In early October, Edmund S. Phelps was awarded the Nobel prize for economics. The next day he published a piece in the Wall Street Journal on capitalism’s dynamism and justness. In the article, Phelps says that he
broadly subscribe[s] to the conception of economic justice in the work by John Rawls…An organization that leaves the bottom score lower than it would be under another feasible organization is unjust.”
Here Phelps is invoking Rawls’s so-called “difference principle,” which permits economic inequalities generated by society’s major institutions only if those inequalities serve to raise the life prospects of the least-advantaged higher than any other feasible alternative arrangement. So far, so good. But then Phelps ends the article with this:
Suppose the wage of the lowest- paid workers was foreseen to be reduced over the entire future by innovations conceived by entrepreneurs. Are those whose dream is to find personal development through a career as an entrepreneur not to be permitted to pursue their dream? To respond, we have to go outside Rawls’s classical model, in which work is all about money. In an economy in which entrepreneurs are forbidden to pursue their self-realization, they have the bottom scores in self-realization–no matter if they take paying jobs instead–and that counts whether or not they were born the “least advantaged.” So even if their activities did come at the expense of the lowest-paid workers, Rawlsian justice in this extended sense requires that entrepreneurs be accorded enough opportunity to raise their self-realization score up to the level of the lowest-paid workers–and higher, of course, if workers are not damaged by support for entrepreneurship. In this case, too, then, the introduction of entrepreneurial dynamism serves to raise Rawls’s bottom scores.
Where to begin? For one thing, Phelps misunderstands “Rawls’s classical” model in two key respects. First, the difference principle is not the sole principle of distributive justice. Rather, it’s one of three, and is the last in line in priority. Rawls’s Basic Liberties Principle and Fair Equality of Opportunity are given absolute priority over the difference principle by Rawls. So if maximizing the prospects of the least-advantaged is inconsistent with the protection of any of the basic liberties or a policy ensuring that equally talented and motivated persons have equal life-prospects, the difference principle gives way.
Second, it is false that in Rawls’s theory, “work is all about money” and has nothing to do with what Phelps calls “self-realization”. In fact, one of Rawls’s arguments in favor of Fair Equality of Opportunity is that its absence would legitimately lead those who do not have a fair chance to secure the most desirable jobs to feel unjustly treated, and this is precisely because they are “debarred from experiencing the realization of self which comes from a skillful and devoted exercise of social duties. They would be deprived of one of the main forms of human good” (A Theory of Justice (rev. ed., 1999), p. 73).
Of course, these exegetical points do not touch the substance of Phelps’s argument; it might be that, after the Liberty Principle and Equal Opportunity principle are satisfied, the difference principle requires increasing entrepreneurs’ prospects for self-realization at the expense of greater wages for workers. So let’s press on.
Phelps’s argument relies upon an unstated premise, something like “If it’s what I really really want, then it alone will contribute to my self-realization, and is therefore elevated to a legitimate interest within a Rawlsian theory of justice.”
This leads to absurd implications. For I could demand that justice cater to my desire to live a in society without entrepreneurs, just as I desire to live in a society without thieves. Or, if you think preferences about others’ preferences are a suspect form of double-counting, then we can tweak my desire: I really really want to receive a wage for playing basketball in my backyard all day, since that is what determines self-realization for me. The absurdity of both these suggestions shows that in order to be a legitimate concern of justice, the claim to self-realization has to pass certain moral tests. We cannot just assume that strong desires determine justice-relevant claims about what individuals need in order to be able to seek self-realization.
Rather, a sound theory must respect both interpersonal objectivity and suitable generality: if they are to be of practical use at all, principles of justice cannot be determined by personal whims or idiosyncratic wishes.
So now, instead of assuming that those wannabe entrepreneurs who are forced to live under a regime that curbs their entrepreneurial prospects are the “worst-off” since they do not have adequate opportunities for self-realization, that must be argued for. And the argument must explain why the entrepreneur’s complaints are legitimate but the complaint of the person who insists on a society that lets him play basketball all day are not. That is a hard argument to make. It would seem that the same strong response is available in both cases: “The fact that you want to play basketball all day is irrelevant to your standing from the point of view of justice. You have plenty of worthwhile opportunities, and it is wrong for you to demand that society makes a life of basketball (entrepreneurship) available to you, especially in light of what that would mean for and require of others. Given the opportunities available to you, given that your basic liberties are not infringed [which I am here assuming–Paul], and given that this arrangement maximizes the justice-relevant prospects of the justice-relevant least advantaged, you cannot complain that you have been treated unjustly.”
Of course, permitting entrepreneurial activities and advantages may well be required by the Basic Liberties principle and/or by the difference principle, even when illegitimate interests or claims about self-realization are ruled out. And this is indeed an argument that Phelps makes. But the supplementary argument about self-realization and the wannabe entrepreneur doesn’t fly.
Howls of outrage (4)