A Succinct Explanation of the Ideological and Philosophical Appeal of “The Entire Rawlsian Achievement”
“…[Rawls’s] argument is the natural response of a liberal who has read Pigou and Keynes seriously. He appeals to those who believe in the desirability, efficiency, and justice of capitalist markets, recognize they may not always function well and may generate serious inequities for some, and want to find efficient ways of addressing those inequities without altering the essential nature of the system. The ambiguous moral status of Keynesianism and welfare economics has always inhered in the fact that they appeal to the short-term interests of the disadvantaged (such as unemployed workers and firms on the verge of bankruptcy during recessions) by ensuring subsistence, creating employment, and expanding credit, yet these policies are geared in the medium term to sustaining the system which generates those very disadvantages—hence the ironic force of Joan Robinson’s quip that the one thing worse than being exploited is not being exploited at all. [….]
Keynesian macroeconomics and Pigouvian welfare economics diverged from the mainstream of neo-classical economics over how to achieve [‘well functioning capitalist markets’]. The Keynesian consumption function entailed that ‘rational’ individual economic behavior would have by-products or ‘externalities,’ incidentally felicitous or infelicitous to others; thus the collective results of competitive individual self-interested behavior may not, and often will not, be socially optimal. Private enterprise, ‘even when it operates under simple competition, often leads to a distribution of resources less favorable to the national dividend than some other possible distributions’ (Pigou).
Both Keynesian macroeconomics and Pigouvian welfare economics were thus born of an acceptance of the goals of neo-classical equilibrium theory but a rejection (for different reasons) of its axiomatic assumption that competitive individual behavior would produce Pareto-optimal collective results in practice. The claims of these newer orthodoxies seemed to many to be vindicated by the events of the Depression, the persistence of poverty with growth, and the seemingly congenital tendency toward periodic recession—the ‘boom-bust’ model of growth—that appeared to prevail throughout the capitalist world between the wars. Furthermore, the counter-cyclical prescriptions of Keynesian macroeconomics seemed to work. The New Deal and Keynesian eras ushered in astonishing levels of growth that did not begin seriously to slow until the late 1960s. [….] [The faith in Keynesian macroeconomics was in some measure undermined in the 1970s, which] brought serious economic stagnation throughout the advanced industrial world.
Keynesian demand management also brought renewed political optimism based on a new social-democratic consensus, because this new ‘managed capitalism’ had a human face. A by-product of its fiscal policies was the welfare state and its safety net that redressed the worst diseconomies and externalities of capitalist competition. Thus the mixed economy with an active state, attentive but subordinate to the needs of the market, could seem to many to be morally desirable and practically efficient, to effect the rights-utility synthesis in the face of market failure. Rawls’s argument naturally falls into this broadly Keynesian vision, which explains its inspirational appeal to so many liberals and the belief among many who perceive difficulties with his particular formulations, that something like it must nonetheless be true and salvageable.” Ian Shapiro, The Evolution of Rights in Liberal Theory (1986): 152-154.
Or, as the late G.A. Cohen put it pithily in Rescuing Justice and Equality (2008: 11): “But among what contributes to the greatness of A Theory of Justice, and of the entire Rawlsian achievement, is that, to put the matter as Hegel would have done had he agreed with me, John Rawls grasped his age, or, more precisely, one large reality of his age, in thought. In his work the politics of liberal (in the American sense) democracy and social (in the European sense) democracy rises to consciousness of itself.”
Keynesian macroeconomics and Pigouvian welfare economics diverged from the mainstream of neo-classical economics over how to achieve [‘well functioning capitalist markets’]. The Keynesian consumption function entailed that ‘rational’ individual economic behavior would have by-products or ‘externalities,’ incidentally felicitous or infelicitous to others; thus the collective results of competitive individual self-interested behavior may not, and often will not, be socially optimal. Private enterprise, ‘even when it operates under simple competition, often leads to a distribution of resources less favorable to the national dividend than some other possible distributions’ (Pigou).
Both Keynesian macroeconomics and Pigouvian welfare economics were thus born of an acceptance of the goals of neo-classical equilibrium theory but a rejection (for different reasons) of its axiomatic assumption that competitive individual behavior would produce Pareto-optimal collective results in practice. The claims of these newer orthodoxies seemed to many to be vindicated by the events of the Depression, the persistence of poverty with growth, and the seemingly congenital tendency toward periodic recession—the ‘boom-bust’ model of growth—that appeared to prevail throughout the capitalist world between the wars. Furthermore, the counter-cyclical prescriptions of Keynesian macroeconomics seemed to work. The New Deal and Keynesian eras ushered in astonishing levels of growth that did not begin seriously to slow until the late 1960s. [….] [The faith in Keynesian macroeconomics was in some measure undermined in the 1970s, which] brought serious economic stagnation throughout the advanced industrial world.
Keynesian demand management also brought renewed political optimism based on a new social-democratic consensus, because this new ‘managed capitalism’ had a human face. A by-product of its fiscal policies was the welfare state and its safety net that redressed the worst diseconomies and externalities of capitalist competition. Thus the mixed economy with an active state, attentive but subordinate to the needs of the market, could seem to many to be morally desirable and practically efficient, to effect the rights-utility synthesis in the face of market failure. Rawls’s argument naturally falls into this broadly Keynesian vision, which explains its inspirational appeal to so many liberals and the belief among many who perceive difficulties with his particular formulations, that something like it must nonetheless be true and salvageable.” Ian Shapiro, The Evolution of Rights in Liberal Theory (1986): 152-154.
Or, as the late G.A. Cohen put it pithily in Rescuing Justice and Equality (2008: 11): “But among what contributes to the greatness of A Theory of Justice, and of the entire Rawlsian achievement, is that, to put the matter as Hegel would have done had he agreed with me, John Rawls grasped his age, or, more precisely, one large reality of his age, in thought. In his work the politics of liberal (in the American sense) democracy and social (in the European sense) democracy rises to consciousness of itself.”
posted by Patrick S. O'Donnell at 7:03 PM
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