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Why Care about Inequality?

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Why Does Inequality Matter?
by T.M. Scanlon
Oxford University Press, 2018, 170 pp.

T.M. Scanlon, who taught philosophy for many years at Princeton and Harvard, is one of the leading moral and political philosophers of the past fifty years or so. Though far from a libertarian, he takes libertarian views with great seriousness and has endeavored to respond to them. He thinks that libertarianism gives inadequate consideration to the importance of certain kinds of equality, especially equality of income and wealth and also substantive equality of opportunity in chances to attain socially esteemed positions.

I’m going to address only these kinds of equality in what follows, though there are other senses of “equality” as well. As Scanlon recognizes, libertarians think that everyone has the same rights, and in this way accept equality; in Kantian terms, all persons have moral worth or dignity. This sense of “equality” certainly matters, and for most people isn’t controversial.

Scanlon distinguishes two sorts of concern with the kinds of equality I’m discussing here. Sometimes people favor equality because a sufficient degree of inequality can have bad effects on people, e.g., by causing them to lose self-respect; this is “equality in the broader sense.” There is also “equality in the narrower sense,” and this is what I shall mainly be talking about in this review. This concerns equality just taken as such: in this view, the fact that some people have much more than others is objectionable, even if those with less aren’t adversely affected by the difference.

If Scanlon’s criticisms of libertarianism are correct, he needs to show that equality of the sort he favors is morally mandated. Libertarians don’t think that it is, and simply to assume egalitarianism at the start would beg the question against them. Scanlon fully recognizes this requirement, and indeed goes further by saying that there appears to be a case that concern with equality is irrational. He says,

Insofar as a reason for reducing inequality is even broadly egalitarian—insofar as it is a reason for objecting to the difference between what some have and what others have—it might seem to count in favor of reducing that difference even if this made no one better off, and left some people (the rich) worse off. The apparent irrationality of such a move is the basis of what has been called the “leveling down objection.” (p. 3; see my discussion of the leveling down argument here)

To understand Scanlon’s response to this, we must first look at his standpoint in normative theory. He is a contractarian. Very roughly, he thinks that people in a society try to arrive at moral rules that no one could reasonably reject, assuming that everyone shares the wish to arrive at such rules. He does not think that strict equality, unmodified by any other considerations, is a rule that no one could reasonably reject. People might prefer rules that allow some degree of inequality, if this will make everyone better off, or at least no one worse off. This resembles John Rawls’s difference principle, but Scanlon’s requirement is less strict. The difference principle requires features of the basic structure permitting that departures from equality benefit the worst-off class to the greatest extent, compared with other rules that allow inequalities, but Scanlon requires only that allowing inequalities benefits the poor. He thinks that in practice, though, his requirement would come close to the same outcomes as Rawls’s. What could not be reasonably rejected is taking equality as the benchmark, from which departures have to be justified. He summarizes his requirement in this way: “[A] necessary condition for features of a basic structure that generate significant inequalities: it must be true that these inequalities could not be eliminated without infringing important personal liberties or that they are required in order for the economic system to function in a way that benefits all” (p. 141, emphasis in original). What Scanlon objects to here isn’t, then, the mere existence of a large inequality, but the fact that the inequality could be lessened without worsening the condition of the less well off or infringing important personal liberties.

I do not think Scanlon’s argument succeeds. He is right that if society is viewed as a scheme for social cooperation, people would reasonably reject any rule that would leave them worse off by entering the society than by staying out. But nothing more demanding than this is reasonably required, and it is only Scanlon’s importation of his own commitment to equality into his decision procedure for the rules of the basic structure that leads him to think otherwise.

The difference between what Scanlon’s principle of reasonable rejection actually requires and what he wrongly takes it to require emerges clearly in this passage.

Whether a particular system of property rights … is justifiable, and therefore violations of the rights it defines are therefore wrongful, depends on the system of holdings and exchange that the system creates. Such a system is justifiable if the benefits it provides are sufficiently important to make it unreasonable for people to object to being excluded from the system from access to objects and other opportunities they have reason to want. (p. 108)

It does not follow from this principle that all acceptable systems of holdings and exchange must ensure equal access to these goods, unless those who do not have equal access benefit from the allowed inequality. Equal access and total exclusion are two very different matters. I would go further. The standard of reasonable rejection doesn’t rule out exclusion from some, though not the entirety, of the objects and other opportunities people have reason to want so long as it meets the “worse off” requirement mentioned in the paragraph above.

Scanlon makes the same jump when he discusses substantive equality of opportunity. In his words, “Procedural Fairness concerns the process through which individuals are selected through positions of advantage. The requirement I have called Substantive Opportunity concerns the education and other conditions that are necessary to become a good candidate for selection through such a process” (p. 53). Once more, it does not follow from the fact that someone would reasonably reject a social system that denied him any chance of access to the best positions that he must reasonably reject systems that fell well short of the substantive equality that Scanlon favors. Scanlon’s notion of “reasonable rejection” leaves open more options than he recognizes.

Many critics of Lockean accounts of property acquisition, including Scanlon, claim that these accounts fail to recognize that most property rights are conventional rather than natural. I don’t think this criticism is correct, but it’s one I won’t be talking about here. I mention it only to bring out a feature of my main objection to Scanlon. Just as he and other critics of Lockean accounts argue that these theories fail to recognize how much is left open even when the right to acquire and hold property is acknowledged, I maintain that “reasonable rejection” leaves open how much social and economic inequality is morally permissible.

Many egalitarians dismiss Robert Nozick’s Wilt Chamberlain example, in which fans voluntarily pay Chamberlain a quarter from their incomes to watch him play basketball, but Scanlon to his credit does not. He says,

The extra dollars that Wilt receives from his fans for the pleasure of watching him play lead to a significant increase in economic inequality. Even if this inequality is something there is reason to prevent, it cannot be prevented by forbidding what Wilt and his fans do. What good is money if one can’t spend it on tickets to basketball games if that is what one wants to do? And it has to be up to Wilt whether to play for a given amount or not. (p. 110)

He goes on to argue, though, that recognizing these freedoms does not exclude taxing Chamberlain on his gains in order to preserve equality. Scanlon seems to me right to this extent. If you accept his contractarian framework, agreement on a system with this consequence is possible, though, as he recognizes, the taxation would have to be carefully designed so that it would not wipe out people’s exercise of their liberty to make exchanges. But, and this is the point I take to be crucial, a system of this sort isn’t required by that framework. If Scanlon thinks otherwise, this is another instance of his making his version of contractarianism more egalitarian than he has shown to be reasonably required.

Some people, such as the economist Gregory Mankiw, argue that people deserve to be paid according to what they contribute to production, i.e., that they should receive their marginal product. (As Scanlon correctly points out, this isn’t Nozick’s view, though in a free market this is what people will in fact tend to be paid.) Scanlon raises an objection to this. He points out that someone’s marginal product “is the difference that adding or subtracting a unit of what that participant does would make to the value of what is produced But … this purely subjunctive idea need not correspond with what a given participant ‘has contributed’ in the sense that seemed to apply to my first example” (p. 129). The first example in question has to do with causing or bringing about a product, and Scanlon’s point is that having a marginal product in the subjunctive sense need not involve this. Someone who coordinates the labor of others, e.g., may enable others to increase production but isn’t producing anything; nevertheless, the person has a marginal product. This objection seems to me misplaced. Scanlon’s argument here rests on the view, which I take to be a common economic fallacy, that only those engaged in certain types of labor are “really” producing things. Even if you see matters in Scanlon’s way, though, this contention has nothing to do with the fact that marginal product is defined subjunctively. If his “real” producers have a marginal product, that product will meet the subjunctive criterion and won’t be given some “real” economic value different from this.

If I am right, Scanlon hasn’t shown that his own contractarian framework requires the strongly egalitarian conclusions he thinks it does. His book deserves careful study, but my answer to “Why does [economic] inequality matter?” would be “It doesn’t.”


Contact David Gordon

David Gordon is Senior Fellow at the Mises Institute and editor of the Mises Review.

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