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.

There has been much discussion in recent years of the role of moral ideas within Marxism. Marx's stringent criticisms of purely philosophical inquiry impose rather narrow limits on the form which a Marxian moral philosophy might take. For Marx often holds that moral ideas and moral theorizing are irremediably ideological. By this Marx appears to mean that moral ideas are part and parcel of a system of class domination, a way of preserving class domination through internalized norms. As many recent commentators have shown, however, these criticisms of moral reasoning, though present in Marx's system, cannot be the beginning and end of his stance on moral matters. For Marx himself is committed to making normative judgments about capitalism and socialism, and there is a richly textured set of normative ideas that run through his writings from early to late. Further, and perhaps more compellingly, there is a pressing need internal to Marxism for discussion of moral ideas in order to steer the course towards the attainment of socialism.

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.

There are two principal philosophical conceptions of socialism, corresponding to two interpretations of the notion of a rational society. The first conception corresponds to an instrumental view of social rationality. Captured by the image of socialism as “one big workshop,” the instrumental view holds that social ownership of the means of production is rational because it promotes the optimal development of the productive forces. Social ownership is optimal because it eliminates the costs of coordination imposed by the conduct of economic activities in formally independent enterprises, and, more generally, overcomes fetters on development that result from the control of resources by individuals whose particular interests (in profit) imperfectly correspond to a general interest in productive advance.

This paper stands at the confluence of two streams in contemporary political thought. One stream is composed of those critics of liberal political philosophy who are often described collectively as ‘communitarians’. What unites these critics (we shall later want to investigate how deep their collegiality goes) is a belief that contemporary liberalism rests on an impoverished and inadequate view of the human subject. Liberal political thought – as manifested, for instance, in the writings of John Rawls, Robert Nozick, and Ronald Dworkin – claims centrally to do justice to individuality: to specify the conditions under which distinct individuals, each with his own view about how life should be lived, can pursue these visions to the best of their ability. But, the critics claim, liberalism is blind to the social origins of individuality itself. A person comes by his identity through participating in social practices and through his affiliation to collectivities like family and nation. An adequate political philosophy must attend to the conditions under which people can develop the capacity for autonomy that liberals value. This, however, means abandoning familiar preoccupations of liberal thought – especially the centrality it gives to individual rights – and looking instead at how social relationships of the desired kind can be created and preserved. It means, in short, looking at communities – their nature and preconditions.

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.

Imagine a society of fisherfolk, who, in the state of nature, fish on a lake of finite size. Fishing on the lake is characterized by decreasing returns to scale in labor, because the lake's finite size (and finite fish stock) imply that each successive hour of fishing labor is less effective than the previous one, as the remaining fish become less dense in the lake. In the state of nature, the lake is commonly owned: each fishes as much as he pleases, and, we might suppose, calculates his fishing plan by taking the labor of the others as given, as he sees it. Each knows that the distribution of fish will be proportional to labor expended among the fisherfolk: if I fish twice as long as you, I will end up with twice as much fish as you. This is not due to some kind of concern with equity (or the labor theory of value) among the fisherfolk; it is a technological fact, implied by the assumption that fishing labor is homogeneous, and all are equally likely to catch a fish in a unit of time. An equilibrium under common ownership can be thought of as a Nash equilibrium of the game where each computes his optimal fishing plan, given the labor of the others and knowing what the consequent distribution of fish would be. (A Nash equilibrium is an allocation of labor and fish to each fisherman, with the property that no one can increase his utility by deviating in his choice of labor, given what the others are doing.)

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 this paper I want to discuss a well-known but poorly understood problem: how can socialists reconcile the observed paucity of cooperatives in capitalist societies with their alleged superiority on normative grounds? If cooperatives are so desirable, why don't workers desire them? If one's ideal of socialism is central planning, it is clear enough that it cannot emerge gradually within the womb of the capitalist economy. If instead it is something like market socialism, it is not clear that a discontinuous transformation of society is required. If workers want (market) socialism, they can start up here and now. If they don't, doesn't it prove that they do not want it?

I shall proceed as follows. Section I argues that the usual explanation - that cooperatives are not economically viable or that workers prefer working in capitalist firms – is not necessarily correct. The explanation may lie elsewhere, in endogenous preference formation, adverse selection, discrimination, or externalities.

Section II is concerned with the variety of cooperative arrangements. Only rarely do we find cooperatives in their pure form, with all workers and only workers having equal ownership rights. Non-working owners, non-owning workers and unequal distribution of shares are frequent. When the deviations become sufficiently large, the firms cease to become cooperatives in any meaningful sense.

Section III extends the argument of Section I by surveying the causes of cooperative failure. Some fail by success: profitable cooperatives often attract or turn into private ownership. Others fail outright, partly because they tend to be established under unfavorable circumstances and partly because of intrinsic difficulties of management.

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.

A small puzzle: the terms ‘capitalism’ and ‘socialism’ initially present themselves as contraries, the one affirming what the other rejects. However, once removed from the dictionary, they function otherwise. The theory of capitalism is very much contained within the science of economics. The positive theory of capitalistic institutions, but also its normative superstructure, rest most easily within the language and methodology of the economist. What distinguishes the free market? It is efficient; allocation of factors of production are optimized; individuals maximize their utility; and so on. These are the terms with which justifications of capitalistic production typically begin – begin, and often end.

The socialist calculation debate is a debate about whether rational economic decisions can be made without markets, or without markets in production goods. Though this debate has been simmering in economics for over 65 years, most philosophers have ignored it. This may be because they are unaware of the debate, or perhaps it is because they have absorbed the conventional view that one side decisively won. This is the side represented by economists such as Oskar Lange and Fred Taylor who, in opposition to free-market economists like Fredrich Hayek, allegedly showed that their version of market socialism is, in principle, as efficient as capitalism.

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.

Marx believed that what most clearly distinguished him and Engels from the nineteenth-century French socialists was that their version (or vision) of socialism was “scientific” while the latters' was Utopian. What he intended by this contrast is roughly the following: French socialists such as Proudhon and Fourier constructed elaborate visions of a future socialist society without an adequate understanding of existing capitalist society. For Marx, on the other hand, socialism was not an idea or an ideal to be realized, but a natural outgrowth of the existing capitalist order. Marx's historical materialism is a systematic attempt to discover the laws governing the inner dynamics of capitalism and class societies generally. Although this theory issues in a prediction of the ultimate triumph of socialism, it is a commonplace that Marx had little to say about the details of post-capitalist society. Nevertheless, some of its features can be discerned from his critical analysis of capitalism and what its replacement entails.

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?”

One of the paradoxes of recent political and economic theory is that, in spite of a period of extended economic difficulty, there has been a growing consensus concerning the virtues of the market economy. In particular, there has been a trend in socialist theory to argue that not only are socialism and the market not incompatible, but that some version of market socialism is the only feasible, practicable, and ethically and politically desirable form of socialism. Notable proponents of this view with whom this paper will be particularly concerned are Selucky, Nove and Hodgson. I will not, in this paper, address the question of whether the market and socialism are necessarily incompatible. Neither will I examine the whole gamut of political and ethical issues surrounding the relation of the market to democracy, freedom, individual rights, and so on – not because they are unimportant, but because they require more extended attention than I could give here. My concern will rather be with some of the economic arguments to which defenders of market socialism have appealed.

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.

Writing in 1912, before the Bolshevik Revolution, American socialist John Spargo said that it was “inconceivable” that a democratic socialist society would ever abolish the “sacred right” of freedom of publication which had been won at so great a sacrifice. According to Spargo, “every Socialist writer of note” agreed with Karl Kautsky that the freedom of the press, and of literary production in general, is an “essential condition” of democratic socialism.