Social cohesion – redistribution’s focus on a “social minimum” condition sufficient to redress inequality is unsustainable – it fails to address the conditions that alienate people from inclusion within the polity, breeding institutional decay absent the democratization of power

Audard 23 – Senior Visiting Fellow in the Department of Philosophy at the London School of Economics.

Catherine Audard, “Addressing the rise of inequalities: How relevant is Rawls’s critique of welfare state capitalism?” Journal of Social Philosophy, 22 March 2023, pp. 3-6, https://onlinelibrary.wiley.com/doi/full/10.1111/josp.12517.

Recent studies of inequalities have shown that if income inequalities have risen since the 80s in most developed economies, it is the rise of wealth inequalities which is most worrying for the future of social democracies, traditionally associated with rising prospects for the middle classes and social mobility. Instead, a capture of political power by the wealthy 1%, a quasi “oligarchisation” 2 of society, is taking place due to extraordinary differences in capital ownership. In his book, Capital in the 21st Century, Thomas Piketty describes the history of this process and how inequalities of both income and wealth have evolved over more than two centuries in Europe and the United States. They have now reached levels not seen since the 19th Century. Even if very high incomes are justified in a meritocratic democracy, they lead to extreme wealth accumulation and to forms of both financial and political oligarchies that have captured the political agenda. “There is,” says Piketty, “a near-perfect correlation between decreasing levels of wealth taxes and the growth of the wealth of the 1%. The political process has been captured by the 1% and has prohibited any significant review of income and inheritance taxation rates” (Piketty, 2013, p. 823).

Thomas (2017b) describes this “new normal” as leading to a structural fall in the level of demand that contradicts the Keynesian view of demand-led economic growth. Insufficient demand due to income and wealth deficits leads to excessive debt and higher levels of taxation for the middle classes. If consumption inequality is still not as extensive as income and wealth inequality, it is because access to essential goods such as healthcare, housing and education remains dependent on high levels of debt, leading to the comparatively worse off being burdened by unforgiven debts. This “new normal” explains the end of the kind of sustained prosperity and social cohesion that the West had experienced in the post-war years until the 80s. In other words, wealth inequalities have made democratic societies more polarized and the burden of the welfare state more and more unsustainable. The unequal transmission of wealth and capital and the growing political power of social, cultural, and economic elites that ensues are then responsible for the weakening of democratic institutions, even in long-established democracies. Fighting unfair inequalities is a most urgent aim to strengthen increasingly fragile democracies. As former US Supreme Court Justice Louis Brandeis said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both.”

2.2 | In what sense is Rawls's critique of WSC “political”?

It is remarkable that a similar verdict was advanced by Rawls in Justice as Fairness as well as in the Preface for the revised edition of A Theory of Justice. It was also briefly present in the original version of TJ but was too easily missed or overlooked by readers (Rawls, 1971, p. 274). Some commentators note that, in fact, Rawls was explicitly thinking about the role of wealth inequalities, capital ownership and POD as early as in 1951 or 1952 (Forrester, 2019, pp. 16–18; Kloppenberg, 2022, pp. 41–44).3

What is striking in Rawls's critique of WSC is his insight that the political consequences of inequalities of wealth and what he calls “background justice” (Rawls, 1999, pp. 73–78), that is, inequality of power and participation in democratic politics, have not been included in its program of redistribution. Its aims have been mostly to remedy economic hardships, poverty, and loss of income, not the inequal distribution of wealth which has been allowed to develop. As a consequence, WSC “permits very large inequalities in the ownership of real property (productive assets and natural resources) so that the control of the economy and much of political life rests in few hands” (Rawls, 2001, p. 138). Keynesian policies have helped capitalism to survive crises and fight poverty in the post-war years, but without addressing the structural causes of poverty and inequalities. Reducing-poverty measures such as income transfers and increased benefits have not done enough to limit inequalities and have aggravated dependency. “The redistribution of income… given the lack of background justice and inequalities in income and wealth may develop a discouraged and depressed underclass many of whose members are chronically dependent on welfare” (Rawls, 2001, p. 140). There is a general agreement that working-class and even lower middle-class incomes have stagnated since the 1980s and social mobility has come to a standstill because redistribution has not eradicated the causes of inequalities. Poverty was the main target for Keynesian policies as it was an obstacle to a type of economic growth and prosperity fuelled by consumption and demand, leaving inequalities as necessary in a market economy or even justified in a meritocracy. Given Rawls's rejection of utilitarianism's view of welfare, even in the form of a “restricted utility principle” (Rawls, 2001, §38)—the dominant post-war ideology- as well as of meritocracy, his criticism of the welfare state should not come as a surprise. Anticipating on Piketty's inquiry, Rawls claims that the transmission of capital and wealth is one of the structural causes of unjust inequalities and of what he calls “background injustice.” This is the reason why he advocates a social policy that would aim at widely dispersing capital ownership and make it possible to apply his principles of justice to the basic structure of society and to fully democratize it: a “property-owningdemocracy” (POD thereafter, Rawls, 2001, pp. 139–140 and pp. 158–162).

Rawls's harsh conclusion is that WSC is incompatible with his two principles of justice because it allows “large and inheritable inequities of wealth incompatible with the fair value of the political liberties (introduced in §36), as well as large disparities of income that violate the difference principle” (Rawls, 1999, p. xv, my emphasis). Income-based inequalities can be remedied with benefits and income transfers. But these transfers are either insufficient or ineffective to fully secure fair equality of opportunities (the second principle of justice) as inheritance taxes and legislation fail to correct inequal starting points. They do not try to impact the basic structure of society, to “mitigate the arbitrariness of natural contingency and social fortune” (Rawls, 1999, p. 82), only to remedy individual circumstances and accidents of fortune. In other words, Rawls claims, benefits and income-transfers may momentarily increase demand and purchasing-power and reduce poverty, but they do not succeed in reducing structural and lasting inequalities of wealth.

2.3 | WSC and the fair value of political liberties

I would like now to stress that Rawls's first criticism of WSC is political as it concerns its impact on the distribution of political power. WSC tends to overlook the dangers of concentration of capital for the fair value of political liberties, Rawls's part of the first principle of justice as fairness (Rawls, 2001, p. 51). The illusion of WSC stems from its misunderstanding of the connection between political institutions and economic policies (Audard, 2007, p. 103). In contrast, a point not always clarified enough by Rawls himself, the theory of justice as fairness requires that its principles work as a single normative program that aims at reducing unfair inequalities and addressing both their political and economic roots. The measures needed to implement equal basic liberties, in particular political liberties and their worth, are only effective if they are supported by poverty-fighting redistributive policies. This is the striking point made by Rawls in his conception of justice. Equally, the measures supporting equality of opportunity and the difference principle, the second principle of justice as fairness, encourage political inclusion and equal citizenship: the two domains of the basic social structure are therefore inherently connected. “Both principles express political values” (Rawls, 2001, p. 48). Because of Rawls's emphasis on the political sources of inequality, one could label his view as quasi-republican in the sense argued for by Philip Pettit (Pettit, 1997), according to which “real” freedom demands political “non-domination,” not simply free choices and noninterference. “As far as this domination is experienced as a bad thing, as making many peoples' lives less good than they might otherwise be, we are again concerned with the effects of economic and social inequality” (Rawls, 2001, p. 131, my emphasis). WSC, being foremost concerned with increasing incomes and fighting poverty, does not address the fact that disadvantaged people are not only poor, but also politically dependent “on large concentrations of private economic and social power” (Rawls, 2001, p. 150). Protecting “the fair value of political liberties” (Rawls, 2001, pp. 148–150) creates a synergy between fighting for citizens' equal political influence and power, on the one hand, and reining in free-market processes and sustaining a more equal distribution of productive assets, on the other. Recognizing this synergy is an aim that “justice as fairness shares with civic republicanism” (Rawls, 2001, p. 150, my emphasis). Democratic governments, then, if they want to protect the worth of equal political rights need to put an end to state capture by private corporate interests and wealthy shareholders who can skew public policy and decision making in their own favor.4

2.4 | Rawls's critique of welfare dependency

A second criticism of WSC pressed by Rawls concerns the issue of stability and the threats to it created by the dependency of a rising and resentful underclass. This second “quasi-republican” argument insists that the stability of democratic institutions is threatened by the lasting exclusion of too many citizens, and even their alienation, from democratic politics because of their material insecurity and their prolonged dependency. This need for inclusion is ignored by WSC which is based on “the concept of a social minimum that is sufficient to cover the needs essential for a decent life” (Rawls, 2001, p. 129), but is certainly too low for what is needed for citizens to become fully integrated in the polity, to be able not only to exercise their rights, but also to support them and to see their value, “to affirm the principles of justice in our thought and conduct over a complete life” (Rawls, 2001, p. 128). The social minimum as measured by basic needs and the principle of restricted utility is unable to sustain a lasting and real commitment to the institutions of a just or quasi-just society and, instead, contributes to creating “a discouraged and depressed underclass, many of whose members are chronically dependent on welfare” (Rawls, 2001, p. 140). Even if WSC can regularly raise income levels, it still creates resentment “in asking the less advantaged to accept over the whole of their lives fewer economic and social advantages (measured in terms of utility)” (Rawls, 2001, p. 127), which leads to estrangement from and even rejection of democratic institutions that obviously do not work for them. This makes the “strains of commitment” (Rawls, 2001, pp. 128–130) excessive: less advantaged citizens will either reject society's demands of justice and its relevant obligations or grow distant from political society. Either way this will threaten democracy's stability. This is the second political argument against WSC based on Rawls's concern for the dignity and duties of citizenship and, again, for the importance of the political liberties that WSC does not take sufficiently into account, being bound up with an individualistic utilitarian ideology. Focusing on economic growth and consumption, and on the social minimum necessary to sustain it, WSC views justice and the distribution of wealth and opportunities as guided quasi-exclusively by capitalism's interests—this being a “capitalist” welfare state.

2.5 | A critique of purely remedial policies

Rawls's next criticism, then, is that the efficient allocation of resources at one point in time, given the needs, desires, and preferences of particular individuals, fails to address the damage to democratic institutions created by lasting inequalities of wealth. What is missing in welfare policies is an understanding of structural inequalities over time and of the value of predistribution that aims at preventing ex ante poverty and exclusion (O'Neill, 2020). Because they “take men's propensities and inclinations as given, whatever they are, and then, see the best way to fulfil them” (Rawls, 1999, p. 27, my emphasis), they tend to ignore the fact that wealth as well as poverty are both created over time as social products. This criticism of capitalism shapes Rawls's view of inequalities. A just welfare state should answer the rise of inequalities during a complete human existence and address life-prospects, not solely immediate consumption and purchasing power. Its ambition should be the lasting participation of the less advantaged in democratic institutions as well as their allegiance to their leading principles. The aim is not only to eradicate poverty, but to provide life-long solutions to the exclusion and disaffection of the less advantaged in so far as democratic institutions and political participation are concerned. The horizon is civic integration, not solely economic growth, and utility maximization. “While a social minimum covering only those essential needs may suit the requirements of a capitalist welfare state, it is not sufficient for what I call a property-owning democracy in which the principles of justice as fairness are realized” (Rawls, 2001, p. 130)