Markets as Fairness

Michael Sandel distinguishes two grounds for objecting to markets: fairness and corruption. Unlike Sandel, I think fairness is the deeper objection. Free markets, I suggest, are a kind of fairness. When we understand free market fairness, worries about corruption change too.

Consider an airline that sells passes allowing wealthy travelers to cut the security line and get screened first. Is this fair? Is it corrupting? Let’s find out.

It’s the day before payday. Wanda, Bill, Carl, and Pauline are planning trips from Boston to Washington, D.C. Wanda is the wealthiest, Pauline the poorest. Bill decides to buy a plane ticket on OptionAir, though he must wait till his paycheck arrives the next day. Carl and Pauline can’t afford to fly, so they plan to buy tickets on BudgetBus and must also wait till payday. Wanda goes online to buy her plane ticket immediately, hang the cost. OptionAir offers a pass to cut the security line. Wanda buys the pass too.

Business is booming at OptionAir. Revenues from their pass program enable them to lower their fares, compensating customers for slightly slower security lines, and luring new customers. Carl, who had been planning to take the bus like Pauline, decides to fly instead. Losing customers to OptionAir, BudgetBus reduces its fare. Pauline buys her bus ticket for less than she’d planned.

Travel day arrives. Wanda cuts the queue. Bill, whose plane ticket cost less than he’d budgeted, buys a latte to sip while waiting in the line. Carl also stands in the airport security line, relieved to have avoided the bus. Pauline boards the bus, extra money in her pocket.

Is it unfair that Wanda can purchase a pass to cut the security line? In his book What Money Can’t Buy, Sandel argues that fairness means waiting your turn. If Wanda wants to travel, she should stand in line with Bill. Call this the Nobody Cuts Principle.

But consider the situation holistically. Just as Wanda has “cut in front” of Bill simply because she can pay more than he, so Carl has “cut in front” of Pauline simply because he can pay more than she. According to Nobody Cuts, this is unfair. Carl should take the bus with Pauline. But then so should Bill, and Wanda too.

Here is a more attractive principle of fairness: basic freedoms protected, inequalities are justified if they benefit the poor. In our example, the system of rules that allows wealthy Wanda to purchase a pass operates in a way that benefits poor Pauline. Despite inequalities in their travel experiences, the system is fair. Call this the Social Justice Principle.

Does Bill have a special complaint? Pauline simply rides the bus. But Bill has to stand there and take it when Wanda cuts in front. Even flying cheaper, this injures Bill’s self-esteem. The pass program corrupts the communal experience of flying.

The emergence of “bleeding heart libertarianism” opens a new possibility.

The Social Justice Principle allows little patience for that kind of complaint from high-flyers such as Bill. Bill should focus less on himself and more on his fellow citizens, especially less fortunate citizens such as Pauline. Bill is a participant in a cooperative system designed to benefit the poor. The Social Justice Principle would urge Bill to hitch his self-esteem to that loftier communal star.

But what if the market system works differently? Wanda buys the pass, OptionAir lowers their fares, Carl decides to fly. But BudgetBus, unable to compete, closes shop. Pauline is forced to walk. And imagine this is not just an unlucky one-off: over time, let’s say, this system increasingly impoverishes the poor. This system thus runs afoul of the Social Justice Principle.

There was a time when defenders of free markets rejected social justice. Old-school libertarians and classical liberals claimed that market distributions define justice. If no property rights are violated, there is no moral difference between the first system I described and the second one.

The emergence of “bleeding heart libertarianism” opens a new possibility. In my book Free Market Fairness, I defend markets on grounds of democratic legitimacy.

But there is a kicker within this democratic laissez-faire view. A system is just only if it is intended to benefit the poor, but rights matter too. Imagine a third case. Some expert designs a system that allows everyone to fly. However, private economic liberties are curtailed. Line-cut programs are outlawed, true, but so is the choice of when and how often to fly.

Free market fairness would reject this system, even if it could materially benefit the poor. After all, people in this scenario have failed to stand up for their fellow citizens’ rights to make economic life choices for themselves. Citizens thus do not honor each other as free and equal self-governing agents. Markets truncated, their community is corrupt.

But, again, imagine a democratic system designed to protect economic liberty and materially benefit the poor. That market system, I believe, would be the fairest of them all.