The Myth of Redistributive Justice
Elements of Justice
Cambridge University Press, 2006, ix + 243 pgs.
David Schmidtz means the title of his outstanding book literally. He does not present a tightly integrated theory of justice; rather his "contextual functionalism . . . is pluralist insofar as none of its four primary elements is an overarching standard to which the others reduce. The theory is contextual insofar as respective elements rule only over limited ranges" (p. 17, emphasis removed). Rather than summarize each of the four elements—desert, reciprocity, equality, and need, I shall concentrate on a few of Schmidtz’s illuminating remarks.
Everyone is familiar with a common argument for progressive taxation. Owing to diminishing marginal utility, a dollar is worth much less to Bill Gates than to someone who is desperately poor. A few dollars may enable the poor man to avoid starvation: Gates would barely notice the loss of a million dollars. Would not utility increase if Gates were taxed to the benefit of the poor man? And even if maximizing utility is not all of justice, is it not at least an important part of it?
But is not the response to this argument almost as well known? We can say that a person values one good more than another: I would, e.g., prefer an ice cream cone to a second copy of Mrs. Nussbaum’s book. But one cannot measure how much more utility I get from my preferred choice: utility is an ordinal, not a cardinal magnitude. If so, it is senseless to ask whether a dollar is worth more to Gates or a poor man. Utility cannot be measured at all, much less interpersonally. Nor is this view confined to Austrians: it is the accepted view in mainstream economics.
Do we need to address the argument further? Many people dismiss the economists’ view: granted that there is a technical sense of "utility" in which the economists are correct, do we not know, in a common sense way, that a dollar is worth more to the poor man than to Gates? And we need not here abandon economic theory. We have only to assume that people’s utility functions are roughly the same, and both Paul Samuelson and Kenneth Arrow will tell us that the argument from diminishing marginal utility is correct.
It is here that Schmidtz enters the scene. He asks, what follows from the fact that a very rich person may have little to gain from an increase in consumption? Will he not be likely to invest his money in production? A poor person, by contrast, will spend nearly all of his income on consumption. If, then, a growing economy benefits most people, it may turn out that redistributive taxation will hurt rather benefit the poor. "A society that takes Joe Rich’s second unit [of corn] is taking that unit away from someone who . . . has nothing better to do than plant it and giving it to someone who . . . does have something better to do with it. That sounds good, but in the process, the society takes seed corn out of production and diverts it to production, thereby cannibalizing itself" (pp. 145–46).
But is not Schmidtz here changing the subject? Does not the argument assume constant production? Schmidtz answers that unfortunately, "many people, and possibly Arrow and Samuelson, reason as follows. If the DMU [diminishing marginal utility] argument’s strongly egalitarian conclusions do not quite follow in a world of production, what presumably does follow is a suitably weakened version of these same egalitarian conclusions. Not so. In a world of production, DMU can weigh against egalitarian redistribution rather than for it, depending on the exact nature of initial endowments and production functions" (pp. 146–47).
It is all very well, a critic might respond, to allege benefits to the poor from higher production; but do we not know that, in recent years, the poor’s share of income has decreased and that of the rich grown ever higher? Schmidtz answers with a simple but fundamental question of his own: why should we care about income shares? Is not what matters to a poor person how well he is doing, rather than whether his gains equal someone else’s? "Critics of capitalism once scoffed at the cliché suburban goal of ‘keeping up with the Joneses.’ Critics now treat evidence that some group is failing to get ahead of the Joneses as a basis for deeming capitalism a failure. That is what pundits . . . are saying when they lament that some income group’s share has not increased. (Income shares add up to 100 percent; no share can increase unless another share decreases. . . .) Elevating that goal [of keeping up with the Joneses] to the status of a principle of justice is mindless" (p. 118). Further, Schmidtz, an economist as well as a philosopher, maintains that, so far as recent conditions in the United States are concerned, "if we look only at changes in household income, we see only part of the picture . . . gaps in household income are to some degree accounted for by differences in household size" (p. 129).
In like fashion, Schmidtz maintains that a system that allows initial acquisition easily overcomes a common egalitarian objection. What happens, "left libertarians" and Georgists inquire, if people appropriate all unowned property? Will not latecomers be disadvantaged, if not altogether squeezed out? Schmidtz vigorously dissents: "latecomers would see first comers as a threat if it were really true that, in a first possession regime, it is better to arrive early rather than late. But it is not true. One central fact about any developed economy: Latecomers are better off than the first generation of appropriators. . . . First possessors pay the price of converting resources to productive use. Latecomers reap the benefits" (p. 156).
Schmidtz has made an insightful point, but he presses it too far. He suggests that "the Lockean Proviso—that as much and as good be left for others" (p. 156), far from prohibiting original acquisition, in some cases requires it. Without private property, the tragedy of the commons threatens. If so, then "when resources are scarce, the Proviso requires appropriation" (p. 156).
This is not the case. The Proviso is a limit on appropriation: it says that appropriation cannot take place unless a certain condition is fulfilled. It does not require anyone to appropriate property. The fact that a tragedy of the commons threatens does not change this. Schmidtz can, if he likes, introduce a moral principle requiring persons faced by a tragedy of the commons to appropriate; but this is not the Proviso but another principle.
But this is not a major matter. Schmidtz is entirely right to identify a failing among many philosophers who defend equality. If equality matters, it does so as a means of improving the condition of those who are suffering. As Elizabeth Anderson, a noted egalitarian philosopher, puts the point: "recent egalitarian writing has come to be dominated by the view that the fundamental aim of equality is to compensate people for undeserved bad luck. . . . The proper negative aim of egalitarian justice is not to eliminate the impact of brute luck in human affairs, but to end oppression" (p. 115).
This is not, of course, to admit that promoting equality is in fact needed. Rather, the issue is what, if anything, could be a reason to support such a policy. Incredibly, some philosophers deny Schmidtz’s point. Larry Temkin, e.g., criticizes "humanitarianism" because it ignores the badness of inequality per se. Equality, he thinks is required even if it does not make people better off.
Even if private appropriation of property and inequality benefit people, can a critic of capitalism at least say that the rich do not deserve their wealth? If their wealth helps the rest of us, well and good; but this does not make them morally deserving of their wealth. Robert Nozick does not challenge egalitarians about moral desert; instead, he maintains that one can be entitled to something without deserving it. Schmidtz adopts a bolder course.
Why do egalitarians claim that the wealthy do not deserve their superior position? They may start with greater talent or opportunities than others, but have they not made good use of their initial endowments? To this, the egalitarian responds that they do not deserve the talents or superior resources that they have successfully used to their advantage.
Schmidtz attacks with great force this notion of desert. According to the view he condemns, any element of luck in someone’s achievement renders what he has done undeserving. But why accept so demanding a view? On it, no one could ever qualify as deserving anything, since some degree of luck enters every chain of causes. We should adopt instead a "nonvacuous conception of desert, [where] there will be inputs that a person can supply, and therefore fail to supply" (p. 36).
Schmidtz suggests it might be more useful to view desert as forward looking. If one is given an opportunity, why not ask, what can I now do that will make it the case that I have made good use of what I have on hand? If I do make good use of my opportunity, then in a defensible sense I deserve it. Another acceptable use of the concept is to ask, "What did I do to deserve this? . . . the question will have a real answer" (p. 38). If, however, the question is, "What did I do, at the moment of the Big Bang, to deserve this, the answer is, ‘Nothing. So what?’" (p. 38). It is a consequence of Schmidtz’s view, which I imagine that he would accept, that not all possessors of great wealth are deserving. A person who inherits an enormous sum of money and squanders some but not all of it would not count as deserving on either of Schmidtz’s two acceptable uses of desert. But contrary to egalitarian dogma, many wealthy people will deserve what they have.
My only substantial disagreement with Schmidtz concerns the nature of moral theory. He maintains that any moral theory is necessarily tentative and incomplete: "Let us explore the idea that one way to see what a theory is, and what a theory can do, is to see a theory as a map. We begin with a terrain (a subject matter), and with questions about that terrain. Our questions spur us to build theories—maps of the terrain—that articulate and systematize our answers. . . . A map of Detroit is an artifact, an invention. So is a map of justice. In neither case does the terrain being mapped really look like that. . . . A map is not itself the reality. It is at best a serviceable representation. Moral theories likewise are more or less serviceable representations of a terrain. They cannot be more than that" (p. 21–22).
But why, in order to be perfectly accurate, must a claim about justice reproduce every detail of the "terrain" of justice? Schmidtz wrongly assumes that every abstraction must to a degree distort reality. To say, e.g., "murder of the innocent is wrong" is a perfectly true statement, even though it gives us no details about the circumstances of particular murders.
If I am right that Schmidtz’s view of moral theory is mistaken, then there is a happy consequence for his view about justice. It may turn out to be perfectly true.
I am glad that Schmidtz attacks Temkin, since I also have criticized him over the same issue. See my review of Matthew Clayton and Andrew Williams, eds, The Ideal of Equality (St. Martin’s Press, 2000) in The Mises Review, Summer 2002.
I have here greatly benefited from lectures by Roderick Long on precisive and nonprecisive abstraction. See, inter alia, his paper at the 2004 Austrian Scholars Conference, "Realism and Abstraction in Economics: Aristotle and Mises versus Friedman,"www.mises.org/asc/2004/long. pdf.