The political problem of economic inequality and the perils of redistribution.

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1 The political problem of economic inequality and the perils of redistribution. Inequality has become one of the most powerful ideas of our days. In the political arena, at the centre of other equality issues like gender or recognition, economic inequality has made its way to the top of national and international political agendas. In this paper I argue that economic inequality can be understood as a political issue, but not in terms of a problem to be solved by politics and government in general. The political dimension of the problem is rather to be understood as the search for political principles that legitimize social institutions in the first place. Thus I consider the political problem of economic inequality as a question of institutional justice. If economic inequality is a political problem, what kind of institutions can be best justified among political beings? What is the relation of economic rights with social choice mechanisms? How much should be trusted to the government and politics for handling economic inequality? For modern political philosophers, the acceptable answers for such question vary depending over ontological, deontological and epistemic assumptions. Here I wish to establish a dialogue with those who consider personal separateness and individual conscience a relevant fact for moral thinking. The answers to the questions of institutional justice considered within this side of the spectrum of political philosophy involve a commitment to treat individuals as ends in themselves, and not merely as means to other people s ends. Economic inequality has to be addressed while maintaining some respect for individual autonomy and personal liberty. Most of their answers, however, conclude that justice requires extensive political intervention to manage inequality. They trust bureaucrats, experts and politicians in the political arena to be the ones that determine in a fair way how to handle economic inequality. I argue that these politicizations of the problem, particularly in theories that leave a broad scope of action for governmental redistribution, face important moral and practical criticism. The liberal egalitarian arguments highlight an important question regarding the place of economic inequality in political philosophy and institutional theory, but they can be considered unsatisfactory on both ideal and non-ideal grounds. 1

2 In this article I start by presenting the answer provided by John Rawls s institutional theory of justice (1999). After taking the inequality problem to the realm of political justification, Rawls thinks of economic inequality as a problem with a political solution to be found by experts and policy makers. I argue that there are some problems related with the demands of procedural justice and the protection of individual rights. Rawls criticizes the utility principle as the parameter for social calculation, but only to place it with his own principles to guide such calculus. I then challenge this on ideal and non-ideal grounds. Without losing the moral concern with the least well off, free market fairness puts forward a more comprehensive definition of basic liberties that includes economic rights. Rawlsian justice as fairness fails to ensure procedural justice by leaving too much scope for social calculation and neglects important basic liberties of every member in society. At the more practical level of the problem, robust political economy suggests that epistemic, motivational and logistical constraints support the claim for reducing such scope. These alternative justifications of political institutions are more respectful of individual separateness as they leave more space to individual choice in the exercise of their rights. A strong commitment to classic liberal rights present them as more salient alternatives to fight the social calculation problem and recognize individual separateness than traditional justice as fairness. This paper recognizes the importance of having a good answer to the political problem of economic inequality, and reminds of the importance of the lessons from classical liberalism about property rights and their role within a just society. Political authority must respect private property in order to be legitimate. I. Fairness against utilitarianism Before Rawls seminal book on justice, the use of political power to equalise the distribution of benefits and burdens was popular in politics. Welfare institutions had been there for a while, but justice as fairness opened the door for a nonconsequential liberal theory for democratic practices to focus on mitigating formal and economic inequalities. The fight against arbitrary inequalities was present at least within western liberal countries, and the institutions advocated by liberal 2

3 egalitarians were a mix of market freedom and political institutions to correct market outcomes. At that time, A Theory of Justice was considered to have delivered a serious blow to utilitarianism. Deontological thinking about social problems came to be in vogue, moral philosophizing that was so prominent in the 1970s usually took for granted some sort of rights perspective rather than any sort of consequentialism (Hausman and McPherson, 2006, p. 109). However only a decade from it, utilitarianism was again influential within theoretical and applied moral philosophy. In terms of the redistributive program nothing seemed to have changed much. Rawls provided an alternative theory that was suitable for grounding policy (Ibid), but the general scheme of redistribution of burdens and benefits of social life was not greatly altered. Progressive taxation and recognition of the redistributive branches of government that Rawls himself defended remained the institutional status quo. In this section I want to argue that the return for utilitarian considerations is not surprising since Rawls analysis was not a true alternative to consequentialism. The influence of a fiscal theory that is not fully compatible with his groundings for justice as fairness paved the way for the return of utilitarian calculation that collapses individual separateness. I. I Principles of justice and the utilitarian calculation A central part of Rawls theory is the challenge to utilitarian justice on the grounds that it does not require an appropriate distribution of benefits and burdens of life in society. This failure to address fairness in distribution responds to the methodology of utilitarian consequentialism, since it requires focusing on the aggregate or average well-being. In this way utilitarianism could accept unjust inequalities that fail to respect individuality. From a procedural point of view, it misplaces the focus on the consequences instead of adopting a contractual or procedural approach that ensures just results, no matter how they look like. In a way, Rawls critique of the utility principle as the yardstick to measure social institutions was successful. Individualism is intuitively attractive and Rawls stressed that utilitarianism was not really an individualistic theory; by conflating all systems of desires, it applies to society the principle of choice for one man [ ] [subjecting] the rights secured by justice to the calculus of social interests (Rawls, 3

4 1999, p. 26). Not only individual s basic liberties are not taken seriously, methodologically this disregard for individual separateness presents its own problems. Appealing to the utilitarian idea of an impartial spectator, the ideal legislator is assumed to be able to provide a social choice, as any other individual entrepreneur. Rawls denounced that: The correct decision is essentially a question of efficient administration. This view of social cooperation is the consequence of extending to society the principle of choice for one man, and then, to make this extension work, conflating all persons into one through the imaginative acts of the impartial spectator. Utilitarianism does not take seriously the distinction between persons (Rawls, 1999, p. 24). At a high level of abstraction, the two principles of justice seem to deliver an attractive alternative difficult to argue with 1. The liberty principle declares that individual rights and wellbeing are not to be bargained upon over a political table, as utilitarianism may permit; while the difference principle tackles inequality focusing on ordinal comparisons and primary social goods, thus dealing with cardinal calculation problems of the utilitarian method (Rawls, 1999, p. 79). Rawls takes from Kant idealism the idea of an analytical tool that allows reason to transcend biased views about just institutions. Kant formulates a moral categorical imperative which asks for the universalization of an action in order to get moral judgments that are free from subjective biases (that may be at the origin of such action). Rawls uses a reflexive equilibrium in the original position in order to get valid and universal principles of justice (Rawls, 1999, pp. 226, 511). This reflects Kant scepticism about the phenomenical world s influence when theorizing about what is right and wrong, ultimately, we cannot know the qualities of external things in an objective way, thus the pleasure or pain that we are able to perceive are not very useful when it comes to establishing moral judgments (Galston, 1993, p. 218). In a similar way, the Rawlsian concept of justice is analysed separately from particular conceptions of justice influenced by conceptions of the good and psychological propensities of the individuals (Rawls, 1999, pp. 11, 223). This is also related with the deontological individualism as a challenge to utilitarian thinking. Individual autonomy and the intellectual capacity to make choices 1 Some critics from the communitarian school have pointed out that the metaphysical idea of the unencumbered self in the original position does not respect personality, more precisely, those cultural elements that provide content to individuality Here I consider such abstraction as an attractive element of a theory of justice. 4

5 make of every man and end in himself and never just some mean to other(s). Doing wrongs like killing, stealing or lying to someone because of a greater good is not a morally acceptable conduct (Kant, 1998, p. 74). But utilitarian doctrines consider that a society is rightly ordered, and therefore just, when its major institutions are arranged so as to achieve the greatest net balance of satisfaction summed over all the individuals belonging to it (Rawls, 1999, p. 20). For Rawls, the aggregative method mentioned earlier by which utilitarianism extends to society the principle of choice of one man [ ] conflating all persons into one is wrong; it does not take seriously the distinction between persons (Rawls, 1999, p. 24). Justice denies that the loss of freedom for some is made right by a greater good shared by others. The reasoning which balances the gains and losses of different persons as if they were one person is excluded. Therefore in a just society the basic liberties are taken for granted and the rights secured by justice are not subject to political bargaining or to the calculus of social interests.(rawls, 1999, p. 25) Justice as fairness conveys the idea that the principles of justice are agreed to in an initial situation that is fair, by free and equal persons who are autonomous and the obligations they recognize self-imposed (Rawls, 1999, p. 11). These principles fall within a more general conception of justice which considers that all social goods, including income, wealth and opportunity, are to be distributed equally unless an unequal distribution is to everyone s advantage. That is, according to Rawls, the fair treatment of economic inequality as a political problem. The first principle is that of equal liberty, in a clear and straightforward way it requires political institutions to respect individual s basic civic and political liberties such as free speech and personal integrity. The second principle is concerned with social and economic inequalities and suggests they are to be arranged so that they are both (a) to the greatest expected benefit of the least advantaged and (b) attached to offices and positions open to all under conditions of fair equality of opportunity. (Rawls, 1999, p. 72). These two principles embed the egalitarian spirit of the Rawlsian project. The core idea is to treat persons fairly, equally (Rawls, 1999, chap. 17), and this requires political institutions to engage in at least two different things at different levels. For the liberty principle, any legitimate political system must recognize and protect at a constitutional level the liberties of equal citizenship. The difference principle requires 5

6 that social and economic policies be aimed at maximizing the long-term expectations of the least advantaged (Rawls, 1999, pp ). According to Rawls, there is a priority of the first principle over the second one. Such position is reflected in the priority of the constitutional convention over the legislative stage (Ibid) of politics, but as an ideal theory, he does not provide an ideal constitution or legislation. However he does put forward some specifics about the background institutions to fulfil the requirements of justice. In the next section I look at such institutions and point out indeterminacy issues and assumptions that leave the door open for the utilitarian calculation to be brought back to the centre of political activity. Even if the original position and the two principles of justice were successful in challenging utilitarianism at the abstract level, the case of background institutions for redistributive justice is different. Since these are essential to fulfil the requirements of the second principle, a failure to distance itself from the utilitarian calculus at this level casts some doubts about justice as fairness as a truly systematic alternative to utilitarianism that respects separateness and individual s rights. Rawls ideal social systems engage in redistribution as a political answer to the economic inequality problem. But for ideal and non-ideal reasons, leaving too much economic power in political hands seems to be a bad answer. I.II The background institutions of distributive justice Rawls keeps his theoretical treatment of inequality as far as possible of determining particular arrangements, sets of rights and obligations, specific levels of taxation or the economic system. Nonetheless he does engage with a somewhat extensive detail in some institutional aspects, in particular the social and economic process within the surroundings of suitable political and legal institutions (Rawls, 1999, p. 243). These supporting institutions have a wide scope of action for economic redistribution: This means that in addition to maintaining the usual kinds of social overhead capital, the government tries to insure equal chances of education and culture for persons similarly endowed and motivated either by subsidizing private schools or by establishing a public school system. It also enforces and underwrites equality of opportunity in economic activities and in the free choice of occupation. This is 6

7 achieved by policing the conduct of firms and private associations and by preventing the establishment of monopolistic restrictions and barriers to the more desirable positions. Finally, the government guarantees a social minimum either by family allowances and special payments for sickness and employment, or more systematically by such devices as a graded income supplement (a so-called negative income tax). (Ibid) The role for government goes beyond the protection of basic individual rights as it has to maintain full employment, ensure the payment of a basic minimum income to all, preserve justice in distributive shares via taxation and adjustments in property rights (Meadowcroft, ). To do this, government needs at least 4 branches: allocation, stabilization, transfer and distribution. The allocation branch is expected to keep the price system workably competitive preventing unreasonable market power. It has to make markets competitive consistent with the requirements of efficiency and the facts of geography and the preferences of households. This branch improves market distributions identify and correcting, say, by suitable taxes and subsidies and by changes in the definition of property rights, the more obvious departures from efficiency caused by the failure of prices to measure accurately social benefits and costs (Rawls, 1999, p. 244). It has to maintain the efficiency of the market economy generally, with the help of the stabilization branch. This last one strives to bring about reasonably full employment (Ibid). The transfer branch has to provide a social minimum that guarantees a certain level of well-being and honours the claims of need. Competitive markets are useful for other purposes, but ignore the claims of need and an appropriate standard of life (Rawls, 1999, p. 245). In Rawls view, this is crucial to deliver the difference principle since whether the principles of justice are satisfied [ ] the total income of the least advantaged (wages plus transfers) is such as to maximize their long-run expectations (Ibid). The distribution branch s task is to preserve an approximate justice in distributive shares by means of taxation and the necessary adjustments in the rights of property (Rawls, 1999, p. 245). It prevents excessive concentrations of economic power by inheritance and gift taxes, and provides revenue to public goods, the transfer branch and the establishment of fair equality of opportunity in education, and the like (Rawls, 1999, p. 247) by expenditure or income taxes. 7

8 The design of such institutions does not presuppose the utilitarian s standard assumptions about individual utilities [ ] [and doesn t try] to maximize the net balance of satisfaction but to establish just background institutions. (ibid). Rawls does not provides much explanation about this difference but there are some features of the branches that reminds of the sympathetic and imaginative impartial spectator that utilitarianism confers the task of an ideal legislator(rawls, 1999, p. 24). But I think there are some issues related to such background institutions when it comes to safeguard both principles of justice. An alternative to utilitarianism requires, among other things, to talk about rights that are not subject to bargain under the utility principle. It strikes as a surprise how a theory that aims to abstraction and universality so easily relativizes and limits rights. Rawls states that none of them are absolute, but are tied to the particular circumstances- social, economic and technological- of a given society (Rawls, 1999, p. 54). His ideal theory cannot define a comprehensive list of what they are, but he is quick to point out that the right to property of the means of production and freedom of contract are not among them. Even if basic rights protected by the liberty principle have a central range of application within which they can be limited and compromised, once they have been defined under a constitution it is perfectly plain and evident when they are violated (Rawls, 1999, p. 174). The case is different when it comes to justifying (or acknowledging as just) unequal economic distributions in terms of everyone s advantage. As Rawls stresses, citizens have to be able to know when government actions are no longer morally binding as it moves away from the pursuit of the two principles. Who and how shall decide on the extent of inequality to be permitted? What is the just distribution that the principle requires? How is the least well off group chosen in order to maximize their long-run expectations? How to stop background institutions from changing those decisions once they have been taken? The strength of procedural justice compared to utilitarianism, is that results are just no matter what they are. The hole case for the principles of justice relies on this, since even contingencies are to be handled by procedural justice (Rawls, 1999, p. 243). But for these relevant issues, he just assumes that the political process can 8

9 provide the answers that his ideal theory cannot. He hopes for it to be conducted as a just procedure for choosing between governments and for enacting just legislation (Ibid). The problem is that his theory lacks of a procedural account of democratic decision-making and a theory of public finance that ensures procedural justice. When he lays down the path to get from principles to institutions, he argues that the first principle should be embodied in a constitutional framework while the second one has to be pursued in a legislative setting. He acknowledges that the ideal of perfect procedural justice cannot be realized. The best attainable scheme is one of imperfect procedural justice (Rawls, 1999, p. 173). However he goes on arguing that just constitutional rules (just procedure) can be framed to produce legislation that accords with the principles of justice (just outcome). Rawls assumes that both constitutional conventions and legislative bodies can handle relevant information in order to solve intelligently Bentham s problem of the artificial identification of interests. In short, this evidences how limited the Rawlsian challenge to utilitarianism really is. He is not against the utilitarian calculation; he just wants to solve the problem according to principles other than the utility one (Ibid). This view of social problems and their solutions is reflected on the influence of The Theory of Public Finance (Musgrave, 1959) in Rawls. He takes from it the idea of the four distributive branches of government but also elements of taxation policy as progressiveness. Rawls and Musgrave consider the provision of social goods and the income distribution needs to be resolved via political process. Not via market mechanisms but through ballot boxes. However, Musgrave does not share some of Rawls central concerns. Musgrave does not want to leave utilitarian calculations. He does accept some problems with cardinal and interpersonal utility comparison, but still he thinks government can decide the questions of redistribution by computing some sort of social welfare function (Buchanan and Musgrave, 1999, p. 45). He reaches out to contractual theories, he tries to conceal the Rawls maximin rule with the familiar utilitarian rule to maximize average well-being (Hausman and McPherson, 2006, p. 204). This cannot be sad to be entirely Rawls fault, but it does provide some insights 9

10 about his failure to distance his theory from utilitarianism when it comes to institutions handling social issues as economic inequality. 2 II. Free market fairness: market democracy and beyond I have argued that Rawls theory provides important lessons to deal political problem of economic inequality. He is able to take the problematic to the theoretical level of principles and the justification of social institutions. In this sense he has correct political conception of the problem. His theoretical justification is based on the idea of an alternative to utilitarian doctrines, however I pointed out that he falls short in his aspirations as he keeps elements of social calculation relative to utilitarian and consequentialist theories. This brings in the end the problem back to a practical level of politics, and this is problematic if we care about individual separateness. Here I will provide alternatives to Rawls background institutions that address the calculation problem. The first alternative is familiar with the Rawlsian program as it considers that politics is essentially about creating a framework of rules and institutions that allows citizens to ambitions in ways that respect the freedom and dignity of all citizens. In Free Market Fairness, John Tomasi (2013) provides a restatement of economic rights appealing to the moral lessons of classical liberalism. He maintains a commitment to address the inequality issue but develops a more comprehensive commitment to the separateness of persons as they are recognized as self-authors of their own lives. For Tomasi, background institutions of justice are to be found in market democracies, and don t include an extensive redistributive apparatus to handle economic inequality. The second alternative also restates the importance of limited state intervention and property rights from classical liberalism. However this case against extensive redistribution is based on a robust political economy framework comes from a more practical level. It addresses the importance of feasibility issues, placing logistical, motivational and epistemic constraints on solutions to economic inequality 2 Another difference is the moral motivations of decision makers. For Musgrave, governmental agents are entirely benevolent. This problems are addressed by the public choice school and they involve the sort of issues raised here relative to the indeterminacy problem for background institutions (Buchanan and Musgrave, 1999). 10

11 that should be taken into account by any theoretical approach. This kind of approach to the political problem of economic inequality point out important limits to the kind of answers we may find acceptable. II.I Basic liberties and free market fairness John Tomasi follows Rawls steps of idealization to deal with justice, including how to face economic inequality. He acknowledges the claims of what he calls the high liberalism claim for social justice as a moral commitment for the least fortunate members of society. As other liberal egalitarians he accepts that justice requires institutions to be designed in favour of the least fortunate, reflecting a commitment to respect individuals as free and equal moral beings. The difference is that he also considers capitalistic economic freedoms (to work, consume, save, invest, etc.) as basic liberties to be protected under the first principle. This economic freedoms are on a par with other civil and political liberties acknowledged by Rawls. Furthermore, he takes on the idea of spontaneous order as a strategy to social construction, this really challenges utilitarian views of society since it is a less direct or planned. For Tomasi liberal justice directs us toward institutions designed to enable citizens to develop their moral powers of responsible self-authorship (2013, p. 215). He affirms capitalistic economic liberties as first-order requirements of social justice because such liberties protect independent economic activity. Self-authorship is respected when individuals are allowed to decide on economic questions that could be at the centre of their life projects. The implications of this difference are relevant for critic institutional decisions. Consider Rawls complicated relation with the free market economy system. In decentralizing the exercise of economic power, market economy provides a background for justice. Price systems allow individuals and households to make independent decisions. Free markets are efficiency and help to protect the important liberty of free choice of occupation (Rawls, 1999, p. 241).Still justice as fairness is not able to favour a property-owning democracy over a liberal socialism as economic systems. For Rawls this is to be determined politically, outside the veil of ignorance and the original position. 11

12 Free Market Fairness considers that if the liberty principle precedes the difference one, and economic rights are to be respected as basic liberties, the question of an economic system should not be left to the chance of historical contingencies and social particularities. Thinking in terms of Rawls s four stages, the equal liberty principle (fortified by a commitment towards economic liberty) comes into play at a constitutive level to ensure respect for basic liberties. Citizens within legitimate market democracies should be recognized basic rights to work and employ their own bodies and time as they consider appropriate; rights to hold private property, including the private ownership of productive property. The right to exclude others from interfering with economic activity is important to secure the independence of citizens, freeing them from reliance on the state regarding the provision of their most basic needs (Tomasi, 2013, p. 107). Free market fairness argument can be understood as a reinforcement of the first principle that changes the way we can legitimately pursuit the second. While liberal egalitarians wish to enlarge the redistributive branches of government, free market fairness demands precaution not to touch upon core economic liberty interests (Ibid). Contrasting with Rawls emphasis on distributive branches market democratic affirmation of private economic liberty requires that any such government branches have strictly limited reach (Tomasi, 2013, p. 195). These concerns become even more relevant in presence of multiculturalism and globalization. Universalized programs of care, even if considered an expression of equal concern and respect owed to each citizen, represent a drive toward uniform standards incapable to respect the distinct way in which citizens understand all the components of life (Tomasi, 2013, p. 202). All this reduces the scope for government to deal with the political problem of economic inequality in the practical sense: Within market democratic regimes the distributional requirements of social justice are to be pursued mainly through the forces of spontaneous order (Tomasi, 2013, p. 87). His theory is more concerned with the fact of differential interests than with differential wealth, when there is a wide range of economic questions are allowed onto the legislative agenda (Tomasi, 2013, p. 199). Difference in interests and power will generate more distributive problems. Tomasi avoids the specifics of the institutions to fulfil the requirements of social justice, however he defends those distributions that emerge spontaneously 12

13 through market processes. They are abler to achieve social justice than distributions crafted out via market corrections by state officials as they to try to implement their consequentialist constructions of a well order society. II.II Realistic idealism of robust political economy Tomasi s effective limitation of the political handling of economic inequality at the practical level is nested in his theoretical approach. He claims that free market democracies and their reduced scope for intervention achieve a higher moral claim than justice as fairness. Even if he reaches out at some point to public choice scholars to point out the sources of government failure, he remains within an idealistic realistic utopia framework, which cares only about some relevant factors in the institutional desirability analysis. In this last part I will focus on the feasibility concerns related with the practical conception of the political problem of economic inequality. Here I use a robust political economy perspective that incorporates logistic, epistemic, and motivational components on human nature in a much more serious way into the institutional analysis (Pennington, 2014). For this approach, theoretical answers to the political problem should not abstract beyond a point where individuals are not able to fulfil the requirements of justice. Redistributive activity to handle inequality and the principles that seek to justify them need to be assessed in the light realistic principles of justice. As mentioned before, Rawls and Tomasi address the moral claims of undeserved inequalities through the analytical device of the original position. For some, however, feasibility concerns should realistically constrain this mechanism. Loren Lomansky, for example, argues that individuals in the original position should be informed by the findings of economic science and public choice (Tomasi, 2013, p. 208). From a more practical level, robust political economy suggest to keep in mind three basic kinds of compliance problems that set the boundaries of ideal theorizing for a realistic utopia: logistical, epistemic, and motivational (Pennington, 2014, p. 10). The first type of constrain to realistic principles is that is a logistical one: they must not require or forbid arrangements that block people from coordinating their actions in a mutually beneficial way (Ibid). For example, as David Schmidtz points out a principle (or its institutional embodiment) that forbids the use of pricing 13

14 mechanisms in the allocation of resources could not be justified because it would prevent an effective response to the problems of relative resource scarcity that any workable society needs to address (Pennington, 2014, p. 10). The epistemic issue highlights the obligation for establishing that individuals have the possibility to know how to honour a principle. Even if individuals are willing to do what justice requires they must know what this is, so realistic principles of justice must not require people to be omniscient in either a private or a public capacity (Ibid). For example, the indeterminacy problems in Rawls s theory about how to fulfil the requirements of the second principle (in particular when it comes to citizens facing measures they don t agree on) make the whole enterprise quite problematic. The same can be said of Tomasi as he fails to specify his own background institutions for social justice, however his constitutional consideration for economic rights provides more epistemic tools to the citizens. Finally, the motivational problem means that sociotropical behaviour is not possible if it implies massive personal sacrifice. Realistic principles must not require people to be saints. To certain extent, the idealistic theories of Rawls and Tomasi make room for some of this considerations. Inequalities allowed to arise among individuals (as long as it benefits the least well off in the society) reflects this concern with feasibility in terms of motivational incentives (Pennington, 2014, p. 7). Given that they are need to increase efficiency and innovation, differences in wealth can be considered part of a just arrangement when it works in advantage of the least well off without demanding too much of the more talented members of society (Rawls, 1999, p. 68). As for the tasks of the distributive branches and the background institutions in general, Pennington thinks that structures favoured by Rawls are unlikely to maintain even the existing level of economic output (Pennington, 2014, p. 24) not to talk about growth or innovation. And even though he recognizes that such concerns for efficiency are orthogonal to Rawlsian interpretation of justice as fairness, he argues that Rawlsian justice still requires a background level of wealth and opportunity that are unlikely to be delivered by either liberal socialism or propertyowning democracy (Ibid). A fair handling of economic inequality, where differences arise in accordance to the second principle is dubious. 14

15 Robust political economy is sceptic of the extensive redistributive activity present in Rawls theory since it underestimates motivational issues like self-interest and rent-seeking behaviour (both in entrepreneurs and government officials) influencing distributive policies or public good provision. Even in full motivational compliance scenarios, logistical and epistemic constraints have to be addressed. These feasibility and compliance requirements seek to inform the theoretical search for the political answer. The impossibility to know, even in the most idealised circumstances, whether or not a certain principle is being fulfilled (or violated) weakens the expectation of representative individuals to endorse such principle within the basic structure of society. Tomasi argues for the higher moral ground of free market fairness by making a case for economic liberties over self-authorship in idealized conditions. But Pennington considers that the strongest arguments for classical liberalism rest on a realistic idealism which examines the significance of compliance problems in a comparative political-economy framework (2014, 29). He defends a system of economic liberty that, as in Tomasi s theory, points out the perils of putting too much economic power in the hands of political authorities. However his claims come from feasibility and compliance problems that shall be brought to the forefront of normative theory. How we understand the political problem of economic inequality and how we address them are important issues in the discussion about institutional justice. III. Conclusion. The political problem of economic inequality What is the right place for a political discussion about economic inequality? From social networks and media to democratic institutions, social and political actors argue over the moral responsibility of the state to handle economic inequality. They normally point out specific economic measures or public policy that would tackle down the inequality issue. But before assuming that justice requires governmental redistribution of economic benefits of life in society, a discussion about political principles is needed. To what extent individuals have rights and duties towards each other when it comes down to economic inequality? How are these transferable to principles that can shape legitimate coercive political institutions that engage in 15

16 wealth redistribution? What is the role for compliance and other incentives, as well as epistemic constraints, when comparing institutional alternatives for social justice? In this work I analysed the answers to such questions from around a broadly Rawlsian point of view, within the justice as fairness spirit of developing an alternative to utilitarian justifications of economic inequality. I argued that from Rawls own theory, an indeterminate difference principle takes over the design of background institutions. This takes the political problem of economic inequality back to utilitarian calculations and transgresses individualism. In a second part I examined a couple of alternatives to the Rawlsian approach. Without challenging the moral concern for the least well off raised in Rawls answer, I argued about the importance of economic liberties neglected in justice as fairness as presented by Rawls. This classical liberal restatement of concerns for economic rights was twofold. On one hand, from a free market fairness perspective, it addressed the moral grounds for less government intervention. On the other, it used a robust political economy approach to address feasibility issues of the background institutions of justice as fairness. Thinking of economic inequality as a political problem to be solved by government actions represents a miscomprehension of the nature of the issue. Before taking progressive taxation and other background redistributive institutions for granted, putting much economic power into legislative agendas, the Rawlsian project needs to consider some of the moral and practical issues raised by its critics. The political problem of economic inequality is about choosing political principles that determine the right scope for government redistribution. Principles that respect property rights limiting encroachment by state s apparatus are more likely to produce fair background institutions, providing the best answer we can get to the problem. Bibliography Buchanan, J.M., Musgrave, R., Public Finance and Public Choice-Two Contrasting Visions of the State. MIT Press, Cambridge. 16

17 Galston, W., What is Living and What is Dead in Kant s Political Philosophy, in: Beiner, R., Booth, W.J. (Eds.), Kant and Political Philosophy: The Comtemporary Legacy. Yale University Press, New Haven. Hausman, D., McPherson, M., Economic Analysis, Moral Philosophy and Public Policy, 2nd ed. Cambridge University Press, Cambridge. Kant, I., On the Relationship of Theory and Practice in Morality in General, in: Reiss, H. (Ed.), Kant s Political Writings. Cambridge University Press, Cambridge. Laden, A.S., John Rawls: A Theory of Justice, in: Shand (Ed.), Central Works of Philosophy 5: The Twentieth Century Quine and After. McGill-Queen s University Press, Montreal. Meadowcroft, J., Nozick s Critique of Rawls: Distribution, Entitlement and th Assumptive World of A Theory of Justice, in: Meadowcroft, Bader (Eds.), The Cambridge Companion to Nozick s Anrchy, State, and Utopia. Cambridge University Press, Cambridge. Musgrave, R., The Theory of Public Finance. McGraw-Hill, New York and London. Pennington, M., Realistic Idealism and Classical Liberalism: Evaluating Free Market Fairness. Crit. Rev. 26, doi: / Rawls, J., A Theory of Jutice, revised edition. ed. Harvard Univeristy Press. Tomasi, J., Free Market Fairness, Reprint edition. ed. Princeton University Press. 17