Question

The Limits of Redistribution and the Impossibility of Egalitarian Ends

By JEREMY JACKSON AND JEFFREY PALM

ABSTRACT

One of the many dangers of the modern egalitarian philosophy is that it hides its true
objectives behind the guise of social justice. Adherents would insist that they reject the
materialistic values of their free-market foes. However, not far below the surface
commitment to relational equality and disruption of social hierarchy lies their true motive:
material equality. The modern egalitarian is shifting from a focus on equality of relationships
to a focus on equality in quality of life and more comprehensive measures of well-being
(Arneson 2000). Whether the egalitarian desires to create policies that lead to equality in
distribution of wealth or to equality in well-being, it does not matter. Both are impossible
ends. Inequalities in wealth and well-being are due in part to inequalities in the distribution of
social capital, which can be neither removed nor transferred from one individual to another.
Thus, inequalities in wealth and well-being are the inevitable result of a system reliant on
humans autonomously making decisions.
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The Origins of Egalitarianism

1. Egalitarianism as an academic school of thought did not actually begin to concretize
until the post–World War II era, although certain basic ideas go back as far as biblical
times (equality of souls but not “earthly” equality) (Anderson 2014). Many of
egalitarianism’s roots are traceable to a particular understanding of the philosophy of
altruism: the idea that a person has but two options in life—to sacrifice one’s self in the
service of others or to sacrifice others in the service of one’s self (Kelley 1991, 2009).
From this understanding of altruism, egalitarians derive a fundamental
misunderstanding of “the zero-sum game.” Because they mistakenly think of all goods
and services as slices of a (finite) pie, they deduce that for one person to gain, another
must lose. From this either–or conception of altruism, egalitarianism concludes that the
only moral thing to do is to sacrifice one’s self in the service of others (Kelley 1991).

2. Karl Marx himself was no egalitarian, yet many of his ideas have helped to shape
modern egalitarianism. His focus on conflict and the exploitation of the subjugated
worker, derived from his misconceptions of the labour market and the means of
production, contributed to the mid- to late-nineteenth-century push for a shorter
workday and higher wages (Anderson 2014). This push then fed into Otto von
Bismarck’s creation of the first modern welfare state in Germany in an effort to combat
Marx’s more revolutionary socialism. Anthony P. Mueller states that “social policy was
foremost national policy and the social security system was primarily an instrument to
lure the workers away from private and communitarian systems into the arms of the
State” (2003).

3. By the early 1940s, which saw the publication of the Beveridge Report in the United
Kingdom in 1942 and Franklin Roosevelt’s suggestion of the “Second Bill of Rights” in
1944, contemporary crystallization and acceptance of the principles of “distributive
justice” had taken place (Roosevelt 1944; Anderson 2014; “The Welfare State” 2016).

4. Philosopher John Rawls, another one of egalitarianism’s most prominent historical
standard bearers, was himself not strictly an egalitarian. However, his seminal work, A
Theory of Justice (1971), is counted among the most foundational of contributions. In
this volume, Rawls explains his most influential concept, the “difference principle,”
which “gives expression to the idea that natural endowments are undeserved” (Wenar
2012). Rawls felt (as do the so-called luck egalitarians) that just because a person is
more intelligent or a naturally gifted musician or better looking or raised with better
values, or something else, it does not entitle him or her to be better off than others. To
Rawls, being more successful than others by using one’s natural endowments (or by
any other means) can be justified only if people who are worse off are made better off
because of that success.

5. On the face of it and according to their own descriptions, egalitarians have differing
ideas with respect to defining the concepts “justice” and “equality.” However, all
schools of egalitarian thought lead to the same ultimate goal: distribution. Most
egalitarians do not actually advocate equality of outcomes because most realize that a
rigid insistence on the tall being made short or the intelligent being made less so would
lead to disastrous consequences. What they want is what they consider to be “fair”
distribution (Kelley 1991). So their basic notions of equality hinge on whether
distribution is just or in the case of relational egalitarianism that societal relationships
are just. However, before discussing the two broad categories of luck egalitarianism
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and relational egalitarianism, we must say a few more words regarding the concept of
justice.

6. To many libertarians and classical liberals, the claim that a free market, an impersonal
mechanism governed by the laws of nature, is either just or unjust is absurd. This
claim is evidence of a complete misunderstanding of how the market functions. As
Hayek aptly points out, such claims amount to nothing other than anthropomorphism
(1998, 62, 75).

7. However, those who advocate free markets certainly cannot claim to have ever
actually seen them. Much of the egalitarians’ perceptions of injustice are the symptoms
of the very root causes that such advocates devote the bulk of their work to exposing,
refuting, and denouncing. This feature of the justice problem is twofold: on the one
hand, egalitarianism incorrectly concludes that the corruption observed is simply the
way free market capitalism works; on the other hand, some market advocates
inadvertently defend the corruption as though it were free-market capitalism. It is
imperative to acknowledge that which is correctly perceived as unjust as such and
simultaneously to point to its being but a symptom of corruption that is rooted in
government intervention in the market. It must always be stressed that this corruption
is not a product of free-market capitalism because it then becomes possible to
illustrate the clear distinction between calls for justice that are grounded in reality and
those that are founded on anthropomorphism.

8. Unfortunately, this distinction does not usually carry much weight in the view of the
egalitarian, who frequently finds it completely irrelevant. As David Kelley (1991) points
out, every form of “social justice” rests on the belief that individual ability is a social
asset, a collective good. John Rawls wrote, “Injustice, then, is simply inequalities that
are not to the benefit of all” (1972, 62). On this point, Rawls and Hayek tend to agree.
“The most common attempts to give meaning to the concept of ‘social justice,’” states
Hayek, “resort to egalitarian considerations and argue that every departure from
equality of material benefits enjoyed has to be justified by some recognizable common
interest which these differences serve” (1998, 80).

9. Luck egalitarianism—what Murray Rothbard (1995) refers to as “old” or “classical”
egalitarianism—is more overtly concerned with distribution of income and wealth. It
holds that no one should have to be worse off just because they were born into
unfortunate circumstance or were the victim of a natural disaster or made a mistake in
business or are unintelligent or something else. Rothbard terms this egalitarianism
“old” because modern-day egalitarians have realized the limitations of using the mere
poverty of individuals as moral leverage for their demands for justice.

10. Relational egalitarianism (sometimes referred to as “democratic egalitarianism”) has
been discovered to be a much more effective means of moral intimidation when it
comes to insisting that justice be done. Rothbard (1995) terms this viewpoint “new
group egalitarianism.” The significance of the “group” distinction will become clear as
we delve a bit deeper into its meanings.

11. The new-group egalitarians are concerned primarily with social hierarchies—
specifically, domination and subjection, honour and stigmatization, and high and low
standing in the eyes and calculations of others (calculations as in government policy,
for example) (Anderson 2014). However, one must always remember that these
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egalitarians employ this technique to rationalize, justify, and affect their ultimate goal of
distribution. Sometimes they assert that just distribution is what is necessary in order
to bring about just social relationships. At other times, they assert that policies to affect
just social relationships are necessary to bring about just distribution. Whether the cart
comes before or behind the horse makes little difference; the end result is always
governmental use of violence, coercion, and central planning to affect distribution (of
other people’s money) (Rothbard 1995).

12. Groups such as ethnic minorities, genders, laborers, elders, the young, and virtually
any other group conceivable conveniently fit into one or more of the social hierarchies
listed earlier (Rothbard 1995). New groups are readily added to the seemingly endless
list whenever anybody says the magic word injustice, and anyone who would oppose
(re)distribution to one of these groups must be considered an oppressor. Rothbard
sums it up nicely by paraphrasing Joseph Sobran: “[I]n the current lexicon, ‘need’ is
the desire of people to loot the wealth of others; ‘greed’ is the desire of those others to
keep the money they have earned; and ‘compassion’ is the function of those who
negotiate the transfer” (1995, 53). The insidiousness of relational egalitarianism lies in
its approach to distribution. Egalitarians have erroneously concluded that the cause of
economic difficulties is rooted in the unjust social hierarchies. Therefore, it follows
(they conclude) that in order to affect just distribution, they must design a system that
eliminates the unjust social hierarchies (Sowell 2005, 249–66).

13. Although unjust social relationships certainly cause an incalculable amount of (often
catastrophic) damage, the currently fashionable notion that these relationships are the
root causes of economic difficulties rather than the other way around is incorrect
(Sowell 2005; Williams 2011). Economic difficulties can always be shown to be the
ultimate root causes of the unjust social hierarchies or relationships. They arise as
resentment for being treated unjustly, as rationalization or justification for treating (or
having treated) others unjustly, as a means of securing the ability to treat others
unjustly in the future, and so on. Upon observing social injustices, we should ask
ourselves what motives the perpetrators might have for their unjust conduct. The
origins of the injustice are never arbitrary. They are economic. They may be
completely immoral and thoroughly unjust, but the fact remains that they exist because
the perpetrators hope to derive some benefit from them (Williams 2011).
Sources of Inequality

14. Regardless of its rhetoric, at its core egalitarianism has as its main goal the elimination
of wealth inequality. It has been argued (Piketty 2014) that wealth inequality itself
comes from one primary source: capital. Yet capital itself can be placed into many
categories. Physical capital includes the factories, buildings, computers, land, and
infrastructure that are ultimately used as the inputs to production. Human capital
comes from the knowledge and creativity possessed by human beings that gives them
the capability to contribute to production. Commonly overlooked but increasingly
recognized as important is the concept of social capital, which refers to the “trust and
norms of civic cooperation . . . essential to well-functioning societies” (Knack and
Keefer 1997, 1283). To the extent that wealth can be taxed and redistributed, the
egalitarian would argue that the desired end of equality of distribution is achievable.

15. Physical capital and the income stream it produces can be taxed from one individual
and transferred to another. Thus, egalitarians conclude that any wealth inequalities
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perpetrated by differences in the distribution of physical capital ownership can be
remedied by the well-intentioned taxing powers. To this end, proposals have
advocated a sweeping global tax on wealth (Piketty 2014) and expansion of the estate
tax (Caron and Repetti 2013). However, taxation and redistribution of wealth will be
able to produce sustained equality in wealth only under a limited set of circumstances.
A wealth tax can be effective if the only sources of wealth inequality are inequalities in
the distribution of physical capital. If there are other sources of wealth inequality, such
redistribution will not be possible with a simple tax system and will be effective only
under continuous management by a totalitarian regime. “So long as the belief in ‘social
justice’ governs political action, this process must progressively approach nearer and
nearer to a totalitarian system” (Hayek 1998, 68).

16. Wealth inequalities caused by differences in the distribution of human capital are more
difficult yet not impossible for the state to overcome. Although it isn’t possible to
directly take one person’s human-capital stock and give it to another, it is possible to
tax the wage income derived from some persons’ human capital in order to provide
educational opportunities for others (Guvenen, Kuruscu, and Ozkan 2013). However,
an increasing amount of evidence has shown that the labor market rewards and
punishes certain noncognitive traits, including personality, with wage differentials
(Heckman 2000; Borghans et al. 2008). An individual’s psychological traits and
characteristics cannot be instilled in others through mere education. The family also
plays a significant role in the development of human capital (Becker and Tomes 1994),
which makes it even more difficult for redistribution to be effective. Rawls himself
states that the family, with its effects on the development of the natural capacities, will
ultimately always stand in the way of “equal chances of achievement,” unless a
solution is found that will “mitigate this fact” (1972, 74; see also Rockwell 2015).

17. Perhaps most problematic for the egalitarian goal of equality of distribution are the
differences in wealth and income that are perpetrated by social capital and networks.
Wage earnings aren’t derived solely from an individual’s human capital. Douglas North
(1990) argues that informal social norms and culture are critical to an understanding of
the sources of prosperity. One way that this idea has been evidenced and measured in
the literature is through the concept of social capital popularized by the works of
Robert D. Putnam (1995, 2001).

18. Social capital itself has proven difficult to define, with no one definition being agreed
upon in the literature. Emily Chamlee-Wright defines it as “a complex structure made
up of community norms, social networks, favours given and received, potluck suppers,
book groups, church bazaars, and neighbourhood play groups” (2008, 45).

19. Even with the complexities and difficulties in measurement associated with social
capital, a large empirical literature has shown that social capital and networks add
significantly to an individual’s labour earnings (Knack and Keefer 1997; Narayan and
Pritchett 1999). Human capital and social capital often function as substitutes
(Boxman, De Graaf, and Flap 1991). Yet not much is known about the production of
social capital, unlike physical capital, with its capacity for direct redistribution, and
human capital, with its capacity for indirect redistribution. We may in a limited sense be
able to tax some of the labour returns to social capital, but it is yet unclear how that tax
income can be used for the creation of social capital. Although we know that there are
great benefits to both the individual and society at large from social capital and that
societies don’t flourish in its absence, we don’t have a well-developed theory or policy
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on how to create social trust and cohesion. Perhaps the most obvious policy
recommendations (as evidenced by the empirical relationships) are among the most
illiberal because social capital is known to be highly related to racial, ethnic, and
religious homogeneity (Alesina and La Ferrara 2000; Portes 2014). As it turns out,
people trust those who are most like them.

20. There is also an empirical literature that links free-market institutions to measures of
social capital and trust. Although some of the results in this literature are mixed,
several papers suggest a positive and causal relationship between economic freedom
and social capital (see, e.g., Berggren and Jordahl 2006; Jackson, Compton, and Min
Maw 2016). In this light, it is possible that inequalities caused by gains from returns on
social capital may to some degree be the kind that Rawls deems acceptable. Social
capital brings about benefits to society as a whole. Yet those benefits are not spread
equally among all of society’s members but accrue in increased quantities to those
with the more favoured social network. The inequality of incomes and wealth could be
taxed away, but this increase in taxation and redistribution decreases economic
freedom, with a resultant deleterious effect on social capital. These inequalities serve
the “social good.” Attempting to redistribute them away may cause the benefits that all
receive to disappear.

21. Given the impossibility of equality of distribution, the only option available to meet the
egalitarian end of equality of distribution is complete totalitarianism. Only when every
facet of each individual’s life is completely controlled by the state in a continuous
manner can equality be achieved. If the system is ever left to operate on its own,
inequality in distribution will be the result.
New Directions for Egalitarianism

22. As discussed in a previous section, relational egalitarians may not see equality of
wealth as their most desired outcome. They instead desire equality of social
relationships. To them, equality of wealth has been the most direct path to achieve this
desired end. However, new trends are developing.

23. There has been increased attention in the economics literature on the failings of
policies that target economic growth and income in an effort to make lives better off.
This argument has been the apex of the emerging literature on the economics of
happiness. Ever since the publication of Richard Easterlin’s (1974) work, which
popularized the Easterlin Paradox, some of the literature has set out to explain why
increases in a country’s income do not correlate with higher levels of self-reported
happiness among its citizens. Indeed, now even former Federal Reserve chairman
Ben Bernanke argues that “GDP is not itself the final objective of policy” (2010). The
better objective is well-being (happiness), and the egalitarian now has a new direction
for policy in promoting equality of well-being. Many advocate augmenting the national
measurement of gross domestic product with a national happiness accounting (Diener
2000).

24. In shifting the policy focus away from wealth inequality and toward inequality of wellbeing
(Goff, Helliwell, and Mayraz 2016), a host of interventionist policies are opened
up to the egalitarians’ disposal. Subjective well-being measures are regarded as
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comprehensive measures of quality of life, and they have many correlates. A
nonexhaustive list of correlates (Dolan, Peasgood, and White 2008) includes variables
such as income (Diener and Oishi 2000), education (Blanchflower and Oswald 2004),
environment (Welsch 2006), materialism (Kasser 2003), mortality (Kawachi et al.
1997), employment (Stutzer 2004), personality (DeNeve and Cooper 1999), and even
social capital and trust (Helliwell and Putnam 2004). The shift in focus away from
income and toward a more broadly defined well-being measure can open up a
Pandora’s box of progressive policy proposals.

25. However, the egalitarians’ search for policies to attain equality of well-being may in fact
lead to the unraveling of well-being itself. A large literature demonstrates that
autonomy of individual choice leads to greater subjective well-being (Ryan and Deci
2000; Verme 2009), and an ever-expanding literature links high economic freedom to
greater subjective well-being (Veenhoven 2000; Gropper, Lawson, and Thorne 2011;
Nikolaev 2014; Jackson 2016). The problems this literature presents for the goals of
redistribution are in addition to the inherent difficulties in distributing such fundamental
determinates of well-being as personality traits and psychological characteristics.
Perhaps a more pervasive problem for proponents of policies for happiness is that of
adaptation.

26. Adaptation in the happiness literature refers to humans’ innate ability to adapt to new
circumstances. In fact, one explanation of the Easterlin Paradox is that increases in
income can fail to create increases in happiness because people rapidly adjust to their
higher incomes. Although there may be an initial temporal boost in happiness from
increased income, the effects do not persist in the long run. Adaptation also explains
why poor and impoverished countries sometimes report much higher levels of
happiness than might seem reasonable (Graham 2010). People have a baseline
equilibrium level of happiness, and any deviations from that baseline are short-lived. If
well-being inequalities are taken to be meaningful, then any policies implemented with
the intention of combating them must target an element of well-being that isn’t subject
to adaptation. Among the correlates of subjective well-being, social capital is often
referred to as a prominent candidate policy target that is immune to the problems of
adaptation (Bartolini, Bilancini, and Sarracino 2016). Thus, if egalitarianism pursues
equality in the domain of well-being, it will still find itself trying to accomplish an
impossible task in determining the distribution of social capital.
Conclusion

27. Although egalitarians may be reluctant to admit their focus on equality of distribution in
philosophical debate, this singular policy focus has emerged even among the so-called
new-group egalitarians with their emphasis on social hierarchy. Equality of social
relations, they assert, must begin from the establishment of economic equality of
wealth. Unfortunately for these egalitarians, wealth and well-being are partly
determined by the distribution of social capital. Social capital is distinct from physical
capital and human capital in that it can neither be removed from an individual nor
imputed to another. A sovereign’s inability to distribute social capital results in an
impossible equality of distribution in wealth or well-being short of totalitarian control of
the entire system.

SECTION A

QUESTION 1

1.1 Why is it impossible for equality in distribution of wealth? (2)
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1.2 What is the moral standpoint of egalitarianism? (2)
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1.3 Why did Otto von Bismarck create a welfare state in Germany? (2)
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1.4 According to egalitarianism, what do their basic notions of equality hinge on? (2)
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1.5 What did Hayek accuse the libertarians and classical liberals of when they classified
free markets as just or unjust? (2)
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1.6 On what point does modern day egalitarianism disagree with classical egalitarianism?
(2)
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1.7 What does relational egalitarianism advocate should be removed any unjust system?
(2)
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1.8 On what grounds do egalitarians agree that equality of distribution is achievable? (2)
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1.9 Why is social capital regarded as the most illiberal? (2)
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1.10 According to the text, what is the only way we can achieve equality of distribution? (2)
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1.11 What is meant by the Easterlin Paradox? (2)
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1.12 If egalitarianism pursues equality in well-being, what obstacle will they face? (2)
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TOTAL: 24 marks

Answer 1

1.1 It is Impossible to distribute wealth equally because of the fact that inequalities in wealth and well being are due to inequalities in the distribution of social capital which can neither be removed nor transferred from one individual to another.

1.2 Egalitarianism is the position which holds the view that equality is central to justice. Egalitarianism is a philosophical perspective that emphasizes equality and equal treatment across gender, religion, economic status and political beliefs.This is the moral standpoints of egalitarianism.

1.3 Otto Von Bismarck created a welfare state in Germany in order to counter Marx’s more revolutionary socialism.

1.4 Basic notion equality according to egalitarianism is the equitable distribution of income and wealth.It holds that no one should have to be worse off just because they were born into unfortunate circumstances or were the victims of natural disaster or made a mistake in business or are unintelligent or something else.

1.11 The concept of 'Easterlin Paradox' suggests that there is no link between the level of economic development of a society and the overall happiness of the citizens. Life satisfaction does rise with average incomes but only up to a point - beyond that the gain in happiness goes down.