In response to:
Just Deserts from the March 4, 1982 issue
Just Deserts from the March 4, 1982 issue
To the Editors:
It is most gratifying to me, as it must be to any economist, that my book Equality, the Third World and Economic Delusion should have elicited such a long, instructive and courteous review from Professor Sen [NYR, March 4]. In this letter I concentrate largely on some points he raises on what for him is the central issue—egalitarianism.
(1) The “rejection of egalitarianism as an ‘appropriate’ goal” attributed to me is not “central to the rest of [my] approach.” At most, 30 out of some 300 pages bear on the subject. My extensive analysis of foreign aid, for example, would be unaffected even if I were a rabid egalitarian. In fact, many egalitarians criticise aid. And much of my analysis of aid and of other policies (including egalitarian policies) shows how the poor are harmed.
(2) Sen refers to Hong Kong, inter alia, as showing that greater income equality need not conflict with fast growth. I agree. This and other examples confirm a major argument of mine, viz. that one cannot sensibly discuss changes in income distribution without examining the factors behind them. Neither I nor anyone else, I think, has seriously criticized greater equality resulting unforcedly from economic growth and change.
(3) I have not said that in an open society individuals get their “just deserts.” I said, rather differently, that normally incomes are earned, not extracted from others, and that it is “by no means obvious why it should be unjust that those who produce more should enjoy higher incomes.” Further, I explained that influential arguments for egalitarianism are defective, and that basic considerations are usually neglected. In any event, a difficulty with Sen’s commentary is that he does not state the criterion on which he would judge income distribution (including how he would treat, for example, cases of joint production), nor the processes by which redistribution should be effected.
(4) I argued that incomes normally are “earned”; and I explicitly drew attention to incomes that are not “earned” in the relevant sense. I instanced cases where monopoly elements are present, notably those protected by the state from market forces. And I have a chapter on restriction schemes.
(5) Sen’s example of barbers and circus performers is neat. But the reader should note that it does not mean that income is extracted from Indian barbers and acrobats either by their richer fellow-citizens or by people in the West. Evidently, the general level of incomes in a society reflects the “aptitudes and motivations for economic achievement” in that society and the policies of its governments.
(6) Inherited wealth certainly benefits many people, though it is not a major factor behind many (perhaps most) pronounced income differences in the Third World, notably in the Far East. And if this advantage is regarded as objectionable enough to warrant non-trivial correction, why should the same not apply to intelligence and good looks? Moreover, it is not ownership of resources that is productive, but their deployment in economic activity.
(7) It is at least arguable that the state is more coercive in Sweden than in, say, West Germany. And it is certain that governments in Sri Lanka have been severely coercive in measures aimed at even moderately well-off groups such as victimised Tamils, or at individuals such as expropriated local owners of small plantations.
(8) It is true, of course, that a government can be coercive without promoting egalitarianism. However, it cannot be true that egalitarian policies can be pursued without coercion (except for obviously unambitious egalitarian measures).
(9) How far back should we go to redress historical wrongs? Should China or the Soviet Union compensate persons in Iraq for the destruction wrought by the Mongols from Central Asia, with lasting consequences? And how do we allow for changes in the idea of what is right and wrong?
(10) I agree that some aid receiving countries have prospered. My main point is that the contribution made by aid cannot have exceeded the avoided cost of borrowing. And many poor countries, in the past and more recently, have prospered without aid.
(11) It is uninformative to treat together South Korea, Taiwan, China, and Yugoslavia as countries with “deep government intervention in economic life.” The nature of the policies and the extent of private ownership and enterprise are of a wholly different order. And it is not clear whether Sen is judging economic growth in terms of improvement in living standards. (Officially recorded national income figures are not helpful here.)
(12) In conclusion, may I note that what Sen calls my “indirect arguments” cannot, on his own admission, be “part” of my main theses (no doubt a slip on Sen’s part)? It is common ground between us that the validity of an argument or piece of analysis is in no way affected by attempts to explain the motivations of their proponents.
London School of Economics
Professor Bauer has raised one dozen interesting issues, and I am not at all sure where to begin. Perhaps at the end—at (12). Bauer misunderstands me here. I did not suggest that Bauer had referred to the motivations of the proponents of an argument to debunk the validity of their argument. Debunking the arguments on nonmotivational grounds is coupled with debunking the proponents on motivational grounds. It is indeed “part” of Bauer’s main theses that “leading academics or other influential people” do “canvass plainly insubstantial notions” because “the acceptance of these transgressions…serves their emotional, political and material interests.”
My review, however, was almost entirely concerned with the arguments—factual and moral—rather than with the proponents. While I did find Bauer’s factual analysis often very illuminating, I argued that it was significantly unbalanced and based on ignoring important facts. In his reply Bauer has not tried to rebut these points, perhaps because of limitations of space. His remarks on these factual matters (points 5, 7, 8, 10, and 11), while interesting in themselves, do not answer the main criticisms.
For example, I do, of course, agree that “the nature of policies and the extent of private ownership and enterprise” in South Korea, Taiwan, China, and Yugoslavia are “of a wholly different order.” But the point at issue—as I explained—is that Bauer’s view of the negative effects of government intervention on economic advance is contradicted by the economic experience “not only of communist countries, e.g., China, Yugoslavia, etc., but also of some with private-ownership economies,” and here I referred to countries such as South Korea with deep government intervention in economic life.
Regarding evaluation and Judgment, Bauer restates his view that it is “by no means obvious why it should be unjust that those who produce more should enjoy higher incomes” (point 3). This is, in fact, a rather modest statement of Bauer’s implicit assumption, since much of his moral analysis proceeds on the belief that it is indeed by all means obvious that those who produce more should enjoy higher incomes, and what they do with their incomes is their business. This underlying belief is important not only for Bauer’s analysis of domestic policy but also for his treatment of international economic relations, e.g., his conviction that “aid should not go to governments whose external policies conflict with the interests of the donors.” Incidentally, since this implicit assumption about one’s right to what one has “earned” colors a great deal of Bauer’s policy analysis, he is not really accurate in suggesting that only “30 out of some 300 pages” of his book “bear on the subject” of egalitarianism (point 1). Egalitarianism is the dog that does not bark in many of the other 270 pages.
I disputed Bauer’s moral approach on three basic grounds. First, since earning more is at least partly a matter of ownership, there is the need to justify including higher incomes from “owning more productive resources” in Bauer’s general category of higher incomes from “being more productive.” The point is not answered by noting that “it is not the ownership of resources that is productive, but their deployment in economic activity” (point 6). (Nor do I, incidentally, accept that inherited wealth is not a major factor behind “many [perhaps most] pronounced income differences in the Third World, notably in the Far East.”) Also, Bauer’s rhetorical question (point 9) as to “How far back should we go to redress historical wrongs?” does not really affect those who do not seek moral justification of inherited advantage. It is, on the contrary, peculiarly relevant to the position of those who—like Bauer—do seek it.
The second dispute concerns the identifiability of what a person has, in fact, “produced” and Bauer’s belief that that magnitude typically coincides with personal earnings. In my review I did indicate why the marginalist logic on which such indentification of “personal production” is supposed to be based cannot really establish the identification. Bauer has not responded to this part of the argument, though he continues to assert that “incomes are normally earned” (point 4). In so far as income is another name of earning, that is of course quite true, but the force of the expression “earned,” skillfully used by Bauer, rests on something deeper, e.g., as Bauer put it in his book, the incomes of the relatively prosperous are “normally…produced by their recipients and the resources they own.” That “personal production view” remains undefended and I had argued in my review that it builds on ambiguities.
The third dispute concerns Bauer’s refusal to consider alternative moral approaches that “focus on variables other than production,” and as examples I had referred here to utilitarian, Marxian, and Rawlsian approaches, among others. I have not, alas, succeeded in getting Bauer to respond to this question. Indeed, it is significant that while wondering about the criterion on which I would judge income distribution, Bauer asks me how would I treat “cases of joint production” (point 3). In fact, it is only with his productivity-focused morality that that becomes a central moral issue. I am sad that I have not been able to draw Peter Bauer—for whom I have the greatest of admiration—away from his well-tended back garden into the excitement of the world outside.