Distributive Justice: An Economist's Perspective

Abstract

In Democratic Distributive Justice, Ross Zucker (2000)1 argues that a capitalist economic system constitutes a commu nity of agents with certain common aims; that the individuals who comprise this community contribute through their interde pendent activity to the promotion of those shared aims; and that the intrinsically interdependent character of most economic activity establishes a principle of distributive justice which enti tles every participant in the economy to an equal share of a part of the income and wealth created by that activity According to Zucker, the principal common aim of all agents is the preser vation and expansion of capital; for all income originates in an expanding circuit of money and production. Interruption of that circuit damages workers and capitalists, consumers and sell ers, alike. The perpetuation of this circuit depends in large part on socially organic activities. First, production is by its nature col laborative and grounded in intersectoral linkages. Second, no production process can continue unless are buyers for what that process creates. Third, con sumption patterns are themselves socially formed. And, fourth, so are the work habits upon which efficient pro duction depends. The social character of the circuit of capital, Zucker con tends, justifies egalitarianism in the dis tribution of part of the aggregate income. His argument can be read as an answer to Margaret Thatcher's famous remark, in a 1987 interview, that there is no such thing as society. There are [only] individuals] . . . and . . . families. Zucker's argument is novel and carefully developed. It is also extremely topical. Over the past two decades income and wealth inequality in the US have gone through the roof (see Bernstein, Mishel & Brocht, 2000). A similar, though less pronounced, trend is evident in Western Europe, where economic policy discussions center on whether, or how quickly, the allegedly more efficient American model should be imported. The same issues have arisen in connection with the transition to capitalism of the economies of Eastern Europe and the former Soviet Union. Recent financial scandals in the US have cast a discomfiting light on the ethical ramifications of exploding inequality, and some observers have begun to worry that the re-emergence of Gilded Age disparities in economic well-being will have profoundly destabilizing social consequences (see Krugman, 2002). Economists are notoriously self-conscious about the scien tific pedigree of their discipline. Most of us would rather talk about efficiency than about justice, and questions of distributive justice concern precisely the sort of normative issues that econ omists prefer to avoid. The conventional neo-liberal wisdom maintains that is a trade-off between efficiency and equal ity?that the latter can be enhanced only at the expense of the former. But this view is a distortion of the orthodox neoclassi cal position, which is agnostic on the desirability of alternative distributive regimes. Indeed the reluctance of orthodox economics to engage the problem of distributive justice is reflected in the ultimately vacuous criterion by which it evaluates economic out comes?Pareto optimality. A particular allocation of resources is said to be Pareto optimal if no agent's well-being can be improved without reducing the well-being of some other agent. Leaving aside the fact that the condi tions required to generate Pareto opti mal outcomes are so restrictive that they can never obtain in actual market economies, the Pareto criterion is an extremely weak prescriptive device. It says only what is obvious: that if resources can be reallocated so as to make someone better off without caus