Justice and Fairness: Survival of the Fittest?

Writing about scandals and corruption, I’ve included justice and how it is applicable. Based on a fair bit of recent reading, should “survival of the fittest” be an added component? Let’s review. Following Harvard Philosopher Michael Sandel, there are five major concepts: 1. Aristotle’s concept of virtue and the golden mean. 2. Adam Smith’s self-interest and the invisible hand. 3. Immanuel Kant’s categorical imperatives. 4. Jeremy Bentham and John Stuart Mill’s utility theory (e.g., greatest good for the greatest number). 5. John Rawls’ theory of social justice based on a “veil of ignorance.” Each has its disciples, but in economics and business it’s Smith and utility theory. [I review these alternatives at the end.]

Why survival of the fittest? Adam Smith’s self-interest just does not do justice to the level of greed and selfishness in today’s business and political systems. Smith barely understood the Industrial Revolution was happening and had no concept of big business, monopoly power, externalities, or investment banking. Herbert Spenser took Darwin’s theory of evolution based on natural selection and applied it to business and societies in general. Spencer may have viewed the concept as the way to human perfection, but there was nothing neutral about “survival of the fittest” as interpreted in business.

After World War II, building on the foundation of FDR and the New Deal, the U.S. created a global network of military, trade, banking, and judicial systems to promote capitalism, democracy, justice, and global trade. The complex systems worked reasonably well for a quarter century or so, then started the long fall leading to today. The U.S. is now a “flawed democracy,” unexpectedly high on the political corruption list, and with big business executives exhibiting an unbelievably high level of immorality and greed, apparently for higher short-term compensation.

The outright greed of wealthy America was captured by Evan Osnos’ “How Greenwich Republicans Learned to Love Trump,” published in The New Yorker. Osnos grew up in Greenwich, Connecticut, one of the richest metropolitan areas in the nation (the richest in 2016, including 15 billionaires). This was Prescott/George H.W. Bush country and moderate Republican thinking (basically Eisenhower Republicans). Over a half century that changed. In itself, that is not unexpected. What was unexpected to me was the triumph of greed and selfishness—outright immorality of many Republican leading citizens. Not politicians, just rich folk. These are people, mainly men, who were smart, well-educated and extremely successful (investment banking was a common occupation—something of a red flag to me, remember the banking collapse and Great Recession). In Osnos’ telling, the leaders on the whole were blatantly immoral and proud of it; their interest over the public good, then throw in racism and sexism. Survival of the fittest in the most illicit ways possible.

Then comes Trump and, as a group, they voted for Trump in the Republican Primary—not obvious town favorite Jeb Bush. The question Osnos asks: “How did America’s country-club Republicans, the cultural descendants of Prescott Bush, learn to love Donald Trump? They don’t have much in common with the cliched image of his admirers: anxious about losing status to minorities, resentful of imperious elites, and marooned in places where life expectancy has fallen” (p. 4). Osnos believes part of the answer is they do have some of these beliefs, like racism, sexism, anti-immigration, and cutting off social welfare programs for the poor. These views are seldom expressed and their Trump admiration often kept hidden. Then there was this: “Greenwich only discriminates on the basis of one color: green.” The area has generally swung left, but “the executive class of the Republican Party … are wealthier, more conservative, and more politically active … in ways that have helped Trump reach the White House, survive impeachment, and fortify his bid for reelection during the anguish of the coronavirus pandemic. … Members of America’s elite accepted the terms of Trumpism as the price of power” (p. 5).

Osnos went back to the original Puritans “who agonized over … the proper balance between their flock’s economic success and the level of success that they deemed would offend God. Long before the Puritans were gone, the tension remained in a seesawing battle between the Brahmin and the buccaneer, service and profit, restraint and greed. For much of the twentieth century, the Brahmin had the advantage” (p. 6). Before World War II, GE chairman and Greenwich resident, Owen Young, gave employees pensions, profit-sharing, life insurance, medical coverage, loans and housing assistance, consistent with the concepts of stakeholder capitalism and social responsibility.

Then there was the conservative counterattack in the form of William Buckley’s National Review, founded in 1955: “governments exist to protect its citizens’ lives, liberty and property. All other activities of government tend to diminish freedom and hamper progress” (p. 7). Liberal John Kenneth Galbraith countered claiming it was “one of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is, the search for a truly superior moral justification for selfishness” (p. 7-8). Out of this came disciples of Friedrich Hayek, Joseph Schumpeter and libertarianism. Then came Barry Goldwater, followed by Ronald Reagan, including a war against civil rights and welfare. The business problems of the 1970s like foreign competition, inflation, and high energy costs were blamed on government regulations. Republican campaign operatives included Roger Stone and Paul Manafort, plus billionaires financing Republicans and their message like Richard Scaife and the Koch brothers. According to Reagan: “Government is not the solution. Government is the problem.” George HW Bush did not help the ethics cause when he hired Lee Atwater to run his 1988 presidential campaign—remember Willie Horton. Swift boat attack adds and the birther claims came in later elections. Bush justified this because he was a politician and had to get elected; presumably, ethics would return once in the White House.

The period was bad for workers, especially blue-collar, and rust belt companies, but technology and innovation would be the new capitalist growth areas. No industry benefitted more that Wall Street and its financial offshoots, using financial engineering and speculation (think derivatives and structured finance, plus gigantic leverage). Investment banks produced insider wealth and power, private equity, billionaires. These were the modern banksters, with little evidence of fiduciary responsibility or ethics. According to Osnos: “By 2017, Wall Streeters were taking home twenty-three per cent of the country’s corporate profits—and home, for many of them, was Connecticut” (p. 12)—in fact, Greenwich was labeled the “hedge fund capital of the world.” Thus, “the culture changed into grabbing as much as you can, as quickly as you can” (p. 13).

Then there were the crooks. Walter Noel was a money manger for Bernie Madoff. Hedge fund manager Raj Rajaratnam went to jail for insider trading. Hedge fund manager Steven Cohen (of the giant Greenwich wall) also was convicted of insider trading. Lesser-known residents on the same street (nicknamed “Rogues Hill Road”) were involved in various financial scandals. Then there were people paying to get their kids into college in various illegal ways. As one father stated: “I’m not worried about the moral issue here” (p. 19).

Investment banks went public, meaning these ethically-challenged money guys were playing with other people’s money. Financial deregulation lobbying with the help of Senator Phil Gramm, Fed Chairman Alan Greenspan, and others came through. There were few roadblocks to the money train. The 2008 mortgage crash and Great Recession may have been an embarrassing setback, but not for long.

Barack Obama was elected in part on the Republican debacle, but the Republicans were effectively back in power in Congress with the 2010 election and the Tea Party movement. What could possibly be worse than taxes, regulation and welfare. [The idea of a black president was usually unstated.] Moderate Greenwich Republican Lowell Weicker ran on principal, stating: “Respect—if not reelection—comes from speaking the truth.” Of course, he was not reelected. Connecticut, as expected, has rich one-percenters, but no interest in paying taxes; government underfunding results in bad infrastructure and generally anything labeled "public." The Puritan ethic of honesty and truth, plus service was pretty much dead. “The underlying massive change in that wealth no longer needs to justify itself—it is self-justifying” (p. 15).

Poll data by Patrick Caddell around 2012 suggested deep frustration with the status quo. Steve Bannon and billionaire Robert Mercer went after a populist challenger running as an outsider against corruption. Yale Professor Jeffrey Sonnenfeld attended a Connecticut meeting and “not one person had a pleasant thing to say about Trump” (p. 17). Trump was the closest fit, however, with name recognition, money, and voter appeal. The choice, according to the Greenwich Grand Poobahs, was between two ideologies. These folks saw high regulations or reduced regulations above all.

After the Trump victory, gleeful town councilman Christopher von Keyserling inappropriately touched a female employee of the town, claiming “I no longer have to be politically correct;” to her he said “It would be your word against mine, and nobody will believe you." The idiot was charged with sexual assault. Women started running for office. Town people appalled by Trump discovered that many others were not, presumably the rich and shameless. Even the pandemic relief bill had goodies for the wealthy and the favored few, including additional tax deductions favoring especially hedge funds and real estate.

The final paragraph is Osnos summary: “On the ground where I grew up, some of America’s powerful people have championed a version of capitalism that liberates wealth from responsibility. They embraced a fable of self-reliance (except when the fable in untenable), a philosophy of business that leaches more wealth fro the real economy than it creates, and a vision of politics that forgives cruelty as the price of profit. In the long battle between the self and service, we have, for the moment, settled firmly on the self” (p. 24).

Appendix: Justice entry from my Business Scandals book:

Justice is the concept of moral rightness based on legal, ethical, rational, and/or religious tenants. Distributive justice, the proper allocation of goods, income, wealth, power, and so on, is particularly important in the context of scandals and corruption. [Retributive justice involves proper punishment for proven crimes; restorative justice involves making victims whole.]

Sandel (2009, 260) summarizes alternative definitions into three approaches to justice: One says justice means maximizing utility or welfare—the greatest happiness for the greatest number. The second says justice means respecting freedom of choice—either the actual choices people make in a free market (the libertarian view) or the hypothetical choices people would make in an original position of equality the liberal egalitarian view). The third says justice involves cultivating virtue and reasoning about the common good. In summary, justice can be viewed as maximizing welfare, respecting freedom, and/or promoting virtue. Maximizing welfare would be consistent with utilitarianism, freedom of choice with libertarianism, and virtue with Immanuel Kant or John Rawls’ principles of justice.

Much of the perspective on justice comes from the Ancient World, particularly Classical Greece. In The Republic Plato (428-348 BC) describes the “just” person and the “just” state. “Lovers of wisdom”—philosophers—should rule in Plato’s just state, understanding the meaning of the good life. Aristotle’s (384-322 BC) Nicomachean Ethics focused on doing good and describing human thought as “well-being” associated with moral virtue (or excellence). According to Sandel (2009, 186-7) Aristotle’s view of justice is (1) based on the essential nature or purpose of an action (“teleological”) and (2) honorific, based on the virtues it should honor. Thus, the focus of justice is on the meaning of honor, virtue, the nature of the good life, and giving people what they deserve. On the other hand, Aristotle defended slavery as potentially necessary and “natural” (slaves being people suited to that role).

Thomas Hobbes’ (1588-1679) Leviathan describes social contract theory, which championed the absolute rights of the king (sovereign). He also favored individual right and natural equality of people. Political communities are based on a social contract, under a king according to Hobbes. The king would provide peace and a civil society, although the price could include abuses of power.

According to British empirical philosopher John Locke (1632-1704), justice is part of natural law, involving consequences from any action or choice (analogous to the laws of physics). Justice is universal and various laws, religions and so on are attempts to codify justice. Locke argued that legitimate government must be based on the consent of the governed. He believed citizens should be equal and independent with the right to “life, health, liberty, and possessions” (changed to “life, liberty, and the pursuit of happiness by Thomas Jefferson in the Declaration of Independence).

David Hume (1711-1776) was a Scottish enlightenment philosopher and economist who believed desire rather than reason ruled human behavior. Hume viewed ethical sentiments as motivated by both passions and reason, a view he shared with economist Adam Smith. Science, according to Hume’s A Treatise of Human Nature, rests on experience and observation, requiring philosophy be viewed as the “science of man” and also subject to experience and observation. As an “empiricist” he influenced other philosophers and economists including Immanuel Kant and the utilitarians.

German philosopher of the enlightenment Immanuel Kant (1724-1804) attempted to resolve the differences of empiricism (all knowledge comes from experience) and rationalism (knowledge is based on reason) in The Critique of Pure Reason and other worlds. Kant argued that experience is preceded by “pure reason” (a priori concepts). As a moral philosopher he developed a theory of moral obligations, the “categorical (unconditional) imperatives” derived from duty. Categorical imperatives are intrinsically valid and from these moral obligations are generated. Kant was a believer in the “rights of man” (now called universal human rights) requiring that humans as rational beings are treated with dignity and respect. Justice, therefore, is giving people what they deserve. Therefore, actions should be based on the motivation of duty, not self-interest (which he called inclination).

One of the major schools of justice (and economics) is utilitarianism, founded by Jeremy Bentham (1748-1832). The basic concept is welfare (utility) maximization based on the greatest happiness. Bentham’s approach was criticized as failing to respect individual rights in the sum of overall “satisfaction.” Utility preferences are not judged—that is, they do not consider independent moral considerations; overall utility is based on aggregate preferences using “a single currency of value” (Sandel 2009, 41)—essentially computing all costs and benefits into the equivalent of dollars. John Stuart Mill’s On Liberty (1859) described the nature and limits of legitimate power exercised by society over individuals. Each individual, according to Mill, can act as he or she wants as long as the actions do not harm others (the “harm principle”). Individuals also are precluded from doing harm to themselves or their property under the harm principle. Act of omission such as failure to pay taxes also are “harms.”

Libertarians call for a neutral state that respects individual choice, especially in terms of civil liberties and property rights. Libertarian positions of liberty with limited government power in defense of human freedom can be traced back to the 18th century enlightenment. Adam Smith popularized laissez faire as free markets with little government except for defense and protection of contract rights and property. Other well-known philosophers and economists with libertarian views included Henry David Thoreau, Austrian school economist Friedrich Hayek, Ayn Rand (creator of “objectivism”), and monetarist economist Milton Friedman.

Generally, libertarians favor self-ownership, but oppose moral legislation (drugs, prostitution, homosexuality, etc.), oppose paternalism that protects people from harming themselves, and oppose legislation that attempts to redistribute income or wealth through taxes and other means. Extreme abuses, massive income inequality, and volatile economic conditions caused by unfettered markets and high-risk behavior are not well addressed by libertarians. The idea of being forced to help other people is anathema. The need for taxation, the plight of the poor, and the ideas that the successful have been helped by society or been extremely lucky are additional objections of distributive justice.

John Rawls’ (1921-2002) A Theory of Justice developed a justice as fairness theory using on a hypothetical social contract (based on “a veil of ignorance” to rule out individual biases). For example, if it is possible that a person could be a slave, the concept of slavery becomes anathema. Therefore, the American Constitution which sanctioned slavery would not be an acceptable Rawlsian social contract. This is an egalitarian approach involving the distribution of goods and services among equals and stressing equal opportunity. Rawls designed a system where economic and social inequalities favored the disadvantaged (inequality would be permitted only if it improves the position of the least advantaged).

In summary, alternative theories of justice coexist from ancient to modern, each with advantages and objections. To date, no viable synthesis exists that solves all moral and ethical issues. An important recent issue according the Sandel (2012, 7) is: “The reach of markets, and market-oriented thinking, into aspects of life traditionally governed by nonmarket norms is one of the most significant developments of our time.” The importance of non-market norms includes both fairness and corruption arguments. In part this has focused more recent attention on libertarian and utilitarian perspectives, including the presidential runs by libertarian Ron Paul.

See also: Austrian School of Economics; Behavioral Economics; Classical Economics; Ethics; Fraud; Professional Ethics; Smith, Adam; Utilitarianism.

References:

Oser, Jacob. The Evolution of Economic Thought. New York: Harcourt, Brace & World, 1963.

Sandel, Michael. Justice: What’s the Right Thing to Do? New York: Farrar, Straus and Giroux, 2009.

Sandel, Michael. What Money Can’t Buy: The Moral Limits of Markets. New York: Farrar, Straus and Giroux, 2012.

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© 2016 Gary Giroux