This post was written by Kalle Kappner. It is part of ESFL’s Intellectual Thought Series, a weekly blog series dedicated to the introduction of different branches in the classical liberal tradition.
John Tomasi: Free Market Fairness
Classical liberals and libertarians are used to utilizing either consequentialist or natural rights-based arguments when making the case for liberty: Freedom leads to prosperity and human happiness. And as these are generally preferred to poverty and suffering, liberal institutions can be justified on consequentialist grounds. Or, as others argue, freedom is the natural outcome of humans exercising their self-ownership and their legitimate claims to justly acquired property rights. As a matter of fact, both lines of arguments are very convincing to those who already entered the camp of dedicated freedom lovers. But they often fail to persuade skeptics, especially those on the left. This is because consequentialism and natural rights-approaches are neither the only, nor the most compelling ways to explore the meaning of a just society.
A society’s institutional structure can also be evaluated by asking in how far it is acceptable to all of its members. This is the broad contractarian line of thought which includes such diverse thinks as Jean-Jacques Rousseau, Thomas Hobbes, John Rawls and James Buchanan. In Free Market Fairness, American philosopher John Tomasi builds upon the contractarian tradition by presenting his own interpretation of the work of dedicated left liberal John Rawls.. Tomasi aims at filling the gap between contemporary left liberal reasoning and classical liberal or libertarian thought, educating both camps about their opponents’ views and solving common misconceptions. His project is nothing less than creating a new theory of liberal justice dedicated to both the material welfare of the least well-off and limited government. Social justice, as Tomasi argues, is to be found in widely acceptable institutions and economic liberty is an important prerequisite to enable people to take control of their own life – to act as free self-authors.
Rawls’s liberal theory of justice
Imagine the following: Before you and the rest of humanity are born, you sit in a closed room called the original position, discussing which institutions and laws would characterize a society in which every discussant would like to live in. The room is separated from the real world by the veil of ignorance which prevents you and your fellows from knowing which talents you will be born with, which social status your parents will have and what your tastes will be. But you know one thing for sure: There will be differences in intelligence, skills, inheritances and the like – and as a result differences in the way people will shape their lives. Given that you don’t know whether you will be born dumb or intelligent, poor or rich, as a man or as a woman: What kind of institutional arrangement – which kind of social contract – would you agree to?
This question was famously asked by American philosopher John Rawls (1921-2002) and his answers continue to influence contemporary left liberal thought to this day .: A society agreed upon under the veil of ignorance would be characterized by two main principles: the liberty principle, which establishes a catalogue of unnegotiable freedoms (such as the freedom to assemble and to be ruled in a democratic manner) which are ordered in importance and where a more important right can never be restricted to ensure a less important one; and the difference principle, which states that inequalities in material wealth and opportunities are only to be tolerated if they benefit the poorest members of society. Rather than finding a compromise between equality and liberty, Rawls’s saw fairness as the key to justice. He envisioned a society characterized by social democratic institutions, including redistribution, a social welfare net and governmental intervention to guarantee equal opportunities.
As Rawls argued, such a social contract would be just, as social justice is a feature of institutions and rules, not of distributional outcomes – a point equally stressed by the classical liberal Friedrich August von Hayek. . Rawls himself did not dare to predict whether such a society would be dominated by capitalist institutions – strong property rights, entrepreneurial firms and meritocracy – or socialist institutions – worker-led cooperatives, massive redistribution and egalitarian ethics. But personal property rights and economic freedoms certainly did not play a major role in his conception of liberty – they are thin rights. For Rawls, the primary domain of human self-expression – or self-authorship – was the political sphere, not the realm of markets and production. Consequently, in a Ralwsian democracy political freedoms play a more important role than economic freedoms and the latter can be restricted if the former are endangered.
Economic freedom as a basic liberty
This is where John Tomasi’s critique comes into play: Rather than playing a negligible role, economic freedom actually is an important means for people to live meaningful lives as self-authors: “Restrictions of economic liberty, no matter how lofty the social goal, impose conformity on the life stories that free citizens might otherwise compose” (p.93). Governmental regulation, taxes and other restrictions often limit the degree to which citizens are able to control the fate of their own lives. In today’s knowledge-based post-industrial society, the sphere of private economic choices becomes more important than ever – a point which Rawls severely underestimated. Tomasi thus calls for a thick conception of economic freedom as a basic right just like religious freedom or free speech. The corresponding institutional structure he calls market democracy.
Tomasi’s case for economic freedom and property rights differs from the two most prominent classical liberal defenses: Neither Milton and David Friedman’s utilitarian ethics – economic freedom correlates with efficiency, growth and general human happiness and is thus justified as a general principle – nor the natural rights-based approaches of Robert Nozick and Murray Rothbard – humans are self-owners and thus own the fruits of their own work – form the backbone of Tomasi’s market democracy. Rather, he sticks to the Rawlsian conception of guaranteed liberties as a requirement for meaningful self-authorship and deliberative democratic legitimacy – except for the fact that he sees thick economic freedom among them. By taking the road paved by Rawls, Tomasi arrives at classical liberal conclusions rather than the regulated welfare state promoted by today’s left liberals.
Can classical liberals support social justice?
What about social justice and its role as a guiding principle for government policy? As noted before, for Rawls – and also for Tomasi – social justice can only be found in institutions and rules but never in particular distributional outcomes of these institutions and rules. While this is an essentially Hayekian conception, Hayek famously denounced the idea of social justice as a mirage, “an empty phrase with no determinable content”. But not only does Tomasi disagree as to the meaningfulness of the concept, he even claims that “social justice [is] the ultimate standard of political evaluation” (p. xv) and should be applauded by classical liberals. One could easily characterize this difference as a simple matter of semantics, because in contrast to Tomasi, Hayek clearly did not define social justice as an institutional feature.
But there is a deeper point: For Tomasi, society is an emergent phenomenon; it is more than the sum of its members: “Society, in its moral essence, is not something private – like a web of commitments spontaneously spun by self-owning individuals. Citizens are not merely self-interested contractors. Nor are they utility maximizers. They are moral beings committed to living with others on terms that even the weakest among them can accept.”  A society’s institutions cannot be justified on consequentialist or natural rights-based grounds, but only deliberately, by the approval of all of its members. As such, actually existing institutions can be fair – socially just – or not, depending on whether they fulfill the liberty and difference principles. As thick economic liberties are both a necessary condition for individual self-authorship and for the fulfillment of the requirement that society’s institutions should be designed in such a way as to benefit the least well-off, they have to be guaranteed in a socially just society.
Tomasi goes one step further by showing that most prominent classical liberal writers actually stressed the beneficial effects of free market reforms for the poorest members of society: John Locke, Adam Smith, James Madison, Herbert Spencer, Ludwig von Mises, Friedrich August von Hayek, Robert Nozick, Murray Rothbard, even Ayn Rand all used the market economy’s beneficial effects on the poor as an important argument for defending their world view (pp.127-142). They did not like to call their concern for the poor a concern for social justice. And they certainly saw other arguments as more important. But the idea that those social institutions which benefit the poor are especially moral was always featured as an important argument in classical liberal and modern libertarian thought.
Tomasi’s Free Market Fairness is a work of political philosophy, not a handbook for concrete policy recommendations. But it can be concluded that his arguments imply a political system placed somewhere between the classical liberal minimal state (not to mention anarchocapitalism) and the regulated welfare state which dominates contemporary society. Government needs to guarantee a minimum safety net where voluntary action fails to do so, because self-authorship requires a minimum level of wealth and opportunities. In addition, some goods such as health care or adequate education are absolutely necessary – but guaranteeing access to them is an entirely different thing from producing and distributing them. Consequently, Tomasi favors voucher systems to government control and growth-maximizing policies to heavy redistribution.
But laissez-faire is no end to itself: Regulation of the economy is very reasonable where markets produce harmful monopolies, cause poverty or ignore externalities. Still regulatory capture – the misuse of regulatory power to advance narrow interests of the regulated rather than the public – is a huge concern to Tomasi. Thus, he supports the libertarian default assumption that markets should be preferred to governments, even if both are failing. It is most important to note that his conclusions about the appropriate role for government are not based on compromises or the wish to occupy a moderate middle ground. Rather, John Tomasi’s vision of a market democracy stems from a simple question: What kind of society can we all agree to live in? Instead of leaving the answer to John Rawls and his left liberal followers, he stresses the importance of economic freedom for people’s potential to take control of their own fate as responsible self-authors.
 Free Market Fairness, John Tomasi, 2012, Princeton University Press.
 A Theory of Justice, John Rawls, 1971, Harvard University Press.
 Friedrich August von Hayek, Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice, 1976, University of Chicago Press.
 See the respective blog posts in this blog series.
 Hayek, see footnote 3.
 John Tomasi, Free Market Fairness, blog post at bleedingheartlibertarians.com, 2011.
Further reading (apart from Free Market Fairness):
Kalle Kappner is a PhD student in economics at Humboldt University Berlin. He has been active in the German liberty movement for several years.
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