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Capitalism best for the poor

Where Rawls was Wrong

John Rawls in Paris in 1987.

On Rawls’ 100th birthday it is time to reflect critically on his main arguments...

American political philosopher John Rawls, one of the best-known left-wing thinkers of the twentieth century, would have been one hundred years old yesterday: He was born on 21 February 1921, and passed away on 24 November 2002. Even if Rawls was perhaps over-estimated in the academy, there is no denying that he posed an important question: How could we derive or construct a society in which the worst off would be as well off as they could be? He thought that a society which provided the best living standards possible for the poorest part of the population would be a just and desirable one. In this he was different from another left-wing icon, French economist Thomas Piketty who is more worried, it seems, about the rich than the poor. Piketty wants to bring down the rich, not to lift up the poor. But most normal people would think with Rawls that poverty is a problem, even a social evil, whereas they might differ from him by regarding affluence as a solution, something to be welcomed. We are not all like Gore Vidal who said that every time a friend succeeded, a little something inside him died.

In his Theory of Justice published in 1971, Rawls conducted a thought experiment: On what type of society would a group of enlightened and rational human beings agree if they did not know how they would themselves fare in that type of society? This group was, in other words, deliberating under Rawls’ famous ‘veil of ignorance’, a device designed to eliminate personal preferences and special interests, just like Plato deprived his philosopher-kings of property and family ties, and like Adam Smith envisaged ‘an impartial spectator’. In a long and intricate argument, Rawls tried to demonstrate that his group under the veil of ignorance would choose a society in which people enjoyed equal political liberties but where the worst off would be as well off as they could be. In other words, wealth should be redistributed from the rich to the poor up to the point when the redistribution would be counter-productive which is when the poor would end up with less than under other alternatives.

There are several weaknesses in Rawls’ complicated edifice, as Robert Nozick, Antony Flew, Jan Narveson, John R. Lucas and other philosophers have pointed out. How should we define the worst off? Would they include alcoholics and depressives, and if so, why? Rawls ignores the process by which some people come to be better, or worse, off than others. Why should the more productive for example be taxed in order to redistribute goods to the less productive? Rawls would grant the point that the more productive should not be taxed so heavily that they would cease to contribute significant amounts of money to the Treasury. But somebody like Ayn Rand would say, then, that he would just limit the robbery of the rich to the extent that they would not choose to emigrate, either ‘internally’ by producing less or ‘externally’ by leaving for a low-tax country where people have not yet learned of Rawls’ theory of justice (from Sweden to Switzerland). Or in other words, the rich should be turned into milking cows for the poor but they should not be killed or starved: the goal would be to maximise their milk production available to others.

However, some would argue that individuals should not be regarded as resources for others, or as milking cows rather than persons. Imagine, as Nozick does, that there are several Robinson Crusoes on as many islands and that they are isolated from one another for many years. Some of them will have hit upon more fertile islands than others; and some of them will have worked harder than others. As a result, their living standards come to vary. Now they suddenly discover one another, perhaps through new transport technology. Does this mean that the poorer ones have some claim on the assets of the more affluent ones? Why would that be? There is no treasure chest lying ready to be redistributed as there is in Robert Louis Stevenson’s novel. Let us then continue the saga and the Crusoes start to trade with one another, to their mutual benefit. But this would not create a treasure chest, either, because they would simply pay one another the required price for the goods and services that they are buying and selling. The point is of course that there is no such thing as distribution: there is only redistribution where assets are taken from some and transferred to others (often with a lot of these assets disappearing in the process).

Economic liberals would say that Rawls is operating under the illusion of the treasure chest which does not belong to anyone and which Harvard-educated philosophers may distribute at will. The fact of the matter is, economic liberals would say, that individuals are entitled to the wealth they create themselves with their labour, their abilities, talents, and skills. Assume that Iceland has an income distribution that a Rawlsian would consider just, in which the worst off group is better off than it would be under any other type of system (and this is indeed the case: the level of absolute poverty in Iceland is about the lowest in the world). Then Milton Friedman comes along to give a lecture, charging each guest 50 dollars in admission fee. People flock to his lecture and fill the meeting hall to capacity, in total 500 people. After the event Friedman is richer by 25,000 dollars and the 500 listeners are poorer each by 50 dollars. Yes, the income distribution has become less equal. But where is the injustice? Who has been done down by this? Are the worst off in society really worse off by this transaction between Friedman and his audience than they would have been if it had not taken place? And would Friedman, or any other person of exceptional abilities (artists, sportsmen, entertainers, and so on), find any reason to develop and exercise their special talents and to visit Iceland to share those talents with others, if most or all of the income derived from the events organised would invariably be seized by government?

Rawls has an answer to this objection. It is that nature distributes abilities arbitrarily and that therefore people do not deserve them. Some are simply born with greater abilities than others. He is partly right. The abilities individuals receive from nature are strictly speaking not deserved. But individuals make different use of the talents with which they are born: some develop them, others waste them. Surely those who develop them deserve the additional income they derive from having done so. It is difficult to distinguish between the contribution of nature and the contribution of the individual, but this is a difficulty which weakens rather than strengthens Rawls’ case. But more importantly, even if people do not deserve the abilities with which they are born, they may be entitled to them. These abilities may be an integral part of their personality, just as their eyes or kidneys are. Few would advocate seizing a person and forcing her to give up one of her eyes in an operation so that a blind person would gain one eye. This may for technical reasons still be a purely theoretical question, but the example of the kidneys is not. There is something intuitively wrong with the argument that you have to give up one of your kidneys, against your will, just so that somebody who desperately needs a kidney can survive. Here the main point is again that you are not owned by others. You are not from a herd of milking cows. You have a distinct personality; and the abilities, skills and talents with which you are born and which you have subsequently developed and cultivated, form an integral part of your personality.

Perhaps the chief weakness of Rawls’ theory of justice is that it is not really a theory of justice, in the traditional sense. It is about prudence. It is a strategic move made by those who fear the worst in an unknown future. The individuals Rawls puts under a veil of ignorance fear ending up in the group of the worst off. Therefore they prudently postulate that the good society would be one in which the worst off would be as well off as they could be. But normal individuals are motivated by hope no less than fear. They prepare both for the best and the worst. They might, under Rawls’ veil of ignorance, decide to support a society where there would be a safety net, under which nobody needed to fall, but that then people would be free to create as much wealth as they could, provided they would obey the principles of a decent society: ‘Juris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere.’ The basic principles of law are: to live honorably, not to harm any other person, and to render each his (or her) own.

Therefore, while the question where the worst off are as well off as they could be, is not the only question to be asked of the good or decent society, it remains an important question. And where would that be, on present evidence? A group of economists have been trying to measure economic freedom over countries and over decades (in space and time, as it were) and to see whether there are any relationships between economic freedom and other statistical aggregates. The results are remarkable. If you divide the 162 jurisdictions they survey into quartels according to economic freedom, in 2018 the average GDP per capita in the top quartile was 44,198 dollars, compared to 5,754 dollars in the bottom quartile. For a Rawlsins it is however more interesting how the worst off fare. In 2018, the average income of the poorest 10 per cent in the top quartile was 12,293 dollars, compared to 1,558 dollars in the bottom quartile. This is amazing: the average income of the poorest 10 per cent in the freest economies was more than twice the average per-capita income in the least free economies.

Thus, even if we would adopt Rawls’ prudential approach (abandoning the quest for justice in the traditional sense) and concentrate on where the worst off would as well off as they could be, we would reach capitalism, the system of private property, free trade, and limited government. This is of course something the poor of the world know in their hearts, without having had the benefit of reading learned treatises by Harvard philosophers. Everywhere they try to get from more to less socialism: from Mexico to Texas, from Cuba to Florida, from China to Hong Kong, and from North Korea to South Korea.  

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