Capabilities

This entry introduces what is known as the capability approach and goes on to review various senses and uses of the notion of capability in philosophy, the social sciences, and policy.

The term capability is typically used to denote a potential, that is, the ability to achieve something that is possessed by a given entity. In philosophy and in the social sciences, the term is often used in connection with the “capability approach,” proposed by Martha Nussbaum and Amartya Sen. The capability approach was first proposed in 1979 by Amartya Sen in a lecture titled “Equality of What?”—in which Sen tries to go beyond John Rawls's theory of justice and its use of “primary goods” as the relevant space in which to assess inequality.

Sen argues that by focusing on “primary goods,” Rawls fails to take into account the differences between human beings. Different human beings will have different abilities to convert primary goods into well-being. Thus, Sen and Nussbaum argue that equality and well-being should be assessed in terms of the capabilities that human beings actually possess, which depend not only on the goods and resources they possess but also on the conversion factors that enable human beings to convert goods and resources into well-being.

Sen notes that there are other approaches that take into account the differences between human beings, such as utilitarianism (which underpins mainstream economics). However, Sen criticizes the use of utility as the space in which to assess equality and well-being. Sen argues that utility is a subjective measure, which depends on subjective preferences and may not reflect human well-being. For example, if our preferences become adapted to a given situation, our utility level may increase, but that subjective phenomenon does not mean that there is an increase in well-being. Thus, human well-being should be assessed in terms of the human functionings we have reason to value, where a human functioning is what a given human being is or does. The notion of functioning has Aristotelian roots; it has been developed especially by Nussbaum but has also been acknowledged by Sen.

Furthermore, the capability approach provides a multidimensional perspective on human well-being, since it focuses on various human functionings. However, Sen argues that equality should be assessed taking into account not only achieved functionings but also the potential to achieve. Thus, equality should be assessed in the space of the potential functionings that we have reason to value, which Sen and Nussbaum designate as valuable capabilities, that is, what a human being can be or do and have reason to value.

The capability approach has been adopted in developing concrete measures of well-being, most notably by the United Nations Human Development Programme, which publishes every year a Human Development Report, where the multidimensional approach of the capability approach is employed, going beyond the traditional measures that rely on the gross domestic product. The capability approach [Page 64]also became influential in feminist studies and within political philosophy.

In business and management studies, the term capability is more often identified with the capabilities theory of the firm. This approach goes back to Edith Penrose and is connected to the resource-based view of the firm, where the term capability refers to the ability of a firm to use resources. Like in Sen's and Nussbaums's capability approach, the aim is to go from goods and resources to capabilities. However, in the theory of the firm, capabilities are seen as relevant to the competitive advantage of the firm rather than to assessing equality among human beings.

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