Ideal theory in an nth-best world: the case of pauper labor

Abstract

One of the most troubling features of international trade is that it often involves exchange between individuals facing dramatically different life circumstances, who therefore derive different levels of benefit from the exchange. Most obviously, wages are extremely low in underdeveloped countries. However, the principle underlying these wages is the same as the one the dictates wage levels in wealthy countries. It is, therefore, difficult to criticize the wages paid to ‘pauper labor’ without at the same time criticizing the way that capitalism functions as a whole. For those who would like to question aspects of globalization, without simply repeating the standard moralizing critique of capitalism, this poses particular difficulties. This paper offers some suggestions on how egalitarians can approach this issue. The central piece of conceptual apparatus introduced, in the service of this aim, is the distinction between a ‘first-best’, a ‘second-best’, and an ‘nth best’ set of normative principles. It is then suggested, first, that capitalism is acceptable to egalitarians only within a third-best framework, and second, that this low level of idealization imposes real constraints on how far one can go in criticizing trade practices at the global level.

Keywords:

• international trade
• egalitarianism
• second-best
• ideal theory
• just price

Notes

The most important evidence of this is the large-scale payment of remittances by domestic migrants from rural to urban areas in countries like China. For general discussion, see Legrain (2002) or Krugman (1997).

I am thinking, specifically, of proposals for a ‘global minimum wage’, endorsed by prominent theorists such as Pogge (2005, 727).

Simon Caney develops this line of thinking. My suggestion then is that at the very minimum, we should accept that people should not receive unequal remuneration for equal work. What is relevant when determining someone's pay is the quality of their work or the demand for the product but their nationality is surely simply not germane. Such a principle would no doubt condemn much international trade. (2005, 124)

Most cosmopolitan theorists, by contrast, have been somewhat reticent to pronounce on this issue, and settle instead of an abstract endorsement of equality (e.g. Tan 2004, 116–122) without specifying what the implications for trade are.

Valentini (2012) helpfully distinguishes three senses: full vs. partial compliance, utopian vs. realistic, and ideal state vs. comparative.

Or not without considerable difficulty. For overview, see Arnsperger (1994, 167–169); also Heath (2004, 324).

Hooker also argues that there are independent reasons for favoring rule-consequentialism, the view is not just derived from act-consequentialism.

Heath (2008). Versions of this fallacy can be found all over. Perhaps the most prominent is Friedman (1982, 120). Also Buchanan ‘The case for the market on grounds of efficiency depends on the extent to which actual markets do approximate, or can be modified to approximate, the ideal market’ (1985, 15).

For a discussion of the contrast between Cohen and Rawls on this point, see Ripstein (2010, 688).

In later work, he also proposes, as one of the attractions of the second-best theory that he has developed, that it is compatible with a wide range of first-best theories, including both Kantianism and utilitarianism (Rawls 1996, 170). In this case, the “merely empirical” detail that prevents the implementation of first-best theories is what he calls the ‘fact of pluralism’. This is one way of interpreting what it means for a theory of justice to be ‘political’.

Malgorzata Kurjanska and Mathias Risse, however, have pointed out one subtlety that is worth taking into consideration (2008, 44). Their argument is not entirely clear, but the claim seems to be that in cases where the exchange between poor producer ‘B’ and wealthy consumer is mediated by a third party (say, a retailer ‘A’), it is not obvious that the consumer has obligations to the producer, since technically the consumer is splitting the gains from trade only with the retailer. This objection, however, could be surmounted through a more expansive specification of the scope of cooperation.

I use the term ‘competitive’ here in a very loose sense, as in Powell and Zwolinski (2012, 453).

This article is a good example of the sort of attempt, frequently made, to map market outcomes onto intuitive moral categories, in this case ‘contribution’ and ‘effort’ as the basis for wages.

For an accessible discussion, see Hartford (2006, 25–28).

This is known as the Baumol effect, or Baumol's ‘cost disease’, and it explains why the cost of services – a sector in which there is little productivity growth – increases over time relative to manufactured goods. See Baumol and Bowen (1966). It should be noted that unionization affects these trends in the short but not the long term.

Thus Caney's principle, that ‘what is relevant when determining someone's pay is the quality of their work or the demand for the product’ (2005, 124) is systematically violated in the domestic economy as well as the international.