Feel-good Hollywood movies are a hallmark of American culture. From childhood Disney films like Aladdin and Cinderella, to classics like Rocky and Forrest Gump, American media saturates our screens with moral heroes who overcome challenges and earn deserved rewards, leaving the wicked villains with their just deserts.
This fondness for satisfying endings isn’t new. During the early industrial era, author Horatio Alger wrote similar “rags-to-riches” stories, capturing the hearts of teary-eyed Americans, hopeful that the world fit their idealized notions of fairness. Romanticized stories of merited success may help explain our uniqueness among advanced nations in viewing outcomes as determined by personal effort rather than external factors. We trust moral individuals to master their own destinies and distrust the involvement of others, especially government, in influencing outcomes.
But doesn’t our system of social cooperation resemble our favorite movies? Can’t any American who works hard and plays by the rules succeed? And haven’t hardworking people earned their rewards through their morals and virtues, while those who struggle lack the same character? Of course not. Only misguided cognitive dissonance fueled by excessive free market optimism, national zeal, attractive political rhetoric, and desire to legitimize our egoism allows us to consider market rewards and their redistribution as just.[1]
We would like to believe that America is fair, and that our market income reflects what we deserve. While these beliefs are mutually incompatible, as market outcomes fail to reflect ideals of fairness, simultaneous commitment to both is widespread. [2] What isn’t properly emphasized is that a fair society requires both taxation and spending to provide opportunity and correct market-generated injustices, such as involuntary unemployment and the morally arbitrary positions and movements of incomes. These market positions don’t have moral worth, allowing a legitimate role for redistribution to help secure fairer outcomes.
Despite a seemingly subjective view of fairness, diverse ideologies may reveal a consensus that a fair distribution would be determined by personal responsibility, merit, and creation of value. Fairness would then require taxation and redistribution to tie outcomes closer to these factors of individual choice, and away from social circumstances.[3]
It is often claimed that market outcomes are determined by merit, with the more deserving rightly receiving more, like in the movies. Merit includes moral traits like talent, hard work, and adherence to principles. For instance, in Rocky we feel that our main character deserves to win in his fight against Apollo Creed due to his work ethic and bravery in the face of adversity. But while merit often factors into outcomes, it’s far from being the only determinant of position in our complex, interdependent market society.
If market outcomes truly reflected moral weight, all forms of charity, by extension, would be deemed immoral for deviating from these moral outcomes. Attaching virtue to incomes means attaching vice to public or private redistribution, making charity a wicked act of redistributing rewards from the more-deserving to the less-deserving.
It is often countered that private citizens should determine their own level of donations to the less fortunate through private charity–but why should justice depend on goodwill? Criminal justice doesn’t depend on the goodwill of alleged criminals to turn themselves in; the state is obligated to take them into custody, by force if necessary. A right to a trial by jury, while not a natural right, entitles individuals to a service and imposes a duty onto others for procuring that service. Similarly, redistribution for more just outcomes shouldn’t rely on people’s malleable feelings of goodwill or even pity. Instead, fair outcomes should be guaranteed if market outcomes are deemed unjust.
While the market is vital for allocating goods, capital, and labor efficiently, we mustn’t lose sight of what it really is: a tool, shaped and founded upon socially developed institutions to promote social welfare. It doesn’t create sacred ends in and of itself. Unfortunately, too many view the market as more than a tool, ascribing it as a procedure generating moral desert–the benefits or disadvantages a person should justly receive–creating inalienable property rights, the redistribution of which is inherently unjust.
While the market provides a semblance of meritocracy, market outcomes also depend on forces entirely unrelated to moral worth and desert. In reality, we haven’t advanced too far from the pre-industrial economic system, when the distribution of wealth and status was largely determined by arbitrary features like social class, race, and gender. We must disregard market income as a measurement of moral worth and a benchmark of fairness, instead recognizing the arbitrariness that leads to “our” money.
This isn’t to say that it’s immoral to reap rewards from morally arbitrary factors like natural endowments or social circumstances, but inequality resulting from these factors should maximize social welfare, particularly benefitting the least advantaged.[4] Using Forrest Gump as an example, natural endowments would include Forrest’s ping pong abilities, while social circumstances would include the storm that eliminated his shrimping competition. Incentives should allow individuals to develop and use their endowments for productive social advancement. This would lead to inequality, but inequality that serves a public good, such as encouraging Forrest to develop and perform his ping-pong talents and provide usable shrimp.
However, if inequality serves no socially useful purpose, as in the unequal wages paid to the capuchin monkeys referenced in the previous article, inequality is unjustified and open to correction.
Imagine the market as mountaineering, with rewards represented by height reached. Hard work, talent, and perseverance play a role, but so do random factors unassociated with moral desert, including one’s starting position, gifted equipment, natural ability, and steepness of their section of the mountain. It may be possible to climb from the bottom to the top without these advantages. But the advantaged climber, who starts closer to the top and is equipped with gear to secure her place, has a far greater chance of achieving these mountain-based rewards.
This is not to mention the changes in the mountain’s shape caused by avalanches or erosion, similar to market changes like business life-cycles (creative destruction) or favorable institutions. One may have a better chance of climbing the mountain if their path has been cleared and smoothed out by erosion from previous climbers, while others, like Aron Ralston in 127 Hours, may find their arm crushed by a boulder. Our interdependent market system can similarly subject participants to random shocks (think American manufacturing or recessions) and slow developments (technological innovation) which may lead to morally unjustified outcomes.
While a mountain-based system of rewards may value some characteristics which reflect merit, such as swimming abilities, the system only rewards talents relevant to mountain climbing. Similarly, while patience, hard work, and social conscience are virtues, the market doesn’t reward these traits in and of themselves, explaining the discrepancy in pay between political lobbyists and social workers independent of social conscience. Even when positions on the mountain are determined, this still leaves open how rewards should be distributed (proportional vs. winner-take-all). Likewise, a market creates outcomes that can’t indicate moral desert.
Rather than producing sacred ends, market outcomes can only be viewed as outcomes of what markets and institutions happen to produce, bearing little if any moral significance. Or, as Forrest Gump would say: “It happens.”
Simply because a rational business would lay a worker off or pay them a less-than-livable wage doesn’t mean that the worker deserves these outcomes. The rise in incomes of the top 1% of “earners” in recent decades, coupled with the relative stagnation of income growth for the bottom 80%, fails to reflect each group’s moral standing. They are simply a result of market and institutional outcomes which deserve further scrutiny, questioning, and correction so that outcomes may better reflect virtuous principles.
We recognize the morally arbitrary nature of market forces. Americans broadly support progressive taxation and a social safety net; we view charity as a moral act to assist the “less fortunate.” We explicitly provide benefits to the poor–paid for primarily by the rich–because we see market distribution as morally arbitrary. Yet, because of the illusion of merit in the market, we sometimes attach moral significance to incomes when it is convenient, defending claims to “our money” on the basis of hard work, talent, and perseverance.
It is often countered that value-creation, not merit, is what should be rewarded, assigned by the market according to “marginal product.”[5] Economist Greg Mankiw even compares a right to one’s organs with a right to one’s marginal product or the “fruits of of his own labor.” However, even if value creation were the sole criterion for social rewards, determining value creation in a market with specialization and a division of labor is subjective. Jeff Bezos can’t accumulate over $100 billion by himself on a deserted island. This wealth isn’t a natural part of him like the organs in his body, but the rewards that arise from a complex market system, where products are vastly greater and different than the sum of their parts.
Even marginal product fails to properly allocate based on value produced. Philosopher T.M. Scanlon illustrates this point by explaining the complexities in assigning production between workers and a coordinator who doesn’t directly produce, but whose direction increases worker productivity. Scanlon notes that the coordinator’s marginal product is the difference between what is produced by her direction and what is produced without it. But he also notes that “the extra quantity of goods produced as a result of this direction is not something ‘produced by’ the person who provides the direction. Rather it is produced by the other workers with her help.”[6] While “marginal product” may be the rational maximum a firm may pay the coordinator, the coordinator doesn’t deserve this salary on the basis of production.
Philosopher and economist Amartya Sen calls marginal product a “useful fiction”–useful in determining how to allocate additional units of inputs, fiction for revealing how much each input has produced. Particularly in a complex market system, “value-creation” is a poor measure for a just distribution of social rewards, let alone moral standing. Sen gives the example of famines, which aren’t morally justified, even though they might arise from a market system.
The only way we can address unfair inequalities is by recognizing that market distributions, however efficient, lack moral weight. We must relinquish the excessive value we place on income and wealth. They aren’t a natural extension of intrinsic worth, but are simply rewards for market-based social cooperation within civic stated-based institutions, valued using state-issued currency and secured through defined property rights. If we continue to attach moral significance to morally arbitrary gains, we’ll continue to wrongly use market incomes as a baseline for fairness. This isn’t a movie, this is the real world, and life is unfair.
So how should we respond to this unfairness? Will we allow it to further develop into deep social divisions, separating citizens by class and status? Or will we counter this unfairness and tie our outcomes closer to individual choices and merit? There is no point in lying to ourselves about this choice anymore.
SOURCES:
[1] This article is informed by John Rawls, A Theory of Justice, (Cambridge: Belknap, 1971) and Justice as Fairness, (Cambridge: Belknap, 2001), Thomas Nagel and Liam Murphy, The Myth of Ownership: Taxes and Justice (Oxford, United Kingdom: Oxford University Press, 2004) and T.M. Scanlon, Why Does Inequality Matter? (Oxford, United Kingdom: Oxford University Press, 2018).
[2] See the description and critique of “Everyday Libertarianism” in Thomas Nagel and Liam Murphy, The Myth of Ownership: Taxes and Justice (Oxford, United Kingdom: Oxford University Press, 2004) pg. 31-37.
[3] See the description of“Fair Equality of Opportunity” in John Rawls, A Theory of Justice. (Cambridge: Belknap, 1971) sec. 14.
[4] See the description of the “Difference Principle” in John Rawls, A Theory of Justice. (Cambridge: Belknap, 1971) pg. 83.
[5] See Friedrich A. Von Hayek and Ronald Hamowy, The Constitution of Liberty: The Definitive Edition (Chicago: University of Chicago Press, 2011) ch. 16.
[6] See T.M. Scanlon, Why Does Inequality Matter? (Oxford, United Kingdom: Oxford University Press, 2018) pg. 128.
