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What Does Justice Require?

A politics capable of altering ecological and social justice outcomes must be a politics that addresses these foundational issues. Wealth and income inequality have ill effects for rich and poor alike. This is most notably documented in The Spirit Level: Why More Equal Societies Almost Always Do Better by British epidemiologists Richard Wilkinson and Kate Pickett, which demonstrates that regions with greater income equality have better health outcomes (life expectancy, etc.) for people of all social strata.

Moreover, because knowledge and wealth tend to be produced collectively and incrementally, the enormous inequities of today are largely undeserved, since most of the technology, on which wealth creation depends, was created by others before we were born. Who deserves the benefits of the steam engine? Even the invention of the computer pre-dates many of us now alive. We all benefit from the economic value of this inheritance, regardless of whether we are industrious or slovenly. Simple justice requires that much of society's welfare should benefit the vast majority who are the logical inheritors of the technologies created in previous eras, often with significant public support.

If this idea is surprising, perhaps it is because of the widespread misperception that there is a strict dichotomy between private and public, market and state, free individual activity and coercive government power. Most people believe that, on one side, there is the private marketplace where individuals work and make productive contributions, and then receive rewards—wages, benefits, wealth, etc.—that are roughly equal to the value of what they contribute to the economy. On the other side, there is the “dictatorial” realm of government, which confiscates individual earnings for the greater good.

But this view is profoundly unrealistic about the sources of value and growth in an advanced society. “Private” market activity—and pre-tax income—is already highly socialized in many ways before governments start “spreading the wealth around” by tax policy. Modern research has demonstrated that the overwhelming share of each individual's gains is actually unearned surplus derived largely from technological gains made in the past, “an increase in output that is not commensurate with the increase in effort and cost” contributed by today's current market actors, as economic historian Joel Mokyr observes.

There are many obvious examples of such collective subsidy in the marketplace. Government-funded research and development (responsible for, among other things, the Internet), as well as government-created markets (through procurement) provide a huge collective subsidy for private gains, a key public foundation of private wealth. Public education is another example: some experts judge that 15 percent of total productivity gains during the twentieth century resulted from advancing education levels in the workforce, as free, universal K-12 schooling became the norm.

Lacking a better empirical understanding of the economic impact of common assets—most importantly our expanding inheritance of scientific and other forms of productive knowledge and know-how—public debate will continue to be controlled by moral arguments pitting strong assumptions of individual “deservingness” in the private economy against equally strong assumptions of “undeservingness” in the development of social policy.

Yet if we are serious in holding that contribution matters, then society “deserves” far, far more. Herbert Simon, a Nobel-laureate economist, employed this concept in a forceful attack against growing inequality: “If we are very generous with ourselves, I suppose that we might claim that we 'earned' as much as one-fifth of [our income]. The rest is the patrimony associated with being a member of an enormously productive social system, which has accumulated a vast store of physical capital, and an even larger store of intellectual capital—including knowledge, skills, and organizational know-how held by all of us.”

One of the most influential and penetrating advocates of these ideas, Leonard Trelawny Hobhouse, understood the moral task in a way that resonates strongly today. As he wrote in his 1911 book Liberalism, “The true function of taxation is to secure to society the element in wealth that is of social origin, or, more broadly, all that does not owe its origin to the efforts of living individuals.” An “individualism which ignores the social factor in wealth” is no individualism at all, but rather a type of “private socialism” that “deprive[s] the community of its just share in the fruits of industry and so result[s] in a one-sided and inequitable distribution of wealth.”

Private socialism occurs when the wealth generated by common assets is not shared generally but is captured by a small minority, and when, at the same time, the public absorbs the losses when the wealthy fail. At a time when the top 400 individuals in the United States have a combined net worth of $2 trillion—a good third more than the poorest three-fifths of the U.S. population combined!—we can safely conclude that private socialism has run amok.

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