Where is the happy medium between free markets and social justice?

Clearly, if American politics are any indication, no one knows.

I’ll have to make this short, but an interesting article appeared in this mornings NYT: “Questions for Free Market Moralists” from Oxford trained philosopher and musician Amia Srinivasen.

Not being a political philosopher myself, much of philosophical the debate on justice, markets and freedom is foreign to me, though I’ve long been interested in the work of John Rawls and his monumental 1971 work “A Theory of Justice.”

Rawls explored the limits of distributive justice, that is, how goods, services and rights can be equitably pass around in a society to maximize benefits to both individuals and society. In a Rawlsian society, each individual has equal access to the same rights and opportunities as all others. Moreover, inequalities (assumed to be inevitable) are arranged such that they benefit the weakest members of society.

Nozick, penned the 1974 book “Anarchy, State and Utopia” (which I have not read) in response to Rawls’ work. He argued that goods and services can only be justly distributed through pure free exchange. The state then serves merely to facilitate exchange by protecting the rights of property.

Srinivasen rightly indicates that most large democracies are decidedly Rawlsian in construction, but that ideologies, particularly in the United States, are swinging toward Nozick (though people might argue that we are becoming more Randian than Nozickian).

Rawls and Nozick represent the two poles of mainstream Western political discourse: welfare liberalism and laissez-faire liberalism, respectively. (It’s hardly a wide ideological spectrum, but that’s the mainstream for you.) On the whole, Western societies are still more Rawlsian than Nozickian: they tend to have social welfare systems and redistribute wealth through taxation. But since the 1970s, they have become steadily more Nozickian. Such creeping changes as the erosion of the welfare state, the privatization of the public sphere and increased protections for corporations go along with a moral worldview according to which the free market is the embodiment of justice. This rise in Nozickian thinking coincides with a dramatic increase in economic inequality in the United States over the past five decades — the top 1 percent of Americans saw their income multiply by 275 percent in the period from 1979 and 2007, while the middle 60 percent of Americans saw only a 40 percent increase.

Nozick’s libertarian position (like Rand), however, leads to some inevitable moral quandries. Is pure “free trade” always fair? Is the exploitation of workers facing few other employment options, and the resultant maximization of profit fair to society?

The problems with Nozick’s position is a problem inherent in neo-classical assumptions that supply and demand markets are based on perfect information between buyers and sellers. It is assumed that buyers know all prices and can make informed choices on purchases.

We know this not to be the case, which is exactly why health markets in the United States are so inefficient and prices so vastly inflated. If one is unconscious from a heart attack, does one really have time to shop around for the best deal possible? Our market approach to health care in the United States has created a system that is neither fair nor efficient.

But the issue here is one of morals. Is it acceptable that we allow for example, loan sharks to exploit the desperate conditions of poverty, or that we allow the poor to sell their organs (or even their daughters), or that we allow the Wal Marts of the world to pay absurdly low wages and offer few benefits, simply because they operate in unemployment-endemic areas of the country?

to concede that there is more to freedom than consent, that there is such a thing as nonviolent exploitation, that people shouldn’t be rewarded and punished for accidents of birth, that we have moral obligations that extend beyond those we contractually incur — this is to concede that the entire Nozickian edifice is structurally unsound. The proponent of free market morality has lost his foundations.

Clearly, there is no happy medium between equality and freedom. What one might call freedom, for example, from exploitation, will be seen as an imposition of the other to realize his or her economic dreams.

OK, gotta go.

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About Pete Larson

Assistant Professor of Epidemiology at the Nagasaki University Institute for Tropical Medicine

One response to “Where is the happy medium between free markets and social justice?”

  1. Art Damage says :

    They can meet here: allow a dollar for dollar deduction of donations to non-profits from income tax owed. Hence, non-profits will compete for tax payer dollars with “invisible hand” dynamics at play, with the general welfare instead of profit as the main objective.

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