Richard Tuschman’s ‘Hopper’s Meditations’
1. General Remarks
My aim in what follows is to pose and answer the question: what is one of the primary goals of the economy? I will pursue this by asking whether the general logic of economic exchange would be in agreement with the common conception of market efficiency. To answer the question “what is one of the primary goals of the economy?” I shall answer “efficiency.”
1.1 Introductory Remarks
Political liberals such as John Rawls and Amartya Sen define the goals of economic exchange either in terms of mutual agreement between “free and equal moral persons”, as Rawls would say, or in terms of the consequences of agreements between agreements and transactions, as Sen’s argument would put it. These two definitions have the advantage, as both readily point out, of not limiting the scope of economic activity to narrow confines of the nonconsequentialist and a priori rights-based justification of market operations proposed by the common libertarian. Rawls and Sen both, by their own necessities, reject the notion that “[t]he results of market transactions may be good, but even if they are bad or unassessable, they are still legitimate because they are sanctioned by antecedent rights.”[1] For to do so would mean to dismiss the consequences of actions and agreements as irrelevant to moral and ethical theory,[2] since, as Nozick argues, libertarians view the consequences of economic engagement as fundamentally missing the fact of original acquisition of holding and the right to entitlement of transfers.[3] [4]
1.2 The Libertarian Position
The libertarian principle holds that economic and social arrangements are just only insofar as they are the consequences of freely chosen actors enacting choices and decisions that they view as being expressions of their own free will.[5] An agreement is then fully just, so long as free participants form an agreement that otherwise could conceivably been formed or chosen differently. Thus the libertarian position requires that economics and moral contracts focus on the terms agreed upon by all participants, and therefore calls upon the participants to follow these rules, since these terms are what they have freely chosen to agree upon. This feature of the libertarian has lead many commentators to point out that this approach not only dismisses the consequences – either moral, ethical or economic consequences – but rather, calls for us to accept these consequences regardless of how they affect us. Sen, for example, finds this position extremely troubling and problematic, writing: “It is not irrelevant to ask the question: If such starvation and famine were to occur, must the results of the market operation be taken as “acceptable,” simply because they have followed from people legitimately exercising the rights they have? It is not easy to understand why rules of ownership, transfer, etc., should have such absolute priority over the life and death of millions of people.”[6]
Richard Tuschman’s ‘Hopper Meditations’
Against this, Robert Nozick maintains that,
If the world were wholly just, the following inductive definition would exhaustively cover the subject of justice in holdings. 1). A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding. 2). A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding.[7]
This statement suggests that the pivot of economic relations – namely, of the moral and ethical dimensions – follow from the status of fundamental rights and the system that instates these rights (that which oversees transfers), instead of following from a perspective that seeks overall efficiency in economic outcomes. Unsurprisingly however, libertarians argue that this type of arrangement produces an overall efficient economic structure, even though they claim to have no interest in consequences or overall outcomes. This point is worth noting.
- Nozick proposes that we think of justice in terms of holdings and transfers of holdings, as procedures sanctioned by antecedent rights; that we envision economic operations in a way that is independent of our particular empirical regularities – beyond the scope of moral and ethical approaches that regard the effects of economic and moral interactions as part and parcel to the overall nature of economic relations. Libertarians believe that by following certain processes we produce a purely procedural approach that eliminates the irregularity of empirical justifications that are so often found in a consequentialist approach.[8] This differs from the traditional social contract theory of J. Rawls because it believes itself to only value the freedom to act (on holdings and transfers of those holdings) and the binding consequences that follows from that supposed free action – i.e., the bus renters knew that the owner would return to claim the bus when they entered into the agreement.
‘Six O’Clock, winter’ by John Sloan 1912
1.3 The Normative Response
This differs greatly from other political and economic approaches to understanding economic relations – and more so, differs greatly from how we commonly conceive of when judging economic relations and considering the rational behind market interactions. Note, first of all, that most defenses of the market-based solutions are described in terms of efficiency, promoting efficient strategies, and delivering solutions that encourage socially useful productivity.[9] These characteristics are what one commonly thinks of when considering why the market is viewed as a good institution. While libertarians are quick to agree to this, however, does not undermine the argument the value of the market mechanism rests on the consequences or results of actions – not the procedure of market mechanisms. Nozick’s argument here is not very coherent on this point. Even if some agreements promote overall economic efficiency because of their strict enforcement of agreed upon rules and obligations, it does not follow that all agreements will promote an overall sense of economic efficiency when we consider the broader structure in which economic interactions take place in. For example, leaving the consequences of certain freely elected agreements to be equally felt by the loved ones of the compliant term holder, in effect, often means that the consequences are not limited simply to the narrow confines of the individual actor who consents to the agreement. This is most readily seen when a father gambles away his family fortune, and his children are thus afforded a worse-off chance at further opportunities for economic and social mobility. Moreover, that we value the harsh elements of market mechanisms does not imply that agreements cannot be molded to enforcing strict rules that attempt to produce efficient ends. No doubt the fact that we can easily locate the problematic of such a position by looking to the often stark and dire consequences of such agreements.
Edward Hopper’s ‘Sunday’
On the face of it, the libertarian position seems to emphasis the efficiency of the market, that agreements must be adhered to – if one agreed to work so and so many hours, one must comply. However, it does not seem that this understanding works so mechanically when we reflect on the deeper dimensions of economic exchange. Consider the consequences of the earlier example – the father gambling away his family’s fortune. It might seem that the market demonstrates an efficient strategy by punishing the man for partaking in a risky investment when he has much more to lose than he can afford. We can see that the market does discourage this type of behavior by forcing the consequences of his actions – the family loses their wealth. But, if we think about this example as an instance when the market demonstrates a teachable lesson to the economic actor – that one shouldn’t gamble their fortune when one has no real chance of replacing it readily – it seems then reasonable that this demonstration is only helpful to the man himself. If we think about what this teaches the man’s children, we can, of course, say that they also learn a lesson from his mistake. However, this not only teaches the man’s children a lesson, but also punishes them for being choice-less observers. This is not to say that market mechanisms should not be scaled down in severity, nor that it should not enforce teachable lessons – rather, it is to say that we need to recognize that market mechanisms affect more than just the actors involved in contractual agreements.
What’s more, once we admit that there are certain consequences we must take into consideration when making an agreement – that following through with an agreement may indeed result in a moral hazard such that millions dying – we seem to suggest an incoherency to the libertarian position. Yet, as a matter of fact, the market seems to demonstrate its desire for efficiency without always necessitating the adherence to following the rules of agreements. Rather, quite contrary to the non-consequentialist position of libertarianism, the market promotes efficiency by demonstrating the consequences of inefficient activity. Say, if one does not attend to their duties at their job, they will lose their job. We can recognize that he, in this moment of inaction, does not adhere to the obligations of his contract. However, the point of dismissing him from his job is not to show that one must adhere to contracts, which thus suggests that it would be just of him to adhere to his contract. Rather, much more simply, that there are consequences of not following his contract, consequences that he does not wish to bear.
1.4 Conclusion
Thus we arrive at the answer to our initial question: the market values efficiency by often demonstrating the consequences of efficient and non-efficient activity because it sets in place certain mechanisms to continually encourage and discourage certain economic actions over others. This is why many consequences of market interactions often serve as a source of frustration and disappointment to economic actors, while others produce greatly positive results. Certain consequences are thus viewed as beneficial for the overall strategy of the market as it seeks its point of competitive efficiency – a worker works overtime and produces an increase in earnings. Furthermore, the market also seeks to provide numerous examples to economic actors to discourage certain productive/non-productive activities – showing up to work late may lead to losing your job. This is most clearly shown when we reflect on the normative agreements that are often left unsaid in contracts – staying at work later than is require to finish a project, volunteering to work on the weekends to assist the completion of an assignment, and so on. While many mechanisms seek to enforce these norms by contractual agreements, most are enforced by normative examples. Thus, the concept of efficiency in the market is neither an obligation nor a consequence of a certain agreement; it is not simply what one wishes to find laid out in an agreement. Rather, the answer lies in the consequences of an agreement.
References:
Eecke, Wilfried Ver. An Anthology regarding Merit Goods: The Unfinished Ethical Revolution in Economic Theory. West Lafayette, IN: Purdue UP, 2007. Print.
Eecke, Wilfried Ver. Ethical Reflections on the Financial Crisis 2007/2008: Making Use of Smith, Musgrave and Rajan. Heidelberg: Springer, 2013. Print.
Nozick, Robert. Anarchy, State, and Utopia. New York: Basic, 1974. Print.
Reiman, Jeffrey. “Is Racial Profiling Just? Making Criminal Justice Policy in the Original Position.” The Journal of Ethics 15.1-2 (2011): 3-19. Print.
[1] Eecke, Wilfried Ver. An Anthology regarding Merit Goods: The Unfinished Ethical Revolution in Economic Theory. West Lafayette, IN: Purdue UP, 2007. Print. 513
[2] Of this Nozick writes in Anarchy, State, and Utopia: “Suppose you own a station wagon or a bus and lend it to a group of people for a year while you are out of the country. During this year these people become quite dependent on your vehicle, integrating into their lives. When at the end of the year you return, as you said you would, and ask for your bus back, these people say that your decision once more to use the bus yourself importantly affects their lives, and so they have the right to a say in determining what is to become of the bus. Surely this claim is without merit. The bus is yours; using it for a year improved their position, which is why they molded their conduct around it, and came to depend on it. Things are not changed if they kept the bus in good repair and running order. Had the question arise earlier, had it looked as though there might be such a right to a say, you and they would have agreed that a condition of lending the bus was that the decision about it after a year was solely yours.” (Nozick, Robert. Anarchy, State, and Utopia. New York: Basic, 1974. Print. 269).
[3] Anarchy, State, and Utopia. 150,151.
[4] On this point, libertarians follow the Lockean notion of rights: “Individuals in Locke’s state of nature are in “a state of perfect freedom to order their actions and dispose of their possessions and persons as they think fit, within the bounds of law of nature, without asking leave or dependency upon the will of any other man.” The bounds of the law of nature require that “no one ought to harm another in his life, health, liberty, or possessions.”” (Nozick, 10).
[5] In Nozick’s response to Sen, he writes: “A more appropriate view of individual rights is as follows. Individual rights are co-possible; each person may exercise his rights as he chooses. The exercise of these rights fixes some features of the world. Within the constraints of these fixed features, a choice may be made by a social choice mechanism based upon a social ordering; if there are any choices left to make! Rights to not determine a social ordering but instead set the constraints within which a social choice is to be made, by excluding certain alternatives, fixing others and so on. (If I have the right to choose to live in New York or Massachusetts, and I choose Massachusetts, then alternatives involving my living in New York are not appropriate objects to be entered in a social ordering.) Even if all possible alternatives are ordered first, apart from anyone’s rights, the situation has not changed: for then the highest ranked alternative that is not excluded by anyone’s exercise of his rights is instituted. Rights do not determine the position of an alternative or the relative position of two alternatives in a social ordering; they operate upon a social ordering to constrain the choice it can yield” (Nozick, 166).
[6] An Anthology regarding Merit Goods, 514.
[7] Anarchy, State, and Utopia, 151
[8] Of this, we see this resonate most clearly with the problematic of one of the most radical consequentialist approaches, utilitarianism. In his piece “Is Racial Profiling Just?” J. Reiman writes: “But this standard [a conception of how to count consequences in terms of pleasure and pain when they hold the same duration and intensity] can be explained simply by the claim that pleasure is good and pain is bad, that is, simply by reference to the nature of the consequences that are to count. If pleasure is good and pain bad, then it will be so wherever there is pleasure and pain, and thus equal duration and intensity of either will count the same wherever they occur. However, as soon as utilitarians start to qualify their counting, say, by looking at the consequences of rule-following rather than simple acts, I believe they do contaminate utilitarianism with smuggled-in deontological principles” (Reiman, Jeffrey. “Is Racial Profiling Just? Making Criminal Justice Policy in the Original Position.” The Journal of Ethics 15.1-2 (2011): 3-19. Print. 8). Thus, in an attempt to bring a sense of regularity to the utilitarian problematic – is this particular agreement good? Does it promote overall satisfaction in this case? – utilitarianism thus seeks to incorporate deontological dimensions to bring more consistency into its framework. Since, as with the example of the bus renter presented by Nozick earlier, the just thing to do – according to the utilitarian – would be to determine which party would benefit the most, demanding a case-by-case consideration. Therefore, we can see the robustness of the procedural position of libertarian position over the messy case-by-case approach of the utilitarian.
[9] Of this Wilfried Ver Eecke writes: “Because [the free market] imposes burdens, it is an institution that many want and try to escape… But why erect an institution that many of its members and many of its most powerful members want to escape? The answer of the neo-liberals is that the free market is a meritorious institution and deserves to be defended because the free market promotes something valuable: efficiency… At the occasion of economic crisis, some economists go back to Schumpeter’s idea that a well-functioning economy has a destructive aspect. Bad companies should not survive.” (Ver Eecke, 58-59). Ver Eecke further points out that the idea of efficiency can also make sense of market fundamental dictating the possible actions of specific individuals: “… a competitive free market consists of an institutional arrangement that has a hard element. Indeed, it is an arrangement in which individuals have the right to a share of the goods and services that others want. If they do not, then the institutional arrangement deprives them automatically of any right to a share of those goods and services. Such individuals are thus faced with bankruptcy, starvation, or both. The purpose of this harsh arrangement is to automatically encourage socially useful productivity.” (Eecke, Wilfried Ver. Ethical Reflections on the Financial Crisis 2007/2008: Making Use of Smith, Musgrave and Rajan. Heidelberg: Springer, 2013. Print., 62).
Sketches From An Album 