Chapter Three: Justice and Economic Distribution

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Overview

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Chapter Three examines the following topics: (1) The concepts of justice and business decisions (2) Fairness, equality, rights, what people deserve, and some rival principles of distribution (3) The utilitarian approach to justice in general and economic distribution in particular (4) The libertarian theory with its emphasis on liberty and free exchange (5) John Rawls’s contractualist and egalitarian theory

Moral Issues in Business Chapter 3

Introduction

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Economic justice concerns a network of moral issues in our society.

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These issues are raised by society’s norms about distribution of wealth, income, status, and power.

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Should CEOs give themselves enormous salaries at the expense of stockholder profits and employee salaries?

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Should expensive medical procedures be available only to those who can afford them?

Moral Issues in Business Chapter 3

(1) The Nature of Justice

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Definitions of justice: Justice is related to morality as part to a whole, and is often specified in connection with concepts such as fairness, equality, desert or rights.

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It is one important aspect of morality.

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Talk of justice generally involves related notions of fairness, equality, desert, and rights.

Moral Issues in Business Chapter 3

(2) The Nature of Justice

(1) Aristotle on justice as fairness: Treat similar cases alike except where there is some relevant difference (2) Mill on justice as a moral right: Justice implies something that is not only right to do, and wrong not to do, but something that an individual can claim from us as a moral right

Moral Issues in Business Chapter 3

(3) The Nature of Justice

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Five rival principles of distribution: (1) Each an equal share (2) Each according to individual need (3) Each according to personal effort (4) Each according to social contribution (5) Each according to merit

Moral Issues in Business Chapter 3

(4) The Nature of Justice

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Reconciling rival principles of distribution: Some philosophers argue that principles are applicable in some circumstances and not in others – but it is not always clear how to reconcile two or more rival principles in the same circumstances.

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Michael Walzer’s approach: The idea that different distribution principles depend on implicit social norms.

Moral Issues in Business Chapter 3

“The Alderson Federal Prison Camp in West Virginia housed domestic guru Martha Stewart... is the type of institution that has come to be known as a “country-club prison.

” How is this sort of description likely to affect some people ’s notion of just desert and equality of justice?

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(1) The Utilitarian View

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Reconciling rival principles of justice: Mill argued that rival principles of justice can be reconciled only on the basis of the principle of utility, such as through considerations of general well-being.

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Utilitarianism does not tell us which economic system will produce the most happiness.

Moral Issues in Business Chapter 3

(2) The Utilitarian View

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Deciding which system will promote most happiness depends on knowing: (1) The type of economic ownership (2) The form of production and distribution (3) The type of authority arrangements (4) The range and character of material incentives (5) The nature and extent of social security and welfare provisions

Moral Issues in Business Chapter 3

(3) The Utilitarian View

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Distinctive utilitarian application: (1) Worker participation: In his Principles of Political Economy (1848), Mill argued for the formation of labor and capital partnerships promoting equality between workers and industrialists.

(2) Greater equality of income: Utilitarians are more likely to favor equal income distribution on the basis of the so-called declining marginal utility of money.

Moral Issues in Business Chapter 3

(1) The Libertarian View

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The principle of liberty: Libertarians refuse to restrict individual liberty even if doing so would increase overall happiness.

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Nozick’s theory of justice: Nozick developed an influential statement of the libertarian position in his book Anarchy, State, and Utopia, based on the idea of negative and natural rights borrowed from the writings of the British philosopher John Locke (1632–1704).

Moral Issues in Business Chapter 3

2) The Libertarian View

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The idea of Lockean negative and natural rights: The idea amounts to (1) non-interference with the way others choose to live or act, and (2) the ownership of those rights prior to any social and political institution.

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Nozick’s entitlement theory: Nozick maintains that people are entitled to their holdings (that is, goods, money, and property) as long as they have acquired them fairly.

Moral Issues in Business Chapter 3

(3) The Libertarian View

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Principles of Nozick’s entitlement theory: (1) A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding. (2) A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding.

(3) No one is entitled to a holding except by (repeated) applications of statements 1 and 2.

Moral Issues in Business Chapter 3

(4) The Libertarian View

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Nozick’s Wilt Chamberlain example:

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The player of a team is guaranteed $5 from the price of each ticket.

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He is a favorite player and eventually ends up with far more than the average income.

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Nozick argues that Chamberlain is entitled to his new wealth, and that any other theory of economic justice would inevitably fail to defend his entitlement .

Moral Issues in Business Chapter 3

(5) The Libertarian View

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Distinctive libertarian ideals: (1) Liberty: Libertarians support economic laissez faire and oppose any governmental economic activity that interferes with the marketplace, even if the point is to enhance the performance of the economy.

(2) Free markets: Libertarians don’t contend that people morally deserve what they get in a free market, but only that they are entitled to it. Moreover, justice does not necessarily help those in need.

Moral Issues in Business Chapter 3

(6) The Libertarian View

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Property rights: For libertarians, property rights exist prior to any social systems and legislative acts, reflecting one’s initial appropriation of a product or exchange between consenting adults.

Criticisms of libertarian property rights: (1) Property includes more than material objects. It also has many abstract forms.

(2) Property ownership is not a simple right but involves a bundle of different rights.

Moral Issues in Business Chapter 3

“According to the libertarian theory of justice, the people that own the house in the background have no obligation to assist the homeless. The wealth that they have acquired is theirs to dispose of entirely as they wish.

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(1) Rawls’s Theory of Justice

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Main features: John Rawls (1921–2002), one of the most influential contemporary social and political philosophers, suggests a social concept of justice in his ground-breaking work A Theory of Justice. Two important features of Rawls’s theory: (1) The hypothetical-contract approach (2) The principles of justice that Rawls derives through it

Moral Issues in Business Chapter 3

(2) Rawls’s Theory of Justice

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The original position: Rawls proposes a thought experiment – individuals are allowed to choose the principles of justice that should govern them prior to any existing political or social arrangement.

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The nature of the choice: Each individual will choose the set of principles that will be best for him/herself (and loved ones).

Moral Issues in Business Chapter 3

(3) Rawls’s Theory of Justice

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The veil of ignorance: To avoid disagreement with others while pursuing one’s self-interest, all circumstances and conditions that can influence one’s choice of principles of justice (economic background, talents, privileges, etc.) ought to be removed.

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Once the basis for bias is eliminated, the groundwork for a choice of fair principles of justice is established.

Moral Issues in Business Chapter 3

(4) Rawls’s Theory of Justice

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Choosing the principles: Regardless of their particular interests, people in the original position will want more, rather than less, of the so-called primary social goods (income and wealth, rights, liberties, opportunities, status, and self-respect).

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The maximin principle: People in the original position will also choose conservatively, by trying to maximize the minimum that they will receive. They want to make sure that the worst that could happen to them is the least bad of the alternatives.

Moral Issues in Business Chapter 3

(4) Rawls’s Theory of Justice

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The two principles: (1) Each person is to have an equal right to the most extensive total system of equal basic liberties, compatible with a similar system of liberty for all.

(2) Social and economic inequalities are to satisfy two conditions: To be attached to positions open to all under conditions of fair equality of opportunity, and to give the greatest expected benefit to the least advantaged members of society.

Moral Issues in Business Chapter 3

(6) Rawls’s Theory of Justice

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Explanation of the principles: (1) The first principle takes priority over the second – it guarantees as much liberty to individuals as possible, compatible with others having the same amount of liberty.

(2) The first part of the second principle articulates the familiar ideal of equality of opportunity. (3) The second part of the principle – called the difference principle – stipulates that inequalities are justifiable only if they benefit the least advantaged members of society.

Moral Issues in Business Chapter 3

(7) Rawls’s Theory of Justice

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Fairness and the basic structure: Rawls rejects utilitarianism because it could permit an unfair distribution of benefits and burdens. Contrary to Nozick, Rawls believes that social justice concerns the basic structure of society, not transactions between individuals.

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Benefits and burdens: According to Rawls, justice requires that the social and economic consequences of arbitrarily distributed assets (natural characteristics and talents) be minimized.

Moral Issues in Business Chapter 3