I liked Rawls’s answers. I still do. But over the past decade I began wondering: was he asking the right question? In this book, I lay out four reasons why he wasn’t. Focusing on the ideally just society, what I call the `transcendental’ approach, means that we are sometimes unable to resolve disagreements; that the solutions are sometimes not within reach; and that the recommendations don’t help us to remove the most egregious forms of in- justice, to identify the really important issues. Also, ideal institutions aren’t enough; behaviour also matters. When we think about justice, we can’t ignore human behaviour to focus on institutions solely.
When I began to think of why Rawls was wrong, I began to realise that a `comparative’ approach, that replaced his transcendental one, would work. And that links up well to social choice theory, which tells us important things about justice and distribution. It is more successful than has been recognised; most people do not read it because it is so mathematical.
But you think that recent economics, which uses math to deal with very human problems, is getting it right. Like Richard Layard [the British economist and peer who is known for happiness economics] …
I disagree with him. But he asked the right question: why are people in rich societies often less satisfied than people in poorer societies? But his answer, to try and quantify happiness, is wrong. What I approve of is the move beyond empty rational choice theory that allows for human beings to maximise nothing beyond self-interest of one sort or another.
Over your 40 years as an observer, is this the worst crisis of academic economics?
The worst of my lifetime. Well, since the Great Depression, when I was born. See, economics is often haphazard, too disorganised. But I am more of a defender of it than most people expect.
Yes, the `efficient markets hypothesis’, the belief that markets are a self-correcting mechanism that was put out by some misguided people was a deadly mistake. One made by the dominant theorists in macroeconomics. But they’re changing their minds now. I sense a re-evaluation.
Scepticism towards the market is greater in economic and policymaking circles than at any time during my lifetime.
When you’re asked about the link between this book and policymaking, you’ve said that this isn’t `an engineer’s handbook’.
Well, this won’t tell you how to build the bridge. Nor will it tell you about specifics: what the nature of the ground is, where to get the materials from. But it will tell you how to think about what width to make it. What the nature of the traffic is likely to be. It’s not a handbook for the policy engineer. But, policy engineers could gain a lot by reading it, and translating its lessons for local conditions.
And some of those lessons for India are?
I don’t want to repeat them endlessly, but it is no secret how I feel. Progressive people in India spend too much time on `perfectworld’ issues and not enough on working out what we should address first and most urgently, and then helping that get done.
Illustration: C R SASIKUMAR And the `freakonomics’ sort of behaviouralists?
Driven by the amusing nature of the examples, true. But I don’t think that economics has become less `serious’ in any way. So much of this is frivolous. But some of us always had an interest in frivolity.