Freedom and Economic Order

by Linda C Raeder

  Nor are they more greedy. Greed is yet another propensity of human nature found in every economic order known to man, capitalist, socialist, or mixed, ancient, feudal, or modern. The classical Greek philosophers were among the first to highlight and condemn insatiable desire, the immoderate appetite they termed pleonexia.[72] Capitalism does not cause human beings to develop an insatiable appetite for ever-greater material possession, and socialism does not transform human beings into selfless altruists. Such qualities, again, are a function of personal or individual character and values, not the prevailing economic system. Moreover, greed can be expressed in many forms, not all of which are economic. Greed can and does manifest itself not only in the drive to accumulate material wealth but also in the drive to accumulate political power, which can provide to its holders a non-economic means of accumulating wealth and privilege. Political elites in communist, socialist, quasi-socialist, fascist, and mixed economies such as the contemporary United States can gratify their greed not, as must the capitalists, by producing items of value to the consumer but rather by appropriating the resources of other persons through taxation or direct confiscation or otherwise using political influence to gain personal wealth. Luxury trips to Spain and Martha’s Vineyard, like villas on the Black Sea, can be acquired by political as well as economic means.

  Ten

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  Justice vs. Social Justice

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  We have rights as individuals to give as much of our own money as we please to charity; but as members of Congress we have no right so to appropriate a dollar of public money. —Congressman Davy Crockett

  The most damaging moral charge leveled against the market order, indeed the centerpiece of the Marxian critique, is the characterization of capitalism as inherently unjust. Such a serious allegation demands an equally serious response. If capitalism truly is unjust and socialism truly does secure a higher justice, as Marxists and fellow travelers claim, then regardless of the material prosperity generated by capitalism, it cannot be supported by decent people. Indeed the question of the justice and morality of the two competing paradigms may rightfully be regarded as paramount to all other considerations.

  What is justice? The question is as old as political philosophy itself, the central inquiry of Plato’s Republic, widely regarded as the first formal contribution to that uniquely Western discipline. Political philosophy, as we recall, is a specialized branch of moral philosophy. Moral or ethical philosophy deals with the substance of morality in general and the requisites of a personally ethical existence. Political philosophy focuses on a related but narrower issue: the moral rules that one human being should observe in his treatment of other human beings. Such an inquiry, as previously observed, is not optional for human beings but rather springs from the nature of things, from the fact that “no man is an island.” Human existence is invariably existence within community, an association referred to by the Greeks as the polis. From birth to death every person (assuming he is “neither a beast nor a god,” as Aristotle remarked) is necessarily in relation with other persons. Political philosophy deals precisely with such relations, that is, the question of how human beings should treat one another given the fact that human existence is social existence. It deals, in other words, with the question of justice. [73] Indeed, the relation between political philosophy and justice is so close as to border on identity, sharing as they do the identical moral concern, namely, the rules of just conduct that individuals should observe in their treatment of fellow human beings, in other words, the rules that ought to govern human relations in society. The question of justice, then, like political philosophy more generally, arises from the social nature of human existence; indeed, it is the “social” virtue” par excellence. Robinson Crusoe has many concerns but justice is not among them. Alone on his island, he does not confront the question of how he should treat other persons or how they should treat him—the question of political philosophy in general and justice in particular.

  Deontological and Consequentialist Morality

  The broad discipline of moral philosophy conventionally comprises two main categories or schools of thought—so called deontological morality and consequentialist morality. Deontological morality is correlative to the philosophical discipline of ontology, which is concerned with the nature of Being, the kinds of things that have existence—what is. The deontological school conceives morality—what is right and what is wrong—as deriving from Being itself, from what exists. Particular actions are regarded as right-in-themselves or wrong-in-themselves depending on their alignment with what is intrinsically right or intrinsically wrong. The deontological school thus regards morality as objective, that is, independent of subjective human preference. Traditional Western or Judeo-Christian morality falls within the deontological category. Right and wrong are thought to be rooted in what is, more particularly, in what God is, in the very Being or nature of God. Actions are regarded as right-or wrong-in-themselves if in accord with or in violation of the substance of morality-in-itself. It is right-in-itself, for instance, to be truthful and honest because truth and honesty are inseparable from the substance, nature, or Being of God. Similarly, it is wrong-in-itself to murder an innocent person or steal because such actions violate the nature of morality itself; they are inherently wrong. Deontological or in-itself morality, moreover, is pursued or avoided for its own sake, that is, regardless of consequences that may ensue (“virtue is its own reward”; “the ends do not justify the means”). The deontological school conceives consequences as more or less irrelevant to morality. What matters is doing what is right for its own sake and avoiding what is wrong for its own sake. Such a conception of morality tends toward moral absolutism. Being (what is), the root of morality, does not change and thus morality does not change, consisting rather of rules valid for all times and all places, regardless of circumstances or consequences. As we shall see, such is the kind of morality implicit in the so-called “procedural justice” that sustains both the capitalist economic order and the limited constitutional government of the American Founders.

  The second chief school of moral philosophy is generally referred to as ethical or moral consequentialism, briefly discussed in a previous context. Consequentialism, in contrast to deontological ethics, regards right and wrong not as intrinsic qualities of action-in-itself but rather as contingent on the consequence of action. What is right is that which produces right consequences; what is wrong, is that which produces wrong consequences. For that reason, ethical consequentialism is sometimes referred to as “outcome-based” morality. Standards of right and wrong are said to derive from the outcome or consequence produced by human action, not qualities intrinsic to an action itself. One of the more influential forms of ethical consequentialism in the modern period is the so-called Utilitarianism commonly associated with the teaching of Jeremy Bentham (1748-1832) and his most celebrated descendent, John Stuart Mill (1806-1873). According to Benthamite Utilitarianism, the end or goal of all human action is happiness, and the supreme end of human action, the summum bonum, is the “Greatest Happiness of the Greatest Number.”[74] The right or the good is defined as that which produces such a consequence—the “Greatest Happiness of the Greatest Number”—and wrong as that which does not. Standards of right and wrong are determined not by what is right-in-itself or wrong-in-itself, as claimed by the deontological school. Such conceptions, on the utilitarian view, have no meaning or reality. Moral standards are determined not by a nebulous and perhaps illusory “Being” but rather the consequences of human action in this world. Marxist morality, as previously mentioned, represents a second form of ethical consequentialism that has achieved prominence in the modern era. Consequentialism of any form tends toward moral relativism. The standard of right and wrong may depend on outcomes whose desirability fluctuates over time and place. The Greatest Happiness for one group of people may differ fr
om the Greatest Happiness for a group situated in different historic or cultural circumstances. The particular moral outcome aimed for by Marxism—greater equalization of wealth—does not itself fluctuate but the means necessary to achieve that end may be relative to particular historical circumstance. The moral demands embodied in the socialist conception of justice, as we shall see, represent a classic instance of “outcome-based” justice informed by ethical consequentialism.

  Justice and Capitalism

  Having discussed the two chief schools of morality in modern Western society, we are now prepared to explore the question of justice. We begin with an examination of justice as traditionally conceived within American society, that is, within a capitalist order governed by the rule of law. As we recall from previous discussion, the traditional American sense of justice is unambiguously represented by its traditional national pastime, baseball. Justice, as we have seen, involves playing by the established rules of the game (the “procedure”), and the umpire’s role is to ensure the players do so. The outcome of a baseball game does not determine the rules of fair play but rather the opposite: the rules of fair play determine the justice of the game’s outcome. The outcome of a baseball game is considered fair or just if and only if the winning team scores the highest number of runs and the team members play in accord with the rules. Although it is common to speak of a game that meets both criteria as “fair” or “just,” strictly speaking, there is no such entity as a “fair game.” We again recall that only human agents, in this case the individual players and the umpire, are capable of acting fairly or justly. Only persons are capable of honoring or violating the rules of the game because only persons possess conscious minds and capacity for moral choice. A “game” of course cannot “act,” justly or otherwise. It can only metaphorically be described as “fair” or “unfair,” a metaphor that indicates whether the team members and umpire adhered to or violated the rules of the game.

  We further recall the analogy between the role of the umpire in a baseball game and the role of government in a free society. The function of both entities is to secure the rule of law, that is, ensure that the established rules of just conduct, whether the rules of baseball or the wider “game of life,” are observed by all parties. Such a function is particularly relevant to the sphere of economic life. Capitalism, as has been discussed, is not an autonomous process but rather dependent upon a particular framework of law and morality. A functioning market economy depends upon observance and enforcement of certain rules of just conduct, such as prohibition of theft, fraud, and arbitrary coercion. Neither stealing nor misrepresentation of goods and services nor coercive force in the act of market exchange can be permitted. We have also seen that the market process is further dependent upon a widespread if tacit moral consensus that permits a requisite measure of trust among market participants. Members of society are expected to behave in accord with certain moral rules, whether implicitly embodied in custom or explicitly enforced by law. Employers are expected to pay their employees the salaries they have earned and customers to pay their bills on time. Drivers are expected to follow the rules of the road whether a police officer is nearby or not. Everyone relies upon the observance of such rules in their daily interactions with other persons. The tacit moral consensus prevailing in every society enables its members to predict the behavior of their fellows with some confidence, and social life would be impossible in its absence.

  The market order, then, is dependent upon an abstract framework of rules of just conduct, including both explicit, legal, and enforceable rules (laws and legislation) and implicit, tacit, or customary rules (practice, convention). Justice in a market economy, like justice in a baseball game, involves adherence to such an established framework, the rules of the game of life that constitute the prevailing sense of justice. Such rules embody mutual social expectations—how the individual expects to be treated and how he is expected to treat other individuals. They are expected to govern all social interaction among individuals, including business or economic interaction. The rules of just conduct require that a person who signs a contract fulfill the terms of that contract. Justice requires that a producer who advertises a product actually supply the product as described in the advertisement. Justice requires that an employee who performs his job as expected actually receive the salary initially negotiated with the employer. Justice requires that a business owner who employs his own resources to produce a good or service that is voluntarily purchased by consumers be permitted to retain the fruits of his investment, his profit. Justice requires that a person who desires a wristwatch owned by another person either persuade the owner to sell it or otherwise engage in voluntary exchange; he is not permitted to snatch the watch from the owner’s wrist. The traditional sense of justice tacitly informing the market process is eloquently summarized in Cicero’s celebrated definition—Iustitia suum cuique distribuit ("Justice renders to everyone his due”)."[75]

  Justice, again, is a social virtue that can only be exercised in dealing with other human beings. Every rule of just conduct involves a relation between persons—the person or moral agent who acts, either justly or unjustly, and another person who is the object of such action. It must again be emphasized that, strictly speaking, only a person can be just or unjust; only a person can bear moral agency. With respect to economics, people commonly speak of a “fair transaction,” as they do of a “fair baseball game.” Indeed Marx and fellow travelers, as we have seen, condemn capitalism as a whole as “unjust.” Such judgments, however, can never be more than metaphor or rhetoric; there is no such entity as either a “fair transaction” or a “just” economic system. A transaction is simply a relation between persons; like a game, it does not and cannot possess a conscious mind and thus capacity for moral choice. Similarly, an economic “system” is nothing more than a set of abstract relations, an institutionalized or formalized set of arrangements that guide transactions between and among persons. Capitalism or the market system is precisely such a set of abstract relations among individual market participants, not an autonomous entity capable of choice or action. The capitalist system as a whole is no more capable of bearing moral agency than the game of baseball. A set of abstract relations cannot act, justly or unjustly. Capitalism, like a baseball game or like “society,” can only be considered “just” or “unjust” in a loose or metaphorical sense. In all cases, such a description can only refer to the actions of the individuals participating in the order, whether the order of the market, the order of a baseball game, or the order of society as a whole. Only human beings are moral agents capable of acting justly or unjustly. An abstract name for an impersonal set of economic arrangements, transactions, or relations—capitalism—is not and cannot be a moral agent and thus is not and cannot be termed just or unjust in any literal or meaningful sense.

  Equally important, traditional justice, like law in general, is not concerned with the outcome of interpersonal transactions but rather with the means individuals employ when interacting with their fellow human beings. Justice is not concerned with an individual’s ends or goals, for instance, whether he aims to possess another person’s watch, but rather the means he employs to possess the watch (e.g., voluntary exchange, theft, or fraud). Traditional justice so conceived and as mentioned is formally classified as procedural or rule-based justice. Whether or not the acquisition of a watch is just or unjust depends on the procedures employed by the parties to the transaction, for instance, voluntary trade or violence. Such is identical to the sense of justice embodied in the game of baseball and other traditional American sports: “it’s not whether you win or lose (the outcome), but how you play the game” (the procedure). Justice so conceived applies to all human interaction within traditional American society, whether winning means scoring the highest number of runs for the team or earning the highest income in a competitive market economy. Justice is served for the losing team, as for the relatively less economically successful members of society, so long as
everyone involved has observed the rules of the games in their respective spheres (baseball and economic activity). The outcome of their various activities is irrelevant to justice.

  On the traditional Anglo-American view, then, justice is achieved when individual members of society act justly toward one another, that is, when they treat one another according to the established rules of just conduct, both legal and customary. Justice, like law and like economic theory, is not concerned with the concrete substance of individual goals (that for which a person aims) but with the means employed to achieve them. Nor is justice concerned with the outcome of the individual’s endeavors, whether or not he succeeds in realizing his goals. Traditional justice is exclusively concerned with the procedures or means individuals employ to pursue their self-chosen goals. Those responsible for enforcing the rules of justice are to be as indifferent to the outcome of individual rule-governed behavior as the umpire to the outcome of a baseball game. Their only concern is to ensure that established procedural rules have been observed. Applied to the capitalist economic system, justice is achieved whenever individuals pursue their economic goals within the established framework of morality and law. Justice is indifferent to the outcome of their economic pursuits, whether acquisition of wealth or suffering of economic loss; such outcomes are as irrelevant to economic activity as to baseball. Whether a person wins or loses the economic “game,” achieves or does not achieve prosperity or wealth, is not a matter of justice. What matters with respect to justice is whether an economic actor has played the game fairly, that is, observed the established rules of just conduct in his treatment of other market participants. In the economic dimension of human action as in sports, what matters on the traditional American sense of justice is “not whether you win or lose, but how you play the game.”