Revealing the role of privilege in free markets, equality‐under‐law and sustainability

Abstract

PurposeThe purpose of this article is to provide techniques for distinguishing and analyzing privileges. With privileges revealed and categorized, the article provides an analysis of the impact different kinds of privileges have on free markets, equality‐under‐the‐law, and environmental sustainability. From this analysis arise recommendations for public policy aimed at improving efficiency and equality‐of‐opportunity in markets while encouraging more environmentally sustainable corporate behavior.Design/methodology/approachThe article calls upon a technique from sociology (“unpacking a knapsack”) to begin this exploration of privilege. It then uses the Harris‐Twomey typology to categorize various kinds of privilege and analyze their impact on free markets, equality‐under‐the‐law, and sustainability. The article uses examples to illustrate the importance of understanding the impact of privileges in developing effective public policy.FindingsIt is difficult to distinguish otherwise “invisible” privileges; having methods for identifying and categorizing privileges make them more visible. Second, the illustrative examples and accompanying analysis suggest that reducing the number of privileges granted by the state, especially those that are economically inefficient, will improve performance and equity across an economy. Where privileges are necessary for efficient resource use or market development, the state would improve efficiency and equality by charging fees equal to the opportunity costs borne by others or the cost imposed on others by the privilege‐holder.Practical implicationsUsing the techniques of analysis and following guidelines for public policies consistent with the principles explored here would be likely to improve access to and efficiency of free markets (making them more “free”), create a more level playing field (greater equality under the law) and diminish the negative environmental impacts of corporate activity by changing the incentive systems that currently encourage monopolistic tendencies in markets, concentration of power, and transference of environmental costs from corporations to the public.Originality/valueThis paper combines analytic techniques from Sociology, Economics, and Management to gain a fresh perspective on the existence and impact of privileges on markets, society, and the environment. This fresh perspective reconciles tensions between equality and efficiency and provides guidelines for effective public policies.