Epistemology – the conceptual and discursive frames articulated within political discourse determine the solutions we view as desirable – critiquing those frames is necessary to undermine the hegemony of neoliberal thought

Gregory Brazeal, “Markets as Legal Constructions,” University of Cincinnati Law Review, vol. 91, no. 3, March 2023, pp. 654-669, https://scholarship.law.uc.edu/cgi/viewcontent.cgi?article=1473&context=uclr.

But a skeptical, practical-minded reader might object: what difference does that make? Why does it matter if our public economic discourse is unclear or misleading? What difference does it make, specifically, if we tend to treat an idealized set of laissez-faire rules as a natural baseline, and speak of any departure from this baseline as "government intervention in the market"? If both the view of "the market" as opposed to "government," and the alternative legal institutionalist view of markets as legal constructions, can be used to argue for or against more or less any economic policy,238 why should we care about the language in which debates are conducted?

Sections I and II mostly tried to appeal to widely held intellectual values such as clarity, consistency, and the ability to offer good reasons, rather than appealing to values associated with a specific political orientation. But in order to explain why a legal institutionalist reframing of popular economic policy debate matters, it will be helpful to focus on the concerns of a specific political orientation or family of orientations. Whether one believes that the legal institutionalist way of talking brings any practical advantages will depend on what one defines as an advantage, in line with one's own moral and political values.

The remainder of Section III discusses the advantages of legal institutionalism for an ideological orientation favoring the creation of a world of greater social equality.239

Addressing readers with relatively egalitarian commitments is especially appropriate because egalitarians might be understandably wary of legal institutionalism as it has been presented above. Legal institutionalism offers a view of markets as legal constructions. It draws attention to the political design of markets. Many egalitarians today in the United States, by contrast, may wish to stop talking about markets altogether. They have lived through an era infused with the glorification of "the free market" and the vilification of "government" alongside soaring economic inequality, the persistence of the racial wealth gap, unprecedented declines in life expectancy, the largest financial crisis since the Great Depression, and, for many Americans, stagnating wages accompanied by declining job, housing, and retirement security.240 It would be understandable, against this background, for an egalitarian to seek a simple inversion of the Reagan-era framing of economic debates: an embrace of "government" alongside a rejection of "the market."241 Because legal institutionalism draws attention to markets by emphasizing their political design, an egalitarian might view legal institutionalism as tainted by the pro-market ideology of the Reagan era.

Against this charge, an egalitarian legal institutionalist might argue that legal institutionalism's wholesale rejection of the "government versus market" distinction in fact represents a more thorough repudiation of the economic assumptions of the Reagan era than the simple inversion of the conceptual opposition at the center of the era's economic debates. Legal institutionalism discards the premise that "government" and "the market" are opposed terms at all, and in doing so lays a foundation for the transformation of public economic discourse away from the terms of the Reagan era.

The dominance of the opposition between "government" and "the market" throughout the Reagan era placed egalitarians at a structural rhetorical disadvantage in economic policy debates, especially debates concerning market rules. By treating laissez-faire policies as the natural definition of "the market," the "government versus market" distinction has invited speakers to think of laissez-faire policies as a baseline from which any "regulatory" departure requires affirmative justification. In doing so, the distinction has anchored economic debate in the direction of a set of laissez-faire market rules that tend to generate profoundly unjust economic hierarchies and other predictable harms.

By contrast, speaking of markets as legal constructions tilts the playing field of economic debate in favor of egalitarian policies simply because the burden of persuasion shifts to opponents of ostensibly egalitarian policies who must explain why a policy that at least intends to benefit the many should nevertheless be rejected.242 Instead of focusing economic policy discussions on whether a given policy represents "government intervention" or "the free market," and, if the former, whether the "intervention" can be justified by some "market failure," legal institutionalism invites us to ask, simply: what economic policy rules will best serve our ends? What rules do we, as a democratic society, choose to govern our lives?

More importantly, a simple reversal of the Reagan-era celebration of "free markets" over "government" fails to address one of the most powerful sources of ideological opposition to equality-promoting economic policies in the United States, what this article calls "the myth of just deserts." According to this myth, the wealthy deserve what they have gained, and the poor have no one to blame but themselves.243 Current economic outcomes are the result of individual efforts, rather than the product of government policy, and thus, poverty must be the result of laziness or other moral or intellectual flaws.244 In other words, the distribution of wealth reflects just deserts for hard work or laziness, and those who live in economic insecurity do not deserve anything better.

From the perspective of egalitarian politics, legal institutionalism's greatest value lies in its power to undermine the myth of just deserts. Before explaining how legal institutionalism can do so, however, it is worthwhile to explore the myth in greater detail.245

Already in 2001, an influential article by three social scientists provided evidence of the significant role that "just deserts" thinking has played in the politics of economic inequality in the United States. In Why Doesn't the United States Have a European-Style Welfare State?, the authors concluded, based on a wide-ranging survey of proposed theories and empirical evidence, that "Americans dislike redistribution because they tend to feel that people on welfare are lazy, whereas Europeans tend to feel that people on welfare are unfortunate."246 The authors also noted that hostility to welfare in the United States "derives in part from the fact that welfare spending in the United States goes disproportionately to minorities."247 They concluded:

Our bottom line is that Americans redistribute less than Europeans for three reasons: because the majority of Americans believe that redistribution favors racial minorities, because Americans believe that they live in an open and fair society and that if someone is poor it is his or her own fault, and because the political system is geared toward preventing redistribution.248

Further supporting the centrality of the myth of just deserts, the authors added that the anti-redistributive structure of the political system "is likely to be endogenous to these basic American beliefs."249 In other words, Americans' tolerance or embrace of the undemocratic features of our political system may result in part from our relatively punitive economic attitudes.250

Illustrations of racialized attacks on government assistance for the "undeserving" are not hard to find. In the infamous words of Lee Atwater, a political strategist for Presidents Ronald Reagan and George H.W. Bush:

You start out in 1954 by saying, "N_____, n_____, n_____." By 1968 you can't say "n_____" that hurts you, backfires. So you say stuff like, uh, forced busing, states' rights, and all that stuff, and you're getting so abstract. Now, you're talking about cutting taxes, and all these things you're talking about are totally economic things and a byproduct of them is, [B]lacks get hurt worse than whites. . . . "We want to cut this," is much more abstract than even the busing thing, uh, and a hell of a lot more abstract than "N_____, n_____."251

In fact, Reagan, the president whose name has come to symbolize the era in American politics that began in the late 1970s, first won political office in a 1966 campaign for California governor that "was organized by a 'handful of millionaires' who characterized the former movie-star as 'the man who can enunciate our principles to the people.'"252 According to Thomas and Mary Edsall, "[o]ne of Reagan's favorite and most often-repeated anecdotes was the story of a Chicago 'welfare queen' with '80 names, 30 addresses, 12 Social Security cards' whose 'tax-free income alone is over $150,000.'"253 In the words of the leading history of "dog whistle" appeals to racial resentment:

Reagan frequently elicited supportive outrage by criticizing the food stamp program as helping "some young fellow ahead of you to buy a T-bone steak" while "you were waiting in line to buy hamburger." This was the toned-down version. When he first field-tested the message in the South, that "young fellow" was more particularly described as a "strapping young buck."254

In the 1980 presidential election, Reagan received 71 percent support from voters who felt "the government should not make any special effort to help [Blacks] because they should help themselves."255 By 1986, "fully 56 percent of [B]lacks saw Reagan as racist."256

But Reagan was only continuing a "Southern Strategy" that had earlier been pursued by Barry Goldwater and Richard Nixon.257 In the words of historian Nancy Isenberg:

Some Nixon supporters acknowledged that there were hardworking people among welfare recipients who only occasionally took government assistance; but there were others, less deserving, whom they saw as permanently trapped in a cycle of dependence. Critics of welfare tended to see the issue as a racial one . . . . Nixon's supporters were seen angrily complaining about how welfare "breeds weak people." Poverty was once again being blamed on questionable breeding, and hard work was proclaimed as the means through which strong families put down solid roots and achieved upward mobility.258

As Isenberg's language suggests, the myth of just deserts has not been applied solely to perceived racial out-groups. Poor whites are also seen as undeserving, and often in a quasi-racialized way, as in the discussion of poor whites in terms of "breeding" that Isenberg traces throughout American cultural and political history.259 The myth of just deserts can serve to naturalize all economic inequality, not only the economic subordination of African Americans.260 Just as defenders of the economic policies in the first Gilded Age sometimes justified vast economic inequalities by presenting them as the natural result of biological differences,261 defenders of such inequalities today often present them as the natural result of fair competition in a "meritocracy."262

But in the contemporary United States, attitudes toward race, specifically, seem to be an especially strong predictor of attitudes toward "government" and economic policy.263 Whether the connection is labelled "racialized economics"264 or "stratification economics,"265 an ever growing library of social science scholarship supports the notion that many white Americans view economic policy through the lens of race, and in particular through the "belief that undeserving groups are getting ahead while your group is left behind."266 The phenomenon is not an invention of the Reagan era. Nearly a century ago, in Black Reconstruction in America, W.E.B. DuBois had already identified this basic dynamic.267 He explained why economically insecure whites might support a white elite political coalition rather than allying with Blacks to achieve policies that could improve all their material circumstances.268 DuBois's answer was that "white laborers, while they received a low wage, were compensated in part by a sort of public and psychological wage," a "psychic benefit" that would be lost if Blacks obtained equal social status with lower-status whites.269

The persistence of the myth of just deserts can be seen even in the most recent economic policy debates in the United States. Consider the rhetoric used to justify the massive, if temporary, expansion of federal safety-net programs during the COVID-19 pandemic, an expansion that caused U.S. poverty to fall to an all-time low.270 In the words of a reporter covering poverty: "What explains such a large safety-net expansion in a country resistant to it?"271 He concludes:

[T]he pandemic removed the usual argument that people in need have themselves to blame. Promoting the $1.9 trillion rescue plan that the Democrats passed earlier this year, Biden hailed the "millions of Americans who, through no fault of their own, have lost the dignity and respect that comes with a job." After the bill passed the Senate, he again cited Americans "out of work through no fault of their own," and added, "I want to emphasize that: through no fault of their own." Politicians as different as Maxine Waters on the left and Josh Hawley on the right used the same words.272

The rhetoric suggests that the United States ordinarily chooses policies that result in exceptionally high poverty levels in part because we assume that those living in poverty do so through fault of their own that is, as a result of their own failings.273 If one begins with the assumption that the economic status quo is the product of just deserts, or an approximation of just deserts mollified by benevolent handouts, then it may seem natural to conclude that the unemployed and materially insecure must have done something to deserve their unemployment and insecurity.274

Expressions of this perspective are not difficult to find among the prominent economic and political voices of the Reagan era. An especially striking series of examples can be found in Jane Mayer's account of the billionaires and multimillionaires who funded the rise of the plutocratic "conservative" movement that helped set the terms of economic debate in the Reagan era. Nearly all of the largest funders of the movement inherited wealth, with some receiving vast fortunes. Yet the movement they funded opposed public spending on social programs, and often justified this opposition based on the idea that wealth should go instead to those who have earned it.

Charles Koch, whose brother joked about inheriting $300 million from their father, "has often lauded the virtuous habits it takes to succeed, publishing a book on the subject in 2007 called The Science of Success."275 Joseph Coors, an heir to a brewery fortune, "regarded organized labor, the civil rights movement, [and] federal social programs . . . as existential threats to the way of life that had enabled him and his forebears to succeed."276 Art Pope, the multimillionaire funder of the right-wing undermining of democracy in North Carolina,277 "attended a private boarding school," and then, after law school at Duke, "joined his family's discount store business,"278 a chain that began by targeting "neighborhoods with median incomes of less than $40,000 a year, and populations that were at least 25 percent African-American."279 Pope often insisted he was "'not an heir,'"280 and in an interview with Mayer, explained that "[i]n the tradition of John Locke . . . he just believed that society functioned best when citizens were rewarded with the wealth that their hard work produced."281 "The poor, he argued, were largely victims of their own bad choices."282

Richard Mellon Scaife, an heir to the Gilded Age fortune of the Mellon family,283 became one of the largest backers of both the American Enterprise Institute and the Heritage Foundation.284 These organizations would later help to develop "what the Wall Street Journal described as the 'new orthodoxy' of the Republican Party" by 2011 the notion that the less-wealthy half of Americans were "'Lucky Duckies' freeloading off the rich."285 This view would be memorably articulated by the 2012 Republican presidential nominee Mitt Romney, himself the son of a former chief executive of American Motors,286 who was secretly recorded at an event for wealthy donors deriding the "47 percent" of Americans who were "dependent upon government, who believe they are victims, who believe government has a responsibility to care for them, who believe they are entitled to health care, food, to housing, you name it."287

As Charles Koch's political advisor Richard Fink explained to another group of wealthy donors in 2014, in another secret recording, the "middle third" of the country tended to view big businesses as "greedy." "'What do people like you say? I grew up with pretty much very little, okay? And I worked my butt off to get what I have. So,' he went on, when he saw people 'on the street,' he admitted, his reaction was, 'Get off your ass and work hard, like I did!'"288

Some Republican leaders attributed joblessness to laziness more publicly, as when former House Speaker Newt Gingrich speculated in 2011 about the possibility of turning public school students in "poor neighborhoods" who have "no habit of work" into "assistant janitors" whose job would be "to mop the floor and clean the bathroom" at their schools.289 Similarly, in 2014, House Speaker John Boehner told an audience at the American Enterprise Institute that a "record number of Americans" are "stuck" outside "the mainstream of American society," thinking: "You know, I really don't have to work. I don't really want to do this, I think I'd rather just sit around."290

The myth that existing distributions of wealth and employment are the natural and just results of individual competition in "the market" can also be found in the writings of ostensibly more sophisticated economic thinkers whose ideas shaped the Reagan era. The Austrian libertarian economist Ludwig von Mises, for example, argued that wealth was "always the result of a consumers' plebiscite."291 In the "consumer's democracy" of the marketplace, "the greater voting power which the disposal of a greater income implies can only be acquired and maintained by the test of election."292 How did different individuals end up with such different "voting power" (wealth)? Perhaps, von Mises suggested, because "men are endowed differently by nature."293

If one assumes that one's wealth is simply the fruit of one's virtuous labor, and that those without wealth must bear the moral responsibility for their poverty, it may seem intuitively obvious that social spending, and taxation in service of social spending, is "unfair." Why, the reasoning goes, should the government take money from a person who worked for it and give it to another who did not? Why, in other words, should the government "redistribute" hard-won earnings from the deserving to the undeserving or, in the public economic discourse of the Reagan era, from the "makers" to the "takers"294 and "moochers"295?

Against this background, it becomes possible to see the potential political significance of a legal institutionalist reframing of economic debates.

Once the view of markets as legal constructions is accepted, it is much harder to defend current distributions of wealth and opportunity simply as just deserts for individual effort, much less to excuse existing inequalities as merely the product of individuals being "endowed differently by nature," or to claim that economically subordinated groups have "no one but themselves to blame." Once it is accepted that the legal rules that structure markets are inevitably the product of political decisions that could have been made differently, and that "the market" can take many forms with different effects on the growth and distribution of wealth and opportunity,296 it becomes harder to deny that political choices in market design bear responsibility for today's unequal economic outcomes.297 Attention shifts away from the individual as the focus of causal explanation and moral blame.

Because the state bears significant responsibility for any market outcome, it becomes harder to assume that those who have fared better are more "deserving," or that those who have fared worse are "undeserving" whatever "undeserving" might mean in a world where inequalities accumulate across generations. In a country whose laws have approved of the owning and breeding of human beings as slaves,298 the ethnic cleansing of indigenous lands,299 other forms of conquest,300 the denial of the vote to women,301 the exclusion of immigrants based on race,302 the violent suppression of organized labor,303 the detention of citizens in concentration camps,304 and ongoing mass human caging at a rate unmatched by any other country in the world,305 the meaning of "just deserts" in the present day is, to say the least, far from clear.

In sum, the greatest advantage of legal institutionalism from an egalitarian perspective lies in the potential for legal institutionalism to undermine the myth of just deserts.306 Once this myth has lost its plausibility, it becomes much easier to make the case not only for egalitarian policies of market redesign, but for egalitarian fiscal policies as well. A contemporary liberal, progressive, social democrat, or democratic socialist who favors currently radical fiscal policies such as a Green New Deal, a job guarantee, or a guaranteed minimum income has as much reason to support a legal institutionalist reframing of economic debate as someone who primarily seeks to achieve egalitarian ends through the redesign of markets.307

Instead of assuming that "freedom" must forever consist of submission to a mythical natural order of market rules, legal institutionalism opens the door to the realization of a more fundamental and enduring liberal ideal: the democratic and experimental reconstruction of our world, without predetermined end. Freed from illusions of false necessity and arbitrary ideological constraints, legal institutionalism invites us simply to ask, in a pragmatic spirit: what rules will best realize our freedom as we, democratically, define it?