The purpose of this paper is to examine whether Amartya Sen's capability approach can suggest an appropriate theory of education for ethical development. Many advocates of Sen's capability approach insist that his approach is superior to rival theories of education, including the human capital theory. This is because Sen emphasizes the purpose and various roles of education for achieving substantial freedom while rival theories focus on the instrumental aspects of education. A focus on rival educational theories often results in the negative effects seen occurring in colonial education. In principle, we agree with the advocates of Sen's capability approach. However, we doubt that Sen's emphasis is sufficient for guaranteeing that his capability approach is the appropriate theory of education for application in the context of ethical development. It does not have theoretical completion, and it gives no guidance as to conflict resolution concerning the roles, or value, of education. Nor does it give guidance as to how to implement pedagogical strategies. This incompletion allows economically instrumental values to dominate intrinsic values and non-economically instrumental values, as seen with the educational Millennium Development Goals. This prioritization is what has occurred in colonial education through the application of human capital theory. We suggest that in Sen's capability approach, firstly, the meaning of the intrinsic value of education should be clarified; secondly, the non-economically instrumental roles of education should be explicated in the context of development; and finally, the priority of the intrinsic and the non-economically instrumental roles of education value should be taken over the economically instrumental values. In this revised theory, people's substantive freedom is achievable through education, people's aboriginal identities and values remain intact, and developing countries take seriously pedagogical strategies.