Transparency Guarantees

Topics: Ethics, Business ethics, Economics Pages: 17 (5359 words) Published: November 11, 2011
TDiscussion Paper on

Transparency Guarantees in Amartya Sen’s Development as Freedom for the National Seminar on Development as Freedom July 31-August 1 New Delhi

by Parth J Shah

Centre for Civil Society
K-36 Hauz Khas Enclave, New Delhi 110016 Tel: 2653 7456 Fax: 2651 2347 Email: Web:

Transparency Guarantees

Among the five substantive freedoms, transparency guarantees receive the least amount of space in the book.1 The definition of transparency guarantees is on pages 39-40, and then an illustration of its significance on pages 184-86, where the link between transparency guarantees (rather their absence) and the East and South East Asian financial crisis of the late 1990s is established.2 This brevity of treatment in the book gives an opportunity to expand on it at this Seminar and I look forward to Professor Sen’s further thoughts on this freedom. The task of writing a background paper for discussion, in this circumstance, is likely to have me reading between the lines and probably off the page. I shall attend to the duty nonetheless. The Definition and an Example In social interactions, individuals deal with one another on the basis of some presumption of what they are being offered and what they can expect to get. In this sense, the society operates on some basic presumption of trust. Transparency guarantees deal with the need for openness that people can expect: the freedom to deal with one another under guarantees of disclosure and lucidity. When that trust is seriously violated, the lives of many people— both direct parties and third parties—may be adversely affected by the lack of openness. Transparency guarantees (including the right to disclosure) can thus be an important category of instrumental freedom. These guarantees have a clear instrumental role in preventing corruption, financial irresponsibility, and underhand dealings (pp 39-40). Professor Sen illustrates this definition with an example of the financial crisis in the East and South East Asia in the late 1990s. I am unlikely to explain this any better, so I quote extensively. “The development of the financial crisis in some of these economies has been closely linked with the lack of transparency in business, in particular the lack of public participation in reviewing financial and business arrangements… The opportunity that would have been provided by democratic processes to challenge the hold of selected families or groups could have made a big difference.” The portfolio investments and commercial transactions, and government policies remained nontransparent. The economic as well as political agents had little incentive to look into the transactions more closely. “The unchallenged power of governance was easily translated into an unquestioned acceptance of nonaccountability and nontransparency, often reinforced by strong family links between the government and the financial bosses” (pp 185-86).

The other four freedoms in Sen’s list are: economic facilities, social opportunities, political freedoms, and protective security. 2 All page references are to Amartya Sen, Development as Freedom, New Delhi: Oxford University Press (Paperback), 2000, unless otherwise noted. Parth J Shah 1


Transparency Guarantees

Reading between the Lines and off the Page The recent SARS epidemic provides another example. China’s non-democratic system allowed the government to hide and then to lie to its citizens about the existence and spread of the virus. Unfortunately for the Chinese government, virus can’t be crushed with tanks. The best course was to be transparent and open— inform all citizens as quickly and fully as possible, and prepare medical personnel and facilities to deal with the virus as and when they had the encounter. Centralisation of information and treatment, like central economic planning, is a recipe for disaster. As Friedrich Hayek has shown, the most efficient way to deal with the ‘economic...
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