Fairness, decentralization & capitalism

Marxists and Conservatives have more in common than either side would like to admit. This thought occurred to me whilst reading a superb piece by Andrew Lilico.

He describes the Brams-Taylor procedure for cutting a cake in a fair way - in the sense of ensuring envy-freeness - and says that this shows that a central agency such as the state is unnecessary to achieve fairness:

Provided that all adhere to an appropriate mechanism, large numbers of people themselves, without central direction, can divide goods, services and assets up in ways that all consider fair.

The appropriate mechanism here is one in which there is a balance of power, such that no individual can say: "take it or leave it."

This is where Marxism enters. Marxists claim that, under capitalism, the appropriate mechanism is absent. Marx stressed that capitalism was founded upon theft and slavery - what he called primitive accumulation, a process that is still going on. This means that the labour market is an arena in which power is unbalanced: the worker, he said, brings only his own hide to market "and has nothing to expect but — a hiding." Exploitation occurs and matters, says (pdf) John Roemer because it is the effect of "an unjust inequality in the distribution of productive assets and resources."

Nor do Marxists expect the state to correct this, because the state is captured by capitalists - it is "a committee for managing the common affairs of the whole bourgeoisie." Marxists smile at the naive centrist utopianism of social democrats who complain about "corporate welfare", because they fail to see that, under capitalism, it could perhaps only rarely be otherwise.

Instead, Marx thought that fairness can only be achieved by abolishing both capitalism and the state - something which is only feasible at a high level of economic development - and replacing it with some forms of decentralized decision-making. There has always been an affinity between Marxism and anarchism, with many Marxists regarding Stalinism as the negation of Marxism.

In this sense, Marxists agree with Andrew: people can find fair allocations themselves without a central agency.

But can they do so under capitalism? One hope that they can lies with trades unions. As Philippe Aghion has pointed out, strong unions are a substitute for minimum wage laws because they ensure a balance of power which facilitates fair labour bargains without state intervention; it's for this reason that Conservatives should in fact support unions.

Herein, I suspect, lie the big differences between Marxists like me and Conservatives like Andrew*. One is: what constitutes a reasonable balance of power? Another is: would a "fair" labour bargain actually be consistent with healthy capitalism, or would it instead lead to a squeeze on profit margins so severe as to deter capital spending and hence depress growth?

* I fear both of these are small groups.

Comments

[Steven Clarke]

I think Nozick's principle of distributive justice helps here.

A distribution is just if there is:

a) justice in acquisition
B) justice in transfer

Primitive accumulation and the evidence of history shows that (a) does not often hold.

But how willing are we to break (b) now, in order to rectify the breaking of (a) in the past. I think this will be a key division between right- and left-libertarians, Marxists and Conservatives.

e.g. Say some of your ancestors made money off of slavery 300 years ago and used it to invest in a tea shop. That tea shop now belongs to you. You now sell a pot of tea to a descendant of a slave.

How do we judge that transaction of a pot of tea? Fair in itself, but based on an unfair power balance created in the past. How do we intervene?

[Metatone]

@Steven Clarke

True, but people are generally pretty willing to let go of the past if the present looks reasonably hopeful.

e.g. I've got a job, my life is ok, family basics provided for, and with a bit of luck in a couple of years it'll get better (promotion or pay rise or whatever.)

One of the crucial problems of the current age is that hope has been removed in various ways. Some people are trapped in short-term contracts so they live in permanent insecurity. Others are in a relatively secure position, but there's no prospect within that position that things will get better. Indeed, for many, the pressure is all for things to get worse - the wages are sticky, but the hours go up, the pressure goes up, the incidentals get worse...

[Metatone]

@chris

Since capital spending is on the decline in Britain even though we've had nothing but the weakening of unions, perhaps the causal factor is somewhere else?

[Jeffrey Stewart]

Here goes Marx-ignorant Chriss Dillow on another discredit Marx by misrepresenting him spree! Geez Louise and the bees' freakin' knees!

The following is completely WRONG!!!

"and replacing it [capitalism and the state] with some forms of decentralized decision-making." -Chris No-Clue!

Where, exactly where did Marx argue that capitalism and the state should be replaced by decentralized decision making? Please cite the text and the page.

There are more inaccuracies here, but there aren't enough hours in the day. Mr. Dillow must be a capitalist lackey agent out to discredit Marx with his tripe! Hey! It's a living, a very comfortable one!

[Deviation From The Mean]

I am not sure about Marx but Engels can be quoted that he thought a proletarian government would take control of large scale industry and the banking system, and these quotes can be found in the 1870's. i.e. in their mature period.

Having said that Marx and Engels certainly believed in the association of free producers, which if you read the context sounds like a pretty decentralised form of society to me, i.e. the decisions would not be made by a few people at the centre. Marx himself ridiculed this idea when criticisng Lassalle

[Steven Clarke]

@Metatone

People may not worry so much about it, but for me it's the biggest flaw in my generally free-market, liberal views.

A society based on voluntary exchange for mutual benefit seems pretty just to me, especially if it's been shown to produce the most prosperous societies.

But the hardest thing to defend about it is the inequality in initial endowments. We don't come to the marketplace as equals. This is partly due to natural inequalities, but it's also due to what station we're born into - which is due to past distributions. But you can't redress past distributions without changing the current ones. Which leads to intervention and redistribution and gradually away from free-market liberal views. There just seems, well, an internal contradiction - to coin a phrase - I can't escape

On your point, you're right. To increase hope, and remove too much worrying about distribution, we need some vigorous, broad-based economic growth. Easier said than done.

[rogerh]

So 100 people call into the local health centre to share out operations etc. To run the BTP we set up 100-factorial pairs - a big number!. The procedure will take longer than the life of the universe. Then I am willing to shave a bit off my cancer op and Fred is willing to shave a bit off his heart op but Yummy Mummy refuses to shave anything off her brat's orthodontics. The BTP is a non-solution to anything other than trivial economics games.

[Socialism In One Bedroom]

Humanity needs to move beyond the market I think, or at least people need conceive of society without markets and what that may look like.

This adulation of markets is fetishism and it is also a ball and chain weighing down upon intellectual development.

That doesn't mean we reject the market, we just stop worshiping it.

But you can now see that gradually people are beginning to reject the market and all that goes with it - the cream rise to the top, natural inequalities are reflected in it, poverty is an individual failing etc etc. Despite the mountains of propaganda telling us that only the market stands between humanity and barbarity people are questioning the market. Shame that libertarians are not so open minded.

[rogerh]

Sorry to be unkind to economists. What the BTP shows is that perfect fairness seems impossibly expensive for non-trivial numbers. What is needed is something close to BTP's fairness and retaining the same openness. But I cannot see Primary Health Trusts etc enjoying such openness nor Ministers being explicit about rationing.

[Bob]

"Marxists and Conservatives have more in common than either side would like to admit. "
Must explain why I dislike both.

[Aromatic Fanny Adams]

Ethereum.

[Seth]

"..., strong unions are a substitute for minimum wage laws because they ensure a balance of power which facilitates fair labour bargains without state intervention; it's for this reason that Conservatives should in fact support unions."

LOL. Conservatives oppose unions precisely because they do NOT want a fair bargain with labor. Ditto their opposition to minimum wages. Totally consistent positions. The whole idea is that the employer always knows best and that the employee should always just "take it or leave it" because "the magic of the market".

[Sam]

Strong unions do not "ensure a balance of power" - they provide a labour cartel which has power and can stand in opposition to employers, but there is no mechanism to ensure that the power is in any way balanced.

[TickyW]

@steven clark

The law does not permit title of stolen property to pass to a buyer, even if the purchase is in good faith. So there can be no justice in transfer in cases where stolen property is involved.

[Steven Clarke]

@TickyW

But surely the point behind primitive accumulation is that certain property - land, people - was 'stolen' and was allowed to be passed on before modern morality and legality applied?

[reason]

@Steven Clark
I don't have much time for Nozick (basically, I think the static and dynamic concepts of justice he uses are different and there is no reason to think that starting "justice" and "justice" in transfer are sufficient to ensure continuing "justice". The whole think is full of very weak concepts, even if you ignore that the preconditions are impossible.

[dadzeno]

@ Steve--I read Nozick recently and put together a critique:

Wishing to confront the libertarian-conservative point of view in its strongest form, I recently revisited Robert Nozick’s “Anarchy, State, and Utopia.” It’s a brilliant, dense book, written in a disarmingly informal style. I’ll start with a sketch of Nozick’s theory of justice, in five paragraphs:

1 Nozick starts with the premise that people have certain rights. These are negative rights, such as the right not to have one’s property taken by force or fraud. He does not recognize positive rights like the right to food, shelter, health, or education.

2 Nozick’s rights are inviolable. Any social order where the State may violate these rights is unjust. This has far-reaching consequences. For example, taxation is unjust, because it means taking someone’s property without their consent. To the question, shouldn’t we tax and use the revenues to do good things, Nozick responds that good things can be done voluntarily and charitably. Nor does he accept the idea that a tax imposed by a representative government is consensual; he would require actual consent by every person subject to the tax—in which case no tax would be needed, because the consenting citizens would donate the funds out of charitable impulses.

3 Nozick’s theory is very close to anarchism. Perhaps his most difficult task is to justify the existence of any state whatsoever. He calls the state he considers acceptable “the minimal state.” The minimal state has a monopoly on the use of force within its boundaries. It punishes those who violate rights and exacts compensation for the victims. It provides a mechanism for the adjudication of disputes. It appears that Nozick’s minimal state has only a judicial system, police, and army. Any state more extensive than the minimal state is unjust.

4 Nozick’s theory, like many others’, starts with a “state of nature”—an imaginary world in which a just social order might evolve. (See also Locke, Rousseau, Rawls.) He gives an account of how the minimal state would arise in the state of nature, but admits it’s just a fable. Nonetheless, he believes the fable helps explain and justify his principles of justice.

5 Nozick’s just society adheres to three principles—justice in the acquisition of property, justice in the transfer of property, and just compensation when one’s rights have been violated. He calls his theory “historical,” in contrast to theories that assess the justness of a social order by its condition at a particular point in time. He thinks this latter type of theory, which he calls an “end state” or “pattern” theory, is untenable.

*********

One can reject all this as far-fetched or absurd, and perhaps it is. But what, exactly, is wrong with it?

For starters, one could reject the rights-based approach altogether in favor of one that looks at the character of society and the welfare of its citizens. In short, one can base one’s theory of social justice on “the good” rather than “the right.” Utilitarians do this.

Within the rights-based framework, one could challenge Nozick’s limited notion of rights. Rights could include rights to food, shelter, clothing, health, and education. The “capabilities” approach of Martha Nussbaum and Amartya Sen does this.

But even if one accepts Nozick’s framework, there are serious problems:

1 The weakness of historical theories. While Nozick identifies problems with end-state theories, historical theories of justice have serious shortcomings as well. Remember, under Nozick’s theory a just society requires not only justice in transfer, but also justice in acquisition. The initial ownership of resources is required to have been just. But there is no initial state. It is not defined and cannot be defined. An even if there were one, it happened too long ago to be knowable. This means that the justice of society, as it stands today, cannot be determined.

The third pillar of Nozick’s theory—just compensation—also demands more of history than it can supply. For example, Nozick’s historical theory leaves room for, and may even require, that compensation be paid to the descendants of African-American slaves (something Nozick’s conservative supporters might be surprised to learn). But there are infinitely many past wrongs that have never been righted and for which compensation is therefore due. These wrongs go back too far in the past to identify and compensate for. History is hazy. In a historical theory, there is no way to know whether the current distribution of wealth and power is just or whether it should be scrambled and rearranged to comply with Nozick’s three principles of justice in acquisition, transfer, and compensation. In fact, the odds that the current distribution is historically just are extremely small. Rearrangement is required, except, we don’t have the information needed to do it properly, or the tools, given Nozick’s restrictions on what the state is allowed to do.

Nor would it be accurate to assume that the consequences of uncompensated wrongs and unjust acquisitions diminish as time passes. Complex systems are extremely sensitive to initial conditions. [See James Gleick, “Chaos”; Ashton Kutcher, “The Butterfly Effect.”]

2 Failures of justice in transfer. Your house is on fire. Firemen arrive on the scene but won’t put out the fire or save your family members trapped inside the burning house–unless you give them $1,000,000. You don’t have $1,000,000, your house burns, your family dies. Is this a just sequence of events? Of, to put it another way, does the fireman have an obligation here to enter into a transaction on terms he does not agree to? I’ll go out on a limb and say yes, sometimes nonconsensual transactions are mandatory.

The fire example describes an unjust failure to enter into a transaction. One can find injustice when transactions do occur, as well as when they don’t. For example, in his book “Justice: What’s the Right Thing to Do?” Michael Sandel describes the actual case of an elderly lady charged $25,000 for a simple plumbing job. He suggests that this is unjust. (It’s also an example of a form of “market failure”—asymmetric information; see section 4 below.)

3 The libertarian police state. Nozick does not articulate principles that would limit the punishment of rights-breakers, the compensation to be exacted from them, or the consequences if they cannot pay it. A rights-breaker forfeits his property rights. He may be imprisoned, losing the right to the liberty of his person. (Liberty of the person can be regarded as species of property right.) He may be put to death.

Furthermore, Nozick imposes no limits on the minimal state’s power, and perhaps responsibility, to prevent rights violations and to punish those who commit them. Indeed, the reason the minimal state offers a judicial system is to allow disputes to be adjudicated rather than be resolved by force.

4 Market failure and libertarian dystopia. The citizens of Nozick’s minimal state are like the consumers and producers in economic theory. Their interactions are conceived of as voluntary exchanges. However, the general equilibrium described in economic theory may be suboptimal, or even truly dreadful, unless certain assumptions are met. These are assumptions that everyone—including Nozick—realizes do not hold in human society. In fact, according to Nozick, the minimal state is a form of natural monopoly—in particular, a monopoly in the use of force. In other words, Nozick assumes “market failure,” with all the evils that result from it (pollution, monopoly power, etc.), but he prohibits the state from doing anything to correct for it. This seems a recipe for dystopia.

5 Nozick’s distributional justice. Nozick discusses justice in the acquisition of newly available resources, like lands first discovered or the electromagnetic spectrum. His principle of justice in acquisition is, at least in part, distributional—that is, when property first becomes available, a person appropriating some of it must leave enough for others. What “enough for others” means, exactly, we don’t need to go into here; it’s sufficient that some kind of principle of common good operates. Nozick further admits that the “enough for other” principle can apply in the realm of justice in transfer, to an unspecified degree—for example, it would not be just for a person to acquire a monopoly in the water supply, even if he or she did so without violating the rules for justice in transfer.

By recognizing “enough for others” as a principle of justice, Nozick opens the door for consideration of peoples’ welfare. This would seem a virtue. But to the libertarian-conservative-anti-statist defender of the status-quo, this ruins Nozick’s theory. It means the state can justly do more than defend the property of those that have it. It means we may use the state to do good.