Tradeoff DA – use of redistribution to ameliorate the market’s negative externalities siphons collective energy away from radical policy change

Alan Thomas, “Rawls’s Critique of Welfare-State Capitalism,” in Republic of Equals: Predistribution and Property-Owning Democracy, Oxford University Press 2017, pp. 181-182.

Rawls thinks that there are such factors:  welfare-state capitalist societies permit concentrations of wealth in private hands because they have a limited focus on ex post facto redistributions of income by tax and transfer policies. If my argument in chapter 2 is correct, then that leaves in place a structure of incentives that can lead to domination. Rawls unequivocally states that welfare-state capitalism involves the “neglect of a principle of reciprocity.”2 Rawls believes that this fact has further damaging political consequences: given that such societies have no intrinsic concern with reciprocity, they also violate the value of solidarity. In the inherently competitive space of pressure for political influence, the better off and the best off will work toward a political consensus that may well undermine the basic liberties if left unchecked by any failure to secure their fair value. (This is Rawls’s first concern about welfare-state capitalism in the passage quoted.)

That objection seems unfair:  surely there are welfare-state capitalist societies that implement forms of “isolation strategy” that try to keep money out of politics? The critic can retort that Rawls’s fair value guarantee for the political liberties was disappointingly thin. But my argument in chapter  4 was that actually we ought to see Rawls’s disjunctive proposal of a property-owning democracy or liberal market socialism as his more effective “fair value” guarantee for the basic liberties than any insulation strategy alone. That point can be redeployed in Rawls’s support in this chapter contrary to the way in which I used it to criticize him in chapter 4: insulation strategies leave in place structures of domination in the same way that welfare-state capitalism leaves in place a structure of domination. The worst off, denied the protection of a genuine principle of reciprocity, depend on the “accidental mildness” of other sectors of society for their life prospects.

Rawls’s first point in his critique of welfare-state capitalism leads directly to his second: that a democratically determined consensus will work against an appropriate degree of wealth transfer genuinely to implement justice. The consensus will, instead, grudgingly concede an underfunded “decent” social minimum appropriate to Sidgwick’s “expedient” society, not a just society. While the welfare-state capitalist state has, as Rawls puts it, “some concern for equality of opportunity, the policies necessary to achieve that are not followed” (Rawls, 2001, p. 138). This concern is, of course, magnified if my arguments in chapter 4 are correct: if either the difference principle or the FEO principle is not implemented, then I have predicted that the basic liberties principle will be in jeopardy, too. Rawls here echoes critics of welfare-state capitalism from the Left: it is a safety valve that vents social discontent with the worst excesses of capitalist inequality, and does so successfully. But this should not be confused with a society designed to be just by implementing a principle of reciprocity.