Review of Singer The Form of the Firm

Abraham Singer has written a book called The Form of the Firm: A Normative Political Theory of the Corporation (OUP 2018). I have a short review up at Perspectives on Politics.

Firms are interesting because they aren’t individualistic (like markets) or egalitarian (like formal democratic politics), but hierarchical and bureaucratic. Political philosophy has tended to focus on basic social institutions, and business ethics on the conduct of individual economic agents. Singer asks why firms exist, what purposes they serve, and what standards should we apply in assessing their behaviour, and the laws and policies that regulate / constitute firms. He does a good job of explaining the economics to non-economists (at least so thinks this non-economist). The central empirical idea is that firms leverage social norms to overcome problems of trust that arise in purely contractual relationships when one of the parties is asked to invest in a specific form of production, making it dependent on the other party continuing to purchase what it produces. If firms are already taking advantage of norms, why not make these norms democratic? Singer’s response is that firms need to be able to compete against other firms and against the market itself, and that there are costs to more democratic forms of ownership and workplace organization. So he thinks government should encourage but not mandate worker cooperatives. On the business ethics side, he thinks firms and their managers have responsibilities other than maximizing shareholder profits, but not to stakeholders generally. The main extra duty is not to create or take advantage of market failures that arise from factors such as externalities and unequal information, though Singer also floats the idea that firms have responsibilities to address the most egregious ‘justice failures’ as well. I learned alot from this book. I think next year I will incorporate a chapter in my PPE course, probably for the topic of economic / workplace democracy.

Reciprocity and Productive Incentives

I have a paper that’s been accepted at the Canadian Journal of Philosophy entitled “Publicity, Reciprocity and Incentives.” The paper mounts a partial defense of what’s known as the “basic structure objection” to the egalitarian critique of productive incentives. The first paragraph provides an overview of the questions at stake:

There is a longstanding debate about the extent to which social justice permits individuals to benefit from their natural talents. On the one hand, it may seem that individuals have a right to the fruits of their labour. On the other hand, superior abilities are already rewarded with personal enjoyment and public admiration of their exercise, ‘without adding to these a superior share of the world’s goods’ (Mill 1969, 254). Socialists recognized that it might be necessary to offer incentives for those with scarce talents to put them to good use, but they tended to view this ‘rent of ability’ as an unfortunate compromise (Jackson 2007, 72-9). Liberal egalitarians have not been so clear about the moral status of incentives. If inequalities benefit the worst off, Rawls’s difference principle seems to count them as just. Yet critics argued that individuals who accepted the rationale for this principle would not expect extraordinary wages for ordinary work, simply because they were blessed with superior productive ability (Grey 1973; Narveson 1976; Cohen 1992). According to G.A. Cohen, people’s economic choices ought to be guided by an egalitarian ethos (Cohen 2008, 2, 17, 123). Even if we all shared the same egalitarian conception of justice, however, we might be uncertain about the extent of compliance with duties that are not legally enforceable. Moreover, real societies are home to a diversity of conceptions of justice, many of them not egalitarian. Are egalitarian norms still binding, or might lack of assurance about the compliance of others justify what would otherwise be objectionably self-interested choices?

The paper addresses a longstanding debate about liberal egalitarian conceptions of distributive justice. If social inequalities benefit the worst off it seems they can be justified to the worst off, rendering these inequalities compatible with mutual respect in a society of equals (Rawls’s “difference principle”). Unequal pay for equally arduous work could incentivize those with scarce skills to deploy them where they are most needed, and so generate prosperity that could benefit everyone, including the worst off. Early on, critics (Thomas Grey, Jan Narveson) questioned whether such incentives were truly justifiable to the worst off. Are those with scarce talents morally justified in withholding their efforts from the community unless rewarded with superior pay for the same amount of work? It may be true that inequality-generating incentives will benefit the worst off, but this claim is not one that the better off could offer to the worse off as a justification for these inequalities, because it is the decisions of the better off that are responsible for making it the case that unequal rewards are necessary to elicit their productive effort. G. A. Cohen argued that in a fully just society, people’s everyday economic decisions would reflect an “egalitarian ethos.” People with greater productive capacity wouldn’t bargain so hard for higher pay, and would be willing to work reasonably hard even under high marginal taxation. They would even make some sacrifices in career choice, accepting more productive work they enjoy less, for the sake of benefitting the worse off (though some incentives would still count as just, because individuals have a prerogative to pursue their own interests, to some reasonable degree).

One response to this critique of incentives was to argue that justice doesn’t apply to personal choices, but only to basic social institutions, e.g. the design of rules of property and contract, taxation and inheritance, family law, funding of education. That’s the “basic structure objection” (to the egalitarian criticism of productive incentives).

Cohen claimed that the basic structure objection faces a dilemma. If the basic structure only includes coercive rules, principles of justice will ignore social norms that are not enforced by the state but which have profound impacts on people’s lives (e.g. norms about gender), while if the basic structure includes norms not codified in law, principles of justice will apply to personal choices too, because that is where such norms reside. Andrew Williams sought to evade Cohen’s dilemma by arguing that the rules of the basic structure need not be coercive but must be public, and that the norms of Cohen’s egalitarian ethos could not achieve the necessary publicity. In order for rules to count as public, it must be clear what they require of us and whether others are complying. The rules of Cohen’s egalitarian ethos allegedly can’t count as public, because verification of compliance would require too much information about individual circumstance.

Williams’s critics have tended to interpret the publicity defence in an uncharitably strict manner — assuming, for example, that in order to resist the critique of incentives we must claim that all duties of justice are conditional on confidence that everyone is complying. In my view, the main weakness of the publicity defence is that its rationale is underdeveloped. Verifiability of whether others are complying is necessary in order to have positive assurance that they are, but what justifies making compliance of others a condition for duties to be binding in the first place? The fact that general compliance with duties of justice would be a good thing doesn’t show that these duties are conditional on general compliance. If people are motivated by reciprocity, conceptions of justice that are too unilateral may be unstable. The stability rationale simply shows that true justice may be infeasible, however, not that duties of justice truly are conditional. What’s needed is an ethical rather than a merely psychological interpretation of reciprocity. The purpose of my paper is to explain the structure of a reciprocity condition on some requirements of justice, and to make the justification for such a condition clearer than it has been in the literature.

The fact that some of our duties of justice are conditional on reciprocity is a consequence of the relational or `second-personal’ nature of social justice, I argue, drawing on Elizabeth Anderson, Stephen Darwall, and Jiwei Ci. The reciprocity condition is fundamentally bilateral, but may take on a proportional form due to uncertainty or because conduct cannot be targeted to specific individuals. Not all duties are conditional on reciprocity, because some duties are owed to third parties, as well as to their primary targets. Our basic moral duties have this multilateral structure. Duties of egalitarian distributive justice are conditional, however. Critics of incentives may admit that some duties are conditional on reciprocity, but insist that exploitation, like racism, is wrong regardless of whether others are engaging in it. Here the paper engages with Seana Shiffrin’s reworking of Cohen’s argument. Some forms of exploitation are unconditionally wrong, I concede, but not the specific form of exploitation at stake in Cohen’s critique of incentives.

Brennan vs. a Bad Argument for Democracy

Jason Brennan has a post up criticizing a bad argument for democracy:

  1. “People disagree about the facts, about principles of justice, about the principles of political economy, and so on.
  2. Therefore, it is illegitimate to make reference to an external, objective standard by which to judge political outcomes.
  3. Therefore, in order to resolve this disagreements in a fair way, we must have democracy.”

He has two main reasons for thinking that this is a bad argument. First, if we only cared about fairness, we could flip coins (Estlund), since that would give everyone exactly the same share of authority (none), but randomization isn’t democratic (since it’s not responsive), and it could be very unwise (if some of the options on the agenda are obviously disastrous – I’m embellishing a bit here).

Second, the argument involves an unstable combination of confidence about procedural fairness with diffidence about the evaluation of outcomes – a “half-assed form of moral relativism” because it holds that “there are objective moral standards about how to resolve disagreements, but no standards about what we should decide when we disagree.”

(He also makes a third point, which I won’t discuss: It’s not because they disagree that real voters have conflict; rather, they disagree because they identify with groups that have conflicts, and then engage in after-the-fact rationalization to justify the beliefs associated with those groups. This criticism raises bigger issues about the relevance of ideals to reality, when the gap between the two is great. I think it’s going to undermine or at least sideline a lot of different normative arguments about democracy, not just this one).

So can we make the argument better?

Here’s an argument that’s a bit better, though I think still not satisfactory:

  1. People disagree about facts, principles of justice, etc., hence they disagree about what the right public policies are, e.g. what rights and duties we should recognize in law, and enforce.
  2. But for a fairly wide range of policies, on a fairly wide range of issues, it’s clearly better to have some common policy than none at all, i.e. better than leaving each individual free to follow their own conscience about which rights are and aren’t valid, and therefore about who can defend which rights by force when.
  3. ‘Having a common policy’ involves some sizeable share of the population accepting as legitimate, and binding, policies that they think are not optimal, perhaps even unjust.
  4. To have common policies, we need a decision-procedure – one whose results will be fairly obvious even to people who disagree about what the rights policies are. The crucial function of this procedure is to legitimate controversial policy choices in the eyes of those that disagree with them.
  5. A decision-procedure won’t have this capacity to confer legitimacy on policies (with respect to those who disagree with them) if all that can be said in the procedure’s favour is that it maximizes the chances of selecting the policies one group deems optimal. For example, if a good Rawlsian like me is trying to persuade a Nozickian that she should pay the taxes she thinks too high, it will be no help for me to say “these tax rates were selected by a procedure that maximized our chances of picking Rawlsian policies.”
  6. It would not be self-defeating, however, for me to say “you should pay your taxes because they were decided upon by a procedure that gave equal authority to everyone, whatever their opinion on tax policy.”

That’s how I understand Jeremy Waldron’s arguments against the instrumental assessment of decision-procedures, from the 1990s.

The problem I see with this argument is that in steps 5 and 6 there is a confounding of two variables: intrinsic vs. instrumental modes of assessment, and degree of (reasonable?) controversy. Instrumentally-justified procedures can be legitimacy-conferring when the values and principles appealed to in assessing outcomes are uncontroversial, or at least less controversial than the values and principles at stake in the specific disputes in question (cf. Aileen Kavanagh’s critique of Waldron). Conversely, intrinsically-justified procedures can fail to be legitimacy-conferring if the values appealed to are controversial / more controversial. Imagine debating an aristocrat in a fledgling democracy in the 19th C. One couldn’t persuade the aristocrat to obey some new law the aristocrat disagrees with by pointing out that democratic procedures respect everyone’s fundamental equality. The mode of justification is intrinsic, but the value appealed to is disputed by the argument’s target audience, in this case.

The goal of legitimizing controversial policies in the eyes of those who disagree with them comes at a cost, if it requires that we appeal to a narrower range of values and principles in assessing / justifying our political decision-procedures. Should we really care what the aristocrat or racist thinks? So the arguments gets run in terms of reasonable disagreement; grounds for assessing our political system should be acceptable to all but only reasonable moral points of view. Thus the argument that Waldron at one point saw as being crucial to the defence of democracy against judicial review actually supports a principle of public reason.

More on Neoliberalism

The Guardian had a ‘long read’ a couple weeks ago on “neoliberalism” by Stephen Metcalfe. I want to comment on the piece’s interpretation of Hayek. Although I don’t share Hayek’s politics, I think it important not to misrepresent what he said. (See also this earlier post on neoliberalism, and this post on the issue of the fairness of reward by contribution).

Continue reading More on Neoliberalism

Worries about the Stability of Meritocracy

In §17 of A Theory of Justice, Rawls attempted “to forestall the objection to the principle of fair equality of opportunity that it leads to a meritocratic society” (86, emphasis added; see also 73). This statement is surprising, at least at first glance; isn’t meritocracy a good thing? Continue reading Worries about the Stability of Meritocracy

Talk on Frank Knight and John Rawls

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.