Helio Beltrão: The social function of wealth

John Rawls, in Theory of Justice (1971), opposes utilitarianism, constructs novel principles of justice, and arrives at indefensible and socially unstable conclusions, as I argued in this column last week.

Today I continue on the subject to illustrate that libertarianism is an alternative not only fairer, but especially more effective, especially for the less fortunate.

Rawls’s egalitarian and constructivist solution would imply a state machine of continuous coercive redistribution of private property. He claims to defend the moral status of each individual, but weakens his position by failing to ensure property and free association, fundamental aspects of our individuality, of what makes us human. For example, the basic right to start a small business, to hire and be engaged in the labor market on mutually acceptable terms, or even to own trivial means of production (such as a computer or a van).

History is unaware of any social order that has respected political and individual rights without ensuring private property. As Cicero said 2,000 years ago, “there is nothing so absurd that some philosopher has not already defended it”.

During his career, Rawls avoided addressing the political philosophy of libertarianism. This, among other individual freedoms, recognizes private property, which in turn is generated from talents, passions and work.

Robert Nozick, philosopher of deontological libertarianism, brings Rawls out of comfort in Anarchy, State, and Utopia (1974). It holds that any pattern of distribution of income, wealth or goods among individuals, no matter how unequal, is fair as long as it is derived from legitimate means, for example voluntary exchanges with others.

According to deontological libertarianism, we are masters of ourselves and, by extension, holders of what results from our work and our voluntary exchanges. The expropriation of the property by third parties is therefore illegitimate. For libertarians, the state has legitimacy only in protecting citizens against aggression (or fraud) against person, liberty, and property. For more strict anarcho-capitalist libertarians, the state acts legitimately only if the state service in question takes place on a voluntary and contractual basis.

Rawls believed that there was no relationship between markets and property, and that, for the formation of prices, socialism or the market did not matter. Nor did he deal with the preconditions for increasing the supply of education, health, and other products and services aimed at improving the opportunities and income of the poorest. One-eyed, just looked at the demand.

In its paradigm of continuous redistribution with high taxes, there would be far less accumulation of savings, investment, innovation, and entrepreneurship than in an environment of protection of private property and freedom of contract and association. And by extension, there would be less opportunity and prosperity for the most precarious.

The period since 1800 -denominated by economist Deirdre McCloskey as “The Great Enrichment”-, has multiplied the average income of more liberal countries between ten and 20 times, with an even greater improvement of the poorest, who on average have a similar standard of living or superior to the nobles of the time. Neither Rawls nor Marx understood that, in a liberal environment, the profits and wealth accumulated by the entrepreneur and the provider of capital represent only a fraction of the enormous value generated for others.

For consequentialist libertarianism, therefore, economic science and history highlight the most pertinent reason for favoring freer markets, with protection of private property: the prosperity of the least advantaged.