It is simply a matter of time before the Federal Reserve finds itself having to choose between inflation and federal insolvency.
What is social justice? Sam Gregg’s essay answers this question by reviewing the origins and evolution of the concept. I find little to quibble with in Sam’s remarks and I am certainly in no position to make them a fortiori.
My contribution will therefore be to offer an explanation for why social justice theory is both misguided and dangerous. It is misguided because it regards observed inequality as prima facie evidence of injustice because of insufficient understanding of how a free market economy actually works. It is dangerous because social justice advocates therefore attempt to solve a moral problem that doesn’t exist and, in so doing, reduce a society’s ability to solve moral problems that really do exist. In making my arguments I’ll discuss the origins of social justice thinking even farther back than considered in the Gregg essay.
Although Gregg is quite right to quote Hayek’s observation that social justice resists clear definition, I must say I disagree somewhat with Hayek on this point. I think it is fair to say that social justice advocacy is now generally taken to be the idea that there are things that are unjust about free market societies, so we are morally required to attempt to redress these problems. Social justice advocacy, if it is to have any normative meaning, is about what must be done to right these wrongs. Among other things, social justice advocates endorse the exercise of government power to redistribute wealth/income and to regulate behavior to produce a more just outcome across the whole of society. People drawn from a very wide variety of ideologies and political views would agree with this characterization of the practical meaning and effect of social justice theory regardless of how it is defined.
But is the premise actually true? Do free market societies inevitably produce unjust outcomes, or are social justice theorists incorrectly inferring injustice from what is actually innocuous inequality? In my view the latter is true and the former is false, so social justice theory amounts to a solution in search of a problem. As such, it constitutes a massive straw man argument against the free market society. Making matters worse, it is a particularly attractive straw man argument because it comports well with incorrect but very plausible folk wisdom about what a market economic system is and how it functions. An affirmative defense of this claim is beyond the scope of this essay, but it will become clear below that an affirmative defense of this claim is not required to reject social justice theory.
What is the argument for the claim that free market societies naturally and inevitably produce unjust outcomes? This is where social justice theory really falls apart, because it does not, in fact, provide an answer to this question. Instead it simply makes a bald assertion or, worse, it assumes its conclusion into existence by way of tautological reasoning. When social justice advocates see unequal outcomes they simply presume there must have been something unfair along the way to produce them which, of course, would be unjust if it were true. It is certainly hard to quibble with the proposition that one does indeed promote justice when one rectifies unjust outcomes that result from the unfair institutions of an unjust society.
But in this case why not go after the cause of the problem rather than its symptoms? What, exactly, about the functioning of the institutions of a free market system is unjust? When you ask social justice theorists this question, they always answer the same way – by offering more specific examples of what they view as unjust outcomes. But such answers miss the point entirely. This is very revealing and it is where social justice theory shows its true colors.
What social justice theory is really about is equality, but that just begs the following question: what, precisely, is so bad about unequal outcomes? I shall now argue that social justice advocates have an answer for this, but they don’t know what it really is and therefore cannot understand why it is wrong. Social justice advocates view inequality of outcomes as sufficient evidence of injustice because they have a very narrow and foolish view of equality that we all naturally find plausible because of our small group moral sensibilities and our hardwired proclivity to be envious. In short, social justice theory implicitly focuses on the equal division of output without accounting for input. Suppose that Bob works 10 hours a day, every day, creating 100 units of output. Mark does nothing and thereby creates no units of output. Mark then insists that he should get no less than 50 units of output per day. Even a child knows this would be patently unfair. And even a child knows that Bob won’t indulge Mark for long.
In small group contexts it is easy to see that, when judging fairness and equality, it is foolish to limit attention to the division of output. But we no longer live solely in small group contexts where cause-and-effect relationships between inputs and output are self-evident. In our large group world the connection between input and output is bewilderingly complex and therefore prone to magical thinking. Those who do not know economics have no framework to connect the dots of cause-and-effect, as it were, and therefore have no choice but to take the amount of total output as given, for what other assumption could they possibly make? This effectively delinks input (effort) from output. So without ever consciously making an argument to this effect, social justice advocates implicitly assume that total output is not a function of how output is divided.
Social justice theory therefore effectively considers only half of the relevant story when making judgments about what is fair and therefore just across the whole of any society. But surely I must be missing something, otherwise how could social justice theory be so popular? I submit that it is so popular because in reality all that social justice theory does is codify small group moral sensibilities that come naturally to us by virtue of being a small group species.
Humans and our immediate ancestors have been around for more than 500,000 years. For less than of 2% of that period, we lived exclusively in very small groups. For the next 1.5% of that period almost all humans continued to live in very small groups. I contend that in very small groups focusing on the equal division of output is normally quite sensible and efficient because in very small groups free-riding isn’t nearly the problem that it is in large groups. This is true for at least four reasons.
First, in small groups the effect on total output of a single act of free-riding often produces a significant change in total output. Second, in small groups most of what individuals do is in the plain view of others in the group. Third, patterns that help us indirectly infer free-riding are easier to discern in small groups. Fourth, and most importantly, like all purposive species humans have evolved traits that induce them to want to do what they need to do to in order to survive and reproduce. Just as cheetahs don’t hate running, humans don’t hate hunting and gathering. But in modern life the hyper-specialization of economic activity often turns our work into drudgery. No one wants to stand at a drill press or sit in a cubical all day, so shirking is a significantly tougher problem to solve for us today than it was for our ancestors.
Consider this example. In 1972 a father in the Soviet Union wants to stay home from work to be with his daughter on her birthday. If he gets an equal share of the output irrespective of his input, the benefit to him of staying home is huge while the cost to him is essentially zero. This free-rider problem was so strong at the time that the only way the Soviet Union could keep going was to deny people the freedom to choose not go to work. This is one reason why after Glasnost took hold so it became politically impossible to continue to use vicious tactics to force people to work that the Soviet Union fell apart.
In the small group milieu within which most of our social traits evolved, nearly everyone did their fair share of the work most of the time because they liked doing it, and they liked doing it because of their hardwiring. This observation is hardly clever as it is almost an evolutionary tautology. Suppose it were not true for any particular group. That group, and the traits it might have passed through future generations, would soon cease to exist. As a result, differences in output among individuals were almost always due to differences in luck. As such, sharing the output equally was not a foolish convention that invited free-riding because free-riding simply wasn’t an issue; it was an efficient form of social insurance. This suggests further that for our not-so-distant ancestors, sharing output was not likely viewed as some kind of higher order virtue but as a very robust social norm.
In modern free market societies, however, dividing output evenly produces strong incentives to free-ride because some of what we have to do to make a living we find unpleasant because it is too hard, too boring, or too risky, while at the same time the marginal cost to us in terms of our share of the total output is virtually zero. Social justice theory therefore makes a grave error by focusing on output without accounting for input, because the free-riding it engenders effectively kills the goose that lays the golden eggs.
Does rejecting social justice mean that we therefore shouldn’t care about the poor? No. Thirst, hunger, lack of shelter, and lack of basic healthcare make people miserable. Being the empathetic species we are, such misery makes us miserable, too. I find this very reassuring. Empathy is indeed the root of our basic decency. In any case, it produces a compelling argument for collective action to alleviate misery if such action is more efficiently undertaken collectively. This is just social insurance in the form of social programs aimed to aid the needy under the premise that no one really knows for certain that he’ll never be terribly down on his luck. Adam Smith, Friedrich Hayek, Milton Friedman, and Ronald Reagan all believed this.
But this is not to make an argument for equal outcomes. There are rather sharp limits to how much water, food, shelter, and healthcare one needs to not be miserable. Beyond these limits, further redistribution is about equalizing outcomes for no compelling reason other than assuaging envy or currying political favor. I am not saying that individuals who give their money to help the poor in other ways (e.g., building a baseball diamond for little league) are foolish. I am only saying there is no compelling argument for doing such laudable acts through the exercise of government power. My immediate point is that going beyond providing for basic needs that we all agree are basic needs ends up destroying incentives for industrious behavior which eliminates the tremendous positive spillover benefits we all enjoy from it. Those who doubt the size of these spillovers in a free market economy need to explain why the poor in free market societies fare so well.
Social justice theory tries to solve a minor problem (unequal outcomes arousing feelings of envy) but in so doing undermines society’s ability to solve a major problem (providing for the basic needs of the needy). But one can only see this irony if one knows enough economics to understand that output is not manna from heaven so one cannot redistribute output without affecting the amount of output to be distributed.
The great prosperity of free market societies is what allows those who live in them to take care of their needy citizens so easily. But when a society goes beyond providing social insurance for basic needs by trying to build an egalitarian nirvana, it ends up effectively inducing fathers to stay home on their daughters’ birthdays. The solution to this problem is to force them to work. That’s why social justice theory is a most dangerous idea indeed.
Gregg correctly points out that “A common criticism from the non-left is that social justice appears to have no stable or concrete meaning. This point features prominently in the critique articulated by Friedrich Hayek in The Mirage of Social Justice, in the second volume of his Law, Legislation and Liberty.”
 For a interesting discussion of this topic see Paul H. Rubin’s “Folk Economics,” Southern Economic Journal, 2003, vol. 70, issue 1, pages 157-171.
 For an interesting take on this observation see Jared Diamond’s “The Worst Mistake in the History of the Human Race,” Discover Magazine, May 1987, pp. 64-66.