It is my intention in this paper to highlight the dangers which arise when people appeal to moral intuitions to settle questions in political, and in general in applied, philosophy. But first I want to ask why all or nearly all of us are in favour both of liberty and of equality – why all our intuitions are on their side.

In the case of liberty it is easy to understand why. Although philosophers have held diverse theories about the concept of liberty – theories which have been drawn together into two main groups in a famous lecture by Sir Isaiah Berlin – there cannot be much doubt that in the mind of the ordinary man to have liberty (to be free; I shall not distinguish between freedom and liberty) is to be under no constraint in doing what one wants to do. This, at any rate, is a main constituent of the concept of liberty as all of us understand it.

Since, therefore, it seems self-evidently true that we want to be able to do what we want, we are bound to want liberty and, in general, to be in favour of it. We want it for ourselves; if we universalize our prescriptions, this constrains us to be in favour of it for others as well. That explains why, if any politician can claim that he is fighting for liberty, he is likely to win a large following.

In the case of equality the matter is not so clear cut.

How valuable is the market mechanism for practical morality? What is its moral standing? We can scarcely doubt that as individuals we do value tremendously the opportunity of using markets. Indeed, without access to markets most of us would perish, since we don't typically produce the things that we need to survive. If we could somehow survive without using markets at all, our quality of life would be rather abysmal. It is natural to feel that an institution that is so crucial to our well-being must be valuable. And since moral evaluation can hardly be indifferent to our interests and their fulfillment, it might appear that there is nothing much to discuss here. The market's moral standing “has to be” high.

Is there anything morally special about free exchange? In asking this, I am asking not only about extreme, so-called “libertarian” views, on which free exchange is sacrosanct, but about more widespread, moderate views, on which there is at least something morally special about free exchange. On these more compromising views, other moral considerations may override the moral importance of free exchange, but even when rights of free exchange are restricted for good reason, something morally important is lost. For some, free exchange may preserve liberty, in some morally significant sense, or realize some such moral value as “to each his own.” Alternatively, a system of free exchange may have a special moral status by virtue of the kinds of pragmatic arguments that economists give, arguments that free exchange produces good social results. Whether free exchange has any such virtues as these is the broad question I address in this paper. I offer what I have to say somewhat in the spirit of an overview. Philosophical scrutiny and economic analysis combine, it seems to me, to delineate fairly clearly what is, and what is not, morally special about free exchange.

There are no first principles etched in stone from which all moral philosophers must take their bearings. We must deliberately choose our point of departure in any attempt to respond to the question: “Must any defensible theory of justice incorporate both a commitment to personal liberty and to economic equality?” Basic to our own approach is a suspicion of seers and visionaries who espy an external source of values independent from human choices. We presuppose, instead, that political philosophy commences with individual evaluation.1 A near-corollary of this presupposition is that each individual's preferences ought to be taken into account equally with those of others. That is, we suppose that there is no privileged evaluator, whose preferences are accorded decisive weight. Conceptual unanimity as a criterion for institutional evaluation follows naturally from the other two presuppositions. If there is neither an external standard of value nor a corps of resident value experts, only unanimity can ultimately be satisfactory as a test of social desirability. Our perspective then is subjectivist, individualist, and unanimitarian.

These presuppositions inform our contractarian analysis. There are, however, two separate contractarian traditions that we shall find useful to distinguish, the “Hobbesian” and the “Rawlsian.” In the first, persons find themselves in the anarchistic war of each against all. They contract away their natural liberties in exchange for the order that civil society – through its sovereign – affords. In this contracting process, individuals are assumed to possess full self-knowledge; they know who they are, what conceptions of the good they hold, and what their endowments are.

The subject of this essay is political, and therefore social, philosophy; and therefore, ethics. We want to know whether the right thing for a society to do is to incorporate in its structure requirements that we bring about equality, or liberty, or both if they are compatible, and if incompatible then which if either, or what sort of mix if they can to some degree be mixed. But this fairly succinct statement of the issue before us requires considerable clarification, even as a statment of the issue. For it is widely, and in my view correctly, held that some sort of equality is utterly fundamental in these matters. We seek a principle, or principles, that apply to all, are the same for all. In that sense, certainly, equality is fundamental and inescapable. But this is a very thin sort of “equality.”

It will almost equally widely be agreed that the principles in question should in some more interesting sense “treat” people equally, e.g., by allotting to all the same set of rights, and moreover, rights that are – again we have to say “in some sense” – nonarbitrary, so that whatever they are, persons of all races, sexes, and so on will have the same fundamental rights assigned to them. Taking this to be, again, essentially uncontroversial, though not without potentially worrisome points of unclarity, it needs, now, to be pointed out that this characterization does not settle the issue that this essay is concerned with. That issue is about economic matters in particular.

My concern in this paper is with the illumination that the theory of rational bargaining sheds on the formulation of principles of justice. I shall first set out the bargaining problem, as treated in the theory of games, and the Nash solution, or solution F. I shall then argue against the axiom, labeled “independence of irrelevant alternatives,” which distinguished solution F, and also against the Zeuthen model of the bargaining process which F formalizes.

De gustibus non est disputandum. This maxim reflects a fundamental problem both for the study of markets and for the concern with morals. The problem is the intractability of tastes coupled with their indispensability for both positive and normative economics. Tastes are indispensable in positive microeconomic theory because, under the label ‘preferences,’ they, together with expectations, determine choice and behavior. Tastes are equally indispensable to welfare economics' conception of morally permissible arrangements, because these arrangements must reflect compromises between competing and conflicting preferences.

Future historians of moral and political philosophy may well label our period the Age of Rights. In moral philosophy it is now widely assumed that the two most plausible types of normative theories are Utilitarianism and Kantian theories and that the contest between them must be decided in the end by seeing whether Utilitarianism can accommodate a prominent role for rights in morality. In political philosophy even the most bitter opponents in the perennial debate over conflicts between liberty and equality often share a common assumption: that the issue of liberty versus equality can only be resolved (or dissolved) by determining which is the correct theory of rights. Some contend that equal respect for persons requires enforcement of moral rights to goods and services required for the pursuit of one's own conception of the good, while others protest that an enforced system of ‘positive’ rights violates the right to liberty whose recognition is the essence of equal respect for persons. The dominant views in contemporary moral and political philosophy combine an almost unbounded enthusiasm for the concept of rights with seemingly incessant disagreement about what our rights are and which rights are most basic. Unfortunately, that which enjoys our greatest enthusiasm is often that about which we are least critical.

My aim in this essay is to take a step backward in order to examine the assumption that frames the most important debates in contemporary moral and political philosophy – the assumption that the concept of a right has certain unique features which make rights so especially valuable as to be virtually indispensable elements of any acceptable social order.

This essay is part of a larger project exploring the extent to which the market paradigm might be usefully employed to explain and in some instances justify nonmarket institutions. The focus of the market paradigm in this essay is the relationship between the idea of a perfectly competitive market and aspects of both the rationality of political association and the theory of collective choice. In particular, this essay seeks to identify what connections, if any, exist between one kind of market account of the rationality of political association and one kind of market-based social choice rule. The market theory of political association I intend to discuss I call “market contractarianism,” and the collective choice rule whose relation to it I intend to explore is the unanimity rule. What, if anything, is the relationship between market contractarianism and the unanimity rule?

Philosophers have articulated six notions of human freedom. Four are metaphysical. According to one, a man acts freely when he is doing what he wants to; according to the second, he acts freely when he is not being compelled by outside forces; according to the third, he acts freely when the prior state of the universe was not a sufficient cause of what he is doing; according to the fourth, he acts freely when he, not any preceding event, is the cause of what he is doing. The third and fourth theories may be called “indeterministic freedom” and “the agency theory,” named only to be rejected. I reject indeterminism out of agreement with a long tradition which holds that (a) there is no reason to think that human actions are ever undetermined, and (b) an undetermined human action would not be “free” in any sense in which we desire our actions to be free and believe that they are in fact free. To appreciate (b), reflect that agents should control and be accountable for “free” actions. Now, we control an event by assembling or obstructing its sufficient conditions; merefore, an event without sufficient conditions, a random event which just happens, would lie beyond human control and, hence, the sphere of human freedom. Similarly, a man is no more responsible for what happens independently of his choices – and an event without sufficient conditions cannot have a choice as a sufficient condition – than he is responsible for the behavior of a roulette wheel.

Utilitarianism and the Concept of Social Utility

In this paper I propose to discuss the concepts of equality and justice from a rule utilitarian point of view, after some comments on the rule utilitarian point of view itself.

Let me start with the standard definitions. Act utilitarianism is the theory that a morally right action is one that in the existing situation will produce the highest expected social utility. (I am using the adjective “expected” in the sense of mathematical expectation.) In contrast, rule utilitarianism is the theory that a morally right action is simply an action conforming to the correct moral rule applicable to the existing situation. The correct moral rule itself is that particular behavioral rule that would yield the highest expected social utility if it were followed by all morally motivated people in all similar situations.

Rousseau has the reputation of being a radical egalitarian. I shall suggest that a more careful reading of his work shows him to have been hardly more egalitarian than Plato. He was undoubtedly disturbed by existing inequalities, especially as he observed them in France. He had an original and interesting theory about how inequality among men came into being; he also set out what he considered to be the connections between equality and freedom. As a champion of a certain idea of freedom, he wrote in favor of specific sorts of equality; even as Plato, as the champion of a certain idea of justice, wrote in favor of putting every man in his place. The great difference is that Plato believed that men were never equal, whereas Rousseau believed they had once been equal but no longer were.

To the proposition that all men are born equal he could be said to subscribe only in the sense that “all men were originally equal”. Rousseau argued that equality prevailed in the state of nature; but he also said it would be wrong to expect, even to desire such equality in civil society. In the final footnote to his Discourse on the Origins of Inequality (hereinafter called the Second Discourse) he wrote (in 1753): “Distributive justice would still be opposed to that rigorous equality of the state of nature, even if it were practicable in civil society.”1

Commentators eager to claim Rousseau as an egalitarian, or proto-Marx, ignore this footnote; as for the opinions expressed in the Dedication to the Second Discourse, opinions no less at variance with egalitarian ideology, they tend to be dismissed as empty hyperbole, designed to ingratiate the philosopher with the authorities of Geneva at a time when he wanted to recover his rights as a citizen and burgess.

The Problem

Economic efficiency is naturally thought to be a virtue of social policies and decisions, and cost-benefit (CB) analysis is commonly regarded as a technique for measuring economic efficiency. It is not surprising, then, that CB analysis is so widely used in social policy analysis. However, there is a great deal of controversy about CB analysis, including controversy about its underlying philosophical rationale. The rationales that have been proposed fall into three basic, though not mutually exclusive categories. There are moralist views to the effect that an acceptable CB analysis would provide, or contribute to, an ethical appraisal of proposed policies or projects. There are rationalist views to the effect that an acceptable CB analysis would contribute to the selection of social policies and projects that are “socially rational.” Finally, there are so-called management science views to the effect that the purpose of CB analysis is to promote the achievement of objectives held by the policy maker, whatever they may be. Different positions are available within each of these categories. But there is also the possibility that CB analysis lacks any viable rationale. I will examine some of the major rationales for CB analysis in this paper, and I will suggest that the last view is close to the truth.

As today's battles rage between those who march under the banner of liberty and those who unfurl the flag of equality, even an engaged partisan might be forgiven for occasionally wondering whether the game is, after all, worth the candle. For one thing, neither party simply rejects the other's principle – properly understood. Egalitarians routinely emphasize that their concern for equality is, also, a concern for true liberty; thus Michael Walzer, writing “In Defense of Equality,” finds it “worth stressing that equality as I have described it does not stand alone, but is closely related to the idea of liberty.”1 Libertarians tend to be less enthusiastic in their embrace of equality, but almost all endorse some form of equality or other – for example, equality of political rights or equality before the law. It would seem, then, that the differences between egalitarians and libertarians are really over the meaning and scope of equality and liberty, and that putting the issue as one of equality vs. liberty may be misleading.

More important, one can wonder whether either the egalitarian or the libertarian combination of the principles of liberty and equality is worthy of support. What society has exalted personal liberty, has taken rights more seriously, than ours? Yet who can easily dismiss Solzhenitsyn's charge that our worship of freedom has resulted in “destructive and irresponsible freedom” being granted “boundless scope,” leaving us defenseless against “the corrosion of evil”?2 The cause of liberty against tyranny surely continues to command our support; but what conclusion ought we to draw from the facts that liberty in absentia seems so markedly more attractive than liberty in practice, and that the qualities manifested in the struggle for liberty seem so superior to those that come to the fore once liberty is secured?

As Sir Thomas Browne solemnly observed in his Religio Medici, “Heresies perish not with their authors but, like the river Arethusa, though they have lost their currents in one place, they rise up in another.” So too with the economist's valuation of life, the heresy being that–without seriously challenging the current concept of subjective valuation of changes in risk–economists have regressed to the once-persistent belief that it bears some quantitative relation, if not to expected earnings, at least to the utility of expected earnings or capital or consumption. This old-tyme recipe for estimating the value of a human life – notwithstanding the ornate convolutions and occasional intellectual effronteries to be found in the more recent versions–is much like that for calculating the value of a two-week honeymoon for a loving couple by reference to their anticipated outlays (including foregone earnings) plus perhaps an allowance for the probability of non-consummation owing to frigidity in either.

The Ministry of Transport is planning for the construction of new roads in its territory. Many projects are being considered, and the Ministry needs to identify the worthwhile projects for which the benefits exceed the costs. Among costs and benefits are the expense of constructing the road, the time saved by motorists using the new road rather than some other road, the time saved through the reduction of congestion on other roads, and the expected increase or decrease in the number of deaths due to traffic accidents. I am concerned in this paper with the last item on the list. It is, of course, difficult to estimate fatalities accurately, but this difficulty is neither unique nor central to our problem. The problem is how best to place a monetary value on fatalities, so that the expected number of fatalities can be compared with other costs and benefits in deciding whether to build a road. However chosen, the monetary value of fatalities for use in this context is what the economist means by “the value of life.” The term is almost a joke, a bit of gallows humor to exorcise the ghoulishness that inevitably clings to analysis of life and death in monetary terms.

1. In praise of Tocqueville. The young United States was lucky – and deserving of its luck – to find as profound an interpreter of its principles as Alexis de Tocqueville (1805–1859). So deeply, so philosophically, did he comprehend this country in Democracy in America1 that today's reflections on liberty and equality in America either copy Tocqueville or fall short of understanding. The following reflections will be guilty of both plagiarism and superficiality but they do intend to capture something of Tocqueville's spirit. He gave this nation its due. He brought to his endeavors some advantages we no longer enjoy. For example, he had first-hand experience of democracy's great alternative and predecessor, aristocracy; he knew both sides because he was both sides.

Of course, some advantages accrue to those of us who have come after him, even apart from having Democracy in America to study. The United States may not be old but it is older now; we can take later developments into account. Thus, we no longer lack poets or poetry; we probably suffer as much from crime as from vice; and juries do not function all that well. But no dwarfish ability to climb the shoulders of a giant nor special dispensation from history can compensate us for the lack of Tocqueville's genius: the breadth of vision that recalls Montesquieu and even Aristotle, an intimacy, reminiscent of Rousseau, with modernity's demons, a sad coming to terms with human contingency that puts one in mind of Thucydides. All honor to Alexis de Tocqueville.

“Towards a Theory of Taxation” is a proper theme for an Englishman to take when giving a paper in America. After all it was from the absence of such a theory that the United States derived its existence. The Colonists felt strongly that there should be no taxation without representation, and George III was unable to explain to them convincingly why they should contribute to the cost of their defense. Since that time, understanding has not advanced much. In Britain we still maintain the fiction that taxes are a voluntary gift to the Crown, and taxing statutes are given the Royal Assent with the special formula, “La Reine remercie ses bons sujets, accepte leur benevolence, et ainsi le veult” instead of the simple “La Reine le veult,” and in the United States taxes have regularly been levied on residents of the District of Columbia who until recently had no representation in Congress, and by the State of New York on those who worked but did not reside in the State, and so did not have a vote. Taxes are regularly levied, in America as elsewhere, on those who have no say on whether they should be levied or how they should be spent. I am taxed by the Federal Government on my American earnings and by state governments on my American spending, but I should be hard put to it to make out that it was unjust. Florida is wondering whether to follow California in taxing multinational corporations on their world-wide earnings.