Abstract: The paper discusses some evidence, based on a review of new literature on economic history, about what is referred to as the Sen-hypothesis, that increasing human agency (of both men and women) is a key factor in economic development. It briefly discusses various dimensions of agency (or its absence): slavery (as the absolute suppression of human agency), access to markets, agency concerning marriage, and political participation. This concept perhaps also allows economic historians to move beyond the historical determinism that is central to much recent work in this field.
This paper distributed by NEP-HIS on 2012-01-03 raises a challenge to economic historians: how can we improve our current explanations of differential development and escape the common rhetorical places of path dependency and institutional persistence in our explanations of material stagnation and change? By placing human agency of men and women in the center of our stories, says Jan Luiten van Zanden, in the form advocated years ago by Amartya Sen in his best-selling book Development as Freedom.
It might be useful to remember Sen’s definition of agency, a concept that diverged from the usual meaning of the term in economics:
The use of the term “agency” calls for a little clarification. The expression “agent” is sometimes employed in the literature of economics and game theory to denote a person who is acting on someone else’s behalf (perhaps being led on by a “principal” and whose achievements are to be assessed in the light of someone else’s (the principal’s) goals. I am using the term “agent” not in this sense, but in its older -and “grander”- sense as someone who acts and brings about change, and whose achievements can be judged in terms of her own values and objectives, whether or not we assess them in terms of some external criteria as well. This work is particularly concerned with the agency role of the individual as a member of the public and as a participant in economic, social and political actions (varying from taking part in the market to being involved, directly or indirectly, in individual or joint activities in political and other spheres) (Sen 1999: 18-19, my own emphasis added).
Zanden’s reading of agency in Sen is “the capacity for autonomous decision making” that ultimately drives “economic and social-political change” (Zanden 2011: 4). Agency is also a synonym of “participation, or autonomy” (Zanden 2011: 5). But two questions remain. How does agency affect economic change? How does freedom impact agency? Sen responds:
Expansion of freedom is viewed both as the primary end and as the principal means of development. Development consists of the removal of various types of unfreedoms that leave people with little choice and little opportunity of exercising their reasoned agency. The removal of substantial unfreedoms is constitutive of development (Sen 1999: xii).
Zanden advances the usefulness of Sen’s framework and formulates what he calls the dual Sen hypothesis, this is, if “development is defined as freedom [… that] freedom -or rather -agency- is an important precondition and driver of long-term economic and socio-political change” (Zanden 2011: 5).
The second part of the “Sen hypothesis”, agency as a determinant of historical change, can be tested with proxy variables such as the gross domestic product or the human development index. However, what is behind these indicators? Zanden advances a suggestive explanation drawn from the new growth theory of Paul Romer and Robert Lucas: human capital is the crucial determinant of economic growth and human development. Human capital is embedded in the other variables for “one has to possess the right skills -the human capital- to really participate in markets, political events and the civil society” (Zanden 2011:5).