Category Archives: A Theory of Justice

Rawls and Cohen Revisited

Reading Huemer reminded me of my notes on Rawls and Cohen. Again, if I were behind the veil of ignorance, thinking about what sort of society I'd want to live in, it would occur to me that since I can't influence who I personally will be incarnated as (as rich or poor, healthy or sick, smart or dumb), I would focus on making the overall society as efficient as possible. This means in particular not its "total happiness" at any given moment, but the speed (and acceleration, etc.) at which this total happiness increases with time.

But that society is precisely libertarian laissez-faire capitalism.

Rawls seems to think differently. He'd rather live in a society where the "morally arbitrary" distinctions between persons, such as the quality of their families or IQs are erased. In practice, that would mean that the accidentally better-off shall toil thanklessly for the benefit of the worse-off. Rawls concedes that there can be "incentives" for the more talented so as to elicit the appropriate effort from them which would regretfully cause society to deviate from perfect equality. Cohen asks why, if justice is our ideal, any incentives are necessary. People should work as hard as they can only to give up the fruits of their labors to the poor out of a sense of moral duty. Perhaps we can even have full-featured capitalism, as long as all consumer goods are distributed equally.

In response, I argue that people act for ends. They perceive future pleasures; choose between them; choose between various means to attain these ends, and act with a hope of bettering their lot. "Moral duty" is not in the equation at all. One is never content with merely following the moral law, for a stone or any other inanimate object, too, is perfectly righteous in this sense. One follows the law for the sake of physical or spiritual survival. But he seeks happiness by working to satisfy his various desires and succeed in his pursuits.

In that case, a man must be ruthlessly brainwashed from childhood in order to forget his own ends and work like an automaton only to have his product confiscated. But what if he wakes up from this nightmare and thinks for himself? That's presumably where the "incentives" would come in. What if he, responding to the tax laws, refuses to work? Then he must be enslaved and forced to work under threat of the whip. And what if he tries to run away to free himself? Then he must be killed, lest other slaves mutiny, as well.

We can see that Cohen is a murderer of both mind and body. Hs soul is his own business. But murdering talented people does not benefit the worse off, as Rawls himself acknowledges. Nor does enslaving them, since slave labor is extremely unproductive. Nor, in the final analysis, does treating them as tax-serfs. Up we go in this manner until we reach libertarian unhampered free enterprise system as the pinnacle of human social evolution.

This, I think, is what really follows from Rawls' "original position."

Rawls: Conclusion

Contractarianism is an intriguing approach to ethics, but unlike what Rawls imagines, it still yields laissez-faire capitalism as its political economy and ethics.

Rawls on Envy

Assuming society is not divided into rigid castes and the lack of government fetters and restraints that would prevent some from succeeding in certain ways, a person's destiny is in his own hands. If he fails repeatedly, he may come to feel self-loathing and self-contempt. These feelings are unsurprising. But there are two ways of ameliorating them: one can continue to try to lift himself up or try instead to pull others down.

Rawls mentions a zero-sum society where one person's gain is another's loss. There is no way to lift oneself up without in the process pulling others down. He claims that here justice demands equal distribution of primary goods. Perhaps. Let me make a weaker claim: there is a reason 1) to outlaw competition between members of such a society as producing a net loss for everyone and because of that, 2) to maintain a very rigid social hierarchy. On the one hand, envy would be natural in such a society and could not be constructively dealt with. On the other hand, envious feelings might not arise at all to the extent that each member feels that his place in the scheme of things is assigned to him from birth until death as if by fate and that he is not expected to justify himself anew every day. He resigns himself to the will of the gods. He cannot improve his own position, but neither can he, in the process of trying to improve it, fail. Envy is checked at the source.

The horror of envy is shown in a different scenario: prolonged failure injures my self-respect and sense of self-worth so much that I don't care if I suffer a loss, if only the better-off suffer an even bigger loss. Thus, if Smith and Jones have utilities A = (50, 100), then Smith's envy can be manifested in his desire to obtain B = (40, 70).

Smith can then try to justify his envy by claiming that B is more equal than A and that this equality is in the interest of justice itself. Perhaps Smith is deluded, and his mind is clouded by envy, but I agree with Rawls that Smith's concept of justice must be evaluated on its own merits. Only if his version of egalitarianism is unjust can we condemn him of the sin of envy.

Even Rawls, I think, would judge this type of envy as contrary to the difference principle and to his system as a whole.

Another possibility is simply that Smith wants to loot Jones, to steal money from him, and justifies his crime by saying that the "transfer," whether initiated by Smith personally or through a political process, will make him and his victim more equal which will be just.

Once again, Smith's defense needs to be given careful attention; only if it does not work can we say that Smith is a thief.

Who Is the Worst Off?, 2

All deviations from initial equality must benefit the worse- (or worst-) off, according to the "difference principle" outlined by Rawls.

But who are these miserable sons of bitches? We can only find that out by examining an actual society. Let's have a laissez-faire free market operate in some country for a long period of time, say, 100 years. At some point we take a snapshot of the economy. We locate the rich people and call them the "better-off" and the poor people and call them the "worse-off."

Question: does it make sense at that precise moment immediately to invest the government with massive new powers to begin expropriating, confiscating, and transferring wealth and incomes from the better-off to the worse-off?

Obviously, "distributive justice" must occur on the level of social institutions. A poor man who robs a rich man on the street at gunpoint does not by this criminal act demonstrate the workings of the difference principle.

Neither do paroxysms of theft by government seem to have the requisite permanence and generality. The just tax regime must always exist; it can't be turned on and off like a spigot to deliver "justice" to the populace. It seems like mob justice to me.

But in that case, identifying the worse-off becomes problematic. A system that features large numbers of people on government dole will have different people as the worse-off and better-off. For example, let a certain man perceive an opportunity to make a great investment that under freedom would make him a millionaire and one of the better-off; as things actually are, he is deterred from investing by the taxes that preserve the risk of the investment but diminish the reward. By missing this unique chance, he remains poor all his life and thus is one of the worse-off. Another man is born not especially bright but with a great talent for sports. Under taxes, he vegetates on welfare all his life. Under unhampered capitalism, he takes his destiny into his own hands, rises to the top, becomes champion, and earns a lot of money, thereby raising himself into the ranks of the better-off.

It seems therefore, that no "objective" determination can be made of who "won" and who "lost" in the "natural lottery." The people who win and lose will only be revealed once we exit the original position and watch them, empirically, in action, hustling and fighting, scratching and biting. The choice of the principles of justice changes who will be high and who, lowly.

As a result, Rawls is tasked with comparing the utilities of the worse off in different societies, such as in order to actuate the difference principle, interpersonally. I am not 100% sure this point explodes the principle, but it's food for thought.

Economic Stages and the Original Position

The stages of economic development are each characterized by its own key social / ideological innovation.

Thus, the first innovation, the state, puts an end to autarkic total war. The isolated families come together to form a tribe. The state (perhaps exemplified by the entire community) is more powerful than any individual or identifiable subgroup within the tribe, and each is deterred through fear of punishment from inflicting unjust harms on fellow men. Tribal wars persist, but the foundation for peace is laid. Everyone is equal before the "law" and alive, though everyone is still equally a loser mired in abject poverty.

With slavery comes division of productive activities. In our primitive tribe there were no business firms of any sort; there were no economic differences between members at all. Now some men offer to their fellows to work for them as slaves, receiving subsistence -- but still higher than autarkic -- wages, thereby organizing an enterprise to produce something. They also may acquire the ability to capture and guard many unwilling slaves obtained through raids upon neighboring nations. Prisoners of wars between tribes are no longer murdered outright but are enslaved and put to work. Each slave-owner produces different things and trades with other slave-owners. Wealth creation for a few skyrockets.

The problem is that slave labor is deeply unproductive. The third innovation inaugurates the transition to feudalism and serfdom: division of labor. Each serf pays a tax to the tax-lord but is free to specialize and work wherever he pleases and accumulate as much wealth as he can, subject to the taxes. Each worker now has an incentive to be as productive and competent as he can. The great variety of individual talents and natural environments ensures that labor will be minutely divided within firms and factories. The spectacular efficiency of this device brings vastly increased prosperity to many.

(Note that division of productive activities is in between firms; division of labor is within firms. Entrepreneurs do not work but produce by arranging complementary divided factors including workers who do not produce but work.)

Capitalism is marked by the final improvement: freedom of entrepreneurship. With it, all productive and creative forces of society are finally fully unleashed to the enormous benefit of all members who now enjoy fast improvement in their standard of living, whatever (temporary) positions within social cooperation they hold.

This has bearing on Rawls' theory of justice. Once again I wondered, where do the goods to be distributed equally in the original position come from, such that any deviation from this equality shall then be permitted only if it is in the interest of the worse-off?

Perhaps our stage 2, a tribe with a state qualifies. Let's say every week the men venture out to hunt a mammoth whose meat is then divided equally among the households. How should this society evolve?

The answer has been suggested: it should implement the foregoing innovations step by step or even all at once. But each innovation greatly increases the speed at which the standard of living grows for some, and the last one, entrepreneurial capitalism, maximizes this speed for everyone, both worse-off, medium-off, and better-off.

Rawls' fanatical and preposterous interventionism to "correct" capitalism simply is not in the picture according to this interpretation of the choices extant in the original position.

Thomas Jefferson vs. Rawls

Rawls posits a lexical ordering in which liberty has priority over welfare: as a general rule, no amount of liberty can be sacrificed for the sake of any amount of welfare.

Jefferson had a better ordering: "life, liberty, and property." It does seem that life has priority over liberty if only in the sense that liberty is of no use to a corpse.

According to this, was the American Revolution impermissible by Jefferson's own standards, because it bought liberty at the expense of lives lost in the war?

A Note on Natural Liberty vs. Democratic Equality

It is possible that "democratic equality" is just a fairly meaningless name picked by Rawls for the combination of "equality of fair opportunity" and "difference principle." It might as well be called "blue paperclip."

Then my attempt to defend liberty by contrasting it with first, democracy and second, equality is as seemingly ineffective as trying to argue that liberty is superior both to the color blue and to paperclips.

Very well. See the preceding two posts discussing "Equally open" and "Everyone's advantage."

Distribution, 3: An Objection

I spoke too soon! In §47, "The Precepts of Justice," Rawls shows himself perfectly well aware that in equilibrium, the market grants to each worker income equal to his marginal productivity, "that is, the net value of the contribution of a unit of labor measured by the sale price of the commodities that it produces. ... This fact explains and gives weight to the precept to each according to his contribution... In this sense, a worker is paid the full value of the results of his labor, no more and no less. Offhand this strikes us as fair. It appeals to a traditional idea of the natural right of property in the fruits of our labor. Therefore to some writers the precept of contribution has seemed satisfactory as a principle of justice."

How does our author demur? I think Rawls would agree that social cooperation under pure free market satisfies the utilitarian demands, but point out that his theory is not utilitarian at all. Perhaps people ought to structure the institutions of the economy on Rawls' principles of justice. Then the allegedly common sense precepts of justice will either be confirmed by his theory (good for them) or rejected by it (no big deal).

Each of these common sense injunctions is "subordinate" and cannot "be plausibly raised to a first principle." In practice, they will be given "different weight" by different systems. "The overall weighting of the many precepts is done by the whole system. Thus the precept of need is left to the transfer branch; it does not serve as a precept of wages at all. To assess the justice of distributive shares, we must note the total working of the background arrangements, the proportion of income and wealth deriving from each branch."

The "branches" are part of Rawls' rather fantastic and incredible design of government: they are given names like the allocation branch, the stabilization branch, and so on, making up an at least 5-horned chimera. For Rawls, there are other concerns beside "to each according to his contribution." Even if this principle is given some weight, other precepts, derived from Rawls' own scheme, will clamor for consideration, as well.

(I don't think the grotesquerie of the "branches" of government and garbled mishmash of Econ 101 and Keynesism follow from Rawls' theory of justice. At this point, he seems to be making stuff up as he goes along, having run out of philosophical things to say.)

Bizarro Justice

I wanted to write a post on how the market distributes income, but after reading Rawls' interventionist phantasmagoria in §43, "Background Institutions for Distributive Justice" in A Theory of Justice, I fear he may be too far gone to be reached by my arguments. Perhaps his followers are not, though. To that end, here it is.

In the free market people are paid according to their marginal productivity, not equally. This has nothing immediately to do with "efficiency" as such; it's just how market allocates income to labor, due allowance being made for 1) entrepreneurial money profit and 2) bargaining abilities of the firm and applicant within narrow limits.

Since the market and its "economic" freedoms are non-negotiable, the initial position is or can be pure free market where the distribution of primary goods occurs according to productivity. (Then we can take a look at egalitarian measures that would adulterate the market and consider the societies / economies generated thereby.) Is productivity irrelevant from the moral point of view? There are two reasons to suggest that it is not.

First, informally and imprecisely, almost all modern production is mass production, so a person who is rich must have created a massive amount of value for other people. We can't compare utilities interpersonally in this case, but something like this can be affirmed. Why then shouldn't one who contributes to society more receive more from society?

Second, a worker deserves his wages, as in it is the most basic justice in buying and selling to get what is mutually agreed upon. How can one therefore be taxed and how can Rawls pay someone for doing no work? In other words, why should low-productivity workers receive any subsidies? Why should they get more than they put into social cooperation? Why should some receive less than they gave and other receive more?

"By their fruit you will recognize them." (Mt 7:16) To do otherwise seems straightforwardly unjust.

Distribution of Primary Goods

In any attempt at discovering human natural law, the crucial question is in any given case whether equality or on the contrary inequality is natural.

There is an easy example here of wealth and income. Is Crusoe's wealth and Friday's relative poverty an unnatural and therefore unjust inequality?

No, because there is no relation that holds between their respective net worths or incomes. It's not as if Crusoe gains wealth at the expense of Friday: the richer Crusoe is, the poorer Friday is: WealthF = 100 - WealthC, where 100 is the total "wealth" to be presumably just "found" out there, a zero-sum game.

Crusoe and Friday can in fact cooperate and grow richer together though unequally. Wealth has to be produced, and even if Crusoe is a superior worker, his riches do not come at the expense of Friday. Under free markets men like Crusoe are implicitly conscripted into service of the masses of the representative common man Friday.

Since Crusoe's and Friday's respective prosperities are unrelated by any permanent formula, Friday cannot be distressed or offended that Crusoe has any or particular or unequal or greater than his wealth. Crusoe's net worth has no impact on Friday's net worth.

As a result, since no relation exists between their wealths, no particular relation prevailing at any point is unnatural (or natural for that matter). Thus, wealth inequalities are not unnatural.

Now rename "natural" to "just according to Rawls" and "unnatural" to "unjust." We can see that inequalities in the distribution of primary goods cannot be called unjust in Rawls' (or anyone's) theory.

Superiority of “Natural Liberty” to “Democratic Equality”

1. Liberty vs. democracy. Mises is at his most eloquent when he harps on consumer sovereignty, possibly because his opponents at the time were infatuated with political democracy, at least publicly -- in private, they were socialists who pined to be dictators and "central planners" -- while slighting the free market. Thus, Mises writes:

The consumers determine ultimately not only the prices of the consumers' goods, but no less the prices of all factors of production. They determine the income of every member of the market economy. The consumers, not the entrepreneurs, pay ultimately the wages earned by every worker, the glamorous movie star as well as the charwoman.

With every penny spent the consumers determine the direction of all production processes and the details of the organization of all business activities. This state of affairs has been described by calling the market a democracy in which every penny gives a right to cast a ballot. It would be more correct to say that a democratic constitution is a scheme to assign to the citizens in the conduct of government the same supremacy the market economy gives them in their capacity as consumers.

However, the comparison is imperfect. In the political democracy only the votes cast for the majority candidate or the majority plan are effective in shaping the course of affairs. The votes polled by the minority do not directly influence policies. But on the market no vote is cast in vain. Every penny spent has the power to work upon the production processes. The publishers cater not only to the majority by publishing detective stories, but also to the minority reading lyrical poetry and philosophical tracts. The bakeries bake bread not only for healthy people, but also for the sick on special diets. The decision of a consumer is carried into effect with the full momentum he gives it through his readiness to spend a definite amount of money.

It is true, in the market the various consumers have not the same voting right. The rich cast more votes than the poorer citizens. But this inequality is itself the outcome of a previous voting process. To be rich, in a pure market economy, is the outcome of success in filling best the demands of the consumers. A wealthy man can preserve his wealth only by continuing to serve the consumers in the most efficient way.

Thus the owners of the material factors of production and the entrepreneurs are virtually mandataries or trustees of the consumers, revocably appointed by an election daily repeated. (HA, 271)

We can see that democracy is a pale and withered imitation of the free market.

2. Liberty vs. equality. We have already seen that Rawls himself rejects equality of wealth and incomes as a value potentially to be traded against utility or even as a social ideal to be pursued at all.

Moreover, his equal liberties have a lexicographical priority over welfare. If we include, reasonably, I think, into the list of liberties the right to own means of production and compete in the market, then the social order based on private ownership and laissez-faire economy stands adequately defended against egalitarian sabotage.

We can do so even within Rawls' system, because "the inequality of incomes and wealth is an inherent feature of the market economy. Its elimination would entirely destroy the market economy." (HA, 840) And we have seen that abolition of the market effectively annuls essential individual liberties understood as manifestations and use of property rights.

Finally, any attempt to force equality upon the people slows down economic progress and so is senseless in the long run. If we don't want our children to curse our names, let us make them as rich as the laissez-faire economy permits.

Equivalence of “Natural Liberty” and “Natural Aristocracy”

Once again Rawls' classification of social orders is reproduced below (57):

"Everyone's advantage"
"Equally open" Principle of efficiency Difference principle
Equality as careers open to talents System of Natural Liberty Natural Aristocracy
Equality as equality of fair opportunity Liberal Equality Democratic Equality

1. Liberties. Under a libertarian system and unhampered capitalism individuals enjoy vast economic, personal, and political liberties. Everyone is equal before the law. Just as important, economic policies do not subtly privilege established businesses, in so doing restricting the freedom of new entrepreneurs to compete with them. As Mises astutely points out,

The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position.

Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow and whose ingenuity will make the life of coming generations more agreeable.

They want the way left open to further economic improvements. (HA, 83)

Similarly, no employee nor union is favored over their competitors. Everyone is free to challenge any billionaire and try to supply the consumers with better or cheaper goods. There is no interference with consumption, whether of risky entertainments or of "controlled substances." There is no protectionism, nor subsidies to any firm or industry, nor government-run enterprises. There are no coercive intrusions into labor markets. Individuals enjoy full private property rights on natural resources. There is no taxation on any level of government above local. The citizens' personal freedoms are secure. The vast numbers of localities (such as the 3,000 counties and 20,000 cities in the United States) ensure vigorous competition among their legal systems for citizens and businesses. In short, individual liberties are not only equal but very extensive and jealously guarded.

2. The difference principle. Rawls writes: "Looking at the question from the standpoint of the original position, the parties would reject the principle of utility and adopt the more realistic idea of designing the social order on a principle of reciprocal advantage." (p. 155) But what is the free market but a principle of reciprocal advantage? When Smith trades with Jones, both benefit from any exchange relative both to being forbidden to trade and to a society where no thought is given to dividing labor in the first place.

In the market economy, everybody contributes to the material well-being of others in his capacity as a worker, landowner, capitalist, or entrepreneur. What is this but a description of how the difference principle is actually supposed to operate?

The closest that Rawls comes to imbuing this rule with some substance is the following statement:

Supposedly, given the rider in the second principle concerning open positions, and the principle of liberty generally, the greater expectations allowed to entrepreneurs encourages them to do things which raise the prospects of laboring class.

Their better prospects act as incentives so that the economic process is more efficient, innovation proceeds as a faster pace, and so on.

...something of this kind must be argued if these inequalities are to satisfy by the difference principle. (68)

Unfortunately, Rawls has no understanding of how the market operates. He writes, for example:

[The meritocratic] form of social order follows the principle of careers open to talents and uses equality of opportunity as a way of releasing men's energies in the pursuit of economic prosperity and political dominion.

There exists a marked disparity between the upper and lower classes in... means to life... The culture of the poorer strata is impoverished while that of the governing and technocratic elite is securely based on the service of the national ends of power and wealth.

Equality of opportunity means an equal chance to leave the less fortunate behind in the personal quest for influence and social position. (91)

Ignoring the quest for "political dominion," let us concentrate on economics. First, what is wrong with pursuit of economic prosperity? Does Rawls want to arbitrarily prohibit people from seeking their own happiness? Is that what "justice" comes to in his view?

Second, it is impossible actually to identify the "upper" and "lower" classes, as there is a smooth continuum of the amounts of personal wealth in people's hands.

Third, on the free market one can only acquire wealth by serving consumers, the vast majority of whom are not rich. The "poorer strata" in their capacity as consumers are continuously served by the ever-shifting elite. One can only leave other people behind in terms of influence and status by creating products and services for them to buy. In short, one can only fulfill the "personal quest for influence and social position" by creating value for others, precisely as the difference principle commands.

In the unhampered market economy the "superior men," the better-off are drawn into service of the common man.

What Mises writes about ownership of the means of production, viz., that it is not a privilege but a social liability, applies equally well to human capital, including natural endowments, inborn talents, potentialities, virtues, and skills.

One who "lost out" in the "natural lottery" has little to worry about. He can afford to have a job that requires minimal responsibility and to take it easy. Regarding the better-off, however, "from everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked." (Lk 12:18) They have the most grave duty to develop their talents and not misuse them for evil ends. The more they are paid, the more serious and dire their responsibility is to justify their wages.

So, natural talents are a "collective asset" (156), in the sense that the better-off must use their powers to produce goods for other people, including the worse-off, to enjoy.

What follows is that in the market economy the principle of efficiency and the difference principle under "equality as careers open to talents" yield the same outcome. Natural liberty and natural aristocracy are the same, with the entrepreneurs most successful at any given moment at filling the needs of the consumers becoming part of the fluid natural aristocracy.

Utilitarianism and the Impartial Spectator

Rawls describes an alleged feature of utilitarianism as follows:

A rational and impartial sympathetic spectator is a person who takes up a general perspective: he assumes a position where his own interests are not at stake and he possesses all the requisite information and powers of reasoning.

So situated he is equally sympathetic to the desires and satisfactions of everyone affected by the social system. Responding to the interests of each person in the same way, an impartial spectator gives free reign to his capacity for sympathetic identification by viewing each person's situation as it affects that person.

Thus he imagines himself in the place of each person in turn, and when he has done this for everyone, the strength of his approval is determined by the balance of satisfactions to which he has sympathetically responded. When he has made the rounds of all the affected parties, so to speak, his approval expresses the total result. Sympathetically imagined pains cancel out sympathetically imagined pleasures, and the final intensity of approval corresponds to the net sum of positive feeling. (163)

Utilitarianism was never meant to apply to individual conduct, as in "you shall act so as to maximize global welfare"; not even rule utilitarianism ("you shall act according to rules following which generally promotes global welfare").

It rather acknowledges a certain division of labor between the lawgivers and the people. It is true that natural law must be wisely discovered, and positive law, prudently made. But the judges and legislators are passive. They make the law and then just sit there waiting.

The first thing they wait for is for people to refuse, perhaps shortsightedly, to honor the incentives generated thereby, in which case the authorities jump out and pounce on the lawbreaker like a snake on its prey and punish him -- also utilitarian-ly.

The second, is also for the citizens to respond to the same incentives, but this time properly. This is because the governed, on the contrary, are active. Even so, they are not required to make any utilitarian calculations but are permitted simply to pursue their own self-interest in whatsoever it may consist. This self-interest can explicitly, through charity, include the happiness of others, but it does not have to; all actions guided by good law tend to redound to the social good and indeed, global welfare.

It is only the judges and legislators who should pay heed to utilitarianism. Moreover, they can't predict how the citizens will act. They cannot predict who will be the next Thomas Edison or Henry Ford, or whether. They can at best, to repeat the quote of Mises in a post below, "provide an environment which does not put insurmountable obstacles in the way of the genius." Whether there will be geniuses to whom the road will be open in such an environment is up to God and His genetic random person generators.

As a result, we don't need an impartial sympathetic spectator who compares utilities intersubjectively. For in the imaginary world before the law is laid down, there are no citizens yet. The morality of Edison is not being compared with the morality of Ford, such that whoever creates more happiness is ordered to act. No one is ordered to do anything; only punishments for crimes are specified. Once this is done, people are left in the command of their own counsel, free to pursue whatever pleasures they fancy.

This humble method turns out to be the most reliable way of creating "the greatest good for the greatest number."

Equivalence of “Natural Liberty” and “Liberal Equality”

Here is Rawls' big picture (57):

"Everyone's advantage"
"Equally open" Principle of efficiency Difference principle
Equality as careers open to talents System of Natural Liberty Natural Aristocracy
Equality as equality of fair opportunity Liberal Equality Democratic Equality

What is equality of fair opportunity (EFO)? It's a state of affairs in which "positions are not only open in a formal sense, but all have a fair chance to attain them. ... those with similar abilities and skills should have similar life chances; ... those who are at the same level of talent and ability, and have the same willingness to use them, should have the same prospects of success regardless of their initial place in the social system." (63)

Now "nature," "nurture," and "effort" cooperate in forming a person and his life's accomplishments. What then can the statement that "in all sectors of society there should be roughly equal prospects of culture and achievement for everyone similarly motivated and endowed" mean? It can surely mean one of three things: either (1) nurture should be the same; or (2) luck in life should be the same; or (3) the law should treat everyone equally.

As for (1), one can come up with all sorts of nightmare scenarios such as a world in which the family, local and regional cultures, nations, and even geographical differences are erased. Our author does not disappoint; for example, he is not fully happy even with liberal equality, because "the principle of fair opportunity can be only imperfectly carried out, at least as long as some form of the family exists" (64); and again "even when fair opportunity (as it has been defined) is satisfied, the family will lead to unequal chances between individuals. Is the family to be abolished then? Taken by itself and given a certain primacy, the idea of equal opportunity inclines in this direction." (448) That Rawls is even toying with such ideas indicates that he is either a madman or a lightweight.

What else? "Greater resources might be spent on the education of the less rather than the more intelligent" (86); and again "resources for education are not to be allotted solely or necessarily mainly according to their return as estimated in productive trained abilities, but also according to their worth in enriching the personal and social life of citizens, including here the less favored." (92) Rawls qualifies this by pointing out that "it is not in general to the advantage of the less fortunate to propose policies which reduce the talents of others" (92). This suggests that he'd like to level people up: promote equality by boosting the worse-off. Unfortunately, this is almost never possible, and in practice he will end up doing something much easier and leveling down. For example, schooling will have to be nationalized, private and home schools outlawed, and so on. Equality will be bought at the unseemly cost of the dramatic fall in the general level of moral and intellectual virtues in children. The wretched inefficiency of government schools is legendary, and so is their propensity for indulging in worthless propaganda and for corrupting the morals of the young. In fact, if our goal is not equality but simply to make knowledge and culture available to all, then there is no better means to that end than a regime of private property (including in schools) and free enterprise. As Mises eloquently argues,

The liberals do not disdain the intellectual and spiritual aspirations of man. On the contrary. They are prompted by a passionate ardor for intellectual and moral perfection, for wisdom and for aesthetic excellence.

But their view of these high and noble things is far from the crude representations of their adversaries. They do not share the naive opinion that any system of social organization can directly succeed in encouraging philosophical or scientific thinking, in producing masterpieces of art and literature and in rendering the masses more enlightened.

They realize that all that society can achieve in these fields is to provide an environment which does not put insurmountable obstacles in the way of the genius and makes the common man free enough from material concerns to become interested in things other than mere breadwinning.

In their opinion the foremost social means of making man more human is to fight poverty. Wisdom and science and the arts thrive better in a world of affluence than among needy peoples. (HA, 155)

Education is not a panacea, either; sometimes it can be a hindrance. Mises explains:

In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained.

A man becomes an entrepreneur in seizing an opportunity and filling the gap. No special education is required for such a display of keen judgment, foresight, and energy.

The most successful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal to their social function of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership. (HA, 314-5)

(2) is impossible to equalize (I mean, are you kidding?). In fact, the element of luck in receiving one's natural endowments is like the good fortune enjoyed by one over the course of his life. But here no one can say how good fortune is distributed. Someone who is rich may be objectively unlucky and would have received his full discounted marginal value product, had he been more fortunate (either at birth or later in life). (That is, he became rich despite life's misfortunes.) Someone who is poor may be objectively lucky in life but would have been even poorer if his fortune had been only average.

Of course, Rawls may reply that luck determines everything. If one was lucky to be born with or develop the desire to work hard and to overcome obstacles, then he will be successful in life. A person is rich because he was lucky to get these traits. He might have been richer but his overall luck is still greater than that of a poor person.

But this confuses our nature and nurture with effort. Everyone has the capacity to work hard. Some choose to vegetate in front of the TV rather than apply themselves. Straightforwardly, this is not luck but individual lifestyle choice.

(3) makes sense in the public arena, such as it is, though not in the private one. In any case, the free market strongly discourages arbitrary discrimination by firms, and everybody can usually get jobs in their area of expertise. Emigration and immigration are generally unrestricted, and labor and capital travel sprightly to each other, bringing about the tendency toward equalization of wages rates for the same type of work everywhere. Under laissez-faire capitalism institutional unemployment does not exist.

And now for the main point. If everyone "has a fair chance to attain" positions suitable to him, then there is intense competition for these positions. Moreover, the labor market is laissez-faire and precludes minimum wages, labor union pressures, labor regulations entangling hiring and firing decisions in red tape, and so on. This means first, that for any job one person may be hired, and five other applicants, rejected. So, the chance to compete for a job, "fair" or not, does not entail victory in the competition. There will still be failures and losers, and plenty of them. Crucially, from the "efficiency" standpoint, it is wonderful when a lot of people vie for jobs. The economy becomes more efficient to the extent that all reasonably qualified people are trying to excel relative to each other; this way, no talent is left imprudently from the social point of view un- or underutilized.

Second, this sort of free market makes for considerable social mobility, both up and down. But the churning of the social hierarchy generated by means of competitive profit-seeking on the part of all members of society (including in their capacity as workers) has sense only when it's in the interest of the common good. If Smith and Jones are applying for the same job, then from the point of view of "justice" it is irrelevant whether Smith wins and Jones by that very fact loses or Jones wins and Smith loses. But not from the point of view of efficiency. If the hiring manager is good at his job, he'll pick the most suitable candidate, thereby adding his own profit to that of Smith or Jones.

As a result, "fair equality of opportunity" is again subordinated to utilitarian concerns. "Opportunity" is too individualistic a notion to be of use here. Again, Smith's being hired by a company entails that Jones is passed over, despite their "equal opportunity" to be considered. The benefits of everyone's being well-born, well-educated, well-connected, as demanded by EFO, accrue not to any individual (because this state of affairs merely intensifies the competition between all) but to society as a whole, as its efficiency and productivity shoot up, as each man tries to exceed and outdo his fellows in how well he performs his job.

We conclude that (1) government policies intended to promote EFO will only level down and hurt both the better-off and the worse-off; (2) to the extent that EFO is embodied in laissez-faire capitalism, it has value only when it is good for the economy. Liberal equality, when rightly understood, is identical to natural liberty.

Why Maximin?

Rawls proposes 3 reasons for "this unusual rule." "First, since the rule takes no account of the likelihoods of the possible circumstances, there must be some reason for sharply discounting estimates of these probabilities. ... Thus it must be, for example, that the situation is one in which a knowledge of likelihoods is impossible, or at best extremely insecure.

"The second feature that suggests the maximin rule is the following: the person choosing has a conception of the good such that he cares very little, if anything, for what he might gain above the minimum stipend that he can, in fact, be sure of by following the maximin rule. It is not worthwhile for him to take a chance for the sake of a further advantage, especially when it may turn out that he loses much that is important to him.

"This last provision brings in the third feature, namely, that the rejected alternatives have outcomes that one can hardly accept. The situation involves grave risks." (134)

Regarding the first reason, there is another way to deal with the veil of ignorance. As a ghost in the original position, I (and therefore everyone else) say: "I want to live in a society in which the productivity of the human labor improves at the fastest speed." Whether after leaving the original position I'll find myself rich or poor, healthy or sick, smart or stupid, I will benefit from the efficient economy around me.

A quickly growing economy is the common factor for and shared by all its future members. If it renders superior service to rich Smith, it will still render the best in class service to poorer Jones. Jones, like Smith, will benefit more from a more efficient society than from a less efficient one. Now perhaps a less efficient society will subsidize Jones at the expense of Smith, procuring for Jones an overall larger share of the now smaller pie. We'll deal with this situation later. Regardless, reason (1) allegedly supporting maximin does not hold: whoever I become after instantiation, I'll benefit from the outer society's productivity. No probabilities are needed, and no calculations are made.

The second condition is bad psychology: ask anyone whether he'll be content with a minimum wage. The pleasures money can buy in the modern society are both enticing and innumerable. "Our contemporaries are driven by a fanatical zeal to get more amenities and by an unrestrained appetite to enjoy life," argues Mises. (HA, 318) Rawls has apparently designed his system for ascetics and those who have taken the vow of poverty. The vast majority of people are not described by the second feature of maximin.

Finally, the third provision is bad economics. Rawls must be envisioning a choice similar to between X = {70, ...} and Y = {20, ... 20, 1 million} But that is indeed unrealistic. A laissez-faire capitalist economy does not looks like either X or Y. In the previous post, I suggested that Z = {60, 100, ..., 100, 120} is far more plausible.

As a result, the maximin rule that buttresses the difference principle stands undefended.

Who Is the Worst Off?

By presupposing initial perfect equality in the distribution of primary goods, Rawls is willy-nilly committed to socialism. Socialism in this day and age? It's not a viable system of production. While capitalism improves its economy every hour of every day in parallel, any attempt sequentially to change things under socialism will most likely break its evenly rotating economy into uncoordinated pieces. We may forgive Rawls for not knowing this (or for choosing not to take sides in a controversy outside his area of expertise), but at this point there is really no excuse for his kind of egalitarianism.

Suppose now that Rawls agrees with this undeniable point but claims instead that the initial condition of equality is but an artifice, an imaginary construction used in order to set the stage for and demonstrate the workings of the difference principle. It is true that perfect equality is preposterous, but, coupled with the difference principle, the system becomes very realistic and in fact describes how a society should actually work. Now this is certainly a fortuitous if unintended development; how lucky for Rawls that his system does not after all result in social disintegration!

In the real world Rawls's key criticism of utilitarianism does not normally apply. In a free society no one is required to sacrifice his welfare for the benefit of others. Therefore, the idea that "allegiance to the social system may demand that some, particularly the less favored, should forgo advantages for the sake of the greater good of the whole" (155) is false. "For what the individual must sacrifice for the sake of society he is amply compensated by greater advantages. His sacrifice is only apparent and temporary; he foregoes a smaller gain in order to reap a greater one later," says Mises (HA, 146):

Praxeology and economics do not say that men should peacefully cooperate within the frame of societal bonds; they merely say that men must act this way if they want to make their actions more successful than otherwise. Compliance with the moral rules which the establishment, preservation, and intensification of social cooperation require is not seen as a sacrifice to a mythical entity, but as the recourse to the most efficient methods of action, as a price expended for the attainment of more highly valued returns. (HA, 883)

In the long-term, as Rawls knows very well, there prevails a harmony of interests among all members of society. Yet in another sense, in any realistic society certain changes must be allowed which, though they are sanctioned by the rules thanks to which the greatest possible prosperity results, may nonetheless harm some particular person or group of people. Thus the invention of a new and better mousetrap may put the producer of old mousetraps out of business; or a shift in consumer preferences may cause job losses in some industry. Under no economic system are people immune from failure, since everyone has to deal with uncertain future. Successful entrepreneurs forecast the future and adjust their actions to it better than unsuccessful ones. If Rawls's theory permits only Pareto-efficient changes, then it is wedded to the status quo in an unacceptable way. It is therefore impossible for all inequalities to be for the benefit of all, as there will always be people who will fail in their endeavors under a more unequal system but who would have succeeded under a less unequal one. Suppose, for example, that there is a person who is poor in the free-market system but who would be richer under socialism working, say, as a powerful bureaucrat. According to Rawls's own rules, we cannot prefer the far wealthier capitalist society to the socialist one because of that person alone. Similarly, we may be unable to choose between a poor and stagnant society ruled by a hereditary class of warriors and a free, wealthy, and peaceful industrious nation with consumer sovereignty in which the warriors end up at the bottom of the social hierarchy. Rawls' rules do not tell us who must be the better-off and who the worse-off. The benefits can only accrue to all in the long-run, and even then, as Keynes put it, "in the long-run we are all dead."

Now to this Rawls would seem to have a reply. We take the worst-off person or group in society A and compare it with the worst-off person or group in society B; if the worst-off in A are better off than the worst-off in B, then A is to be preferred. This is the "maximin" rule. But it will not do. For the reality is that the worst-off are pretty miserable in any society, no matter how wealthy, in which they are not explicitly subsidized. Regardless of where we place them, the worst-off will receive $0 + α, where α is a some sort of trivial minimum possible wage. It is not the welfare of the worst-off that differentiates societies; it is the welfare of the common man, the masses, the general public. But if we are to compare their welfare, then we are squarely back to utilitarianism.

Now we come to the main part of my argument. Let there be an initial society X of 12 people each receiving 50 utils of welfare. Societies Y = {70, ...} and Z = {60, 100, ..., 100, 120} are both preferable to X. (Assuming we live under capitalism, Z is eminently plausible and realistic.) At the same time, utilitarianism clearly picks Z over Y, while the difference principle picks Y instead. Which is bad news for Rawls, because Z is obviously superior. The masses of Z, 83% of the population, are veritable hostages to the Z's worst-off person (Smith) who is receiving 60 utils. What's more, if the better-off of Z agree each to donate 1 util to Smith, then we obtain society Z+ with the distribution {71, 99, ..., 99, 119} which is an improvement over Y even according to the difference principle. Introducing theoretical compensations, even if they are hard or even absurd to try to implement in practice, fully subsumes Rawls' criteria under utilitarianism.

Rawls is aware of the argument along these lines:

This objection is analogous to the following familiar difficulty with the maximin rule. Consider the sequence of gain-and-loss tables:

0 n
1/n 1

for all natural numbers n. Even if for some smallish number it is reasonable to select the second row, surely there is another point later in the sequence when it is irrational not to choose the first row contrary to the rule. (136)

He is irritated by this, replying as follows:

Part of the answer is that the difference principle is not intended to apply to such abstract possibilities.

As I have said, the problem of social justice is not that of allocating ad libitum various amounts of something, whether it be money, or property, or whatever, among given individuals. (136)

Oh wow. Rawls "has said" nothing of the kind; indeed, the opposite is exactly what he has been insisting has been his aim from the beginning: to distribute primary goods justly! It's outrageous that he up and summarily denies what he's been deafening our ears with! He then argues that this scenario is unrealistic under his scheme, because "great disparities [of wealth] will not long persist." Oh yes, they certainly will under capitalism, the only reasonable system of economic organization. In particular:

1. In regard to the differences between the minority of the rich and majority of the non-rich, it is true, of course, that capitalism features mass production for the masses, such that new luxuries for the rich, perpetually created, trickle down quickly enough to become necessities for the common men. Moreover, the differences in the real standard of living of the rich and non-rich continuously diminish, as these luxuries become increasingly more "far-out." But it is precisely the possibility of earning vast fortunes that makes the capitalistic economy so productive. This is less important for our purposes than the next distinction:

2. In regard to the differences between the majority of the bourgeoisie and the minority of the unskilled workers, with respect to money wealth and incomes, there will also be extensive inequality.

Rawls admits considerations of this sort, in fact depends on and explicitly invokes them in his own attempt at defense of maximin: "there is no objection to resting the choice of first principles upon the general facts of economics and psychology. As we have seen, the parties in the original position are assumed to know the general facts about human society." (137)

And concerning (2), Rawls can't keep the great majority beholden to the whims of the tiny minority of the worst-off.

Rawls, Equality, and Utility

Rawls lists the conception of justice that would require one to "balance total utility against the principle of equal distribution" as an alternative to his own conception. (107) And indeed, equality (as regards the lower-priority income and wealth as opposed to higher-priority rights and liberties) for Rawls has no value other than as the initial stage in the deliberation of persons in the original position. Anything, including a very unequal society, can be justified with further discussion, for all Rawls knows, via the difference principle. Equality is not some fundamental value that we reluctantly sacrifice in part in order to increase prosperity, because egalitarian measures diminish productivity and so on.

This is very fortunate, because the idea that the size of the "pie" has to be balanced with equal distribution of the pie is completely mistaken.

What ends up being traded off for equality is not the size of the pie at any given time, but rather the momentary speed at which the pie grows over months and years of future economic improvement.

The limiting case of perfect equality in consumption through socialism in production is akin to an evenly rotating economy in which, though the size of its pie is non-zero, nothing ever changes.

Let us therefore consider two societies, A and B, initially identical in regard to their wealth. Society A pursues a laissez-faire policy and is unegalitarian. Society B is less productive and grows slower but is marked by greater equality. It is true that after a long time, say, fifty years, A will outperform B so much that the masses in A will have a standard of living better than even the elites in B. But at least in the meantime B will enjoy greater equality. Is there any reason why we should not prefer B to A?

The answer is, we may well already be in the stage at which our society's better-off are poorer than the worse-off of a freer and more capitalistic society that could have been but was not chosen fifty years ago. We may be reaping the consequences of past egalitarian policies right now, and we would have to admit that our ancestors made a nasty mistake.

We can see that promoting equality as an independent value makes no sense in the longer run. I am pleased that Rawls makes no such mistake.

Appeal of Contractarianism

Remember Thrasymachus in the Republic arguing that justice is the "interest of the stronger"? What does he mean?

Well, clearly, the "strong" do as they please; particularly, they murder, plunder, and oppress the "weak"; however, slightly bothered by their own depredations, and in order to secure their good reputation and public esteem, they seek to rehabilitate themselves in public opinion. They do so by lying and hiring propagandists to lie to other people that their deeds, rather than being wicked and traitorous, are in fact noble and great. They sophistically proclaim their most ignominious actions to be just.

Meanwhile, the weak also do not find value in any independent notion of justice. What they proclaim to be the strong's injustices is just thinly veiled impotent and resentful envy of the strong. If a weak man were suddenly to become strong, then he would instantly renounce his notions of justice and would not only commit injustices freely but in imitation of his fellows, insist that his morally dubious behavior is actually the pinnacle of justice.

(It's a bit like polylogism. A person's social status as either strong or weak allegedly fully determines his intellectual commitments. Yes, this idea is obscene and disgusting. Blame Marx.)

It is precisely these crazy goings-on that are preventing a detached and objective analysis of the notions of justice and injustice. Let us, therefore, enter the original position and throw a veil of ignorance over ourselves so that we don't know whether we are strong or weak. Can the notion of justice be formulated apart from our biases? Remember that as truth is correspondence of thought to reality, so justice is correspondence of reality to an ideal. The ideal applies to the actual society, but it is arrived at by contemplating abstract perfections. Utilitarians have their impartial observer; virtue theorists have their fully actualized sage; so why not allow contractarianism its own ideal-making tool?

But why contracts? Obviously, because if everyone agrees to some idea of justice, then the question is settled; there is no controversy. They may all be wrong in some sense, I suppose, because contractarianism is pure procedural justice: anything whatsoever that is agreed to in a "fair" original position (hence, Rawls' "justice as fairness") is designated "just," but by that very agreement, people will be in considerable harmony and accord with one another, and what more can we ask for of a theory of justice?

I speculate that justice most generally remains for Rawls the disposition to "live honestly, to injure no one, to assign to each his own." But what sorts of things are to be assigned to people? So, while being in the original position is good for our ideals, this must be accompanied by a theory of the good. Rawls has one. It's a little lurid. He defines "primary goods" as those that "a rational man wants whatever else he wants. Regardless of what an individual's rational plans are in detail, it is assumed that there are various things which he would prefer more of rather than less. With more of these goods men can generally be assured of greater success in carrying out their intentions and in advancing their ends, whatever these ends may be. The primary social goods, to give them in broad categories, are rights, liberties, and opportunities, and income and wealth." (79)

Rawls' concern then seems to be allocation of primary goods arrived at by the contractarian method. (He gives little thought to production of such goods.) Who gets what, found out thereby, gets it justly.

Worst Off, Shmorst Off

When Rawls writes that

No one is to benefit from [natural accidents and social circumstances] except in ways that redound to the well-being of others. ...

The difference principle represents... an agreement to regard the distribution of natural talents as in some respects a common asset and to share in the greater social and economic benefits made possible by the complementarities of this distribution.

Those who have been favored by nature, whoever they are, may gain from their good fortune only on terms that improve the situation of those who have lost out. The naturally advantaged are not to gain merely because they are more gifted, but only to cover the costs of training and education and for using their endowments in ways that help the less fortunate as well. (86-7)

what is he talking about, exactly? If I am one of the better-off, am I prohibited from making a sandwich, because that does not "help the less fortunate"? Unlikely, so Rawls must be talking about institutions or the "basic structure of society" rather than individual actions. As I'll argue later, the free market operates precisely under this very principle.

A more potent objection is, must not the worse-off help themselves and each other? Must they only help themselves and each other or should they help the better-off, as well?

It is obvious that the worse-off should participate in social cooperation on equal terms with the better-off; that is, they should contribute, too. (After all, the very problem that Rawls deals with is how to distribute the fruits of social cooperation.) But this admission devalues the difference principle. For the worse-off must now worry about the welfare of the better-off exactly as much as the better-off must worry about the welfare of the worse-off.

Rawls is so eager to harness the better-off to serve society that he ignores the symmetrical duty of the worse-off. This symmetry makes it true that there is a harmony of interests of all men in society, regardless of their natural endowments or luck in life.

Types of Justice and Efficiency

Rawls makes a distinction between 3 kinds of distributive justice: perfect, imperfect, and pure procedural.

For the first of these, "First, there is an independent criterion for what is a fair division, a criterion defined separately from and prior to the procedure which is to be followed. And second, it is possible to devise a procedure that is sure to give the desired outcome." An example is dividing a cake among dinner guests equally (outcome): we let "one man divide the cake and get the last piece, the others being allowed their pick before him. He will divide the cake equally, since in this way he assures for himself the largest share possible" (procedure). Here, "there is an independent standard for deciding which outcome is just and a procedure guaranteed to lead to it." (74)

An imperfect procedural justice is also when the outcome is well-defined, but the means sometimes fail to secure it, as is the case with real-life criminal trials. Despite our best efforts, sometimes innocents are convicted, and guilty men go free.

Finally, pure procedural justice has no independently defined outcome to bring about: whatever distribution results by everyone's faithfully following the rules of the game is just.

Let's see if we can apply these distinctions to market 1) efficiency, 2) justice.

First, according to Rawls:

Since it is not reasonable [for a person in the original position] to expect more than an equal share in the division of social primary goods, and since it is not rational for him to agree to less, the sensible thing is to acknowledge as the first step a principle of justice requiring an equal distribution.

Indeed, this principle is so obvious given the symmetry of the parties that it would occur to everyone immediately.

Thus the parties start with a principle requiring equal basic liberties for all, as well as fair equality of opportunity and equal division of income and wealth. (130)

The equally obvious rejoinder to this is, where does the wealth that is to be distributed among the disembodied ghosts behind the veil of ignorance come from? Are we talking about Rome c. 400 A.D. after it had been sacked by the barbarians, Germany after World War I paying reparations to the Allies, present-day America? It may be replied that any hypothetical society will fit the bill. But this will not do at all. Apart from some very small religious communities, it is never the case that goods come into being collectively owned. Not even in the Soviet Russia was this true. Once we take any realistic society as our guide, we must take it as given that all goods initially come to be owned by their producers, and, what is more, there is no process of distribution separate from that of production:

Now in the market economy this alleged dualism of two independent processes, that of production and that of distribution, does not exist. There is only one process going on. Goods are not first produced and then distributed. There is no such thing as an appropriation of portions out of a stock of ownerless goods. The products come into existence as somebody's property. If one wants to distribute them, one must first confiscate them.

Adds Mises:

It is certainly very easy for the governmental apparatus of compulsion and coercion to embark upon confiscation and expropriation. But this does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation. (HA, 804)

Second, the free market is not an evenly rotating economy in which nothing changes. It is rather a process of perpetual improvement in human welfare. Hence, there is no fixed amount of booty to distribute but rather an ever-growing overall prosperity.

Now utilitarianism is concerned with producing the greatest good for the greatest number. But what is the greatest good? Is it some global perfection in which no improvement is conceivable? What is that, exactly? What are the intermediate stages toward this wonder? We don't know. Can we consult God as to whether we are achieving this perfection at the fastest possible speed? How then can we say that the market is utilitarian? Perhaps it is more utilitarian that any alternative: 1) the market gently guides each person toward finding that social position in which he can best serve his fellow men, and 2) society serves each individual better and better with time. Moreover, capitalism is superior both absolutely as a workable system of social cooperation as compared with socialism which is not an economic system at all, and relatively to any interventionist scheme so far attempted or imagined. A government intervention is like a sin: after all is said and done, in the end, and at long last we have to abandon it and embrace virtue. At any rate, no one really favors interventionism; no person would seriously agree to let other people privilege themselves in the eyes of the law by rigging the game in their favor, such as by erecting legal barriers to entry into their industries, and against the interests of the great majority of people particularly in their capacity as consumers.

Using Rawls' own terms, the market is perfectly efficient in this sense, as in better than anything else, and the means to it are known -- a laissez-faire legal regime. But given that regime, any actual momentary distribution of wealth, income, or means of production is just. Production and consumption are carried out by real people in an actual economy. No innovation or improvement was fated to happen; individual human beings made them happen with their own minds and their own hands. So whatever people do and whatever economy they create within the bounds of pro-market law are Ok. The rules of a free economy are arranged to maximize the potential speed at which society becomes more ideal, and whoever get rich or lose everything within those rules do so legitimately, and their fate is bestowed by the market justly upon them. Entrepreneurs become rich because the masses, the "poor," rush to outbid each other on the products offered to them for sale. If they fail to satisfy the consumers' wants, they will forfeit their wealth and their vocation as entrepreneurs and be demoted into the rank of laborers. Personal wealth in a free society is thus a consequence of previous success in serving consumers.

The consumers patronize those shops in which they can buy what they want at the cheapest price.

Their buying and their abstention from buying decide who should own and run the plants and the farms.

They make poor people rich and rich people poor.

They determine precisely what should be produced, in what quality, and in what quantities. (HA, 270)

The market's justice then is pure procedural. Any distribution of "loot" is just, provided the rules (such as governing initial appropriation, production, exchange) are just and generally observed. The smaller the underclass of welfare recipients and crony capitalists who imagine themselves above the law, the more just the result.