This past weekend I attended the inaugural conference of the PPE Society in New Orleans – an excellent event, with lots of interesting papers on related themes. My presentation was based on my paper ‘Markets, Desert, and Reciprocity,’ Politics, Philosophy & Economics, 16, (2017): 47-69. It was called The Free Market Critique of Desert, and its Relation with Justice as Fairness; the text of the talk (lightly revised) is available on my academia.edu site, via the link above. “Free-market critique of desert” is misleading; it should really be “the free-market critique of the desert-based justification of capitalism” but that’s too long. Another possible title for the talk would be “the neoliberal foundations of liberal egalitarianism,” but that would generate too much confusion.
A few years ago I wrote a paper on Hayek and Rawls (ungated early version here). This, plus teaching a course on libertarianism, led me to the early 20th century University of Chicago economist Frank Knight. One of the points of commonality between Hayek and Rawls is their scepticism about desert as the basis for social institutions. This scepticism owes much to Frank Knight. Rawls cited Knight’s 1923 essay “The Ethics of Competition” in the discussion of desert from A Theory of Justice, and in an earlier essay cited Hayek, who in turn cited Knight. Knight is remembered as one of the founders of Chicago economics, and thus indirectly one of the fathers of free market fundamentalism. He was indeed a teacher / colleague of both Friedrich Hayek and Milton Friedman. Yet Knight was a fierce critic of what he took to be bad, simplistic arguments for laissez-faire, chief among them the view that by distributing income according to marginal product the competitive system rewards the deserving. Knight didn’t deny that marginal productivity explained the distribution of income, he just denied that reward according to marginal product was ethically important, in itself. Hayek and Friedman had essentially the same view. The virtue of reward by marginal product is efficiency, not fairness. It’s surprising, then, to read that neoliberalism teaches that markets reward the deserving. I posted about this earlier, but now I have a paper on the topic forthcoming in PPE. It’s called “Markets, Desert, and Reciprocity,” but its subtitle could be “Knight, Hayek, Friedman, and Rawls (vs. Bell, Nozick, Sandel, etc.)” The final section includes some discussion of the reciprocity objection to proposals for an unconditional basic income.
The Guardian has an article by George Monbiot on “Neoliberalism – the ideology at the root of all our problems“, an excerpt from a forthcoming book. He cites von Mises, Hayek and Friedman as the original neoliberals, which is fair enough given their roles in organizations such as the Mont Pelerin Society. What struck me is his account of the role of ideas of deservingness, or merit, in neoliberalism.
“The market ensures that everyone gets what they deserve. We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances. Never mind structural unemployment: if you don’t have a job it’s because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you’re feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it’s your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.”
As a description of a popular belief system, this account of neoliberalism may be accurate. But since Monbiot cites Capitalism and Freedom, let’s take a look at what Friedman says. Continue reading Neoliberalism