by Tim Sommers
A 2011 survey by Michael Norton and Dan Ariely, of Harvard’s Business School, found that the average American thinks the richest 25% of Americans own 59% of the wealth, while the bottom fifth owns 9%. In fact, the richest 20% own 84% of the wealth, and the bottom 40% controls only 0.3%. An avalanche of studies has since confirmed these basic facts: Americans radically underestimate the amount of wealth inequality that exists – and the level of inequality they think is fair is lower than actual inequality in America probably has ever been. As journalist Chrystia Freeland put it, “Americans actually live in Russia, although they think they live in Sweden. And they would like to live on a kibbutz.”
Thomas Piketty ramped up the inequality debate, a couple of years later, with “Capital in the Twenty-First Century”, a massive 250-year survey of wealth inequality. He discovered that r > g. That is, the rate of return on investment is always greater than growth. The rich really are getting richer – and the poor? Well, not so much. The post-war middle-class, Piketty warned, may well have been a historical anomaly. Economic inequality is likely to get worse – and never get better – without coordinated international action. The good news is that not one, but two, serious candidates in the current Democratic Presidential Primary are endorsing versions of Piketty’s “Wealth Tax” – Bernie Sanders and Elizabeth Warren. (And, by the way, the English-translation of Piketty’s latest book, “Capital & Ideology” is due out in March.)
So, what should the distribution of wealth be? What does justice have to say about wealth inequality?
Here are some of the main positions philosophers have taken. Libertarians, or as they are sometimes misleadingly labeled, “classical liberals”, don’t believe that the distribution of wealth is a matter of justice at all. Utilitarians think whatever distribution maximizes the overall amount of wealth (or utility, really (see the caveat below)) is just. Welfare state liberals, sufficientarians, and many of the advocates of Universal Basic Income (UBI) think that there should be a certain minimum level of wealth that no one should have to fall below. Egalitarian liberals argue for a still more equal distribution. John Rawls, for example, argued that the least well-off members of society should be as well-off as possible. But Rawls still allows for inequality where it works to the benefit of everyone. Some socialists, Marxists, and G.A. Cohen go all the way. They think the distribution of wealth in society should either be straight-up equal or, as in Marx’s famous (notorious?) formulation, “from each according to their ability, to each according to their need”. Here are just a few of their arguments.
Wealth is not just out there waiting to be distributed by the state. Wealth is created. Things mostly come into being already attached to someone, i.e., owned, the result of someone’s labor. Hence, there is nothing for justice to distribute or redistribute. People own themselves and whatever they can acquire by laboring or free exchanges with others. Justice is just preventing force, fraud, and theft.
Here are just a couple of problems with this view. The current distribution of wealth is, in fact, mostly the result of force, fraud, and theft. Robert Nozick, one of the most influential philosophical libertarians of the twentieth century, recognized this. In a much-overlooked footnote in “Anarchy, State, and Utopia”, he suggested that we would need something like 200 years of Rawls’ “difference principle”, before we could start to have a just libertarian social order.
Also, things rarely come into being as the result of a single-person’s labor. As Obama said, “You didn’t build that” – at least on your own. Often, then, the question of how the returns on collective effort should be divvied up is unavoidable. The state’s role is not helpfully viewed (as many libertarians suggest it should be) as simply enforcement of a mutual protection pact. Developed economies are almost impossibly complex cooperative ventures. Whatever role markets should play in modern economies, asking how their fruits should be shared is not just a reasonable question, it’s an inevitable one.
There’s a crucial misunderstanding that is easy to make here. The question of how wealth should be distributed is not, or at least not mainly, the question of how wealth should be redistributed. The distributive question, or at least the one Rawls, Cohen, and other analytic philosophers are asking, is what would the ideal distribution of wealth be – all other things being equal. It doesn’t follow, from the answer to that question, that we should immediately seize everyone’s holdings and redistribute them according to that principle. Rather, the principle gives us a background ideal as a reference point going forward. Knowing what distribution of wealth we think is ideal helps us make decisions about taxes, property law, corporate law, and everything that touches the basic structure of our society.
Why not, then, view whatever distribution of wealth maximizes the overall wealth of society as a whole as the just one? That’s utilitarianism. It’s effects over the last 150 years on philosophy, economics, law, and even the design of factories and prisons would be hard to overstate. It makes sense too, right? Why shouldn’t the distribution that creates the most wealth be ideal?
But would you like to move to a society where the total amount of wealth is much higher than in our society, but in which one person owns 99% of that wealth – and everyone else lives in abject poverty sharing the 1% left over? Or would you think a society just if 10% of the people in it were slaves, but the other 90% were very, very well-off because of those slaves? Would you like to live in the wealthiest society in history, if in that society the richest 1% owned more that the bottom 90%? By the way, you do, if you live in the U.S.
The trouble with utilitarianism is that we do, and should, care about, not just the total amount of wealth, but how that wealth is distribution. One last example. Which would be fairer? A society where two people equally split 100 units of wealth or one where one person has 101 units of wealth and the other has 1? Libertarians would say it depends on how the wealth came to be. But utilitarians don’t care about that. They must always favor the second highly unequal distribution as long as the overall total is higher – even if (for some weird reason) it was the person left with 1 unit that created all the wealth. Does that seem right?
Here’s a different possibility. Maybe you should care about creating a society as well-off as possible (as utilitarians do), but not at the expense of everyone or, in particular, not at the expense of the least well-off. Welfare-state liberals, sufficientarians, and many advocates of UBI think a fair distribution of wealth would be one where, however overall wealth gets distributed, a certain basic minimum is provided to everyone.
Maybe, I ‘m wrong, but I think this is the bare minimum required of a decent society – of justice. A relatively well-off society, one in what Rawls called “reasonably favorable circumstances”, should (and can) provide a minimum level of wealth to everyone.
But how do you set that minimum? Who’s to say what it is? Well, think about what kind of society you would want to live in. You probably want to be free in various ways, but you also want to be as well-off materially as possible. If you didn’t already know your social position or your talents and abilities, you’d probably choose, if you could, to live in a society that maximized your prospects for being materially well-off. Whether you were the most well-off, or a member of the most well-off group, wouldn’t be as salient to you as the question of whether you might be one of the least well-off members of society. Given that we are talking about a society that overall is pretty well-off, arguably, the thing to do would be to go all-in for the least well-off being as well-off as possible. This is the conclusion of Rawls’ argument from an “original position” behind a “veil of ignorance” – and his “difference principle”. And one way to think about it is as a natural extension of the view that we need a social minimum. We need a social minimum, we might say, and that minimum should be set as high as possible.
But why should there be inequalities at all? If our natural talents and abilities and social position are unearned, why not just go for strict equality? Well, for one thing, because some inequalities benefit everyone – including the least well-off. One central way that they do that by incentivizing the talented to contribute and work hard by giving them a larger share of wealth in return.
But why do the talented need to be incentivized? If I am one of the talented and I accept the argument for the difference principle, then I know that if I work harder without demanding greater compensation, I can help the least well-off even more. This will result in a stricter equality than that demanded by the difference principle. Now, as a practical matter, I might think that we do need to incentivize the talented in this way. But that practical need is not a matter of justice. In fact, it’s unjust of the talented to demand to be incentivize in this way. They are holding the rest of us hostage, demanding ransom to work to their fullest capacity. If they accept the difference principle they should want to make the least well-off as well-off as possible and should spend their energy and effort doing so without threatening to boycott contributing unless they get more. This is G.A. Cohen’s argument in “Rescuing Justice and Equality”. It is related, of course, to the long history of such arguments by Marxist, utopian socialists, et al.
Maybe, Cohen’s right. But here I am tempted to borrow from the libertarians. Cohen’s view results, I worry, in “the slavery of the talented”. While I think libertarians are wrong to argue that any social scheme that does not attempt to distribute wealth based solely on individual contributions is wrong, I still think there is a limit to what should be demanded from people. It’s one thing to think that, overall, we should aim to make the least well-off as well-off as possible. It’s another to think that unless everyone tirelessly labors to make everyone equally well-off, they sin against justice. The principle that governs the overall distribution of wealth it is not, I would think, also the one that specifies my charitable obligations – or what morality in general requires.
But all of my arguments here have been relatively simple, superficial even. This is meant to be the beginning of a discussion, not the end of it. And I should also say that I have been treating the distributive justice debate between philosophers as though it is only a debate about the distribution of wealth. This is a serious simplification. Philosophers debate both the distribution that justice demands and what the distribution is a distribution of. This second debate is sometimes called the debate over “the currency of egalitarian justice” (see, Cohen). No one in that debate actually proposes that wealth, much less money, is the right stand-in for what we should be distributing. Instead, they propose that we distribute primary goods, resources, welfare, unchosen luck, capabilities, the opportunity for welfare, utility, access to advantage, or the like. However, I think these arguments apply well-enough to the distribution of wealth to be useful. You might disagree.