What kind of economic regime is more compatible with Rawlsian justice, private ownership or social ownership of the means of
production? Since Rawls has published A Theory of Justice,(1)
there has been much debate over this problem. Some argue that A Theory of Justice
offers "a philosophical apologia for an egalitarian brand of welfare state
capitalism."(2) Others argue that his political and
economic regime is completely different from the capitalism in the classical sense of
Marxism.(3) But he himself rejects a welfare-state
capitalism and illustrates a property-owning democracy and a liberal (democratic)
socialism as economic regimes consistent with his justice as fairness.(4)
I will deal with the following problems in this paper ; what are the characteristic
features of the property-owning democracy as an alternative to capitalism? Can a liberal
democratic socialism be compatible with Rawls's political liberalism? I will argue that a
property-owning democracy can be compatible with Rawlsian justice but a liberal socialism,
particularly concerning his political liberalism, cannot. And I will suggest my
understanding of his property-owning democracy as a "mixed" regime.
1. Rawls's conception of property-owning democracy (5)
a) the main institutions of Rawls's property-owning democracy
Rawls thinks that his property-owning democracy realizes all the main political values
expressed by the two principles of justice, but a capitalist welfare state does not. He
thinks of such a democracy as an alternative to capitalism. Concluding his survey, Rawls
outlines the main institutions of property-owning democracy as follows:
i) Provisions for securing the fair value of the political liberties,
ii) Provisions for realizing fair equality of opportunity in education and training,
iii) A basic level of health-care provided for all.(6)
Furthermore, Rawls insists upon two conditions: 1) a regime of competitive markets, and
2) state intervention both to correct market imperfections (e. g., to supply public goods
and to correct negative externalities) and to ensure the background conditions essential
to distributive justice.(7) So the main institutions of
property-owning democracy are the above mentioned i), ii), and iii), together with iv)
competitive markets and state intervention.
b) guarantee of the equal liberties
Concerning with the fair value of political liberties, in spite of his criticism that
welfare state capitalism rejects the fair value of the political liberties, he is also the
target of the standard left criticism that the equal liberties in the liberal democratic
state are solely formal and the great inequalities in background institutions enables the
few with more wealth and powers to control the political lives.
To answer this criticism, Rawls distinguishes between the basic liberties and the worth
of these liberties. But this distinction is simply a definition and does not answer the
left's objection. To meet that objection, Rawls includes in the first principle of justice
a proviso that the equal political liberties, and that only these liberties are to be
guaranteed their fair value.(8)
But what kinds of institutional arrangements are needed to secure the fair value of
political liberty? Rawls simply assumes that "there are practicable institutional
ways of doing this compatible with the central range of application of the other basic
liberties. But we can imagine two alternatives in Rawls's justice as fairness to this end
: 1) insulating the state from the influence of underlying inequalities in economy and
society, and 2) eliminating those inequalities.(9)
I think that Rawls covers both of these alternatives. With respect to the first, what
is crucial is that political parties and the political process be autonomous with respect
to private demands. Rawls proposes the public funding of elections and restrictions on
campaign contributions.(10) But the insulation of the state
from the background inequalities cannot be sufficiently guaranteed enough to secure the
fair value of political liberty without eliminating those inequalities. For capitalist
economies impose significant structural constraints upon the range of policy options
available to the liberal democratic state. So the fair value of political liberties
requires the elimination of at least the most severe underlying economic inequalities if
political process is to be insulated from the inequalities.
As for the second, Rawls also emphasizes that if the fair value of political liberty is
to be maintained, background institutions for upholding distributive justice must prevent
excessive accumulation of property and wealth.(11) We may
think of the difference principle as a means of equalizing the wealth. The egalitarian
potential of the difference principle would face powerful constraints, both political and
economic. But "it (the difference principle) says that to benefit still further from
that good fortune we must train and educate our endowments to work in socially useful ways
that contribute to the advantages of those who have less".(12)
The difference principle is to justify just inequalities, though they may be rather great,
not to disperse the wealth of the more able to the less able equally.
Rawls follows Meade in supposing the key institutional means of equalizing property
ownership are 1) a progressive taxation over gifts and inheritances(13),
2) public policies to promote equal opportunity in education and training of various
kinds. But Rawls does not agree with Meade that certain eugenic policies(14)
are available. For they may violate the priority of liberty required by the first
principle of justice. I believe that in Meade's property-owning democracy, eugenic
policies play a substantial part in reducing inequalities. If Rawls cannot accept Meade's
eugenic policies, Rawls should emphasize the importance of public policies to promote
equal opportunity in education and training of various kinds in order to help citizens to
get and exercise their power of earning income substantially.
c) the fair equality of opportunity in education
Concerning provisions for realizing fair equality of opportunity in education and
training, Rawls states "the expectations of those with the same abilities and
aspirations should not be affected by their social class". The formal equality of
opportunity in education is necessary but insufficient. For the higher education which
influences the individuals' earning powers and which may bring out a great inequalities of
wealth makes up a very large part of the cost.
In order to treat all persons equally, it is necessary to devote more attention and
resources to those born into less favourable social positions or with fewer native assets.
However, the fair equality of opportunity in education can at best be imperfectly
realized, so long as the autonomy of family is respected.(15)
So the fair equality of opportunity in education requires constraints upon the permissible
degree of underlying inequality. Rawls places a great emphasis upon restricting the
intergenerational transfers of unequal property and wealth. This is the explicit purpose
of the distribution branch in Rawls's structure of governmental institutions, and it
requires a steeply progressive taxation on gifts and inheritances.(16)
d) property-owning democracy and welfare state capitalism
In Meade's property-owning democracy, the progressive taxation of gifts and
inheritances may promote consumption rather than savings. It may also occur in Rawlsian
justice. For an important feature of the difference principle is that it does not require
continual economic growth: net real saving may fall to zero. To answer this problem, Rawls
reminds us that the principle of just savings should hold between generations, while the
difference principle holds within generations. Of course real saving is required only to
make possible the conditions needed to establish and to preserve a just basic structure
over time. So the just saving principle will be one that a member of any generation would
adopt as the principle they would want preceding generations to have followed, no matter
how far back in time.(17)
Though such a kind of just saving principle may bring out real savings, it cannot
regulate intergenerational transfers of wealth at the level of individuals. Rawls, like
Meade, regulates bequest and inheritance by progressive taxation to preserve a just basic
structure over time. But the aim is not to raise funds to subsidize the poor, but to
encourage a wide and far more equal dispersion of real property and productive assets,
that is, to prevent accumulations of wealth that are judged to be inimical to background
justice, eg., the fair value of the political liberties and to fair equality of
opportunity. So the principle of progressive taxation is applied at the receiver's ends
and thereby income taxation might be avoided altogether.(18)
Therefore whether Rawls's property-owning democracy works successfully or not depends
largely on the progressive taxation over gifts and inheritances to prevent the
intergenerational transfers of wealth. And these features of progressive taxation make
Rawls's property-owning democracy completely different from a welfare state capitalism.
Every modern industrial state is a welfare state. None permits natural or social
contingencies fully to determine the life chances of its members. All have programs whose
explicit purpose is to protect adults and children from the degradation and insecurity of
ignorance, illness, disability, unemployment, and poverty.(19)
In this sense, Rawls's property-owning democracy could be seen as a welfare state, even if
not as a welfare state capitalism rooted in the utilitarianism.
Both a property-owning democracy and welfare state capitalism allow private property in
productive assets.(20) But one major difference is this :
the background institutions of property-owning democracy work to disperse the ownership of
wealth and capital, and thus to prevent a small part of society from controlling the
economy, and indirectly political life as well. By contrast, welfare state capitalism may
permit a small class to have a near monopoly of the means of production.(21)
Property-owning democracy avoids this, not by the redistribution of incomes to those with
less at the end of each period, but rather by insuring the widespread ownership of
productive assets and human capital (that is, education and trained skills) at the
beginning of each period, all this against a background which puts all citizens in a
position to manage their own affairs on a footing of a suitable degree of social and
economic equality.
So the least advantaged are not objects of our charity and compassion but those to whom
reciprocity is owed as a matter of political justice among those who are free and equal
citizens along with us, and who are doing their full share on terms seen by each as
mutually advantageous and consistent with everyone's self-respect.
Welfare state capitalism accepts as given substantial inequality in the initial
distribution of property and skill endowments, and then seeks to redistribute income ex
post; property-owning democracy seeks greater equality in the ex ante distribution of
property and skill endowments, with correspondingly less emphasis on subsequent
redistributive measures. "The ownership of property in property-owning democracy
could be equally distributed over all the citizens in the community. No citizen owns an
excessively large or an unduly small proportion of the total of private property. Each
citizen will be receiving a large part of his income from property."(22)
Clearly Rawls's view presupposes that widespread ownership of productive property would
result that the distinction between labouring and capitalist classes would disappear.(23)
So "property-owning democracy" could not be described as "capitalist"
in the classic Marxian sense(24). But what I have argued
till now does not show that property-owning democracy is more compatible with Rawls's
political liberalism than liberal democratic socialism is.
2. A liberal democratic socialism
Rawls argues that "to illustrate the content of the two principles of justice, we
need not decide between a property-owning democracy and a liberal socialist regime. In
each case, the principles of justice can be realized."(25)
What does a property-owning democracy share with a liberal democratic socialism? What
makes him think that his theory has no commitment to either capitalism or socialism? What
are the differences between the two?
In both systems, firms in free and workably competitive markets compete against one
another, but in liberal socialism, capitalist firms are bound to be prevented from
forming, and only worker controlled firms compete against one another. In these firms the
workers can not have full ownership rights(26) over the
means of production. In other words, they do not have the rights to sell, alienate to
others and destroy the means of production. They have only the rights to access, that is,
the use rights and the income rights, etc.. For if they have the full ownership rights
over the means of production, then capitalist firms could emerge. So the central feature
which distinguishes the two forms of regime is not the competition in markets, but only
whether the existence of the full ownership rights over the means of production is allowed
or not.
Rawls argues that the first principle of justice includes a right to private property,
but this is different from the right of private property in productive assets.(27)
I want neither to reject this argument, nor to argue that the list of his basic rights
must be expanded to include a) a basic right to free exchange and b) a basic right to own
and acquire natural resources and means of production.(28) I
believe that even without these additions to the list of basic rights Rawls should favor
property-owning democracy over liberal socialism in modern democracies.(29)
Rawls argues that a virtually permanent feature of modern democracies is the existence
of a wide variety of divergent and incompatible conceptions of the good. And he emphasizes
that these conditions are not just the plurality of opposing conceptions of the good, but
a plurality of opposing but reasonable comprehensive doctrines.(30)
Given this fact of pluralism, the only fair basis for social cooperation is to allow a
wide variety of determinate conceptions of the good (within the limits of justice) to
flourish and for basic rights to maintain and protect such flourishing.(31)
Arguments for principles of justice are incomplete (that is, a mere modus vivendi) until
one shows these principles can help to constitute and promote a stable society under
modern democratic conditions.(32)
When a practical decision is to be made between property-owning democracy and liberal
socialist regime, we look to society's historical circumstances, to its traditions of
political thought and practice.(33) The fact of pluralism of
opposing but reasonable comprehensive doctrines is a characteristic feature of modern
democracies, not the content of the two principles of justice. Therefore the problem of
choice between the two forms of regime at the constitutional stage should be understood as
the problem of which kind of regime is more compatible with the features of modern
democracies.
Now the question which I should answer is which form of regime allows for a much wider
variety of divergent conceptions of the good (within the limits of justice) to flourish
and for its basic rights to maintain and protect such flourishing. There are many
conceptions of the good which require the existence of capitalist firms. There are
conceptions of the good which require the existence of worker-managed firms. And there
also may be certain conceptions of the good which require the existence of completely
different forms of ownership rights according to their own unique communitarian
conceptions of the good.
Liberal socialism cannot permit the existence of capitalist firms. However
property-owning democracy permits the existence of a wider variety of ownership rights,
including socialist forms of ownership. Thus property-owning democracy allows for a wider
variety of conceptions of the good. Therefore, if Rawls's political liberalism accept the
fact of pluralism seriously, the right of private property in productive assets should be
recognized as an additional but important right at the constitutional stage, so
property-owning democracy should be favored in modern democratic conditions.(34)
3. Conclusion : Reinterpretation of Rawls's property-owning democracy
The attempts to argue that Rawls's two principles of justice are more compatible with
liberal socialism is related to the importance of democracy in the workplace.(35)
Many people's sense of self-respect is significantly affected by work. There are
significant differences in the extent to which capitalists and workers control the labour
of others, their own labour, and the productive process of the firm as a whole.(36)
And since Rawls argues that there is a link between equal rights and equality in the
social bases of self-respect, and since his principle do not guarantee the latter equality
explicitly, the most direct solution may be to add to the list of basic rights use and
income rights over means of production, for in this way we can eliminate the inequalities
in power and authority in the workplace. But the basic problem with this argument is that
little has been said to show uncontentiously how the income and use rights in market
socialism will actually be effective in eliminating these inequalities.(37)
The more reasonable solution seems to me that both worker-managed firms and firms
consisting of capitalists and workers, are included in a constitutional regime, that is,
property-owning democracy.(38) For Rawls believes that
Mill's idea of worker managed firms is fully compatible with property-owning democracy. I
believe that this is the nearest solution to Rawls's political liberalism. For this
solution can realize Rawls's claim that "in each case, the principles of justice can
be realized" without the expansion of the list of basic rights. So I want to
understand Rawls's property-owning democracy as a "mixed" regime which includes
both socialist ownership and private ownership of the means of production. If we
understand Rawls's property-owning democracy as I propose, we can easil&y accept
various kinds of reasonable but opposing conceptions of good in our constitutional
regimes. If so, we can get an overlapping consensus regarding political justice under
modern democratic conditions.
Furthermore, all of us Koreans, like Germans in a few decades ago, do sincerely desire
the reconciliation of our nation, that is, the reunification of Korean peninsula. But some
of them live in a "so-called" communist regime. Others live in a liberal regime.
For the choice of political regime for the reunified Korean peninsula, I think that
Rawls's property-owning democracy understood as a "mixed" regime will have a
great practical implication. For it is really emergent for us Koreans to make a model of
the reunified constitutional regime.
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