The question I wish to take up in this paper is whether competitive markets, as mechanisms that initiate the distribution of scarce goods, allocate those goods in accordance with what participants in those markets deserve. I want to argue that in general people do not in fact deserve what they get from market interactions, when “what they get” is determined by the competitive forces coming to bear on the market (the laws of supply and demand). This more general claim is meant to apply to all participants in the market (workers and their wages as well as capitalists and their profits). However, my strategy here is to focus on the particular case of the role of entrepreneurs, as I will define them, and whether they deserve the profits they reap in a competitive capitalist market. In particular, I will argue that the claim that entrepreneurs deserve their profits, when spelled out precisely, is indeed not plausible. Generalizing from this claim, I want to suggest how moral desert is inappropriate as a justification of market shares whenever competition determines the magnitude of those shares.

I should stress, though, the particularity of my central claim: it is that “(strictly speaking) entrepreneurs do not (strictly speaking) deserve their (strictly speaking) profits.” This is not to say that, for other reasons (for example, reasons of entitlement or utility), people should not receive the rewards doled out by a market. My claim is only that desert has nothing directly to do with it.

I am deviating significantly here from the usual strategy for denying the relevance of desert claims to principles of distributive justice.

John Donne's song was hardly written in the tradition of political philosophy, but it has a good deal to say about the theme of luck, both good and bad, which I want to address. There is no doubt but that bad luck has bad consequences for the persons who suffer from it. If there were a costless way in which the consequences of bad luck could be spread across everyone in society at large, without increasing the risk of its occurrence, then most of us would pronounce ourselves better off for the change. In this sense it can be said, for example, that there is a utilitarian grounding for a moral obligation to care and provide for those persons who suffer the fortunes of bad luck. For the sake of argument I do not wish to contest this particular starting point, although there are many who would. Instead, I want to ask the question of whether this moral obligation should be converted into a legal obligation, backed by public force. The dominant answer to that question today is yes. Even those who think that markets should determine decisions on production find that the state has a proper role to reduce the adverse consequences of bad luck. My cast of mind is more skeptical. In life, or, in this instance, politics, “come bad chance, and we do join to it our strength.” In general the effort to use coercion to counter the adverse effects of luck tends only to make matters worse.

In what follows, “persons” are ideal-typical concepts of human beings, deployed expressly or supposed implicitly in particular theoretical contexts. Thus, the person of Kantian moral philosophy is a pure bearer of moral predicates, bereft of all properties that empirically distinguish human beings from one another: properties that, in Kant's view, are irrelevant to moral deliberation. No man or woman, actual or possible, could be so starkly featureless. But Kant's aim was not to describe human beings in actual or possible deliberations, but moral agency as such. Similarly, homo oeconomicus, economic man, is not a composite man or woman, but also a person, a theoretical construct introduced for explanatory purposes in models of economic behavior. My aim is to investigate capitalist persons: ideal-typical concepts of human beings deployed in justifying theories of capitalist property relations.

I shall identify two capitalist persons, and impugn one of them. To situate my position historically, I call the impugned person Lockean, and the other Kantian. It is tempting to designate the Lockean person “the capitalist person.” However, this characterization would be misleading. Justifying theories of capitalism can employ either concept, and both can serve in accounts of socialist economies. Nevertheless, the Lockean person is tendentially procapitalist while the Kantian person is not.

What follows is therefore relevant to the broader capitalism/socialism debate. To fault the Lockean person is not quite to fault capitalism itself. But a case against the Lockean person, if successful, would undermine an important strain of procapitalist argument. More importantly, the considerations I will adduce suggest a way of thinking about distributive justice and, ultimately, an ideal of equality that socialism, but not capitalism, can in principle accommodate.

From the standpoint of libertarian ideology, capitalism is a form of liberation. In contrast to the slave, whose productive powers are wholly owned by his master, and the serf, whose productive powers are partially owned by his lord, the worker under capitalism is presented as possessing the fullest possible self-ownership. That capitalism fosters self-ownership is a false and stultifying myth. Exposing its errors from within capitalism's own conceptual framework requires a careful analysis of the concept of a person's “ownership” bodh of his or her productive powers and of the means of exercising these productive powers. This analysis will show that, in certain plausible circumstances, the capitalist economic system can make full self-ownership impossible. Since capitalism's supposed nurturing of self-ownership provides one of the major justifications for its moral legitimacy, capitalist ideology has a serious internal inconsistency.

In a series of important papers, G.A. Cohen has developed a forceful argument for the claim that workers are rendered unfree by capitalist institutions. His argument poses a powerful challenge to those (such as myself) who think that capitalist institutions best promote freedom. Yet, formidable as it is, Cohen's argument can be shown to be flawed at several crucial points. It is not one argument, but three at least, and one of the goals of my criticism of Cohen on this question is to distinguish and assess the various separate lines of reasoning that together make up his case for the unfreedom under capitalism of workers as a class. Cohen argues of workers that they are rendered unfree by the institution of private property on which the capitalist system depends, that they suffer a form of collective unfreedom under capitalism, and that they are forced to sell their labor power under capitalism.

The authors of Habits of the Heart (Robert N. Bellah, Richard Madsen, William M. Sullivan, Ann Swindler, and Steven M. Tipton; hereafter, simply Bellah) charge that America is losing the institutions that help “to create the kind of person who could sustain a connection to a wider political community and thus ultimately support the maintenance of free institutions.” Bellah fears that “individualism may have grown cancerous – that it may be destroying those social integuments that Tocqueville saw as moderating its more destructive potentials, that it may be threatening the survival of freedom itself.”

Proponents of the liberal free market order should, I will argue, take seriously the concerns that motivate Bellah and company: citizens of a liberal regime cannot live by exchanges alone. Liberal constitutionalism depends upon a certain level and quality of citizen virtue. But while the need for virtue is often neglected by liberal theorists, it is far from clear that the actual workings of liberal institutions have drastically undermined virtue in the way Bellah's dire account suggests. That analysis serves, moreover, as the springboard for a radically transformist argument that seeks, not so much to elevate and shape, but to transcend and deny, the self-interestedness that the free market exercises. Having argued against Bellah's analysis and prescriptions, I shall attempt to show how the phenomena he describes are open to an interpretation that is happier from the point of view of a concern with virtue. I shall end by using Tocqueville to suggest that combining liberal capitalism with intermediate associations like voluntary groups and state and local government helps elevate and shape self-interest, promoting a citizenry capable of and insistent upon liberal self-government.

Mainstream economics evaluates capitalism primarily from the perspective of efficiency. Social philosophy typically applies other or additional normative criteria, such as equality, democracy, and community. This essay examines the implications of these contrasting sets of criteria in the evaluation of capitalism. Its first two sections consider the criteria themselves, assuming that a trade-off exists between them. The last three sections question whether such a trade-off necessarily occurs, and explore the claim that improvements in nonefficiency dimensions of capitalist society may enhance, rather than conflict with, efficiency.

The debate that raged in the interwar period between the Austrian economists (who argued the thesis that under socialism it would not be possible to engage in rational economic calculation) and socialist economists (who rejected that thesis) was, narrowly conceived, a debate in positive economics. What was being discussed was certainly not the morality of capitalism or of socialism. Nor, strictly speaking, was the debate even about society's economic well-being under socialism; it concerned the ability of central planners to make decisions that take appropriate account of relevant resource scarcities, in the light of consumer preference rankings. To be sure, the extraordinary interest which surrounded the debate and the passions that lurked barely below its surface testified to the powerful implications of the debate for crucial issues in welfare economics. The Austrians were not merely exploring the economies of socialism; they were in effect demonstrating that, as an economic system attempting to serve the needs of its citizens, socialism must inevitably fail. But, even if the debate is interpreted in its broadest terms, as a debate in welfare economics, it represented a sharp break widi traditional polemics relating to the socialism-capitalism issue. Traditionally the arguments for or against capitalism had, until 1920, been deeply involved in ediical questions. Mises's 1920 challenge to socialism, in contrast, was explicit in making no attempt to address any claims concerning the alleged moral superiority of socialism. He simply argued that, as an economic system, socialism was inherendy incapable of fulfilling the objectives of its proponents; central planners are unable to plan centrally.

It has often been remarked that the most eloquent tribute ever paid to the incomparable effectiveness of capitalist social arrangements as means for achieving economic growth was that of the Communist Manifesto. Yet it is rather rare to notice that neither Marx nor Engels, either there or elsewhere, either asks or attempts to give an answer to a question which, to anyone proposing to revolutionize these arrangements, ought to have appeared crucial: namely, “What was the secret, and how shall we ensure that, under our proposed alternative arrangements, that secret is not lost?”

How is one to set about the task of comparing capitalism and socialism in a systematic fashion? The contest between capitalism and socialism has many facets. It is both an intellectual debate about the relative merits of models of hypothetical social systems and a real and substantive historical struggle between two groups of states seen as representing capitalism and socialism. Perhaps the intellectual challenge to capitalism thrown down by Marxist thinkers and the “cold war” contest between the U.S.A. and U.S.S.R. are such diverse phenomena that it is pointless and even misleading to try to treat them as part of a single problem. However, I believe that the dieoretical and historical aspects of the capitalism/socialism issue are directly related. I would argue that a full understanding of, say, the cold war is not possible without understanding the socialist critique of capitalism – and that a purely abstract comparison of capitalist and socialist models would fail to do justice to the historical and empirical essence of these two grand conceptual schemas.

In Section I, I expand upon these arguments, seeking to convince Utopian socialists that they should not continue to rely upon invocations of a hypothetical future, but must come up with some empirical examples of what socialism is and how it works. After all, it is more than a hundred years since Marx and Engels railed against Utopian socialists in favor of socialist arguments based on empirical reality. This is not to say that Marx and Engels were crude empiricists, accepting “facts” at face value.