The State

Anthony de Jasay, courtesy of the author
Jasay, Anthony de
(1925- )
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Indianapolis, IN: Liberty Fund, Inc.
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3. Democratic Values

How Justice Overrides Contracts


If rational people wish the state to override their bilateral contracts, they must be arguing from equality to justice rather than the other way round.


A "scheme of social cooperation" need not be bought twice, first with rewards for burdens, second with a social contract to redistribute the rewards.


Let us revert to the idea of a society where individuals have title to their property and to their personal endowments (capacity for effort, talents) and are free to sell or hire them out on voluntarily agreed terms. Production and distribution in such a society will be simultaneously determined, in the proximate sense, by title and contract, while its political arrangements will be at least closely constrained (though not wholly determined) by the freedom of contract. Only the capitalist state, with the meta-political ends we attribute to it to keep it in its place, can be comfortable within such constraints. The adversary state, whose ends compete with those of its subjects and which relies on consent to gain and keep power, must proceed by breaking them down. In the limiting case, it may substantially abolish title to property and the freedom of contract. The systematic manifestation of this limit is state capitalism.


Short of this, the state will override people's bilateral contracts in the name of a social contract. The policies effecting this will, as far as the coincidence is feasible, serve the state's own ends and help realize democratic values. Broadening the franchise and redistributing income are two typical policies of this sort, though others, too, may achieve a degree of the desirable coincidence. At all events, such policies will in general be capable of being interpreted as maximizing social utility or justice or both, and since these maximands are recognized as ultimate ends (requiring no justification or supporting argument in terms of other ends), the policies will claim to be rational for society as a whole.


The interpretation of a policy as ipso facto a maximizing one is a tautology if it depends on the underlying interpersonal comparisons having been favourable to it; for such an assertion is by its nature incontrovertible. By contrast, when it takes the risk of being more than a tautology and invokes conformity to some substantive rule (which cannot be twisted and "interpreted," but can be seen to be either observed, or breached) like "to maximize utility, equalize incomes," "to maximize justice, override contracts in favour of the least advantaged," "to maximize liberty, give everyone the vote" or more cautiously phrased variations on such themes, the claim that the corresponding policies are rational stands or falls with the theory that yielded the rule.


Moved by such considerations, I shall now attempt to try out some implications of one democratic theory that was elaborated over the 1950s and 1960s by John Rawls and finally set out in his Theory of Justice. My choice is dictated, among other reasons by its being, to my knowledge, the only fully fledged theory within the liberal ideology of the state as the prime instrument of the justice of rewards and burdens.*27 The state receives an irrevocable mandate from the parties to the social contract, and hence has unlimited sovereignty, to give effect to the principles of justice.


One way of characterizing Rawls's concept of justice and approaching his conception of it (for the distinction, see his p. 5) is to suppose that at the end of any particular day people have become parties to all the feasible contracts they would like to enter into. Some will then sit up and reflect as follows:*28

So far, I have done as well as circumstances allowed. Others more fortunately situated have done better, though those less fortunate have done worse. Tomorrow, circumstances will have changed and I might do better or worse with new contracts. Some of my old contracts may work out nicely, but others might not look too good under changed conditions. Would it not be "rational to insure (myself) and (my) descendants against these contingencies of the market"? (p. 277, my emphasis). I would then have an "out" for each time I thought that my contracts were not treating me right.

As a matter of fact, I do think so now, for I feel disadvantaged by having less property and personal endowments than some others. I should like to see institutions of justice which would ensure that when my contracts provide me with "rewards and burdens, rights and duties" which I consider less than fair, they should be adjusted in my favour. It is true, come to think of it, that every one of my contracts has another party to it, and if a contract is overridden in my favour, it is overridden in his disfavour. Now why should he agree to a "background institution" which deals with his contracts in this way just when they are the fairest to him and he is happiest about them? Would I agree to it in his place? I would need some inducement, and surely so does he; I am quite happy to offer him something and I hope we can work something out, because without his consent, which must remain binding forever, the background institution I covet will not click into place.


This looks a candid paraphrase of that part of Rawls's theory which ought to lead to his "contract situation," i.e. to cause the parties in the state of nature (who are assumed to be self-interested, non-altruistic and non-envious) to solicit each other to negotiate a social contract, a sort of omnilateral super-contract ranking above and, in case of conflict, overriding bilateral contracts.*29 Even before starting to wonder about what might be the next step, the substantive content ("the principles of justice") of the social contract, it is pertinent to ask how to create a "contract situation" if someone, whether or not fortunately situated, declines to see the point of negotiating at all? Can this not happen? Can he not argue, (a) that he is doing all right as it is, and will not try to do better under a social contract at the risk of having to accept to do worse? and (b) that the moral position to take about the justice of social arrangements (of which the division of labour is one) is for everybody to keep his word, whether or not it would be to his advantage to go back on it?


Argument (b), for all its Old Testament flavour, is at least consistent with Rawls's requirement that people must have a sense of justice (p. 148). The two arguments (a) and (b) seem to me to provide a quite Rawlsian rationale for prudently staying put and refusing any negotiation which would, in exchange for advantages or inducements to be defined, release others from their contractual commitments. The alternative is the state of nature, with "finders are keepers" in place of the "principles of justice." At this stage, we cannot infer from anything that one is juster than the other, for the sole criterion of the justice of principles on offer is that, given the appropriate conditions, they would be unanimously chosen. However, appropriate conditions will not evolve through voluntary cooperation, and therefore people will not all wish to negotiate a social contract, if some have rational cause for abstaining.


Rawls's key assertion, that "willing social cooperation" yields a net advantage, might perhaps prevent the theory from stopping short in this way. The advantage must manifest itself in an increment of society's index of "primary goods" (provided no one makes a fuss about problems of aggregating such "primary goods" as authority, power and self-respect) for no other advantage would be recognized under Rawls's theory of the good. Unless reflected in an increase in primary goods, there are no such advantages as "greater social harmony" or "no class hatreds." This increment could presumably be distributed so that nobody was worse off and some were better off than under the distribution that is mutually agreed as plain, de facto cooperation unfolds.


Let us, therefore, revert to the ambition of a person B who wants to induce another person A to negotiate a social contract with power to override bilateral contracts. Under the latter, A and B (like everyone else) are already engaged in a scheme of social cooperation, producing a volume of primary goods and sharing them according to what Rawls calls a "natural distribution" (p. 102). Each scheme of cooperation is predicated on a distribution, meaning that the resulting volume of primary goods must be wholly distributed to call forth the sort of cooperation in question. The natural distribution corresponds to de facto social cooperation.


Might not, however, another distribution call forth not merely de facto, but also willing social cooperation, of a sort that would yield an increment of primary goods, compared to the de facto one? This can, perhaps, be expected "if reasonable terms are proposed," on which "those better endowed, or more fortunate in their social position, neither of which we [sic] can be said to deserve, could expect the willing cooperation of others" (p. 15). Now if B wants to create a "contract situation," he must convince A that if he were assured more reasonable terms than he is, or is liable to be, getting in the natural distribution, he would cooperate more willingly; his greater cooperation would yield an increment to pay for his "more reasonable" (in the sense of more favourable) terms; and there would be a little something left over for A, too. But can he really deliver the required increment?


If he is not bluffing, i.e. if he is both capable and prepared to deliver it, and if the special terms he demands for doing so do not cost others more than this increment, he would already be producing it and he would already be getting the special terms under ordinary, bilateral contracts, for straightforward reasons of market efficiency. He would already by cooperating more willingly for better terms. That he is not, and his contracts do not already incorporate such better terms, is proof that the social contract, interpreted as redistribution in exchange for greater social cooperation, cannot be the unanimous preference of rational persons already cooperating and having agreed to a natural distribution.


Whether those better endowed deserve it or not is, in Rawls's system of choice criteria, irrelevant. The "advantages of social cooperation" are looking very much like something of which everybody is already getting as much as he chooses to pay for. They are insufficient bait to lure him away from the mutually agreed natural distribution and into the social "contract situation." The extra quantity of primary goods that greater social cooperation with its attendant just-distributional requirements, is claimed to yield, can only be forthcoming by redistributing more than the extra quantity obtained (so that at least some must lose).


What are we to make of Rawls's contrary assertion that "representative men do not gain at one another's expense... since only reciprocal advantages are allowed" (p. 104)? In a reasonably functioning market, prevailing terms reflect all the reciprocal advantages that can be got. How, by acting on what parameter, does the social contract, with its terms which "draw forth willing cooperation," alter this? If Rawls means the assertion to be one about facts, it is either wrong or unverifiable. (It is the latter if it depends on the purported distinction between willing cooperation and de facto cooperation being what we wish it to be; for instance, willing cooperation would mean a dream world of doubled productivity, no strikes, no inflation, pride in workmanship, no alienation and no command-obedience relation, while de facto cooperation is the poor, shoddy, muddled, unproductive, futile and alienated world we know.) If, on the other hand, it is to be an arbitrary frontier of the area within which the argument is applicable, the theory shrinks to total insignificance.


Still less can the theory get going on the strength of the mere desire of some people to persuade others effectively to let them out of this unattractive situation, though it is the best they could have chosen, and concede more attractive terms under an overriding super-contract. Whichever way we turn it, it is impossible for everybody both to have and not to have conflicting interests, to choose a set of contracts and unanimously to prefer another.


Why, however, should we accept the (historically quite unsupported) postulate that the yield (in primary goods) of social cooperation increases as better-than-market terms are offered to the less-advantaged? Why do the better-endowed have to propose "satisfactory terms," in the form of redistribution topping up the rewards afforded by the market, seeing that they are already getting all the cooperation which "terms" can advantageously buy them?*30


And if special, better-than-market terms have to be offered by someone to somebody else to draw forth his "willing" cooperation—which seems totally unsubstantiated—why is it the better-endowed who must do the offering? Nozick took a machine-gun to shoot this sitting duck to shreds, showing that if there is any argument about this, it must be symmetrical and cut both ways.*31 Maybe, if cooperation, or its degree or extent, is in doubt or jeopardy for some unexplained reason, it is the worse-endowed who would have to offer special terms to get the better-endowed to go on cooperating with them (for, as the bitter joke goes, the one thing worse than being exploited is not being exploited at all).


Rawls's book provides no answer why new terms should be necessary or, which seems to amount to the same thing, why rational non-altruists would all accept, let alone seek to negotiate about, distributive justice. It does have a curious answer to why, if overriding terms are necessary, it is the rich who will concede them to the poor rather than the other way round or in some other, more sophisticated and complex redistributional patterns: "Since it is impossible to maximize with respect to more than one point of view, it is natural, given the ethos of a democratic society, to single out the least advantaged" (p. 319, my italics). The principles of justice, then, are what they are because society is democratic, rather than society being democratic because it has been found just for it to be such. The democratic ethos comes first and the requirements of justice are deduced from it.


Here, moral philosophy is standing on its head and first principles come last.*32 Principles for designing a state which will make rewards and burdens different from what they would otherwise be, must necessarily be in the relative favour of somebody. Whom should they favour? Rawls singles out the least advantaged. This might have been a random choice, but as we now know, it was not; it was derived from democracy. Making the state take the side of the least advantaged has the great convenience that the consent-dependent state is by and large inclined to do it anyway for reasons inherent in competition for getting and keeping power. The imperatives of the "democratic ethos" which make it "natural" to bias distribution one way rather than the other, are prima facie a code word for the exigencies of majority rule. If not, they must express a belief that there is some (democratic) value anterior or superior to justice (for if there were not, it could not give rise to a principle of justice).


One suspects, having got this far, that some notion of equality might be this value; we could in that case argue from equality and recommend a distribution as more just than another because it favoured the least favoured, without having to demonstrate that favouring the least favoured is just (which would be an argument for equality rather than from it).


The irony of it all is that had Rawls not tried and failed to prove in the doing, that a theory of distributive justice is possible, it would be much easier to go on believing the universalist claim for democratic values, i.e. (in essence) that equality is valuable because it is the means to the undisputed final ends of justice or utility or perhaps liberty, too, and hence it is rational to choose it. Rawls had made it easier for non-democrats to cry that the Emperor has no clothes.


In the basic, "justice as fairness" version of his theory, Rawls (to my mind successfully) showed that rational self-interested people would concede special terms to each other to regulate the permissible inequalities of burdens and rewards if the only available alternative on offer were their equality. It is self-evident that under his key "difference principle" (inequalities must benefit the least advantaged or else they must go) the corresponding unequal distribution, if there is one, is better for everybody. If it makes the worst-off better off than they would be under equality, it must a fortiori make the best-off even better off, as well as everybody in between. (If the facts of life, production functions or elasticities of supply of effort or whatever, are such that this is in practice not possible, inequalities fail to get justified and the principle commands the distribution to revert to equal.) In an egalitarian distribution, an egalitarian distribution tempered by the difference principle will be regarded as "just," i.e. chosen.


Taking equality as the base case (Rawls also calls it the "initial arrangement" and it is the "appropriate status quo" from which his theory can get going)—the natural presumption—and departures from it as requiring the Paretian justification of unanimous preference,*33 is in unison with arguing from democracy to justice. That no one seems to protest that here the cart is before the horse, simply shows that Rawls is, at least on this point, quite at one with the evolving liberal ideology. (The critics who, declaring for liberalism or socialism, attack Rawls's ideological content, so to speak, "from the left," accusing him of being a Gladstonian relic, a disciple of the despised Herbert Spencer and an apologist of inequality, seem to me to have well and truly missed the point.)


But no majority vote can settle questions of justice. In the spirit of the liberal ideology, which considers people's rewards as subject to political review purportedly guided by some ultimate value, a change in distribution which favours someone at the expense of somebody else raises a question of justice. Answers can be sought by intuitionist or utilitarian arguments. (The latter, as I have contended in chapter 2, pp. 110-1, are really intuitionist ones at one remove.)


Intuitionist arguments are irrefutable and do not rise above the rank of affirmations. Rawls could have put forward his principles as deductions from the given end of equality qualified by Pareto-optimality. Equality (its ultimate goodness) would then have the status of an intuitionist value-affirmation, while Pareto-optimality would tautologically follow from (non-envious) rationality. However, in his ambition to square the circle, Rawls appears to want to deduce "the standards whereby the distributive aspects of society are to be assessed" entirely from rationality (p. 9). His justice must consist of "principles that free and rational persons concerned to further their own interests would accept in an initial position of equality" (p. 11). What the "initial position," the "appropriate status quo" needed to get the theory going really amounts to is this: Rawls, in the formal core of the argument, takes out equality as an end and puts it back in as the rule imposed for playing the rational decision game.


He is plainly entitled to fix any rule he likes, but he cannot oblige rational people (or any other, for that matter) to join in the game and accept its outcome forever, unless they already share his commitment to the article of faith that unequal endowments of property and talent must not be allowed to shape a distribution if it is not to be unjust. Agreement on the justice of a certain principle of distribution will be the consequence of this shared commitment. Despite appearances, and the insistence that it is an application of decision theory, the argument is still dependent on the intuitionist affirmation (however disguised) that equality is prior and can give rise to justice. The "appropriate status quo" is the moment when the rabbit is safely in the hat, ready to be pulled out.


Unlike any other status quo, it is one where there is no social cooperation at all to start with, hence no "natural distribution" based on bilateral contracts, and where people can have no rational reason to suppose that if there were a "natural distribution," their share in it would be larger or smaller than their neighbours'. This is the effect of the much-discussed "original position," where complete ignorance of their own particulars (the "veil of ignorance") enables people to choose a distribution (which is what choosing principles to design institutions which will shape the distribution, really amounts to) out of interest unsullied by any consideration which could make one person's interest diverge from another's. Behind the veil of ignorance (which blots out not only morally arbitrary personal particulars, but also society's particulars, except for certain general sociological and economic causalities), whatever principles people, henceforth moved by interest only (for their sense of justice is incorporated in the original position), choose in order to get some social cooperation, will give rise to a just distribution. The design of the original position ensures that whatever any person chooses every other person will choose, too, since all individual differences have been defined out of it. With unanimity, no occasion for interpersonal comparisons can arise.


It is one thing to acknowledge as formally unassailable the analytic statement that principles chosen in the original position will be those of justice, given that this is how they have been defined. It is another to agree that it is Rawls's principles that would be chosen; and yet another that what Rawls's principles represent is really justice. Each of these different questions has a contentious literature, most of which I cannot even acknowledge here. Nozick (Anarchy, State and Utopia, Part II, section II) seems to me to deal more thoroughly and devastatingly than most with the justice of Rawls's justice, while a rigorous (and to my mind convincing) argument that rational people in the "original position" would not choose his principles, is offered by Wolff in Understanding Rawls, chapter XV. (I shall be addressing a few supplementary remarks to this effect in the next section.)


Rawls's core arguments are protected by a tissue of less formal discourse designed, in the spirit of "reflective equilibrium," to enlist our intuitive agreement, appeal to our sense of the reasonable, and often to intimate that his justice is really little more than our plain prudential interest. Social justice is to be agreed to in part because, to be sure, we ought to be just, and because we like justice but in any event because it is a good idea, and because that is what elicits social peace. Such arguments echo those that champions of the "third world," despairing of the generosity of rich white states, have lately been resorting to: give more aid to the teeming underdeveloped millions lest they go on multiplying, and drown you in their multitude, and rise up and burn your hayricks, or at the very least become clients of Moscow.*34 Also, give more aid so you may do more trade. The use of bribe or threat to induce us to do the right thing is hardly less blatant in Rawls. As Little puts it in his pithy paraphrase: (in the original position) "each participant would agree that anyone who is going to be rich in the society he votes for must be coerced to aid the poor, because otherwise the poor may upset the applecart and he would not choose to be an apple in so unstable a cart. This sounds to me more like expediency than justice."*35


Moreover, to read Rawls, coercion hardly enters into it and if it does, it need not hurt. The operation of the principles of justice lets us have our cake and eat it, have capitalism and socialism, public property and private liberty all at the same time. Rawls's blandness on these deeply contentious points is astounding: "A democratic society may choose to rely on prices in view of the advantages of doing so, and then maintain the background institutions which justice requires" (p. 281). Considering that "relying on prices" is synonymous with letting rewards be agreed between buyer and seller, to maintain background institutions which prejudge, constrain and retroactively adjust these rewards is, to put it no higher, to send contradictory signals to Pavlov's dogs. It is, in any case, an attempt to mislead the market about "relying on prices." In common with mainstream liberal opinion, Rawls must feel that there is no inconsistency; first, a market economy can be got to deliver its advantages "and then" the background institutions can do distributive justice while leaving the said advantages somehow intact. There is no inkling in any of this of the possibly quite complex unintended effects of having the price system promise one set of rewards and the background institutions causing another set to be delivered.*36


Lastly, we are to rest assured that a social contract which is powerful enough to override property, and which mandates the quintessential "background institution" (the state) to ensure distributive justice, does not invest the state with noticeably more power. Power continues to rest with civil society and the state develops no autonomy. Nor has it a will to use it in pursuit of its proper purposes. No genie is let out of any bottle. Politics is just vector geometry. To quote Rawls: "We may think of the political process as a machine which makes social decisions when the views of representatives and their constituents are fed into it" (p. 196). We may indeed, but it would be better not to.

Notes for this chapter

Rawls's principles serve to help design "practices" or "institutions" which "determine (the) division of advantages" and underwrite "an agreement on the proper distributive shares" (A Theory of Justice, p. 4). (Page references in parentheses are all to this work.) He considers institutions on a high level of abstraction and generality, but it is clear, either from the context (esp. pp. 278-83) or from analysis of his arguments that the one institution that has "bite" and that can "underwrite" anything at all, is the state.
There is no ground for supposing, at this stage, that all will. The position does not make for unanimity.
I believe it is fair to interpret Rawls as meaning that the social contract is a unanimous (omnilateral) agreement on principles for a state which will, by overriding ordinary (bilateral) contracts whenever the principles so require, ensure a just distribution. The state of nature is a network of ordinary contracts giving rise to a "natural distribution" with no "institutions" (no state) for making it conform to a conception of justice. Aspects other than the distributive aspect of justice do not seem to enter into the distinction between "social contract" and "state of nature" in an important and explicit manner. A society equipped with a state concerned with the preservation of life and property only, would from the Rawlsian point of view still be a society in the state of nature. As he would be the first to admit, Rawls's social contract descends from Rousseau and not from Hobbes.
Richard Miller, "Rawls and Marxism," in Norman Daniels (ed.), Reading Rawls, 1974, p. 215, argues that willing cooperation can be maintained "for centuries" by ideological institutions and the coercive apparatus of the state (paid for out of the workers' taxes!) without any social contract about principles of distributive justice.

Interpreted in a Marxist framework, Rawls's better-endowed would agree on better-than-the-market terms for workers when they feared that the centuries referred to by Miller were drawing to their historically inevitable close, and reformist remedies were the order of the day. Although they would, I believe, be hastening their demise, and be suffering from "false consciousness" in choosing the means to their end, the argument is at least genuinely based on self-interest. Rawls's argument altogether fails to establish a basis in self-interest.

Nozick, Anarchy, State and Utopia, pp. 192-5.
In fairness to Rawls, he provides an account (para. 9) of what moral philosophy is about, which (if correct) would make his stand right end up. His parallel with the theory of syntax is revealing. The way people speak is the source of knowledge about language. People's moral judgements are the source of substantive knowledge about justice. If it is democratic to like equality, this tells us something about justice—though nothing as crude is implied as that the principles of justice derive from opinion polls.
"Strong" preference at that; to justify the inequality, even the least advantaged must be better off than they would be under equality, and other groups, strata or classes (or whatever representative men represent) must be better off than the least advantaged, for otherwise there would be no inequalities to justify. (I take it that people always "prefer" to be "better off" and prefer only that.) The two formulations "inequalities must be to the advantage of every representative man" and "of the least advantaged representative man" respectively, become equivalent vis-à-vis equality as the alternative, but not vis-à-vis the general case of all possible distributions.

This is easily seen by comparing how three representative men, A, B and C fare under three possible distributions, o, p and q; total income to be distributed increases with inequality, which is the case the "difference principle" was invented for:

A 2 5 7
B 2 4 5
C 2
  6 12 15

Everybody is better off in both p and q than in o (equality), but only A and B are better off in the more unequal q than in the less unequal p; the additional inequality of q is of no benefit to the least advantaged C, and he is merely indifferent between them (being neither envious nor altruistic). Hence q will be ruled out as violating at least one of the principles of justice, though it would yield three more primary goods at nobody's expense.

This perverse result of the difference principle has been spotted early on by A. K. Sen, Collective Choice and Social Welfare, 1970, p. 138n. Rawls, ever conveniently, can rule it out by his strange assumption of "close-knitness," under which the improvement in the situation of A and B when placed in q rather than p, entails an improvement in the situation of C also (and vice versa). In other words, "close-knitness" asserts that p and q cannot both be possible, so we do not have to worry about which would be preferred and which is just.

Should close-knitness fail, Rawls has recourse to a more complex "lexicographic" difference principle (p. 83), under which inequalities are permitted if they maximize the situation of the next-least-advantaged (in this example, of B) once that of the least advantaged (C) cannot be further improved.

Close-knitness is very hard to make sense of in a scheme where the difference principle requires that some people be made worse off so the least advantaged can be made better off (e.g. by redistribution of income). Taxing A makes C both better off (he gets a transfer payment) and worse off (as close-knitness requires).

If this were so, it ought surely to be taken by nations opposed to Moscow as a potent foreign policy reason for not increasing aid, in order to hang all these teeming millions around Moscow's neck.
I.M. D. Little, "Distributive Justice and the New International Order," in P. Oppenheimer (ed.), Issues in International Economics, 1981.
Among such unintended effects, a fairly obvious one is the growth of the "black economy" and of voluntary unemployment. These, in turn, set off a self-reinforcing tendency to place an ever-weightier burden on the ever-shrinking "legal" and gainfully employed proportion of society which lets the "background institution" batten on it, instead of its battening on the "background institution."

However, other less conspicuous unintended effects may be more powerful in the long run. I am chiefly thinking of the ill-understood ways in which the characteristics of a society change as the behaviour of one generation slowly adapts to the kind of "background institution" implanted by the preceding generation. The lagged sequence is, in principle, capable of bringing about a steady (or why not a variably paced, or accelerating?) degeneration both of society and of the nature of the state. It may, of course, be impossible ever to agree on objective criteria for telling that such degeneration is going on, let alone for judging its pace and the no doubt very involved functional relations controlling it.

End of Notes

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