November 2, 2011

When you see well-to-do financial-industry types (as I have in recent weeks) with a glint of discomfort and even fear in their eyes — wondering if this thing may just spin out of control — you know that Occupy Wall Street is having a visceral impact. But if you want a philosophy that explains why the matter of the 99 percent and the 1 percent has deservedly struck such a nerve, you need to go back to John Rawls.

The way to create the rules for a just society, Rawls argued in his 1971 masterwork, “A Theory of Justice,” is to first imagine everyone in an “original position” behind a pre-birth “veil of ignorance,” where no one knows what their own traits will be — whether they will be rich or poor, beautiful or plain, smart or less so, talented or not, healthy or unwell. Then you’d see what kind of social order people would agree in advance was fair, if they couldn’t know what place they were destined to occupy in it. (I’m pulling here from a discussion of Rawls I used in my 2003 book, “The 2% Solution,” which seems freshly pertinent today.)

Rawls uses this thought experiment to focus us on the central role luck plays in life. There’s the pre-birth lottery that hands out brains, beauty, talent and inherited wealth. There’s a post-birth lottery that (via family) bequeaths values and schooling. “The institutions of society favor certain starting places over others,” he writes. “These are especially deep inequalities . . . yet they cannot possibly be justified by an appeal to the notions of merit or desert.”

Rawls argues that, in this original position, people would agree on two basic principles to structure society. The first would be equality in the way basic rights and duties are assigned. The second would be to arrange social and economic inequalities so that “they are both (a) to the greatest benefit of the least advantaged, and (b) attached to offices and positions open to all under conditions of fair equality of opportunity.”

Rawls’s first principle is straightforward, but it is the second — what he dubs the “difference principle” — that in today’s context is so interesting. He is saying that the vast inequalities of wealth and position we observe stem primarily from advantages for which people can’t take credit; this is his idea that “no one deserves his starting place.” Behind a pre-birth veil of ignorance, therefore, Rawls suggests that we would agree these inequalities are just only if they most benefit those who end up not winning these early lotteries, and if the top spots in life are open to everyone in a system where we’ve made a serious effort to equalize opportunity.

“Injustice,” Rawls summarizes, “is simply inequalities that are not to the benefit of all.” (emphasis added)

How does U.S. economic life circa 2011 fit this criterion? It’s worth noting that well-functioning capitalism can, in theory, meet Rawls’s test quite well. Indeed, as Milton Friedman always argued, free-market capitalism over time delivers the greatest good for the greatest number; he also argued that the advances secured by entrepreneurial capitalism have most helped the least advantaged, as Rawls requires.

Thanks to the technological advances made possible by free enterprise, the poor in the United States live better today — with indoor plumbing, smartphones, cable TV and potable water, among other things — than royalty lived a century or two ago.

But the surge in income and wealth inequality we’ve seen in recent decades breaks with this pattern. Virtually all the benefits of growth have gone to the top 1 percent, and ultimately to the top sliver of the top 1 percent, while the rest of the country has stagnated or lost ground. Meanwhile, anyone who’s spent time in high-poverty schools and communities knows that, for all the rhetoric, America’s efforts to make opportunity more equal are a charade.

Our rising inequality, in Rawlsian terms, has plainly not been to the benefit of all.

What’s more, when good chunks of the 1 percent come by their riches via clubby, rigged systems of CEO pay, or by peddling subprime securities that implode and wreck the economy, or by taking taxpayer bailouts and turning them into obscene bonuses, people know something is deeply, systemically corrupt.

Rawls’s message to OWS and its sympathizers wouldn’t be to scrap capitalism. It would be to fix the abuses that make today’s version of U.S. capitalism unjust.

Purge the crony capitalists!

Get serious about equal opportunity!

Make life’s inevitable inequality work for all of us!

Not as punchy as “Off with their heads!” But if Rawls were making the signs, that’s where he’d start.

mattino2@gmail.com