Tuesday, March 28, 2006

The Stakeholder Society: founded in the Lockean Proviso?

One way to justify the stakeholder society suggested by Ackerman and Alstott (everyone gets a $X stake at birth: see e.g. 41 Ariz L Rev 249, or the American Prospect, 11(16) July 17, 2000) is to demand, as Ackerman does, that every American "get a fair start in life." This could be a fundamentally Lockean idea. It might also just be plain-vanilla liberal, or some extension of Rawls, or something else. Lefty Justin discusses a simple and elegant version of it below. Locke supposes that everyone has a right to the bounty of the earth, to natural resources and land to mix his labor with. Lockean theory, to some degree, needs the frontier, so that the disgruntled and innovative can push forward and start afresh. To keep the frontier alive, justice requires that every first-expropriator of property (who starts the property chain so that trading can occur) leave "as much and as good" behind for his followers. Since this is no longer possible--there is no more land beyond the frontier, since there is no frontier--either Lockean theory breaks down, or it needs a correction, in the form of an initial stake to make up for the missing Lockean Proviso. This correction gets us back to the first position, where everyone can seize goods and so everyone somehow starts equivalently. There's no "first mover" advantage--being born before expropriation was complete or after doesn't matter. Everyone has either resources or their equivalent in cash. This is equality of opportunity, which has a nice moral ring to it; but it's not some form of nasty pinko radical egalitarianism, since it doesn't insist on anything approaching equality of outcome.

There's one problem: these resources are pretty worthless, and so their cash equivalent is rather paltry. Milton Friedman has estimated that the commodity value of physical resources in situ, and unimproved land, if this value were spread about, would put folks dramatically below the poverty level. (I'll find this reference sometime; it's in Capitalism and Freedom.) This points to a basic truth: the vast majority of wealth in America is in the form of capital, which is effort mixed with resources--whether the result is refined goods (mixing effort and resources to make machines which then make nice new things) or social goods (mixing effort and resources to keep people alive so they can learn how to do things better). But capital is not an equality of opportunity issue. Someone has already mixed their labor up with the resources; the outcome has already come-out. Continue... Maybe you're not joining the race late by being born late, but you're wearing leather sandals and your competitors are wearing space-age jetpacks. If you want to correct for this result, you need something more than equality of opportunity in a nice cozy making-up-for-the-closing-of-the-frontier sense. You need a strong theory of egalitarianism--that mixing your labor with something can still be trumped if others need your result. And those theories are hard to come by. Or hard to keep, if you expose your theory to political and philosophical debate.

This problem also sits deep in Reich's New Property, in which the government owns much of a nation's capital and distributes it as largesse, and people can't call bull$#!+ because they're getting something for free, and are better off than the baseline of no-largesse no matter what package they get. The problem is, the magnitude of our accumulated social capital makes the baseline look pretty impoverished indeed. Again, the mere fairness restriction on the new property leads to a pretty weak protection against radical inequality without a more powerful injection of theory.

So stakeholder theory might be Lockean, but it would permit those who truly just start out with a fair share of the world's resources to go somewhat hungry. The lack of the frontier is not the real problem. The real problem--as with so many things!--is history.

PS: in Ackerman's law review article above, he notes that some people will squander their stakes, but it's important that the majority who do not blow it be given a chance to profit from their responsibility. This same willingness to allow a few failures in the process of improving the lot of most was not, um, much in evidence when Bush proposed privatizing 6% of Social Security. One always seems to evaluate one's own plans a bit more charitably...

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