Republic of Equals: Predistribution and Property-Owning

Democracy

By

Alan Thomas

Oxford Political Philosophy

Publication: June 2016

Series Editor: Samuel Freeman

Editors: Peter Ohlin/Emily Sacharin

For Kathryn

COLONEL [Roosevelt] PRESERVED his sphinx-like silence about domestic politics all the way across the Atlantic. He agreed to speak only at a Sunday service for first-class passengers and preached a lay sermon on “scribes and Pharisees, publicans and sinners.” Afterwards he said that he felt uncomfortable that similar worship was not provided for lower-class passengers. “Let’s see if we can’t carry this righteousness down to the steerage people and the stokers.” Arrangements were made on the bottom deck, to vast excitement. When Roosevelt descended, escorted by the captain, he found more than a thousand Poles crowded round a makeshift altar draped with the German and American flags. The only light in the windowless space came from candles. He asked a Polish priest to say on his behalf “how earnestly he wished the adventure into the new land would be a turning-point in their lives; wished that they might find there all their dreams had painted for them; and how earnestly he, as a citizen of the great republic, welcomed them to it.” Many in the congregation began to weep as these words were translated. [….] Later in the day, musing, Roosevelt said to one of the journalists on board that he would like to see steerage done away with, so that all American immigrants “might, from the beginning of the voyage, feel that they were entering into a new life of self-respect, with privacy and cleanliness.”

Edmund Morris, Colonel Roosevelt.

This kind of gaping inequality gives lie to the promise that is at the very heart of America: that this is a place where you can make it if you try. We tell people – we tell our kids – that in this country, even if you are born with nothing, work hard and you can get into the middle class. We tell them that your children will have a chance to do even better than you do. That’s why immigrants from around the world historically have flocked to our shores.

Barack Obama, Address at Osawatomie High School, December 6, 2011.

Acknowledgements

This book has grown from many years of teaching political philosophy, in particular, the

work of John Rawls: his work forms the basis of what follows. I have learned a great deal

from the work of Charles Larmore who is the independent architect of a different version

of political liberalism from that developed by Rawls. On a more personal note I have also

benefitted from Charles’s kind support and encouragement over the last five years. I have

also benefitted from on-going discussions of the subject matter of this book with Thom

Brooks, Lisa Herzog, Waheed Hussain, Annabelle Lever, Ryan Muldoon, Martin

O’Neill, Bob Taylor, John Tomasi, Christian Schemmel, Fabian Schuppert, Stuart White

and Thad Williamson. I have been conscious, throughout writing this book, that I am

following a path first travelled by Dick Krouse and Michael MacPherson to whose joint

work on this topic I am indebted. Their research together came to a premature end with

the tragic death of Dick Krouse in 1986; a memorial notice by Bruce Jennings gives

evidence of the personal and professional esteem in which he was held. [Jennings, 1987]

I began work on the manuscript in 2005 and early versions of several chapters of

this book have been presented at various workshops and seminars. I am grateful for the

comments and questions of all of the participants in these events. I would like, im

particular, to acknowledge the comments of Jonathan Anomaly, Dick Arneson, Christian

Barry, Anne-Margaret Baxley, David Brink, Bruce Brower, Alison Denham, Gerald

Doppelt, Bill Edmundson, Robert Goodin, Gil Hersch, Seth Lazar, Emily McTernan,

Blain Neufeld, Eric Mack, Jim McCollum, Emily McTernan, Michael Moehler, Knox

Peden, Maura Priest, Oliver Sensen, Dave Shoemaker, Kai Spiekermann, Lachlan

Umbers and Eric Wiland. Elvio Baccarini organized a workshop on the penultimate

version of the manuscript at the University of Rijeka in June 2015. I am grateful to those

who participated: Zlata Božac, Viktor Ivanković, Man Kong Li, David Owen and Elvio. I

am also grateful to my editors, Peter Ohlin and Emily Sacharin, and to my series editor,

Samuel Freeman for their help and advice. This included the selection of three

anonymous referees whose comments have greatly improved the book and to whom I am

very grateful. Samuel Freeman’s own pioneering work on property-owning democracy is

a constant point of reference throughout this book. [Freeman, 2007b, 2009b, 2013,

forthcoming]

All of the foregoing leads me on to by far my greatest institutional debt, namely,

to the Murphy Institute for the award of a Faculty Fellowship at the Center for Ethics and

Public Affairs in 2009-2010. It allowed me to develop this project, and a book on moral

particularism, in ideal surroundings. This book is often critical of those who accumulate

private wealth, but I am cognizant of the fact that it was written at a Research Center

funded by the Murphy family. I would like to express my gratitude for the philanthropic

support that the Murphy family has shown to this Institute over many years and thereby,

indirectly, to my own work. I am also grateful to Meg Keenan, the administrator of the

Center, for helping to make it such a successful year in New Orleans. In addition, thanks

are owed to the Philosophy department of the Australian National University for

facilitating a very productive six-week stay as a School Visitor in the summer of 2013

where the first draft of the book was finalized. I am grateful to Seth Lazar for very kindly

arranging this opportunity. I completed the book at the ANU in 2015 as a Visiting Fellow

of its Humanities Research Centre; I am grateful to the Centre for this support.

Finally, my wife, Kathryn Brown, took time away from her own work to read

successive versions of this manuscript and greatly improved it in many ways. To be able

to draw on the insights of a person who is not only an art historian and philosopher but, in

a previous career, a corporate lawyer was invaluable for a research project of this kind.

The depth of my indebtedness is indicated by the fact that this book is dedicated to her.

Permissions

I am grateful to Tom Baldwin, the editor, and to Oxford University Press for permission

to reprint material from ‘Cohen’s Critique of Rawls: A Double-Counting Objection’,

Mind, November [2011] and from ‘Prerogatives and the Scope of Justice: A Reply to

Brian Berkey’, Mind, July [2015]. I am grateful to Martin O’Neill and Thad Williamson,

editors, and to Blackwell-Wiley for permission to reprint material from ‘Property-

Owning Democracy, Liberal Republicanism, and the Idea of an Egalitarian Ethos’ in

Property-Owning Democracy: Rawls and Beyond, [2012], pp. 101-128. I am grateful

once again to Thad Williamson, my co-editor and to the Committee on the Political

Economy of the Good Society for permission to reprint material from ‘Rawls, Adam

Smith and an Argument From Complexity to Property-owning Democracy’, The Good

Society, [2012]. I am grateful to Richard North, then editor, and Sage Publishers for

permission to reprint material from “Sen on Rawls’s ‘Transcendental Institutionalism’:

An Analysis and Critique” published in The European Journal of Political Theory, 2013.

I am also grateful to Enzo Rossie and Matt Sleat, the current editors, and Sage Publishers

for permission to reprint material from “The Realist Critique of Rawls” published in The

European Journal of Political Theory, 2015.

Table of Contents

Introduction [p.12]

Chapter One: Rawls, Republicanism and Liberal-republicanism [p.27]

(i) Why Liberal Republicanism? [p.27]

(ii) Roman Republicanism. [p.39]

(iii) Liberalism and Republicanism: Complementary or Rivalrous? [p.47]

(iv) Two Kinds of Pre-distributionism. [p.61]

Chapter Two: Justice, Pareto and Equality. [p.73]

(i) Rawls’s Theory of Justice [p.74]

(ii) Are Rawls’s Views Indeterminate? [p.79]

(iii) The Paretian Interpretation. [p.81]

(iv) Rawls and Classic Liberalism. [p.83]

(v) Difference Principles. [p.85]

(vi) Why Fetishise the Interests of the Worst Off? [p.94]

(vii) The Extrinsic Badness of Inequality. [p.105]

(viii) Inequality and the Fracturing of Solidarity. [p.109]

(ix) Paretianism and Problems of Transitional Justice. [p.118]

Chapter Three: G. A. Cohen’s neo-Marxist Critique of Rawls [p.124]

(i) Cohen’s Critique of Rawls. [p.125]

(ii) Is Rawlsian Justice Limited in Scope? [p.135]

(iii) The Rejection of Moral Dualism. [p.140]

(iv) Social Relations and Market Relations – An Holistic View. [p.146]

(v) Property-owning Democracy Undercuts Cohen’s Critique. [p.155]

Chapter Four: Liberal-republicanism and the Basic Liberties. [p.165]

(i) Property-Owning Democracy and the Equal Basic Liberties. [p.166]

(ii) The Failure of the Fair Value Proviso. [p.180]

(iii) Roman Republicanism and the Basic Liberties. [p.190]

(iv) Property-Owning Democracy and Fair Equality of Opportunity [p.197]

Chapter Five: Three Forms of Republican Egalitarianism. [p.206]

(i) Juridical Republicanism [p.207]

(ii) Demogrants as a Catalytic Change [p.216]

(iii) Constitutionalising a Background for Justice. [p.222]

(iv) Is the Difference Principle Now Redundant? [p.231]

Chapter Six: A Liberal-republican Economic System [p.238]

(i) Why Capital? [p.238]

(ii) Property-owning Democracy: a Short History of an Ideal [p.242]

(iii) A ‘New Keynesian’ Framework – Beyond the Welfare State [p.251]

(iv) From Meade to Rawls. [p.260]

(v) Pre-Distribution and the New Inequality [p.267]

Chapter Seven: Rawls’s Critique of the Welfare State. [p.283]

(i) Non-Domination and the Critique of Welfare State Capitalism. [p.284]

(ii) Is Rawls’s Methodology Flawed? [p.291]

(iii) A Faulty “Highest Common Factor” Argument. [p.301]

(iv) Welfare and Reciprocity. [p.305]

(v) Three Conceptions of the Social Minimum. [p.323]

Chapter Eight: Property-owning Democracy Versus Market Socialism [p.338]

(i) Market Socialism in its Mandatory Form [p.343]

(ii) Why Mandatory Market Socialism Must be Exploitative. [p.348]

(iii) Coupon ‘Socialism’ as a Property-owning Democracy. [p.382]

Chapter Nine: Towards a Pluralistic Commonwealth [p.394]

(i) From Associative Democracy to Workplace Democracy. [p.395]

(ii) Neo-Corporatism, Democratic Control and non-Domination. [p.407]

(iii) A Role for Civil Society. [p.418]

Chapter Ten: Classical Liberalism and Property-owning Democracy [p.432]

(i) The Market Democratic Research Program. [p.435]

(ii) The Perfectionist Basis of Market Democracy. [p.445]

(iii) Rawls versus Tomasi on Thick and Thin Economic Liberty. [p.449]

(iv) Free Market Fairness versus Property-owning Democracy. [p.460]

(v) Tomasi’s Unrealistic Utopianism. [p.475]

Chapter Eleven: A Realistic Utopianism? [p.487]

(i) Ideal Theory and ‘Realistic Utopianism’ [p.488]

(ii) Lack of Realism Given Actual Political Conditions. [p.495]

(iii) Capital Dispersal and Democratic Governance [p.506]

Chapter Twelve: Inequality and Globalisation [p.517]

(i) Rawls’s Statism. [p.520]

(ii) Liberal-republicanism and Global Justice. [p.524]

(iii) An “Autonomous Logic” of Globalising Capitalism? [p.528]

(iv) Patterns of Global Inequality [p.533]

(v) Regulation, “Hot Money” and Instability [p.540]

(vi) The Democratic Responsibilities of Capital [p.550]

(vii) Globalization: Threat or Opportunity? [p. 553]

Conclusion: Nothing is Obvious [p.557]

Bibliography [p.560]

Notes [p.597]

Introduction

The aim of this book is to construct and to defend a liberal-republican theory of justice.

Its primary motivation is to renovate our options when thinking about justice and

equality, but I have kept in mind the need for a solution to the urgent crisis of justice in

the two societies with which I am most familiar, namely, the UK and the USA. The issue

of what I here call the “New Inequality” – to borrow the useful phrase of Richard B.

Freeman – is more than an academic problem. [Freeman, 1996/7] Others have

approached the problem from the perspective of economics and political science; my aim

is to complement this work with a philosophical contribution to how best to theorise the

emerging patterns of income and wealth inequality of our times.

The theory has three distinctive elements: first, as its name indicates, it is an

intellectual hybrid developed from two apparently rivalrous traditions – political

liberalism and Roman republicanism. Secondly, the theory has a distinctive content: that

of justice as fairness. Thirdly, liberal-republicanism has an institutionalist focus. While

my view begins from John Rawls’s neglected discussion of what he called the “choice of

a social system” it goes beyond this discussion to select one determinate institutional

scheme as a requirement of justice: a property-owning democracy. I will expand on each

point in turn.

First, political liberalism and republicanism are usually understood to be

incompatible and rivalrous traditions in political philosophy, even if there is one

important point of overlap between them. That overlap is that both political liberalism

and one strand of republicanism are solutions to the problem of reasonable pluralism in

different conceptions of the good life held by citizens. Both ask how we can develop a

legitimate political view in the face of such pluralism – one that that arises naturally

under conditions of liberty. Rawls’s answer, paralleled by that of Charles Larmore, is that

we should develop a strictly political conception of liberal principles that draws on the

support of a plurality of reasonable views of the good life as it is not the proprietary

possession of any of them. [Larmore, 1990; Rawls, 1993]

In locating a parallel answer from republicanism, one has to begin by noting that

the republican tradition is internally complex. One strand of that tradition, originated by

Rousseau, takes a diametrically opposed view to that of the political liberal. Rousseauian

republicanism argues that a life without political participation is an ethically impaired

life. That view takes an exclusionary position on the nature of a good life, thus proving

incompatible with reasonable pluralism. However, another strand of that tradition,

originated by Machiavelli (and that I will refer to in this book as “Roman republicanism”)

argues, in parallel to political liberalism, that the basic political motivation is that of

prudence. The citizen is motivated to take an interest in politics because, if she does not,

she will be at the mercy of other people’s interests – and their stance towards her own

interests may not be a benevolent one. There is no incompatibility between that view and

political liberalism over their respective compatibility with pluralism about the good life.

It is true that the Roman republican, as opposed to the political liberal, seems to

have other commitments that are incompatible with this rapprochement with pluralism.

All republicans are concerned with the nature of a background civic culture and the active

role of citizenship and that seems to invoke a contestable ethical ideal. However,

developing an earlier argument of mine, I do not think that this broader focus places the

Roman republican in conflict with reasonable moral pluralism, for these can be treated

within the theory as option values. [Thomas, 1997] Option values do not have to be

promoted, but neither are they cost free.

The position defended in this book exploits this area of overlap between political

liberalism and Roman republicanism. In summary, my argument is that each view needs

the other. Political liberalism is the protective shell for an embedded conception of justice

as fairness; what this conjunction of views needs is a better theory of institutions in the

form of an expanded conception of the economic basic structure for a society. Roman

republicanism orients itself around the idea that there is a third concept of liberty as non-

domination. As formulated by Philip Pettit, that view needs to identify a person’s real

interests in order to show that a just regime of law that protects those interests is no

violation of liberty at all. Is is, rather, liberty enabling. [Pettit, 1997, 2012, 2014] To

identify those interests, the Roman republican establishes a role for a contestatory forum;

I will argue that, thus far, the republican has not certified that the procedures of that

forum meet the independent standard of being fair. So both views, political liberalism and

Roman republicanism, can emerge from this principled synthesis strengthened.

This synthesis is important for the second and third distinctive components of my

view: that it defends justice as fairness and specifies its institutional requirements. The

reason for treating these two components together is that the way in which liberal-

republicanism understands justice as fairness depends on its complementary theory of

institutions. Rawls’s focus on institutions in A Theory of Justice was innovative: over

time, the fact that his theory primarily applies to what he calls the “basic structure” of

society became one of its most controversial aspects. [Rawls, 1971/1999] By the time of

his summative statement in Justice as Fairness: A Re-statement this institutional focus

had taken on a new guise. [Rawls, 2001] In that book Rawls developed his

specificationist approach to principles to ask which determinate economic system would

adequately express his three principles of equal liberty, fair equality of opportunity and

the difference principle? He narrowed his candidates down to two: a property-owning

democracy or liberal market socialism. Surprisingly, he claimed that welfare state

capitalist views are structurally unjust because they violate his principle of reciprocity.

My aim here is to develop this position by drawing on the resources of liberal-

republicanism. In particular, Rawls’s interest in property-owning democracy and liberal

market socialism represent his late emphasis on political power and its connection with

the monopolistic control of capital. If, on one understanding, orthodox liberals are too

concerned with negative liberty, and avoid the republican ideal of non-domination

because the latter focuses on how the capacity to dominated is rooted in social structures,

then in at least this respect Rawls is certainly not an orthodox liberal. [Pettit, 2012, p. 11]

In fact, throughout this book, I will bring out the respects in which attributing to Rawls

sensitivity to the ideal of non-domination helps either to strengthen his own arguments or

shows why we need to supplement them.

Another way to formulate the same point is by explaining the pivotal role that

Jerry Cohen’s critique of Rawls plays in this book. Rawls’s specificationism about justice

begins from adjusting principles to the kind of object to which the principle applies: what

is fair cooperation between free and equal citizens in a democratic society with market

institutions? [Ripstein, 2010] Cohen begins from a very different starting point: a priori

rational insight into the true principles of justice. [Cohen, 2008] Cohen’s principles are

very compact, so they have to be adjusted to the complexities of regulation and the facts.

For Cohen, however, there remains a contrast between the purity of the content of these

true principles and this impure accommodation with the facts of human nature, society,

and institutions. This profound methodological difference explains Cohen’s reaction to

one component of Rawls’s theory of justice, namely, the difference principle. Cohen

views it as tainted via its accommodation with people’s current motivational profiles:

“taking people as they are” in the wrong way.

Before outlining my response to Cohen’s argument, let me begin by identifying

what the republican hopes for from any theory of justice. The republican’s orientating

idea is that of liberty construed as the modally robust property of being free from the

domination of others no matter what the quality of their will directed towards you.

Politically, this commitment to the equal status of all citizens leads to the question of how

the liberty of each citizen is to be compossible with the same status for all. Achieving this

mutually secured status need not demand material equality, but it does suggest that

material inequalities have to be regulated. This is required so that one citizen, dominant

in the economic sphere, is not permitted to damage the status of any other citizen thereby

placing them in a subordinated position. If a major threat to the liberty of citizens is

material domination in the market, then the republican seeks to remove it by re-

structuring incentives so that inequalities fall only within a permissible range.

I will argue that this goal is also shared by the political liberal: Rawls, too, is

concerned with securing the status of a citizen amongst free and equal citizens. We seek

to realise, for each, a social reality to which they can be reconciled as hospitable for the

exercise of their two moral powers of rationality and reasonableness. There is a tacit

theory of the nature of a modern society here: that we can so much as frame the question

this way reflects an historical achievement. [Ripstein, 2010, p. 683] Taking Rawls’s

arguments as a whole, he came to see that they could be defensible only in their fully

specified form in either a liberal market socialist scheme or in a property-owning

democracy. So Cohen’s critique, setting aside his very different methodological starting

point to that of Rawls, mistakes a part of Rawls’s view for the whole. His critique ignores

the full specification of justice as fairness against the correct background context as

determined by an expanded economic basic structure for society. Specify the correct

context and Cohen’s critique lapses. [Thomas, 2011]

This structure, then, does dual duty: it expresses the republican requirement that

the pattern of incentives determined by a market should be constrained to prevent the

domination of one agent by another. Permissible inequality has to fall within an

acceptable range: determining this range secures justice as fairness in a stable way. These

are two routes to the same conclusion: the only stable conception of justice sees it as fully

specified, in one determinate social system, such that this system forms the background

to the implementation of justice as a whole.

As the argument of this book develops, the fact that it is an intellectual synthesis

of liberalism and republicanism helps to explain, and to defend, otherwise puzzling

aspects of Rawls’s position. These include his critique of welfare state capitalism and his

critique of an unconditional basic income. It also suggests that we have good reason to

reject Rawls’s irenic suggestion that his principle of reciprocity could be equally well

expressed by either liberal market socialism or by a property-owning democracy. A

commitment to republicanism explains why a property-owning democracy is clearly

distinct both from welfare state capitalism and from market socialism in its legally

mandatory form. We can narrow down Rawls’s “choice” of a social system to one option:

a property-owning democracy. I will argue that this generic form of social system is,

therefore, an appropriate object for constitutional specification and protection.

In the context of the current debate over inequality and our fundamental choice of

social system, my commitment to the republican component of liberal-republicanism

explains why we sometimes need to go beyond Rawls. On the one hand, he is a critic of

welfare state capitalism as leaving in place structures of domination and ameliorating

their effects. (This reflects the fact that his conception of justice is not one of redress.) On

the other hand, he seems relatively content to guarantee the fair value of the basic

liberties by pursuing an insulation strategy that protects the political process from the

material inequalities generated by the market. I argue that this is inconsistent: if a concern

for non-domination underpins his critique of welfare state capitalism, then it ought also to

challenge his confidence in an insulation strategy, too. The only secure protection for the

“fair value” of the basic liberties – and protecting the value of those liberties for the worst

off is Rawls’s highest priority – is nothing less than a property-owning democracy itself.

[Freeman, forthcoming]

Here my argument has been influenced by the work of Thomas Piketty who

works in the same tradition, grounded in the work of James Meade, as did Rawls.

[Piketty, 2014a] One of the central arguments of Piketty’s Capital in the Twenty First

Century is that with the historical record of capitalist societies before us not even social

democratic governments have succeeded in constraining the accumulation of capital over

the very long run. The only “setbacks” to such accumulation have been world wars –

political failures, not political achievements. The ratio of total wealth to total income

stood in a ratio of 3- or 4- to 1 immediately after the Second World War; it now stands at

6-1. (A ratio not seen since the Ancien Regime or the Gilded Age.) Furthermore, Piketty

argues that long-term capital accumulation generates a “drift to oligarchy” even in liberal

social democracies. So if a contemporary egalitarian thinks that her social ideal of 1970s

Sweden represents a fairer society than, say, the USA in 2010 she is right to do so. But

she would be wrong to take her ideal combination of welfare state capitalism and liberal

social democracy in 1970s Sweden to exhaust any egalitarian concerns. Such a society

may do well on measures of income inequality, but it does markedly less well when it

comes to inequality in the holding of capital. The latter, in turn, is an index of many other

egalitarian concerns: class, access to educational opportunities, and ability to mobilise to

have a disproportionate political influence on the determination of policy.

Throughout this book the generic kind of economic system represented by a

property-owning democracy is characterized in more detail. Briefly, it is an economic

system that ensures that all citizens have access to capital, both human and physical. It

engages in a macro-level restructuring of markets, placing them in a context that patterns

their outcomes as fair in the only feasible way that this goal can be secured. The point of

this re-structuring is to eliminate the conflict between capital and labour construed as

distinct classes within society. It intertwines the interests of all society’s different sectors

so that gains in prosperity from capitalist forms of economic organisation are diffused as

widely as possible. It shares many of the institutions of our welfare state societies: for

example, free and universal education and healthcare systems and a basic minimum of

provision for all. However, the basis on which these institutions are justified differs

radically from their rationale under welfare state capitalism. The context in which these

institutions operate transforms both their justification and their nature.

I will discuss various mechanisms for capital diffusion throughout the book, but

examples include a society wide unit trust where the state invests in all capitalised

companies on behalf of all citizens and some form of individual control of equity. In the

attempt to harness capitalism’s constant innovation when it comes to forms of property

and capital holding, my version of a property-owning democracy does not attempt any

fundamental revision to the nature of such equity. In this regard it contrasts with

competing proposals such as John Roemer’s coupon socialism (unless this view is

understood as a merely transitional proposal). [Roemer, 1994] Finally, and importantly

for the demarcation of this kind of economic system from its morally individualist

equivalent under classical liberalism, the system I describe sees an important role for the

state. The state not only brings about this capital diffusion; it works to maintain it,

generation upon generation, so as to maintain the stability of the system overall. The

result is an economic system that expresses a stable conception of justice as reciprocal

fairness.

However, this issue of our “choice of a social system” is only of concern because

of its relation to liberal-republican values in their more specific guise as a conception of

governance. Unconstrained capitalism is a threat to the values of democracy: the threat of

a “drift to oligarchy” is real. Our strongest protection against it is a strategy of diffusion

so that capital is not associated exclusively with a narrow set of political interests. In a

property-owning democracy not only is every citizen a capitalist, but social and

associational forms are also re-shaped by that new fact. In our own societies we associate

the interests of capital with corporations, and corporate lobbyists, and are cynical about

their motivations when it comes to the democratic process. We pay less attention to

controllers of pension funds, activist shareholders and those engaged in community

wealth building projects. A property-owning democracy re-shapes this associational

reality: the interests of capital will be plural, dispersed and then re-combined in new

ways, so as to generate a capitalism that is no longer a threat to liberal-democratic values;

rather, it converges on those values. To use an image I take from Mark Warren what we

need is a balanced “ecology” of associational forms, some good for democracy, some

bad, many indifferent. [Warren, 2004] Lobbyists for major corporations, for example, are

entitled legitimately to go about their business – within certain limits set by the values of

democracy itself – but in a property-owning democracy their activities will be balanced

by those of other organised capital interests, too.

This book stems from earlier work of mine on Rawls and on republicanism. The

focus of my earlier discussion of both views was epistemological. I argued that political

liberalism and republicanism could be defended together by a distinctive kind of political

justification. That justification exemplified a form of inferential contextualism: a general

model of justification whose development was the centrepiece of Value and Context: the

Nature of Moral and Political Knowledge. [Thomas, 2006/2010, chapters 11 and 12] In

that work I put contextualism to use to explain the distinctive approach that political

liberalism and the Roman republican share when it comes to the issue of legitimacy. I had

insufficient scope to focus on its application in political philosophy to issues of justice or

equality. Nor did I discuss any specific form that its implementation would take at the

level of principles or institutions. My focus in this book is different. Developing my

earlier arguments, my aim is to descend from abstract issues about legitimacy and the

nature of political justification in order to examine the content of a liberal-republican

view.

I want to close this ‘Introduction’ with an observation about the range of

examples used in this book. I am not an American citizen (although I have lived in the

USA for short periods), and a good question about what follows is why so many of the

examples cited are of developments in the USA over the last forty years. Part of the

answer is that Europeans such as myself are accustomed to treating America as the “test

bed” for political ideas, from a new democracy virtually unimpeded by a prior set of

aristocratic institutions to a combination of moral individualism and laissez-faire

capitalist arrangements. The latter have brought substantial increases in standards of

living while incurring various costs – both material and democratic.

That is the long-term view in which the United States offers a testing ground for

the idea of justice. The complementary short-term view is that there is an increasing

sense, both in academic and popular publications, and in the discussions of both

academics and ordinary citizens, that something has changed over the last forty years in

the USA that marks a decisive moment in that country’s history. Initiated by the co-called

“Reagan Revolution” there has been a major shift in inequality of income and wealth,

very high levels of corporate remuneration, a precipitous decline of trade union

membership, and a decline in the distinctive forms of public-private risk management

characteristic of America’s patchwork of social and medical insurance institutions.

1 [Hacker, 2006] America was already exceptionalist in these cases: tolerant of

widespread inequality in income and wealth, hostile to organised labour, and with a

unique combination of state and private coverage of a variety of risks. Given this

exceptionalism, there is still a sense that something radical has changed and that ideas

play a role in explaining that change.

Some ideas about property-owning democracy seem to have played a key role in

these developments in America’s recent political history.2 [Hacker, 2006, p. 55] One of

the most insightful commentators on these changes, Jacob S. Hacker, has pointed to the

role played by Stuart Butler of the Heritage Foundation in transposing key elements of

Margaret Thatcher’s version of a property-owning democracy into a parallel American

“personal responsibility crusade”:

Butler was what might have been called, in his native country, a Red Tory – a conservative free market enthusiast who nonetheless believed that government could and should play a positive role in people’s lives, albeit an indirect one …. A keen student of Margaret Thatcher, Butler believed that the only way to cut back government’s role in providing economic security was to offer voters an attractive alternative vision of government’s role that was rooted in the self-interest of powerful private actors …. [to] create the institutional means to put the government out of the insurance business down the line. [Hacker, 2006, p.55]

This crusade, with its emphasis on individuals taking responsibility for building up

personal stocks of capital – to protect themselves against risk and to develop the

individual virtue of prudence – putatively supplied an ethical justification for the

dismantling of the American welfare state and the unbundling of pooled social risks.

All of this reflects the ambivalent heritage of the ideal of a property-owning

democracy. I discuss this ambivalent history in chapter six. As I will note there, the idea

originated with a Scottish Tory politician, Noel Skelton, even if it was developed in its

most sophisticated form by James Meade in the 1970s. But it is a serious embarrassment

to proponents of the egalitarian – as opposed to the “classic liberal” – version of a

property-owning democracy that the only serious attempts to implement the ideal were

made by Margaret Thatcher and Ronald Reagan. I will trace the different ways in which

this ideal was applied – I would prefer to say “distorted” – by this conservative agenda

over the course of this book.

It is undeniably true, however, that we are living with the upshot of the

implementation of this ideal: the last forty years have seen a shift in the control of capital

and the emergence of a class of Americans who have pulled away from the rest of their

fellow citizens in the extent of their economic power. A unitary middle class has become

obsolete; an “upper” middle class has been co-opted by America’s very wealthy and is

successfully transferring advantage to its own children. The “squeezed middle” is a lower

middle class facing income stagnation during this period, to which members of this class

have reacted in several ways. Typically, both partners in a relationship work, often in

several jobs, and in each case they work for longer hours. By contrast, for single parent

families the situation is even worse; a fact with implications for both gender and racial

justice. This group, as we will see, also faces the challenge of what Hacker calls “the

great risk shift”; at a time of income stagnation they are urged to save capital to cover

life’s grave risks as everyone is “on their own”. [Hacker, 2006, p. x] The persistence of

an underclass of the chronically disadvantaged remains, by contrast, the most durable

aspect of the American economic scene. [Hacker, 2006]

So even against the background of America’s broader exceptionalism, this set of

developments marks a change. Whether you are located on the political Right and

welcome the broad sweep of this change while regretting some of its side-effects (the

position of Charles Murray which I will discuss in chapter two) or instead are profoundly

concerned about the death of the American Dream of an opportunity for prosperity for all

(the position of Robert D. Putnam), the central themes of this book have a direct bearing

on explaining these changes. [Murray, 2010; Putnam, 2015] That puts us in a position

either to entrench them or to counter them. So many of the examples that I will discuss

below are drawn from recent American experience, including research on the wider ill

effects of extensive inequality in income and wealth, the great risk shift, and the general

sense that one of the foundations of the American republic, a prosperous and property-

holding middle class, is slowly being undermined in the face of substantial inequalities

not so much in income and wealth as in the holding of capital.

Within the academy there is now a plethora of books addressing the “New

Inequality”; in addition to the work of Piketty, Hacker and Gar Alperovitz, there is

important recent work by Anthony Atkinson, François Bourguinon, Samuel Bowles,

James K. Galbraith, Lane Kenworthy, Pierre Rosanvallon, Joseph Stiglitz and Adair

Turner.3 [Bowles, 2012; Stiglitz, 2012; Turner, 2012; Kenworthy, 2013a; Rosanvallon,

2013; Galbraith, 2014; Atkinson, 2015, Bourguinon, 2015] A provocative recent essay in

political science, authored by Martin Gilens and Benjamin I. Page, concluded that the

USA is an oligarchy if not de jure then de facto. [Gilens and Page, 2014, see also Winters

and Page, 2009] There is also the fascinating documentary study of the impact of these

economic changes on the lives of a cross-section of individuals in George Packer’s The

Unwinding: the Inner History of the New America. [Packer, 2013] One of solutions that

has recently been proposed by a group of economists bears a marked affinity to the ideas

of Meade and Rawls (and, indeed, the historical precedent of Louis Kelso). [Kelso, 1958;

Blasi, Freeman, Kruse, 2013] American legal scholar and political philosopher Robert

Hockett not only proposes a justification for what he calls a “society of owners” in his

book of that title. [Hockett, forthcoming]; he also supplies detailed policy proposals to

realise this goal. In addition, he stresses, throughout, how deeply woven these ideas have

been in America’s political history. I have drawn on all of this recent research in this

book.4

Once again, recent American experience serves as an example from which one

can draw conclusions that are, I hope, supportive of the central thrust of the arguments

presented here. If ideas led to these politically disastrous changes, only more and better

ideas can lead to their being reversed. As Alperovitz remarked in 2005:

It would not surprise me – given the growing pain and frustration – if in the coming decades, we were to experience something like the Federalist debates of the founding era – a time of great and historic public rethinking of fundamentals. [Alperovitz, 2005, p. x]

In a democratic society it is for people as a whole to determine their social and economic

fate; the role of books like this one is to try to supply some materials for reflection and, in

particular, to put an interconnected series of ideas about democracy, citizenship and

fairness in some theoretical and historical relationship to one another. The ambivalent

role played by ideals of property-owning democracy in the recent political history of

major Western democracies is one of the main themes of this book.

1 This patchwork is, as Lane Kenworthy points out, an historical anomaly: “Our

employer-centred health insurance system was a historical accident. It originated in

World War II, when wage controls led firms to offer health insurance in order to attract

employees. After the war, encouraged by a new tax break, this practice proliferated, and

it has remained in place ever since.” [Kenworthy, 2013a]

2 I set aside here another quirk of American social history, namely, that one major cause

of unequal schooling outcomes is widely disparate levels of funding and that can be

traced (in part) to a “decentralized, property-tax-based system of school funding”. One

form of capital holding, then, plays a prominent role in perpetuating inequality. I set this

aside partly because Lane Kenworthy notes that state investment has partially leveled the

playing field – but as he also notes, it has not entirely done so. [Kenworthy, 2013a, p. 59] 3 I have focused in this book on the time period of the last forty years; the challenge of

Thomas Piketty’s book, Capital in the Twenty-First Century, concerns how we ought to

interpret this focus. [Piketty, 2014a] Have the last forty years in advanced industrial

democracies marked an exception to a general trend towards greater equality? Piketty

argues, solely from an economic historian’s perspective, that this time period marks,

instead, a return to how capitalist forms of social organisation will develop if it is not

brought under the control of social democratic institutions. “[O]ne should be wary of any

economic determinism in regard to inequalities of wealth and income. The history of the

distribution of wealth has always been deeply political and it cannot be reduced to purely

economic mechanisms.” [Piketty, 2014a, p. 20] 4 I have not considered the semi-popular works on inequality that are being published in

increasing numbers – the trickle of such publications is rapidly becoming a flood. The

reason for this limitation is not that such books are not informative and well-written, but

that they draw on the more fundamental research that I do consider for their normative

orientation.