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Substantive freedoms, capability, and ethical demands

Amartya Sen, recipient of the Nobel Prize in Economics in 1998, is most famous for his contributions to welfare economics and for his freedom-based ‘capability’ approach. Developed in the context of social choice theory, the idea of capability has found application in a number of other fields, such as human development and, more recently, in the context of human rights and justice theory.[1] This section will argue that Sen’s capability approach can contribute to a new perspective on consumer law, as it bridges the ideas of substantive freedom, welfare, ethics, and human rights, which, in turn, are increasingly important aspects of consumer life. The capability perspective may also be particularly relevant for the European case, because it has been suggested as an approach that can combine social justice with economic development.[2] Before discussing the applicability of the capability approach to EU consumer law and human rights, we briefly review some key concepts in Sen’s theoretical approach.

‘Capability’—the cornerstone of Sen’s theory—is defined as ‘a substantive freedom to achieve alternative functioning combinations’.[3] In turn, ‘functioning’ (or more simply, a function) refers to the objectives or ‘things’ that a person may value, or may enjoy doing or being,[4] which range from basic needs or activities such as nutrition and health, to more sophisticated ones, such as taking part in the political life of the community.[5] The capability concept focuses in particular on the ‘real opportunity’ of individuals to achieve valuable outcomes, as opposed to concentrating merely on the means to achieve these outcomes.[6] In particular, this approach puts an emphasis on effective freedom and on what individuals can achieve with their resources, rather than focusing on the resources themselves and their allocation (e.g. on commodities or income). This sets Sen apart from previous economists.[7]

Sen stresses that similar material resources need not lead to equal capabilities, because people have different abilities and opportunities to convert the means at their disposal into ‘functions’, depending on personality traits, education, and, importantly, the environment. In particular, the legal system in which individuals live can determine the capacity to exercise certain functions, therefore having an important impact on capabilities.[8] For example, inequality may be reduced by an opportune legal design.[9] An economic, social, or legal system, Sen argues, should expand the capabilities of individuals.

Furthermore, Sen sees a close link between freedom, ethical values, and responsibility—sometimes also called ‘agency’. He argues that a focus on substantive freedom, providing the opportunity to choose between options, empowers individuals, but this comes with an increase in responsibility or obligations. According to Sen: ‘Since a capability is the power to do something, the accountability that emanates from that ability—that power-is a part of the capability perspective, and this can make room for demands of duty.’[10]

Sen’s concepts and ideas have influenced policy-makers at the international level, and in particular in developing countries, where issues of social justice are very pressing. However, they have also received attention in developed countries. They have, for example, surfaced in European social policy; notably, in the Supiot Report[11] and have been discussed as an inspiration to develop European contract law.[12]

Sen’s approach to substantive freedom may provide new perspectives in the field of EU consumer policy too, for several reasons, which will be discussed in what follows: its focus on substantive freedom and choice, its attention to diversity, responsibility, and ethics, and because of its links to the debate on human rights.

The capability approach stresses the importance of substantive freedom and effective choice, which makes Sen’s theory immediately relevant for any theoretical discourse on consumers, who constantly have to choose between goods and services in the global marketplace. While most daily purchasing choices are trivial, others are complex and can have a major impact on the life of consumers, for instance binding them financially to long-term contracts. At the same time, while the variety of products and services have increased considerably, rational and effective choices are sometimes rendered more difficult or hindered by a number of factors, such as aggressive advertising, and lack (or overflow) of information.[13] From a capability perspective, these difficulties are particularly relevant because they constrain the substantive freedom of consumers and thus provide a strong case for policy actions and development of EU consumer law towards enhancing consumer knowledge. For example, this could be achieved by requiring firms to provide simple and comparable information and by building consumer knowledge through education or independent advice, particularly in complex areas such as financial services, where choices may have important and lasting effects on consumer welfare. Interestingly, as we will see in the next chapter, a financial capability approach has inspired the UK consumer policy precisely in this sector.

Sen’s focus on substantive freedom and real opportunity also implicitly calls for empowering and inclusive measures. Such a perspective could inspire an approach that focuses on enabling consumers to exercise their rights effectively and promote their interests, thus reducing a discrepancy that has been noted between formal recognition of rights and the ability to defend these latter. Indeed, it has been observed that although the law provides consumers with an increasing number of rights and protection provisions, individuals sometimes face barriers to solving practical problems effectively and refrain from seeking help, a challenge compounded by the limited resources of enforcement authorities.[14]

Another core feature ofthe capability approach is that it acknowledges human diversity, highlighting that individuals have different abilities and opportunities to use resources or participate in economic activities. As discussed at the beginning of this chapter, this is relevant for EU consumer law. The OECD and EU have recently highlighted the existence of an increasing number of consumers who can be considered as ‘vulnerable’, for example due to their age, limited economic resources, or lack of knowledge.64 These consumers may struggle to participate actively in complex markets and thus risk social exclusion. Sen’s theoretical system, recognizing differences in individuals’ capabilities, would then be a natural foundation for a consumer framework flexible enough to respond to the needs of different consumer groups, and therefore able to address these social challenges.

A final feature of Sen’s theory which may inspire consumer law is its focus on ethics and responsible behaviour. In his book On Ethics & Economics, Sen criticizes mainstream economic theory for separating ethics from economics, and argues instead that human behaviour and choices are not only determined by self-interest, but are also driven by other goals, values, and ethical con- siderations.65 To describe this dualism, Sen uses the terms ‘well-being’ and ‘agency’. Well-being concerns the individual’s personal advantage.66 Agency, in contrast, ‘takes a wider view of the person’ as an actor pursuing broader objectives, commitments, or values, which may go beyond the realization of personal well-being. The separation of agency and well-being in Sen’s approach introduces the possibility of moral conflict, that is to say, a discrepancy between what a person does in obedience to a moral principle, and what a person ‘would like to do’, in the absence of such a moral imperative. Sen argues that economics could be made more productive by paying explicit attention to the ethical motivations that influence human choice. For example, in his book on The Idea of Justice Sen shows how the concepts of agency, from consumer organizations or public authorities to resolve them and seldom consider courts for dispute resolution; Communication from the European Commission, A European Consumer Agenda—Boosting confidence and growth, COM(2012) 225 final, 22.5.2012.

  • 64 OECD Document, ‘The Changing Consumer and Market Landscape’ (n 7), pp. 24-7; see the Communication from the European Commission, A European Consumer Agenda—Boosting confidence and growth (n 63).
  • 65 A. Sen, ‘Well-being, Agency and Freedom: The Dewey Lectures 1984’, (1985) 82 J. Philosophy, pp. 203 et seq.
  • 66 Sen, ‘Well-being, Agency and Freedom (n 65), pp. 203-4; see also A. Sen, On Ethics and Economics (Oxford: Basil Blackwell, 1987), pp. 40-1 and 58-9.

freedom, and capability can be relevant to approach environmental challenges and further sustainable development objectives, focusing on a broad view of the quality of life.[15]

Sen’s theoretical approach could thus provide the basis to develop a legal approach which takes into account market ethics and sustainable development, reflecting the broader dimension of modern consumption.[16] This would require law and policy incentives in the form of information and education to promote consumer awareness. The application of the capability perspective in consumer law may thus generate a dyad of autonomy and responsibility whereby consumers are empowered, but also have a bigger role to play in terms of sustainable behaviour.

In conclusion, Sen’s theory may help to reconcile conflicting dimensions of EU consumer law: freedom and market goals on the one hand, and social and ethical values on the other, showing that these are all promoting substantive freedoms. This is further confirmed by looking at these issues from a human rights angle, which is prominent in Sen’s work, as discussed next.

  • [1] A. Sen, Commodities and Capabilities (Oxford: OUP, New Delhi , 1985); M. Nussbaum andother scholars have further developed the capability approach: M. Nussbaum, ‘Capabilities andHuman Rights’, (1997) 66 Fordham L. Rev., p. 273.
  • [2] In EU law the capability approach was initially mainly tested in the field of EU employmentlaw and fundamental rights: R. Salais & R. Villeneuve, ‘Introduction: Europe and the Politics ofCapabilities’, in R. Salais & R. Villeneuve (eds), Europe and the Politics of Capabilities (Cambridge: CUP,2004), pp. 3-5; S. Deakin & J. Browne, ‘Social Rights and Market Order: Adapting the CapabilityApproach’, in T. Hervey & J. Kenner, Economic and Social Rights under the EU Charter of FundamentalRights: A Legal Perspective (Oxford: Hart Publishing, 2003), pp. 33 et seq.
  • [3] A. Sen, Development as Freedom (Oxford: OUP, 1999), p. 75.
  • [4] Sen, Commodities and Capabilities (n 50), p. 18.
  • [5] A. Sen, The Idea ofJustice (Penguin Books, 2010), pp. 231-3; Sen, Development as Freedom (n 52), p. 75.
  • [6] Sen, The Idea of Justice (n 54), pp. 231-3 and p. 287.
  • [7] See also Arango, who argues that Sen’s approach to social justice appears more realistic andcontextualized than the approach taken by liberal scholars such as von Hayek: R. Arango, ‘BasicSocial Rights, Constitutional Justice, and Democracy’, (2003) 16 Ratio Juris, p. 151.
  • [8] See, Deakin & Browne, ‘Social Rights and Market Order’ (n 51), pp 27 et seq.
  • [9] See also Deakin & Browne (n 51), pp. 27 et seq.
  • [10] Sen, The Idea of Justice (n 54), p. 19, and pp. 270-1.
  • [11] Supiot Report, Au-dela de Pemploi: Transformations du travail et du droit du travail enEurope, Rapport pour la Commission Europeenne (Paris: Flammarion, 1999). Salais & Villeneuve,‘Introduction: Europe and the Politics of Capabilities’ (n 51).
  • [12] S. Deakin, ‘ ‘ "Capacitas”: Contract Law and the Institutional Precondition of a MarketEconomy’, (2006) 3 Eur. Rev. Contract Law, p. 317; M. Hesselink, ‘European Contract Law: A Matterof Consumer Protection, Citizenship, or Justice?’ (2007) 2 Eur. Rev. Private Law, pp. 323-48.
  • [13] See e.g. J. Davies, 4 Consumer Protection in a Normative Context’ , in J . Devenney andM. Kenny (eds), European Consumer Protection: Theory and Practice (Cambridge: CUP, 2012),p. 370. Regarding the limits of consumer freedom from a philosophical perspective see Y. Silier,Freedom: Political, Metaphysical, Negative, And Positive (Aldershot: Ashgate, 2005), pp. 55-6.
  • [14] European Commission, Eurobarometer 2010 Report 342, ‘Consumer empowerment’survey. This survey revealed that only 16% of consumers who experience problems seek help
  • [15] Sen, The Idea of Justice (n 54), p. 248.
  • [16] Sen, Development as Freedom (n 52), pp. 18-19.
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