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CHAPTER 9: The Concept of Economic Justice in Religious Discussion * - Paul Heyne, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion [2008]

Edition used:

“Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion, edited and with an Introduction by Geoffrey Brennan and A.M.C. Waterman (Indianapolis: Liberty Fund, 2008).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


CHAPTER 9

The Concept of Economic Justice in Religious Discussion*

Identifying the Problem

What iseconomic justice? The concept is clearly a central concern for those who believe that the salvation and the righteousness of which the Bible speaks are social and not merely individual.1 Nonetheless, the concepts of economic justice commonly employed or assumed in theological essays and denominational statements do not seem to have been thought through with any care. A critical reader might wonder if those who use the phrase know themselves what they mean by it, and whether they could really intend what they seem to be asserting.

Justice is notoriously hard to define in any way that goes much beyond platitude and still commands wide assent. That probably explains, at least in part, why most people who use the term do so without defining it. They assume (or hope) that others will understand the word as they do. But by excusing themselves from the necessity of stating clearly what they mean, advocates of justice often fail to discover that what they are proposing has no defensible meaning at all.

The problem of talking clearly and sensibly about justice diminishes considerably, however, when we shift our focus and talk about injustice. “Injustice wears the trousers,” as J. R. Lucas has put it.

[I]t is when injustice is in danger of being done that we become agitated. . . . And therefore we should follow the example of Aristotle, and adopt a negative approach, discovering what justice is by considering on what occasions we protest at injustice or unfairness.2

What, then, do writers in the biblical tradition have in mind when they protest against economic injustice?

Unequal Money Incomes

They most commonly seem to be pointing to an objectionable inequality of money incomes. Since no one is willing to argue that all inequality is unjust, the question immediately arises: When and why is inequality of income unjust? When the question is seriously pursued, it proves extraordinarily difficult to answer satisfactorily.

A basic but generally neglected difficulty stems from the fact that inequality of current money income is not a reliable indicator of inequality in the power to acquire valued goods. There are many reasons for this. One important example is provided by the case of Americans over sixty-five. While their money incomes tend to be low, they often own capital goods (home, automobile, furniture, a lifetime’s accumulation of household tools) and special entitlements (reduced fares, tax exemptions, Medicare benefits) that make their money income a very poor gauge of their real income.

The situation of older persons raises the more general question of age. Since earnings typically change with age, it will always be misleading to compare the incomes of different groups without taking explicit account of their ages. The average income of U.S. families in which the principal earner is 45 to 54 is about twice the average of income of families in which the principal earner is under 25.3 This is obviously an inequality, but it is not an injustice. On the contrary, it would be unjust to allow a medical student to qualify for welfare assistance, on the grounds of low current income, rather than having to borrow against expected future income.

Choices and Incomes

Family size and composition also affect both money income and the welfare significance of that income. Other things being equal, people’s incomes decline when they separate or divorce, or when they choose to live alone rather than with relatives. Inequalities resulting from such decisions are not injustices unless we believe that people have a right to make these decisions without experiencing any income change as a consequence.

People make many other decisions that cause their incomes to differ in ways that few who thought about it carefully would want to call unjust. Some families have a single earner, others have two adult members pursuing careers. Some people work a forty-hour week or less, while others seek overtime, moonlight, or take up a trade or profession that enables or requires them to work twice as long and hard as their neighbors work. Some devote their resources predominantly to current consumption, while others opt more heavily for investment activities: schooling, training, or the purchase of assets that will yield larger future returns. Some simply manage their resources more carefully than others. Everyone does not have an equal opportunity to make such choices, of course; but it is surely not unjust to let these choices have some effect on people’s incomes. A quite substantial inequality of money incomes would seem to be compatible with even highly egalitarian concepts of economic justice.

But why do we focus so exclusively on money incomes and the goods that money will buy directly? Our society also displays a highly unequal distribution of power, prestige, challenging and satisfying work opportunities, as well as risks and uncertainties. At some level of income these other goods surely become more important than money income. Are we preoccupied with money incomes because we think we know how to redistribute them, whereas we don’t know how to redistribute power, prestige, and “meaningful” work? Is this perhaps a form of “commodity fetishism,” in which we transform the indexes of economic calculation into measures of welfare and even worth? If so, this would be an ironic ideological triumph of capitalism over its critics.

How Much Less Inequality?

Those who infer economic injustice from income inequality are rarely willing to tell us how much inequality would be consistent with justice. “Less” is not an adequate answer.4 Where is the limit? Many advocates of greater income equality have argued that the maximum inequality compatible with justice is the minimum inequality that will preserve incentives to work, risk, innovate, and perform competently and conscientiously. It is not obvious why this should be so. But in many areas of economic life, this limit has long since been passed. Incentives don’t simply “disappear” at some point. They diminish, at different rates for different people under different circumstances. More importantly, they change. People alter their activities in response to high marginal tax rates; they don’t simply retire.

The best evidence that the incentive criterion is not in fact being used by advocates of income redistribution is their widespread indifference to the readily demonstrable effects of high marginal tax rates, explicit on high incomes and implicit in current welfare programs. Imagine a situation in which acceptance of an $8,000-per-year job entails a loss of $6,000 in cash and in-kind transfers such as Medicaid benefits and food stamps, plus payment of $2,000 in income and Social Security taxes and the acceptance of job-associated costs. That amounts to a 100 percent marginal tax on earnings. The fact that our income redistribution system has created marginal tax rates of this magnitude and allowed them to persist is fairly good evidence that the preservation of work incentives is not an important criterion for those advocating further redistribution.5

The Criterion of Need

Equality (or less inequality) in the distribution of income does not seem, then, to be a workable criterion of economic justice. What about the criterion of need?

If we define need in terms of what is required to sustain life on an adequate level, we run into two problems. Most simply, the criterion of need is unrealistic in poor economies and irrelevant, at least for most of those who talk about economic justice, in affluent ones.

For the vast majority of the people who have ever lived or are living now, poverty is the consequence of low productivity, not of unequal distribution. No redistribution of income within the country would satisfy the “needs” of all the people currently living in Kampuchea, Bangladesh, or Ethiopia. There is simply not enough to distribute.6

At the other end of the income scale, people who speak of “needs” in Canada, Sweden, or the United States clearly do not have in mind anything even remotely close to subsistence incomes. “Need” in these countries is culturally defined. An American family today “needs,” if it is to maintain a decent, socially acceptable level of living, enough income to secure housing, clothing, food, furniture, recreation, and medical services in a quantity and of a quality that could not have been provided to more than a small minority as recently as fifty years ago. By today’s standards, then, a majority of Americans did not have enough income to meet their “needs” at a time when our incomes were the highest in the world and the object of widespread admiration and envy.7

The fact is that, in wealthy countries, “need” is continuously redefined to embrace whatever becomes widely available as a result of increased production. “Need” defined in absolute or physiological terms is accepted as a standard for economic justice only with reference to very poor countries, where low productivity makes the standard impossible to meet. In wealthy countries, “need” is relative. But as soon as we allow “need” to be determined by prevailing incomes, we have actually abandoned the criterion of need for the criterion of equality. And we are back to the question, When does inequality become injustice?

The notion that “need” or subsistence is more a sociological than a biological fact has a long and respectable lineage. Adam Smith, David Ricardo, and Karl Marx all defined subsistence at least partly in sociological terms;8 the propensity to view poverty as a relative matter is therefore not simply the product of some modern rage to reduce income inequalities. However, neither Smith, Ricardo, nor Marx had any pressing reason to wonder about the ultimate implications of defining poverty in terms of relative deprivation. If it is the social significance of differences that matters, and if, as a great deal of evidence strongly suggests, the elimination of some differences increases the social significance of those that remain, then the pursuit of a just pattern of income distribution based on need could be the costly pursuit of a mirage. It might even be no more nor less than the sanctification of envy.

The Criterion of Merit

What about the criterion of merit or desert? This criterion has always figured prominently in formal discussions of justice.9 It is therefore somewhat surprising to discover how rarely it is invoked in contemporary ecclesiastical statements on economic justice. Is that because theology, or at least the kind of theology dominant in contemporary economic discussions, has no place for the criterion of merit? If all that we possess, including our intelligence, aptitudes, and attitudes, is the gift of God, then claims or merit or special desert would indeed seem to be ruled out.

I believe that this is in fact the explanation for the puzzling absence of the merit criterion from so many theological discussions of justice. But that absence makes the discussions thoroughly unrealistic. All of us, including the most egalitarian theological ethicist, do in fact regard merit as relevant to the distribution of economic goods. We do not regard the parable of the employer who gave the same wage to all his employees,10 regardless of how long they had worked, as normative for the employment relationship. Those who have borne the burden and heat of the day deserve more than those who started work just before quitting time. The employer may, if he wishes, pay the late arrivals as much as he is obligated to pay those who worked all day. But that would be a matter of benevolence, not justice. And it would surely be unjust for him to strike an average and pay five hours of wages to those who worked eight hours and to those who worked but two. Those who worked eight hours have a claim in justice to receive a reward proportioned to their merit, a merit acquired by their efforts. In some contexts it may be relevant to point out that they did nothing to earn their ability and willingness to work long hours at hard labor, or that they wouldn’t have had the opportunity to work at all if they hadn’t just happened to be standing in the hiring hall when the employer walked in. But no one will claim that these facts diminish their deserts in the case at hand or that it would therefore be perfectly just for the employer to pay them for fewer hours than they actually worked.

A theology of economic justice that neglects merit or desert is simply not addressed to the world of social decisions. What we deserve at the hands of God is not the same as what we deserve from one another.11 To suppose that we can settle the one question by answering the other is to abandon the question of economic justice altogether.

Perhaps this is not always recognized in theological statements on economic justice because those statements are so frequently formulated as antitheses to a system which seems to exaggerate the role of merit or desert. Defenders of capitalism often claim that capitalism distributes economic goods justly because it distributes them on the basis of merit. Those who don’t accept this claim and who believe that the distribution which occurs under capitalism is unjust may have responded by rejecting the merit criterion when they should have been criticizing its application.

Differing Grounds for Entitlement

There is an important difference between earning something and having a right to it. Neglect of this distinction generates confusion on the subject of merit as a criterion of economic justice. A teenager given the keys to the family car for the evening has a right to use it. The teenager would be unjustly deprived of a right if someone else—an older brother, perhaps—saw the car on a theater parking lot and appropriated it for his own use. This does not imply, however, that the teenager deserved the right to use the car that evening, or that he would have been treated unjustly if the keys had been denied. If he had been promised the use of the car in return for washing and waxing it, then he would indeed have earned its use, and failure to grant the use would have been unjust.

Defenders of capitalism sometimes seem to be assuming that all entitlements are earned entitlements and can therefore be credited to merit. This position cannot be defended without stretching the concept of earning past the point when it loses its ordinary meaning. People are sometimes lucky. They may well be entitled to what came to them as a result of luck, but they cannot properly say they earned it or that it has accrued to them as a result of their merit. Defenders of capitalism do their cause a disservice, I believe, when in their eagerness to establish the moral legitimacy of capitalism they undertake to argue that people deserve, as a consequence of their merit, whatever they receive in a competitive capitalist economy.

It is both interesting and of some theological significance to note the great difficulty that many of us have in accepting as ours what we aren’t certain we have earned. Are we consequently tempted to fabricate merit for ourselves so that we may claim to deserve that to which we are merely entitled? It is not enough to possess; we want to possess in good conscience, which too often means that we want to deserve whatever we rightfully possess. Adam and Eve, it seems to me, did something very similar to this when the serpent raised its guileful questions.

The Function of Rules

The mishandling of the merit criterion, both by defenders and by religious critics of capitalism, points to what I believe is the gravest flaw in contemporary theological discussions of economic justice. That flaw is the general failure to perceive the role and importance of rules.

Since the position for which I am now going to contend strikes many religious people as fundamentally immoral, let me begin indirectly, with a question based on an everyday dilemma.

After the bus has pulled away from the designated transit zone, should the driver stop the bus and open the door for someone running to catch it?

Some passengers will pull the stop signal and call out to the driver when they see a tardy passenger running to catch the bus. If the driver ignores their signals and drives on, they may comment disapprovingly: “A mean driver this morning.” If he does stop, open the door, and wait for the running passenger, he will, of course, earn the gratitude of the beneficiary; but he may also be the recipient of approving comments from other passengers: “Someone who likes people more than schedules.”

My purpose in recounting this familiar scene is a simple one. Here is a politically uncharged illustration of the function that rules play in a society and of the common ethical confusion that results from ignoring that function.

We begin by noticing that the driver who stops in such a situation is not necessarily helping people more than the one who does not. He certainly helps this one passenger—assuming that the driver’s action doesn’t cause an accident! But in addition to increasing the probability of an accident, the decision to stop delays all the other passengers on the bus. If the next bus will be along in 15 minutes, there are 25 other passengers, and the driver’s action delays them all by 30 seconds, some might argue that the driver’s action produces a net social benefit of 2½ minutes.

But this is an unconvincing claim. We can’t compare different people’s minutes in this manner. The 30-second delay, multiplied by the number of times the driver acts in this way, could cause a dozen passengers to miss their transfer connections. Those dozen people might consequently be late for important meetings, so that eventually many hours of other people’s time is lost in the process of saving 30 seconds for each of a handful of late-running bus passengers.

The Rights of Unknown Persons

The argument still involves illegitimate comparisons, however. A minute of one person’s time is not the moral equivalent of another person’s minute.12 The principal reason for rejecting such an equation is not that people in fact value time differently, although that is certainly true, but rather that punctual people have a right not to be delayed by tardy people, and the bus driver has an obligation to respect that right. The man who gets up late does not have a right to delay the people who arrived at their bus stop on time. He ought to pay the cost of his tardiness, and it is unfair of him to avoid that cost by shifting all or a part of it to others.

Suppose, however, that he overslept because he had been up most of the night tending a sick child, and now must catch this bus in order to keep a counselling appointment with a distraught alcoholic who’s contemplating suicide. Would we want to say in such a case that he, rather than the punctual passengers, ought to bear the cost of his oversleeping? Doesn’t he deserve commendation rather than blame? Moreover, it isn’t he but rather the suicidal alcoholic who will bear the cost of his being late.

All of this is quite irrelevant, however. The bus driver has no way of knowing why his passengers are punctual or late, whether they’re embarked on important errands or simply taking a trip for the fun of it. The driver’s moral obligation is to provide safe transportation and stay on schedule; the passengers must assess their own individual circumstances and decide whether or not to be at the bus stop by the scheduled time. Adherence to these rules will sometimes produce results inferior to what an omniscient driver could achieve; but bus drivers are not omniscient.

Moreover, a driver who elects to disobey the rules is behaving unjustly. He is violating the rules of the game and benefiting some at the expense of others in an essentially capricious way. The passengers who applaud his behavior when he stops in the middle of the street fail to consider the harm he may be inflicting on others. They may also be quite wrong in assuming that he was motivated by kindness; he could well be trying to curry favor, secure praise for himself at the expense of others.13

Rule-Coordinated Social Interaction

Thinking through this trivial example helps us see why it will often be more ethical, more socially responsible, and even more humane to “go by the rules” than to violate the rules in order to serve the known interests of particular people. We have been conditioned to believe that it is morally wrong to adhere to rules in circumstances where we believe our doing so will harm particular people. We are not used to thinking about the broader consequences for others, or the long-term consequences for the system in which we’re participating. Not only do bus drivers make punctual passengers late when they choose to violate the rules; they also begin to change the relative costs and benefits of adhering to the rules, which means that the rules start to break down. We would probably be less sanguine about this consequence if we more fully appreciated the extent of our dependence upon rule-coordinated social cooperation.

What we loosely call “the economy” is essentially a system of social cooperation overwhelmingly dependent for its functioning upon rule-coordinated behavior. If all the farmers in the United States, for example, decided to devote their time and other resources to producing what was specifically wanted by the most needy or otherwise most worthy people they knew, millions of people who are now well fed would soon starve to death. The production decisions of American farmers are in fact made for the most part according to a simple rule: choose the available option from which you expect the largest net revenue. Those who believe that production for profit is morally inferior to production for use have apparently never thought through the consequences of what they’re recommending. They are ignoring the incredible complexity of the system of social cooperation by means of which we are fed, clothed, housed, warmed, healed, transported, comforted, entertained, challenged, inspired, educated, and generally served.14

We must accept and honor rule-coordinated behavior not only in order to maintain our level of wealth. Justice also demands it. A large society cannot be a just society unless most of its duties and benefits are allocated in accordance with established and accepted rules. This truth is in no way confined to the so-called economic system. A college professor teaching a class of 500 students must, if she wants to be just, clarify the rules in advance and then apply them impartially. If a student confronts her with circumstances that the rules had not contemplated and so do not cover, she must search for a response that can be generalized. She must not allow some students to take advantage of other students by securing unique advantages. Each of the 500 students, if pressed, could probably find an explanation, unrelated to what the student actually knew, for missing one or more items on the last test. It is fundamentally unfair to give extra credit exclusively to those students whose obsession with grades or personal belligerence prompts them to ask for it. If the same privilege is extended to every student in the class through a general announcement, it might seem at first that justice would be salvaged. But now the question arises as to whether the teacher can in fact adequately hear and evaluate the explanations of 500 students. Justice in large societies requires not only that general rules binding on all be promulgated, but also that they be applied in a non-arbitrary manner. The more likely outcomes of such an attempt to apply personal criteria in a large-society situation are capricious decisions and poorly-used time.

Knowledge and Justice

What would we say about a judge who discovered that the defendant coming before him on a drunk-driving charge was his next-door neighbor and nonetheless decided to hear and dispose of the case? Justice requires that the judge disqualify himself and turn the case over to someone else. The reason is that he knows the defendant too well. The judge is consequently in a position to know far more about the special circumstances of this defendant than he can know in other cases brought before him. To know all is, in a very important sense, to forgive all. It is therefore the responsibility of a judge not to know too much about a particular defendant, so that he can save the lives of many unknown persons by applying impartially the rule against drunk driving.

A judge in a small village might be able to act simultaneously as a just judge and a just neighbor. Justice will sometimes demand that we go beyond impersonal criteria in allocating burdens and benefits. We are properly horrified by David’s famous painting of Lucius Junius Brutus and his two sons whom he had ordered executed for treason; a father owes more than that to the members of his own family. And it is possible to supply something more than impersonal justice in a small society where people know one another well. The size of the society is the crucial issue, however.

It is hard to see, for example, how a law against loitering could be a just law in a city of any size. Its application would inevitably leave too much discretion to police officers who could not know enough to enforce the law fairly, and who would therefore necessarily enforce it unfairly. It is conceivable, for the same reason, that the personal discretion which has to be exercised in the enforcement of any anti-loitering ordinance could be exercised fairly in a small village. The essential point remains. Justice itself demands that we use impersonal criteria to allocate burdens and benefits in a large society, where inescapable limitations on our knowledge make it impossible to take personal considerations into account in any consistent way.

Justice, Expectations, and Promises

It seems to me that our reflections on economic justice would be far more satisfactory if we recognized the connection between justice and the keeping of promises. I have increasingly come to think of justice as basically the fulfillment of legitimate expectations.15 This definition is faithful to our most fundamental moral perceptions, I believe, while illuminating a wide range of issues. Injustice is done, I suggest, when someone’s legitimate expectations are not fulfilled because others broke their promises.

Sometimes promises are made explicitly by one person to another. The breaking of such promises, other than for reasons beyond the control of the promisor, is an injustice whenever the promisee’s well-being is thereby lessened.

More often, however, our promises are implicit, part of the unarticulated compacts that we have with our families, our neighbors, members of our church, associates at work, plus millions of people whom we will never even meet. I commit an injustice when I fail to provide family members, friends, or associates with the assistance, support, or other cooperation that my previous actions have legitimately led them to expect. We won’t always agree completely on which expectations are legitimate, because we will inevitably disagree to some extent about what has been implicitly promised. But we always promise more than what we spell out formally, because explicit promises entail prior commitment or tacit assent to a vast network of “background” agreements.16

In this approach to the question of justice, laws can be thought of as promises. They bind everyone within their jurisdiction to behave or refrain from behaving in specific ways, and thereby they create legitimate expectations. An unjust law would be a law that repudiated prior promises; because of the resulting inconsistency of promises, the expectations that such a law might create would be less legitimate than the expectations created by a law whose justice was undisputed.

Customs and traditions are also promises. Moreover, every society is grounded in some kind of moral consensus, and the basic principles of that consensus are the most fundamental promises that the members of the society make to one another. Because these principles are not fully articulated, they can become mutually inconsistent in the course of social evolution. This most commonly happens, I think, when new possibilities for behavior lead to situations in which basic principles start to yield conflicting promises. The development of such situations threatens the stability of a society, because it removes, at least temporarily, the common ground which must exist if disagreements about justice are to be resolved. At such moments in a society’s history, it is especially difficult but also especially important for the members of the society to refrain from caricaturing the positions they are rejecting. The ultimate bond of any society is its members’ commitment to their common humanity; so long as that can be preserved, we are not compelled to say “thy blood or mine” and to settle our disagreements about justice by the naked criterion of force. When we impute immoral motives to our opponents, we are in effect declaring war on them by expelling them from the community of moral discourse.17

Now it seems clear that if we make promises or otherwise create expectations that we cannot subsequently fulfill, we inflict harm on others. It is not true that they are neither better nor worse off as a result of our promising but not delivering; they are worse off. People build upon their expectations, and when those expectations turn out to be illusory, the structures erected on them collapse. This is a psychological and an economic truth. In both the realm of feeling and the realm of action, we make investments on the basis of our expectations. And we sustain a loss when those expectations turn out to have been overly optimistic. Not every unfulfilled expectation constitutes an injustice, of course. Some expectations are bound to prove mistaken in a world characterized by uncertainty. Injustice is done only to people whose expectations are disappointed by the failure of others to fulfill promises they were capable of keeping.

Promises and the Size of the Society

A satisfactory theory of economic justice must recognize not only the importance of honoring commitments, but also the crucial relationship between the size of the society and the kinds of promises that can be made and fulfilled within it. The members of a nuclear family can conscientiously promise to assign tasks among themselves on the basis of ability and to distribute benefits on the basis of need. In larger societies, such a promise is impossible. If it is made, it is made in ignorance. There is simply no way for even one hundred people, much less 225 million, to acquire the knowledge that would be required in order to assign tasks on the basis of ability and benefits on the basis of need. We don’t have to raise the question of whether people would be willing to make and keep such promises to one another. Incentive is a necessary but not a sufficient condition. Information is also necessary. This point is important because religious discussions of economic justice tend to focus on the incentive issue and to overlook the problem of information. They thereby hold out the false hope that a “change of heart” would enable us to get rid of capitalism, or at least of certain features of capitalism that they find morally objectionable.

The Nature of “Capitalism”

Let me say at this point what I mean by capitalism. I think of it as a social system in which individuals are free to choose what they will supply and demand, offer and bid, subject only to general rules known in advance. These rules will be both legal rules, externally enforced, and moral rules that are internally enforced. I call capitalism a social system because it is the social rules that determine whether the society will be capitalist, socialist, or something in between. Capitalism, in short, is a system of individual freedom under law, where law does not mean “legislation” but rather the whole body of established rules, agreements, and conventions by which the members of a society acknowledge themselves to be bound.18

The engine of the system is the individual’s perception and pursuit of net advantage. Collective behavior is not excluded, but it must be the product of the voluntary choices of individuals. The pursuit of one’s net advantage is not a synonym for greed, selfishness, or materialism. All purposeful human action is self-interested, in the crucial sense that it aims at goals accepted by the individual, using means evaluated by the individual. Greed or selfishness, by contrast, is a matter of claiming for the self more than is due. I would want to describe greed or selfishness in terms of a failure to fulfill obligations, and hence as injustice. But the point here is that greed is about as common under capitalism as it is under any other kind of political system, but no more common.

Capitalism is thus by definition an impersonal system. It is not altogether an impersonal system, because the individuals within it do participate in families and small, face-to-face associations, where they can know other persons well enough to be concerned with and to care for their unique qualities. But the distinguishing characteristic of capitalism is the impersonal nature of the social interactions that make it up. It can be described paradoxically as a social system in which people do not care about most of those for whom they care. The farmer who feeds me does not even know I exist, and while he wishes me no ill, he does not and cannot care about me in any subjective sense. Nonetheless, he cares for me, and very effectively, in an objective sense.

We are all dependent, throughout our lives, for our actual survival as well as our many comforts, upon the assistance and cooperation of millions of people whom we will never know and who do not know us. They help us to fulfill our aims in life not because they know or care what happens to us, but because this enables them to fulfill their own aims most effectively. They are motivated by their own interests, whatever these may be. They are guided by the rules of the society and their perception of the expected net advantages from alternative decisions. These net advantages, or structures of expected costs and benefits, are created by the similarly motivated and guided efforts of everyone else in the society.

The Necessity of “Commodity” Production

Marx was thus correct. He saw more clearly than most of his procapitalist contemporaries that capitalism was a system based on commodity production. It had replaced (by supplementing, I would argue, more than by displacing) a system based on relations of personal dependence. Thereby, as Marx and Engels observed in the first part of The Communist Manifesto, capitalism had achieved productive wonders. Their mistake, and the mistake of so many who followed them, was in supposing that capitalism could be replaced in turn by a system of production based on “socialist relations,” a system retaining the productive powers of capitalism while assigning tasks on the basis of ability and distributing the product according to need.

The Roots of Resistance

I suspect that the deepest root of this belief, a belief remarkably immune to either theory or evidence, is the conviction that an impersonal social system is morally unacceptable. I maintain that this is a tragically mistaken prejudice. Impersonal does not mean inhumane, as we sometimes carelessly assume. Nonetheless, our model for the good society seems to be the family, where production is from each according to ability and distribution is to each according to need and merit (though we tend to underestimate the actual importance of the merit criterion in thinking about family distribution decisions).

The religious heritage of Western thought pushes in the same direction. The Old Testament’s criticism of economic behavior often presupposes a society small enough and sufficiently close-knit for its members to care about as well as for one another. A more prominent feature of this literature, in my judgement, is its emphasis on impartial administration of the rules; but this feature has rarely been noticed by those who turn to the Old Testament for passages with which to support their concern for economic justice. The New Testament emphasis upon love as the fulfillment of all law has further reinforced our inclination to suppose that impersonal relations are somehow morally deficient relations.

A False Option

Our basic mistake may be the belief that we must choose between personal, face-to-face societies and impersonal societies. If we accept as fully legitimate the impersonal, rule-coordinated societies in which we participate, we are not repudiating or depreciating in any way marriage, the family, intimacy, I-thou relationships, the unique value of the individual, or the power and significance of personal caring and sacrifice. If we were in fact compelled to repudiate all of this in order to enjoy the benefits that only large and hence impersonal societies can provide, we would be foolish to opt for those benefits. In the long run that choice would deprive us of the advantages of both worlds, because the moral values essential to the successful operation of a rule-coordinated society can only be nurtured in personal societies.

But we are not forced to choose. We are tempted to choose, it is true, and from both directions. The expanding wealth of opportunities that the impersonal society lays before us makes us progressively less dependent (or so we believe) on particular other persons. As we enlarge our individual freedom and power, we simultaneously declare our continual independence. We view commitments as entanglements and we work toward fuller emancipation. That kind of freedom is really perpetual mobility, and I doubt that it is ultimately compatible with the institutions and virtues of personal community.

My primary concern in this paper, however, is the temptation coming from the other direction, a temptation whose appeal might be in large part a function of the anxiety that many of us feel about the decline of personal community in our own lives. Many of the “best people” in our society, including theologians, denominational leaders, and deeply religious people, sincerely believe that economic justice requires the destruction of rule-coordinated societies. Moreover, they are committed to the belief that they may legitimately use the coercive power of state legislation to accomplish this goal. They seem determined to do so, with little thought about what justice might actually entail and often the most superficial attention to what occurs in the democratic legislative process.

False Promises and Injustice

Legislation that aims at the achievement of economic justice cannot succeed in this purpose unless the promises that it offers are genuine, realistic, and not in themselves unjust. Legislators often hold out promises of benefits, for vote-gathering purposes, when they have no intention of enacting the enabling legislation which would impose the requisite costs on the public.19 For very similar reasons legislators will sometimes refuse to consider the consequences of what they are doing; it is not in their interest to recognize, much less to admit, that a bill which offers electoral gains to those who support it cannot in fact achieve its stated purposes. Legislation of this kind is unjust legislation because it deliberately creates expectations that will not be fulfilled.

Particularly common and troubling is the tendency of democratically-controlled legislatures to defend special-interest legislation on the grounds that it secures economic justice for its beneficiaries, while ignoring the injustices that this legislation will impose on others. The most familiar and to my mind most disturbing contemporary example is the arbitrary expropriation, through legislated rent controls, of people who have invested in residential rental property.

Those who draft the “social concern” statements of church bodies too often endorse this kind of legislated injustice, apparently because they can think of no way to measure economic justice except by looking at the pattern of outcomes. They are not deterred by their inability to provide a coherent, applicable, and defensible definition of a just pattern of outcomes. Meanwhile they ignore or repudiate in their official pronouncements some of the most basic principles of justice that they themselves use in their everyday, “real world” activity. The fundamental dependence of justice in a large society upon adherence to general rules is almost totally overlooked.

What do religious pronouncements about economic justice really accomplish? What interests do they serve? Those are the pressing questions with which I find myself left. But they would be questions for some other study.

[* ] Reprinted from Morality of the Market: Religious and Economic Perspectives, ed. W. Block, G. Brennan, and K. Elzinga (Vancouver: The Fraser Institute, 1985), by permission of The Fraser Institute. First draft presented at a Liberty Fund/Fraser Institute conference, directed by Walter Block, Paul Heyne, and A. M. C. Waterman on “The Morality of the Market” in Vancouver, British Columbia, 9-11 August 1982.

[1. ] If the Hebrew words yeshuah and tsedeq and the Greek words soteria and dikaiosune are translated as “deliverance” and “justice,” the individualistic connotations of “salvation” and “righteousness” are diminished.

[2. ] J. R. Lucas, On Justice (1980), p. 4. I am indebted to James Buchanan for urging me to read this book. The “negative” character of justice is a central point in F. A. Hayek’s Law, Legislation and Liberty, where he also traces the long intellectual history of the insight that we can best approach an understanding of justice through our ability to recognize its absence. See especially op. cit., vol. II (1976), pp. 35-48, 162-64. My indebtedness to Hayek in this essay will be obvious to anyone familiar with his more recent work.

[3. ] Here are the mean incomes of families in the U.S. in 1978, by age of what the Census Bureau now calls the “householder”: 14-24 years, $12,570; 25-34 years, $18,205; 35-44 years, $22,575; 45-54 years, $25,363; 55-64 years, $22,408; over 65 years, $13,754. Per capita income differences will be much less because of age-related differences in family size.

[4. ] For a recent instance of this answer and a representative example of the reasoning that accompanies it, see Robert Lekachman, “Capitalism or Democracy,” in Robert A. Goldwin and William A. Schambra, eds., How Capitalistic Is the Constitution? (1982), pp. 127-47, and especially p. 146.

[5. ] An illuminating discussion of this issue, along with a presentation of the basic data, may be found in Edgar K. Browning, “How Much More Equality Can We Afford?” The Public Interest (Spring 1976), pp. 90-110.

[6. ] Per capita gross national product in 1978 has been estimated by the World Bank at $120 in Ethiopia, $90 in Bangladesh, and less in Kampuchea. These data must be interpreted with great caution, since a much smaller fraction of production enters GNP calculations in poor than in wealthy countries. Data were taken from Poverty and Human Development (1980), p. 68.

[7. ] The disposable personal income (roughly income after taxes) of Americans per capita in 1929, in dollars of current (1982) purchasing power, was about $3,765. That’s considerably less than half of current disposable income per capita, despite the fact that far more services now than then are financed through taxation and hence no longer have to be purchased out of disposable income.

[8. ] Adam Smith, The Wealth of Nations, book V, chapter II, article IV, discussing taxes upon consumable commodities; David Ricardo, On the Principles of Political Economy and Taxation, chapter V (see pp. 96-97, 100-101 in the Sraffa edition [1951]); Karl Marx, Wage-Labour and Capital, chapter VI.

[9. ] J. R. Lucas offers a useful overview in op. cit., chapter 8; see especially the long footnote on pp. 164-65.

[10. ] Matthew 20:1-16.

[11. ] This criticism applies also to some of the core arguments advanced by John Rawls in his influential A Theory of Justice (1971). J. R. Lucas puts the problem concisely: “Rawls yearns for a theodicy. To be morally acceptable, a distribution must be justified completely.” Op. cit., p. 191. Robert Nozick has pointed out that Rawls’ argument finally does not take individual persons seriously. Anarchy, State and Utopia (1974), p. 228.

[12. ] Economists generally insist that they have no basis for making “interpersonal utility comparisons”; they rarely recognize that judgements about the relative efficiency of alternative resource allocations require either the making of such judgements or prior decisions on who possesses what property rights. What it all comes to is that judgements about efficiency in multi-person transactions presuppose judgements about the justice of people’s exercising certain powers. For a concise presentation of the central issue, see John Egger, “Comment: Efficiency Is Not a Substitute for Ethics,” in Mario J. Rizzo, ed., Time, Uncertainty, and Disequilibrium (1979), pp. 117-25.

[13. ] Most of the contemporary literature advocating “corporate social responsibility” totally overlooks this point. Examples could be multiplied endlessly. Christopher Stone offers an excellent critical survey of the discussion about business social responsibility in Where the Law Ends: The Social Control of Corporate Behavior (1975).

[14. ] The most serious single error committed by non-economists in their proposals for reform of the economic system is their neglect of information problems. I have often wished that I could persuade everyone interested in social justice to begin with a careful reading of the classic essay by F. A. Hayek, “The Use of Knowledge in Society,” originally published in the American Economic Review (September 1945), pp. 519-30, and frequently reprinted since. It is included in Hayek’s 1948 collection of essays, Individualism and Economic Order.

[15. ] This is the tradition first spelled out by David Hume in A Treatise of Human Nature, book III, part II, sections I-VI. I do not think my argument here is vulnerable to the criticisms put forward by J. R. Lucas, op. cit., in pp. 208-15, a chapter he entitles “Pacta Sunt Servanda.”

[16. ] Michael Polanyi, Personal Knowledge: Towards a Post-Critical Philosophy (1964; Harper Torchbook edition), especially part II.

[17. ] The controversy over abortion laws in the United States provides the most distressing example.

[18. ] The conception of “freedom under law” that I am assuming here was thoughtfully spelled out by Bruno Leoni in Freedom and the Law (1961).

[19. ] Neither the theoretical analyses nor the abundant empirical evidence put forward by public choice theorists in recent years seems to have influenced church pronouncements on political issues.