make
something of their lives. That some succeed while others fail is to be
expected. What economics shows us is that neither personal failure
nor personal success is entirely a matter of personal effort and luck.
Success and failure lie at the intersection of the personal and the
social. Of course, to say that is easy enough, but to uncover the
pathways by which the personal and the social interact is
immensely hard. I have tried to show you that it can nevertheless be
done, and that without an understanding of those pathways,
debates over national and international policies are unfruitful.

I am resisting the temptation to produce a list of the material things
Desta needs, partly because they are all too obvious, but partly also
because they serve only to satisfy proximate needs. That Becky™s
world shouldn™t create roadblocks in Desta™s (through trade
restrictions, domestic agricultural subsidies, and so on) is also




Epilogue
obvious and proximate. What is neither obvious nor proximate “
the elusive bird we would all wish to catch for Desta “ is for
communities in her world to discover how to shape new avenues to
do business with one another so as to increase their inclusive
wealths.

In a moving discourse on the character of poverty at the 2001
Plenary Meeting of the Ponti¬cal Academy of Social Sciences,
Vatican, Justice Nicholas McNally of Zimbabwe urged us all to see
poverty as a sense of fatalism to ever-increasing economic
hardships in a changing, and elsewhere an often progressive, world.
At that same meeting, the political scientist Wilfrido Villacorta
suggested that the term ˜poor™ when applied to countries is perhaps
no longer useful; that countries ought perhaps now to be classi¬ed
in accordance with some such term as ˜progressive™, so that we may
ask if they have the institutions, policies, and civic attitudes in place
to enable people to improve their lot. Perhaps the best Becky™s world
can do for Desta™s is to offer ¬nancial and technical assistance so as
to promote and support local enterprises “ including those

159
involving education and primary health care “ that people there are
all too keen to create even as they see from a distance how people
elsewhere have been able to improve their conditions of living. And
perhaps the best Desta™s world can do for Becky™s is to alert it to the
enormous stresses economic growth there has put on Nature. There
is, alas, no magic potion for bringing about economic progress in
either world.
Economics




160
Further reading




Political Economy, by Edmund Phelps (Norton, 1985) and Economics,
by Joseph Stiglitz and Carl Walsh (Norton, 2006) are ¬ne
introductory textbooks.

Chapter 1
On economic growth, see The Mystery of Economic Growth, by Elhanan
Helpman (Belknap, 2004).

Chapter 2
On trust, see Trust: Making and Breaking Cooperative Relations, edited
by Diego Gambetta (Blackwell, 1988) and Social Capital: A
Multifaceted Perspective, edited by Partha Dasgupta and Ismail
Serageldin (World Bank, 2000). Good introductions to the theory of
games are Fun and Games, by Ken Binmore (Heath, 1992) and
Games, Strategies, and Managers, by John McMillan (Oxford
University Press, 1993).

Chapter 3
An Inquiry into Well-Being and Destitution, by Partha Dasgupta
(Clarendon, 1993) offers a more detailed account of communities.

Chapter 4
On markets, see Microeconomic Theory and Applications, by Edgar
Browning and Mark Zupan (Addison Wesley, 1998). On the

161
macroeconomic consequences of market failure, see Macroeconomics,
by N. Gregory Mankiw (Worth, 2000).

Chapter 5
On the economics of knowledge, see the essays in The Economics of
Science and Innovation, edited by Paula Stephan and David
Audretsch (Edward Elgar, 2000).

Chapter 6
On households, see A Treatise on the Family, by Gary Becker (Chicago
University Press, 1981).

Chapter 7
On the economics of natural capital, see Human Well-Being and the
Natural Environment, by Partha Dasgupta (Oxford University Press,
2001).
Economics




Chapter 8
On the role of the state, see Economics of the Public Sector, by Joseph
Stiglitz (Norton, 2000). The classic on collective choice is Social
Choice and Individual Values, by Kenneth Arrow (Wiley, 1951; 2nd
edn, 1963). Collective Choice and Social Welfare, by Amartya Sen
(North Holland, 1979) contains a wide-ranging discussion of
collective choice and its place in social life. The exposition in Chapter
8 has been taken from ˜The Fairest Vote of All™, by Partha Dasgupta
and Eric Maskin, Scienti¬c American (March 2004).

I have not included any account of the history of my discipline because I
am inexpert on the subject. Readers wishing to learn the history of
economic thought should study Epochs of Economic Theory, by Amiya
Dasgupta (Blackwell, 1985).




162
Index Australia 17
authoritarianism 141, 145


B
A Bangladesh 134“5, 136
adverse selection 69, 86, 88
bankruptcy 113, 114, 115
Africa 16, 22, 24, 45
banks 1, 16, 47, 55, 67, 109,
average incomes 17
112“13, 116, 126
ecological collapse 129
bargaining 31, 76, 145
female-male ratio 102
barter 54
fosterage 103“4
Bauer, Peter 139
rural credit transactions 39
beliefs 31“3, 38, 44“5, 55“7,
aggregates 7, 73, 86, 88, 115,
59, 81, 88, 115, 120, 152
143, 146, 151, 152
bifurcations 45
agreements 30, 31, 32, 56, 68,
biomass-based economies 18
79, 92, 128, 152
birth control 22
breaking 34“5
borrowing 50, 108“9, 116
community 46“7, 49“50, 81
Boserup, Esther 102“3
enforcement 36“43
Brazil 17, 39
human rights 145
breach of contract 37
market-community
bribery 28
mediation 149, 150
Brundtland Commission
tied engagements 64“7
Report 126
agriculture:
gender discrimination in
C
102“3
incomes 17“18 capital assets 46, 108, 119, 122,
labour 92 127, 129“32
risks 105“6 carbon emissions 8, 49, 53,
subsidies 159 120, 122“6, 128, 133
subsistence 5“6, 39, 112“13 Central America 17
anonymity principle 154“7 central planning 77“9
anti-trust laws 84 Chen, Lincoln 102
Argentina 17 children:
Aristotle 91 dysfunctional families 147
Arrow, Kenneth 51, 94, 153“4, fosterage 103“4
156 mortality rates 6, 19, 20,
Aumann, Robert and Shapley, 21“2
Lloyd 41 resources transferred to 109

163
legal 37“8, 47, 149
China 17, 102, 134“5, 137, 138
social 30“1, 37, 38
citizenship 140, 151“2
cooperation 33, 40“9, 64“7,
civil rights 140, 143, 148
149
climate change 120, 122“6, 133
copyright 96
collective action 52“3
corporations 114“16
colonization 25
corruption 27“8, 30, 36, 38,
commodities see goods and
45, 49, 57, 86, 150
services
cost of living 1“6, 16
communities 46“7, 49, 50, 56
country-speci¬c idiosyncrasies
agricultural risks 105“6
11, 12
authoritarianism and 141
CPRs (common property
common resources 3, 6, 30,
resources) 6, 48, 106, 113
48, 106, 113
credit 4, 30, 37, 39, 67
conformity 59“61
critical mass 62
failure of 147
cronyism 141
infrastructure and 85“6
culture 4, 34, 56“63
markets and 149“50
currency crashes 55
networks 67“71
Economics




tied-engagements 64“7
competitive equilibrium 63,
D
74, 76, 79, 80“2
competitiveness 63, 78, 83, 93, Daily, Gretchen 119
153 dated commodities 51
Condorcet paradox 155 David, Paul A. 94
conformism 59“61, 62, 103 debt 4, 108, 114“15, 116, 146
consensus principle 154“7 de¬‚ation 15
constituents 143, 148 deforestation 121, 128, 130
consumption 39, 54, 72“3, demand curve 74“6, 79, 87“8
100, 104, 138 democracy 140“2
climate change and 123“5 as a merit good 146“7
discount rate 111“13 protection of 149
equalize 107“8 voting rules 151“7
marginal costs 77“9 demographic transitions 62“3
contingent commodity 51 Diamond, Jared 14, 25
contingent markets 79“80, 86 discount rates 41, 64, 65, 111,
contracts: 112, 123“6
contingent markets 79 discoveries and inventions
employment 91“2, 94 91“9
forward markets 79 dividends 114

164
externalities 53, 83, 85,
division of labour 56, 118
104, 128, 132, 147, 150,
151
E
ecological services 144
F
econometric tests 11, 12, 33
female employment 23
economic history 10, 14“15
female infanticide 102
economies of scale 84“5, 114
fertility 19, 21“2, 59“61, 62,
education 1, 18“19, 20, 53, 94,
103“4, 113
145, 151, 160
¬nancial institutions 113
ef¬ciency 23, 57, 82, 115, 147,
¬rms 27, 31, 37, 49, 57, 80,
149
113“16, 147
Ehrlich, Paul 119
ideal markets and 73“8
enforcement 74
monopolist 83“5
external 36“8
moral hazard 69, 70
government 139
Fisher, Irving 111
mutual 38“46
Fogel, Robert 25
social norms 97
food distribution 101
Technology 97
forward markets 79, 86




Index
engagements 29, 32, 64“7, 68,
fosterage 103“4
142, 150
France 87
Enlightenment 98, 99
free trade 120“1
environment:
free-rider problem 52, 53, 83,
climate change 122“6
104
ecological stress 44, 45, 49,
freedom 140, 143, 148
53, 117“18, 129
Fried, Charles 148
population growth and 21
Fudenberg, Drew 41
trade expansion and 120“1
funeral expenses 4, 39, 107,
equilibrium 32“3, 60“3
108
communitarian 46
competitive 63, 74, 76, 79,
G
80“2
democratic 142 game theory 31, 42
Nash 32“3, 40, 43“4 GDP (gross domestic product)
reproductive 60, 61 15“18, 87, 129, 146
social 55 enforcement expenditure as
Ethiopia 2“6, 17 percentage of 37
ethnic networks 69, 70 productive base 126“9
export subsidies 121 rich-poor gap 18“25, 148

165
greenhouse gases 122
sustainable development
grim strategy 42“4, 65“6
117, 134“6
trust and 46
gender inequality 19, 102“3,
H
148

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