Realistic Idealism and Classical Liberalism: Evaluating Free Market Fairness

ABSTRACT

In Free Market Fairness, John Tomasi defends classical-liberal principles not because of real-world considerations but on ideal-theoretic grounds. However, what constitutes a sufficiently “ideal” ideal theory is debatable since, as Tomasi shows, regimes that range from laissez faire to heavily interventionist can all be classified as legitimate from the perspective of ideal theory. Conversely, if ideal theory can allow for realistic constraints, as Rawls does, then we should recognize that even under ideal-theoretic conditions, political actors face logistical, epistemic, and motivational challenges that only intensify in the real world, where questions of feasibility become paramount.

Notes

1. This particular principle is advocated by Iris Marion Young (1990, 250–51) in her support for an extended form of deliberative democracy.

2. This point also has relevance to the suggestion by some Rawlsians (for example Brighouse 2000) that “fair equality of opportunity” has priority over the difference principle—i.e., that inequalities that raise the position of the worst off are only to be tolerated if these inequalities have been generated in background conditions of equal opportunity. Yet pursuing equal opportunity may lower the absolute number and quality of opportunities available—so the egalitarian must choose between equal opportunities, which lower the general standard of opportunity, and unequal opportunities, which may result in more and better opportunities for all.

3. To be precise, Rawls (1971, 271) claims that “there is no essential tie between the use of free markets and private ownership of the instruments of production.”

4. Hodgson, a left social democrat who is critical of many so called “neo-liberal” policy prescriptions, offers one of the most compelling discussions of the “socialist-calculation” problem, demonstrating its relevance not only to “centrally planned” regimes but also to various models of “decentralized” or “participatory democratic” socialism.

5. In highlighting some of these deficiencies I have drawn on the insights contained in a series of blog articles by Kevin Vallier on the “Bleeding Heart Libertarians” website. See in particular Vallier 2012.

6. Contrary to popular commentary there is little evidence to suggest that financial markets have been subject to the “massive de-regulation” often referred to in the press. In the UK for example, since 1979 there has been a forty-fold increase in the number of financial supervisors even though employment in financial services has increased only fractionally. In 1980, there was one regulator employed for every 11,000 people who worked in financial services, but by 2011 this had increased to one regulator employed for every 300 financial-service employees. Similarly, regulatory reporting requirements for banks increased from 150 cells of data in 1974 to 7,500 in 2011—a figure set to increase to between 30,000 and 50,000 cells of data following new European level legislation. The pattern of regulatory expansion is similar, though less spectacular, in the United States where Federal Reserve reporting requirements for bank-holding companies increased from 547 Excel columns in 1986 to 1206 in 1999 and then 2,271 columns in 2011 (Haldane 2012, 13–14).

7. Levenstein and Suslow suggest that while some cartels last for a prolonged period of time the majority collapse within a year or at most five years and that the primary reason for cartel breakdown is new entry to the market.

8. There is clearly a difference here between poverty relief and classic examples of pure collective goods, such as the maintenance of urban air quality. An individual decision to give money or some other form of help to an individual or family can have a decisive impact on that person or family's condition in a way that a single person's decision not to continue driving cannot affect air quality either at the micro or at the macro scale—on this see Pennington 2011 (163–64).

9. This seems to be the grain of truth in Hayek's account of the “mirage of social justice,” the view that there are no clear-cut criteria to determine whether social justice has in fact been achieved and who or what has been responsible for achieving it. Consider in this context the case of Sweden, which many commentators believe demonstrates both the necessity and the capacity for state-based income redistribution to improve the conditions of the worst off. As Tino Sanandaji (2012) has shown, the high quality of life and social indicators found in this country actually pre-dated the large scale programs of income redistribution that began in the 1960s. So it is far from clear whether the actions of the Swedish welfare state are the underlying cause of Swedish social outcomes.

10. This claim has been challenged recently by Corey Brettschneider (2012), who suggests that welfare rights might reduce the need for state expenditures on crime prevention and are thus not necessarily more costly than a minimal-state framework focused on private-property protection. There is little available evidence to test this claim, but it is worth pointing out that property crime in extensive welfare states such as the United Kingdom and Sweden is notably higher than in the less generous United States welfare system (Ormerod 2005). The significantly higher U.S. prison population, which might seem to support Brettschneider's thesis might be better explained by the disproportionate influence that the “war on drugs” has had in the American context especially since the 1970s. On a standard classical liberal/libertarian view drug-related crime is largely a product of state intervention in proscribing voluntary exchanges between consenting adults.