When the Chief Secretary to the Treasury, Liam Byrne, gave a speech to the CBI on public-sector reform last month, he declared that "social justice means capability and power for everyone". And to support his argument that the regime of centrally imposed targets had resulted in public services that were not sufficiently closely "tailored" to the "ambitions" of individual users, Byrne quoted the Nobel Prize-winning economist Amartya Sen.
“Responsible adults," Sen wrote, "must be in charge of their own well-being; it is for them to decide how to use their capabilities. But the capabilities that a person does actually have (and not merely theoretically enjoys) depend on the nature of social arrangements, which can be crucial for individual freedoms. And there the state and the society cannot escape responsibility."
Byrne is not the only Labour minister to have found Sen's language of "capabilities" seductive, and to see in it a way of reshaping debates about equality and social justice - debates that are turning out to have a central place in the burgeoning ideological struggle over the legacy of New Labour. David Miliband, for instance, argued recently that Sen's great contribution to political discourse in this country was to teach the Labour Party that the first question to ask about equality and inequality was "equality of what?" (the title of one of Sen's most influential academic papers).
Redistribution of income and resources matters, on this view, but so does what people are able to do with those resources - their “capabilities", in other words, among which Sen lists literacy, nutrition and the "power to participate in the social life of the community". You can increase people's income without thereby enhancing their power or ability to choose for themselves the kinds of lives they aspire to lead.
The idea that inequality of power matters as much as inequality of resources or income is also central to the "power egalitarianism" espoused by the former work and pensions secretary James Purnell. In a speech delivered shortly before he resigned from the cabinet, Purnell insisted that the left has to recognise that income inequality is part of a "wider struggle against the inequality of power. The greatest injustice is when people cannot achieve their goals because someone else with power stops them."
Purnell is now leading a project at the think tank Demos that is devoted to a rigorous reappraisal of the fundamental values of the centre-left, and, if his initial statement of intent is anything to go by, Sen's work will continue to shape his thinking in profound ways: Purnell says he is on the left because he worries about "inequalities of capability".
All of which confirms, according to Richard Reeves, the director of Demos, that Sen is an authentic public intellectual. "He may not appear on the op-ed pages," Reeves observes, "but that's a weakness of public discourse. Sen is the real deal" - the "real deal" because his work, for all its technical rigour (and it is worth remembering that Sen won the Nobel for highly technically refined contributions to welfare economics and "social choice" theory), speaks not only to his fellow economists, but also to his fellow citizens.
Reeves suggests that Sen's latest book, The Idea of Justice, which was written explicitly for the educated general reader, is an "elucidation of the political implications of his thinking. He's a proper, thoroughgoing liberal. Liberalism has been bastardised by neoliberalism, but what the capabilities approach does is move liberalism beyond the non-interference model of what it means to be free. Sen remains true to the insights of classical liberalism, but avoids the difficulties someone like Isaiah Berlin got into. To be genuinely free, you need to have a capability set."
In the autobiographical essay he wrote for the Nobel Foundation when he was awarded the Nobel Prize in Economics in 1998, Sen traced this insight into the nature of substantive or genuine freedom (as opposed to the "negative" freedom from external interference that Reeves associates with a debased version of classical liberalism) to a childhood experience in Dhaka, then part of pre-Partition India, where he lived until leaving for Presidency College in Calcutta, when he was 16. (Though Sen remains an Indian citizen, he has spent most of his professional life in Britain and the US, since coming to this country to study for an undergraduate degree at Trinity College, Cambridge in 1953. Two of his four children, one of whom is a Bollywood actress, live in India.)
One afternoon in the mid-1940s, a man staggered into the family compound bleeding profusely. It turned out that he was an unemployed Muslim labourer named Kader Mia, who had come into a predominantly Hindu area to look for work. He had been attacked by a hostile mob and later died. The experience was "devastating" for Sen, but it also taught him an important political and moral lesson that would inform his life's work: which was that "economic unfreedom, in the form of extreme poverty, can make a person a helpless prey in the violation of other kinds of freedom". Mia's murder may have been the "ultimate violation of his negative freedom", but the reason he was in the neighbourhood in the first place was that poverty had robbed him of the "positive" freedom to do the things he wanted to do.
This latter point is also a reminder of something that Purnell and other proponents of the capabilities approach on the centre-left sometimes forget: there may be more to inequality than disparities in income distribution, but this does not mean that people's ability to choose for themselves the lives they wish to lead is not drastically curtailed by their economic circumstances - by what they earn and what they own. If we are to take the story Sen tells about Kader Mia seriously, then the conclusion we ought to draw is not that we should forget about income inequality. It's rather that people want income and resources not for their own sake, but in order to do things with them.
Sen's theoretical and political commitments, which he freely concedes were shaped by the fate of Kader Mia, fuse in a deep and enduring preoccupation with the forms that injustice takes. One of the main arguments of the new book is that the social contract tradition in moral and political theory is concerned with arriving at the fundamental rules and principles governing ideally just institutions, at the expense of examining the multiple injustices of the lives human beings actually lead.
According to his friend and colleague, the philosopher T M Scanlon, this is also reflected in Sen's teaching. He says that the classes in political philosophy that he co-taught with Sen at Harvard were "exciting . . . particularly because of the way he would raise real-world examples, which I would not have thought of, to illustrate important points. He is a great admirer of the work of [the political philosopher] John Rawls, but he has come to believe that a theory of justice that is applicable to the problems we face in the real world must differ in important ways from Rawls's theory as he understands it."
When I met Sen on a drizzly midsummer's day in Cambridge, where he spends six months of each year (the other six months he teaches at Harvard), he began by complaining about political indifference on the subcontinent to precisely such "problems in the real world". "I'm very much on the left," he tells me. "But I have been very critical of the left in India. A party which has a real commitment to the underdogs of society should be worried that India has a higher proportion of undernourished kids than anywhere else in the world. Instead, the left parties are concerned with whether India is losing its sovereignty by signing a contract with the US for a civil nuclear project."
Sen received his political formation as a student in Calcutta, where the milieu was predominantly Marxist. "Whether you sat in Calcutta, Saigon, Tokyo or Peking, Marx was a huge presence. Marxism was anti-imperialist and also intellectual. So I was attracted by that." He was never a Marxist himself, however. A more enduring intellectual influence on the adolescent Sen was Adam Smith. "I still remember the thrill of reading The Theory of Moral Sentiments as a young man," he told me.
Much of Sen's subsequent career has been devoted to saving Smith from his admirers. "While some men are born and achieve smallness," he once wrote, "Adam Smith has had much smallness thrust upon him" - principally by neoclassical economists who have forgotten that the original tribune of free trade was also a moral philosopher. (Another of Sen's collaborators, the philosopher Martha Nussbaum, draws an implied comparison with Smith when she suggests that Sen's contribution to economics is "unique, because he is the only recent or living economist who takes philosophy seriously and whose thinking about the foundations of economics is informed by his own high-level work in philosophy".)
Mainstream economists who claim to be upholding the legacy of Smith are committed to a view of economic behaviour which, if Sen is right, the author of The Wealth of Nations never held. "Rational economic man, in the narrow mainstream sense, is close to being a social moron," he says. "The inability to think about other people is not a proof of reason - it's the absence of reason! But the kind of self-satisfied, self-interest maximisation that Smith demolished in The Theory of Moral Sentiments, came back in the form of rational choice theory, and it's only now that we're getting away from it, though many of us have been sceptical of it for a very long time."
What Sen also derives from Smith is an agnosticism about markets. "Smith argued that the market economy is not a free-standing institution, nor a self-regulating one. You need support from other institutions. You need supervision from the state, and you need supplementation by the state and society to take care of poverty, ill-health, illiteracy and educational backwardness." To take care of inequalities of capability, in other words.
Sen says Smith also has something to teach us about the current financial crisis. "His critique of 'prodigals' and 'projectors' in the context of usury laws could be seen as an argument in general for supervision and regulation of markets. A Smithian view of the present crisis would be that there's a confusion in thinking about the market as free-standing. Today, more than a trillion dollars' worth of bad credit default swaps are terrorising banks across the world. Smith would have seen that as hugely unfortunate, and as stemming from lack of regulation."
Perhaps it is time for Sen's epigones in government to brush up on their Adam Smith, too.
“The Idea of Justice" by Amartya Sen is published by Allen Lane (£25)
Jonathan Derbyshire is the New Statesman's culture editor