Economic Justice

Economic justice is certainly an honorable goal; perhaps even the most important thing a society can work toward for its citizens. It is, unfortunately, often a concept that is misinterpreted by those seeking to attain it. There are many economic systems in this world that work in theory, but fail to be successful when those ideas are applied in real world situations. Economic systems based on the ideals of capitalism, however, have been able to take their ideas off the page and actually put them into successful practice. Milton Friedman’s book, Capitalism and Freedom, expounds the role and importance of personal freedom to society and how this concept should be mirrored in that society’s economic system. He addresses many of the issues faced in developing economic justice, but focuses, in part, on what can be interpreted as the role of the common good, the necessity for equal opportunity, and the social mobility achieved through capitalism. By grounding these rather metaphysical ideals to tangible practices and results Friedman demonstrates that a truly capitalistic society promotes the most economic justice.

            Seeking to further the common good is the most misunderstood and misused objective of economic justice. Frequently, the idea of working for the common good is about removing all inequalities within an economy or requires people use certain personal abilities for the good of everyone. The intentions behind the desire to always work for the common good are noble, but in practice they frequently cause more harm than good. Stressing that an economic system must always put the common good first, at this point, seems to be a desire to “level down” society until everyone can be on exactly the same level. Proponents rarely take into account the fact that people, besides each being human, are inherently unequal. Abilities, desires, attitudes toward risk, and almost all other aspects of being human vary from person to person. These inherent inequalities seem to only be fairly addressed under a capitalist system.

The idea of always putting the common good first also asks for people of ability to continually sacrifice themselves for others in a manner that will earn them little, if anything, in the terms of either money or respect. At first, this view may seem extreme, but it is essentially true. In forcing people to think like this, society is impeding on individuals’ freedom in regard to their personal abilities and is coercing them into behavior they might otherwise not engage in. A society built around a mandated public good creates only disincentive as Friedman correctly observed, “one can hardly compel individuals to put forward their best efforts.” (166)  

A system utilizing the theories behind capitalism, however, creates the opposite type of environment while fulfilling the original goal of a greater common good. A capitalist system which rewards risk takers and stresses personal achievement fosters creativity, thinking, and production. This new level of incentives calls for people to rise to the challenge of making themselves better. As a beneficial side effect, the whole of society is built up instead of being leveled down. Members of a society that once called for sacrifice for the greater good would now be in a position to do good by doing well. Inequalities are allowed to exist, but these inequalities actually flow back into the system as efforts that will ultimately raise everyone up so that even those less fortunate are in an overall better position.

Despite the end result of such a system it may seem to many to be surrender to complete materialism without any regard for the “human element.” People operating under capitalism, it could be argued, would only be valued for their ability to produce, nothing more. This argument, at best, is only partially true. Yes, production is important, but “the great achievement of capitalism has not been the accumulation of property, it has been the opportunities it has offered to men and women to extend and develop and improve their capacities.” (169) In light of this it would seem that capitalism actually demonstrates a high level of regard for the human element. People do not have to merely subsist, but can grow to expand their horizons and are encouraged to do so.    

The common good, however, can never be served if equality of opportunity does not exist first. Equal opportunity combined with the values of individual freedom creates the backbone of capitalism. This idea of equal opportunity puts everyone on at least the same starting level and works to enhance each individual’s freedom of choice while allowing them to rise to their full potential. Having equal opportunity will in the long run lower overall inequality. It is also what effectively allows for the justification of inequalities that will exist within an economic system. If equal opportunities exist then the only thing holding anyone with ability back from success is simply bad luck, or, more likely, a lack of motivation. Bad luck, while unfortunate for a time, would be fairly easy to bounce back from in a capitalist system. Addressing the lack of motivation goes back to the right to live according to personal choices, but ties people to then live with the responsibilities of making those choices.

To bring this idea down to a more immediately evident level, Friedman references the fact that the “extension and widening of educational opportunities has been a major factor tending to reduce inequalities.” (176) Education is especially important in a capitalist society because the motivation to move toward constant improvement is always present. If education stagnates then thinking and innovation stagnate along with it, and society is once again in a cycle of leveling down. As things stand today it is a fairly common consensus that private schools, at least through secondary education, are doing a better job at educating than public schools. Because education is really the key to equal opportunity in a society with constant improvement as a mindset it is necessary for the government to step in and ensure good education for all its citizens.

The need for equal education should not by any means call for abolishing either private or public education. To do that would once again be removing personal freedom as well as act as leveling down for everyone. Instead, the government should rethink the way in which it handles public education. While I am not in a position to suggest highly specific changes to policy it seems that reworking the way public schools are funded would go a long way toward evening the playing field of opportunity. By tying funding of schools to property tax revenue the government is institutionalizing inequality of opportunity for many of its citizens. This method of funding puts both inner city as well as rural schools at risk as their tax base will most likely be lower than that of wealthy suburbs.

The result of working toward the capitalist ideals of valuing personal freedom and granting equal opportunities is a society which “undermines status and introduces social mobility.” (172) Inequality will still exist, but it will not be a strict class structure. Data put out by the Treasury Department shows that this is still true here in the United States. The relative well-being of the poor is improving from year to year and is still higher than in much of the rest of the world. The number of people in the U.S. filing tax returns as millionaires almost doubled from 2003-2006. In 2003 there were around 181,000 such filers; now there are close to 354,000 people filing with more than $1 million of income per year. 

This strived for ideal of social mobility also ties back into the concept of what is best for the common good. Capitalism has made more choices available to more people, “freed the masses from backbreaking toil” (170) for the most part, and has made “products and services that were formerly the monopoly of the upper classes” (170) available to much of the population. These quality of life measurements are just one way to quantify the idea behind the common good and they will continually improve as long as markets act on cooperation through mutual consent for mutual advantage.

History provides several dramatic examples of social mobility that appear to be on the side of countries that have adopted capitalist economies. Communist or socialist systems that stressed government-controlled economies, always worked primarily for the difficult-to-define common good, and operated through a cycle of leveling down have more often than not failed. As countries open up their economies to capitalism the value in personal freedom takes hold and these countries begin to flourish. The United States, even in light of recent events, still operates as one of capitalism’s greatest achievements. Now, China, post-Soviet Russia, and even Africa, an entire continent once deemed “hopeless” by the Economist, have begun to prosper under new systems of open market capitalism.   

When taken as a theory on paper capitalism seems like any other proposal for one set of ideal’s way toward economic justice: utopian set up acting under ideal conditions. What really matters, however, is how those theories act in the real world to promote real and evident economic justice. Friedman’s analysis of capitalism as the best way to reduce inequality seems to hold true to being effective when applied in the often harsh laboratory of the real world.