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Why Luck Egalitarians Should Condemn the Market

Moti Gorin

Rice University

I. Introduction

My central objective in what follows is to show that the underlying commitment

motivating luck egalitarianism is inconsistent with an acceptance of market-generated

inequalities. The argument is fairly straightforward. No individual has substantial

control over the value of goods or labor in her society when these are priced on the

market. This lack of control mirrors the lack of control to which luck egalitarians appeal

when condemning distributions that leave some worse off than they might have been. So,

consistency requires that luck egalitarianism should condemn market-generated

inequalities. As a theory of distributive justice that purports to be sensitive both to the

value of equality and to the importance of letting people determine the shape of their own

lives, luck egalitarianism is doubly incompatible with an economic engine whose

mechanisms of distribution both generate inequalities and lie largely beyond anyone’s

grasp.

II. Luck and Markets

Luck egalitarians believe that inequalities due to luck are unjust. Though different

versions of luck egalitarianism construe the nature of luck differently, there are cases that

any plausible version of luck egalitarianism will judge to be paradigmatic examples of

unjust inequalities. For example, if two otherwise similarly placed agents are unequally

well off (in whatever dimension is thought to be the morally relevant one) only because

one of them was suddenly stuck by a meteorite and made worse off, any account that is

committed to the claim that inequalities which are due to luck are unjust will render the

verdict that the inequality in this case is unjust. 1 In the remainder of this section, I argue

that because the moral arbitrariness to which luck egalitarianism is opposed is best

measured from the perspective of the particular agent whose level of income, or well-

being, or whatever, we are assessing, the preferences of other economic agents and the

choices these preferences help shape are no less matters of luck than is the trajectory of a

meteorite. And because these preferences and choices largely determine how well off

any given agent is, the inequalities that arise from these preferences and choices are

themselves matters of luck and hence unjust.

Let’s begin by taking a look at the easy case. Two similarly talented and

ambitious agents who enjoy equal levels of income, or welfare, or well being, or

whatever, are suddenly rendered unequal when one of them is struck by a meteorite.

According to Ronald Dworkin, this inequality is a result of the bad brute luck of the

worse off agent, and is therefore unjust. Here is Dworkin’s classic statement of the

distinction between brute luck, which leads to morally problematic inequalities, and

option luck, which does not:

Option luck is a matter of how deliberate and calculated gambles turn out—whether someone gains or loses through accepting an isolated risk he or she should have anticipated and might have declined. Brute luck is a matter of how risks fall out that are not in that sense deliberate gambles. If I buy a stock on the exchange that rises, then my option luck is good. If I am hit by a falling meteorite whose course could not have been predicted, then my bad luck is brute… (293).

1 I borrow the meteorite example from Dworkin, (293).

On this view, brute luck inequalities are unjust while option luck inequalities are not

unjust. We will return to Dworkin’s account in more detail below. Now let’s turn to a

slightly different case.

Meteorite Kills Cows: A meteorite strikes Bernie’s barn, causing a fire and killing the milking cows. As a result, Bernie is worse off than he was before the meteorite struck, and worse off than his neighbors are now.

It should not matter at all from the point of view of morality whether Bernie is made

worse off when his cows are killed by a meteorite or when, as in Dworkin’s case, Bernie

himself is struck by the meteorite. In both cases the agent is made worse off due to

factors that lie well beyond his grasp. Next case:

Meteorite Looks Like Cow: A meteorite which bears a striking resemblance to a milking cow lands in the center of a large city. Interpreting this oddity as a warning against the exploitation of cows, millions of people choose to avoid consuming dairy products. As a result, Bernie sells less milk—much less milk— and is left worse off than his non-dairy-producing neighbors.

In Meteorite Looks Like Cow, Bernie is made worse off when, “through no choice or

fault” (Temkin, 1993: 13) of his own, the preferences of other agents and the patterns of

choice these preference help shape are altered. Therefore, the inequality that obtains

between Bernie and his neighbors is a matter of brute luck and is unjust. Now, more

realistically:

Soy Lobby: The Association of Soy Producers, a trade lobby, pours millions of dollars into an advertising campaign touting the benefits of soy products, including soy milk. As a result, millions of people form a preference for soy milk over dairy milk. Demand for Bernie’s product plummets, leaving him worse off than his non-dairy-producing neighbors.

In Soy Lobby, Bernie is made worse off when some of his competitors succeed in

garnering a share of the market that was previously controlled by him. Consumers’

preferences changed, leading to a change in their habits of consumption, all as a result of

the preferences and actions of members of the Association of Soy Producers. Whereas in

the original case Bernie was made worse off by a meteorite’s direct hit, in the last case

Bernie is made worse off by the change in preferences and actions of other economic

agents. In neither case is Bernie’s agency implicated as a contributing factor in the

reduction of his level of income, welfare, or whatever. Any consistent theory that

condemns the inequality in the original case as unjust because it is a function of luck

must either do the same in Soy Lobby or else show how the cases differ in some morally

relevant way.

In the next section I explore several responses to the argument just given and I

show that they do not succeed in insulating market-generated inequalities from the moral

arbitrariness which luck egalitarianism seeks to remedy. But before doing so, it is

worthwhile to emphasize that the kind of luck with which Bernie is forced to contend is

endemic to markets. Each of the following could serve as the final case in a series of

cases which begins with a random meteorite strike or some other similarly uncontentious

instance of brute luck.

1. Other agents share one’s preference for beachfront property and such property is scarce.

2. A competitor opens a business across the street from one’s own.

3. The value of one’s house rises when a wealthy entrepreneur develops an adjacent tract of swampy land into a posh golf course.

The preferences of others and the choices these preferences help shape affect the degree

to which one is well off relative to how well off one would be, and to how well off others

are, under a different distribution of preferences and choices. This way of determining

distributions is central to—indeed, perhaps definitive of—the market.

III. Trying (and Failing) to Rescue the Market

In order to defend the market against the charge staked out above, we need an argument

showing that the meteorite-generated inequality with which we began is importantly

different from the sorts of market-generated inequalities illustrated by the examples with

which the last section concluded. One promising line of argument begins with the

reminder that brute luck differs from option luck in that the latter is a matter of how

“deliberate and calculated gambles turn out” while the former is not. If market-generated

inequalities typically arise out of deliberate and calculated gambles, then these

inequalities will fall on the option side of the luck divide. 2 The next step in this argument

is to claim that market generated inequalities do result from deliberate and calculated

gambles. It follows from this that the resulting inequalities are not unjust.

How might we defend the crucial premise, the claim that market-generated

inequalities are the products of deliberate and calculated gambles? First, it might be

pointed out that when Bernie got into the dairy business he assumed certain risks, one of

which was that the demand for milk would fall and that, similarly, when one of the agents

opened a coffee shop she knew she might one day have to contend with a nearby

competitor. And so on.

There is something right about this objection, but something wrong with it. It is

right insofar as when agents are making choices within a market scheme they know (or

2 For current purposes, I assume that there really is an important moral distinction between brute luck and option luck and that Dworkin’s way of distinguishing the two is unproblematic, at least in the abstract.

should know) that there is some non-zero probability that they will fare more poorly as a

result of some event in the economic web than they would have fared had some other

event transpired instead. They also know that the degree to which they can single-

handedly determine the ultimate outcomes of their choices is limited in the face of a

rebellious and oftentimes inscrutable world. It is plausible that knowledge about the

possibility of failure is a necessary condition for a choice to be a gamble. In the cases

discussed above this condition is met.

But the response is misguided insofar as it overstates the degree to which people

have control over their vocations. I do not mean only that, for example, Bernie may have

been raised on a farm and knows no other way of life. Even if we assume complete

equality of opportunity and of talent, as well as fine risk-assessing skills, so that every

agent has an equal number of meaningful options and the ability to take advantage of

them, we are still left with the fact that it will be the demand for this activity rather than

that one that largely determines which activities agents choose to pursue, and this demand

is a function of other agents’ preferences and choices and as such is subject to

fluctuations over which no particular agent has substantial control. If Bernie became a

dairy farmer at least in part because there was a demand for dairy products, then at least

one of the conditions that were necessary for his making the choice he made (viz., that

this sort of farming would provide him with means) was beyond his control. To appeal to

this choice in justifying the inequality that later obtains when consumer preferences have

changed is merely to construe the same sort of condition which led to the problem as its

solution.

More fundamentally, the problem with this response is that it begs

the question at hand. It assumes that there is nothing unjust about a

distributive mechanism which (for all practical purposes) forces an agent

to gamble. By choosing to operate a dairy farm, or to open a café, or to buy a house

near a swamp, one takes a gamble when one chooses to do these things within the

framework of the market. In a market, any such choice can be interpreted as a gamble,

and in a market one has no choice but to make such choices. In order to get off the

ground the response we are entertaining must make room for some non-market

alternative which the agents in question reject in favor of taking their chances on the

market. Such an alternative might guarantee, for example, straight equality. Or it might

guarantee some specific amount of income. 3 In the absence of an alternative to a system

in which everyone must gamble, it seems unreasonable to countenance inequalities

generated by that system on the grounds that these outcomes are the products of

gambles. 4

A further problem attending any objection that appeals to deliberate and

calculated gambles is that such an objection must be able to provide a plausible

explanation of which instances of risk-taking count as deliberate and calculated and

which do not. ‘Deliberative’ and ‘calculating’ denote characteristics of agents, not of the

probabilities comprising the content of agents’ deliberations and calculations. Take the

following case: one agent invests in acquiring the astronomical skills and equipment

required to predict (as well as possible) when meteorites will strike and then, after

3 It is no part of my argument here that such alternative schemes are practicable or just, or that they are the only imaginable alternatives. 4 For a somewhat related discussion of the complications that attend accounts of distributive justice that make justice contingent on the probabilities attaching to certain outcomes, see Kasper Lippert-Rasmussen, “Egalitarianism, Option Luck, and Responsibility”, Ethics, Vol. 111, No. 3 (Apr., 2001), pp. 548-579

deliberating and calculating, leaves the house and is struck by a meteorite. Another

agent, before opening her business, fails to calculate and deliberate about the probability

that a competitor will open a business across the street from her own and is then quickly

driven out of business by such a competitor. Which of the two agents took a deliberate

and calculated gamble? If it is plausible that the answer is the meteorite-obsessed agent,

then luck egalitarians will want to compensate anyone who ends up worse off at least

largely as a result of her own failure adequately to assess the risks associated with her

various options. But they will not want to compensate anyone who chose to do the math,

irrespective of the probabilities involved. 5 Perhaps there is a way to construe deliberate

and calculated gambles in a way that does not lead to such a strange conclusion, but it is

not obvious.

It is only fitting that Dworkin, whose articulation of the distinction between brute

luck and option luck has been so influential, has also provided a sophisticated means to

tame the influence of brute luck. For current purposes, the most noteworthy aspects of

Dworkin’s treatment of luck are the following two. First, as we have already seen,

Dworkin thinks inequalities flowing from deliberate and calculated gambles are not

unjust while those arising from brute luck are unjust. Second, Dworkin regards one’s

economic rent—that is, the income one’s talents can produce—as a matter of brute luck

(308, 314-317). He thinks this is so because one’s economic rent is a function of one’s

genetic endowment, the preferences of other economic actors, and the type and

availability of resources. Each of these is a matter of brute luck and so inequalities that

stem from them will be unjust unless this brute luck can be converted into option luck.

5 For some similar worries about the kinds of characteristics luck egalitarians are committed to compensating for, see Elizabeth Anderson, “What is the Point of Equality?”, Ethics 109, January 1999, pp.

287-337

Dworkin maintains that brute luck can be converted into option luck by means of

an insurance market. Insurance serves as a bridge between brute luck and option luck

because by choosing the level of insurance one wants to buy, one chooses the amount of

exposure to brute luck one is willing to tolerate (Dworkin, 293). But Dworkin’s

insurance market is not an ordinary insurance market. It is a hypothetical insurance

market. This is how it works: first, there is some amount of money that we suppose the

average person would insure against failing to be able to earn. Second, there will be

people who earn below the specified amount and there will be people who earn above it.

To those who earn less than the amount specified, the policy pays the difference between

that amount and the amount these people actually earn. Those who earn more than this

amount, on the other hand, pay a higher premium, so that what we end up with is a

system of redistribution, via taxation, from those who earn more than the minimum

amount to those who earn less (316-334).

There is much to say about the hypothetical insurance market. I will make only a

few brief comments, focusing on the relationship between this market and the ideal of

non-arbitrariness which motivates Dworkin’s equality of resources account and luck

egalitarianism more generally. First, insofar as the insurance market is a hypothetical

market the justification for any inequalities it permits cannot be fully grounded in facts

about the choices people have made. The amount of income the average person would

insure to receive is not determined by any choices that anyone has actually made.

Indeed, because the amount is based on what the average person would choose, the

amount may not even correspond with the amount that any actual person would choose.

Thus, neither the cost of the premium nor the amount the policy pays out is directly tied

to any of the agents the scheme is intended to cover. It is hard to see how this scheme

respects the value of choice. To the extent that luck egalitarianism is intended to

accommodate this value, Dworkin’s hypothetical insurance market is inconsistent with

luck egalitarianism.

Dworkin has claimed that “…the idea of an economic market, as a device for

setting prices for a vast variety of goods and services, must be at the center of any

attractive theoretical development of equality of resources” (284) and that “an equal

division of resources presupposes an economic market of some form, mainly as an

analytic device but also, to a certain extent, as an actual political institution” (284). But

Dworkin is also sensitive to the contingency involved in the determination of an agent’s

economic rent, and so he needs a way of reconciling the tension between the market and

this contingency. After describing his auction, which is designed to generate a

distribution that passes the envy test 6 in a non-arbitrary manner, he describes how a

participant in the auction may still consider himself unlucky. He may consider himself

unlucky because “it would be a matter of luck…how many others shared various of his

tastes. If his tastes or ambitions proved relatively popular, this might work in his favor in

the auction, if there were economies of scale in the production of what he wanted. Or

against him, if what he wanted was scarce” (188).

Here we may recall the agent who has a strong preference for beachfront property

when such property is scarce. It seems that it’s her bad luck if there are others with

whom she must compete for this resource. This is what Dworkin has to say about such

cases:

6 Passing the envy test is a constraint on any (normatively) equal distribution. A distribution passes the envy test when no agent prefers the bundle of goods of any other agent over her own bundle.

Under equality of resources…people decide what sorts of lives to pursue against a background of information about the actual cost their choices impose on other people and hence on the total stock of resources that may fairly be used by them…So the contingent facts of raw material and the distribute [sic] of tastes are not grounds on which someone might challenge a distribution as unequal. They are rather background facts that determine what equality of resources, in these circumstances, is. Under equality of resources, no test for calculating what equality requires can be abstracted from these background facts and used to test them. (289)

This is a different sort of response to the main argument given above and it is not clear

how best to understand what Dworkin says here as speaking to that argument. Having

knowledge about the costs my choices impose on other people and on the “total stock of

resources that may fairly be used by them” does not neutralize these costs, nor does it

bring them under others’ control. Moreover, from the perspective of any agent, it is

plausible that what really matters in the context of a market is not what costs her choices

impose on others but rather what costs the choices of others impose on her. If some

central planner were to determine the set of envy-free distributions and randomly select

distribution D, any agent who would have been better off under some different

distribution D’ may complain. The complaint is not an epistemic one; it is not that the

decisions which determined the agent’s bundle made use of facts about which she had no

knowledge. Rather, the complaint is that the mechanism that selected distribution D was

out of the agent’s control and that this selection left her worse off than she would be, and

worse off than some others are, had some other distribution been selected.

Thus, it is hard to see how an appeal to knowledge about the costs of one’s

choices on others or on the total stock of resources helps mitigate the worry that the

market merely institutionalizes brute luck rather than bringing it under our control. If the

resource A prefers is both scarcer and more popular than the resource B prefers, and if A

has no control over this fact, then A’s brute luck is bad relative to B’s. In order to secure

possession of the resource he wants A will have to forgo other goods that B will be able

to secure in addition to the (common, unpopular) resource that B wants. A’s knowledge

about the costs his choices impose on others seems irrelevant. It cannot help here to

claim that A has no complaint because he does not envy B’s bundle, for equality of

resources does not need the market to establish envy-free distributions (it can do this by

trial and error) (Dworkin, 285); rather, it needs markets to cope with a putative unfairness

that persists despite the distributions’ already being envy-free.

Dworkin wants the device of the auction, and of markets more generally, to serve

as a kind of moral conversion process whereby arbitrary “background” facts about tastes

and resources become non-arbitrary facts about the kinds of lives people choose to live.

But as far as any particular agent is concerned, facts about the kinds of lives that other

people choose to live are just as contingent and beyond her control as are the facts about

raw materials and the distribution of tastes. Your choices serve as a background to my

choices, and vice versa.

But perhaps we can appeal to something in this neighborhood in defense of the

market. Though your choices play the same kind of role with respect to my choices as

the background facts about raw materials do, in the former case there is a relationship of

reciprocity that is absent in the latter. Your choices may affect my choices and mine may

affect yours, and in this way we are equals. As Dworkin says, “people should pay the

pay the price of the life they have decided to lead, measured in what others give up in

order that they can do so” (294). The problem here, however, is that insofar as the

introduction of the auction was motivated by complaints of unfairness among those who

ended up with bundles which are, from their point of view, inferior to the bundles they

would have received under some other envy-free distribution, it is far from clear that such

complaints had anything to do with the normative principle Dworkin articulates, i.e., that

“people should pay the price of the life they have decided to live, measured in what

others give up”. Pricing resources in terms of what others are willing to give up for them

may be a fine way to price them, all things considered, but this fineness does not have

anything to do with the conversion of brute luck into option luck. If an official

determines prices by fiat I am subject to the same degree of luck with respect to the price

of any given resource as I am when potential market competitors choose to bid, or to

forgo bidding, on that resource. The arbitrariness of the market resides in the fact that the

price of living some life, when measured by what others give up in order that one may

have this life, will depend on the contingent matter of what others are willing or able to

give up. That this arbitrariness is reciprocal hardly makes it any less arbitrary.

I am not convinced, however, that the appeal to reciprocity is doomed. First, it is

clear that the relation in which one agent stands to another agent is morally rich in a way

that the relation between an agent and a non-agent is not. Meteorites do not have

interests and it is unlikely, to say the least, that an agent has some obligation to consider

how her preferences or choices may affect one. Neither meteorites, nor genetically-

determined diseases, nor any number of the other sorts of non-agent whose powers to

render agents unequal luck egalitarians seek to neutralize, have any stake in the manner

in which this neutralization is instituted. Conversely, every agent has a stake in the

determination of the principles and political institutions which will shape the framework

within which they go about living their lives.

It is plausible that as a theory of justice that is committed to the moral equality of

persons, luck egalitarianism aims at least in part to guarantee that no agent is placed in a

position in which her interests are subservient to the interests of other agents. Because in

a market the preferences and choices of any given agent have the potential to have some

impact on the ways in which the preferences and choices of all other agents will play out,

equality is maintained so long as the degree to which any agent may impact any other

agent is neither supplemented nor reduced by features of the world which in no way

constitute anyone’s agency. On this view, it is one thing for me to be made worse off by

a meteorite, with which I stand in no moral relation, and quite another thing for me to be

made worse of by the preferences you have or the choices you make. Your interests are

vulnerable with respect to my preferences and actions just as my interests are vulnerable

with respect to your preferences and actions.

In order for this response to work against the main argument of this paper, one

would need to show that it is incorrect to regard the preferences and choices of others as

matters of luck—even from the perspective of the agent who is adversely impacted by

these preferences and choices—so long as the preferences and choices of the agent in

question were equally powerful (at least potentially) with respect to how well off other

agents are. That is to say, we need an account of luck according to which reciprocal luck

isn’t really luck. I believe such an account may ultimately require an abandonment of the

emphasis on distributive equality. 7 The reason for this, in short, is that we may be able to

understand what it is for one agent to stand in a morally and politically reciprocal relation

to another agent in the absence of any information about how one of the agent fares

7 For an argument in favor of a non-distributive conception of equality, see Elizabeth Anderson, “What is the Point of Equality?” Ethics 109, January 1999, pp. 287-337.

relative to the other in terms of resources, welfare, or whatever. 8 Moreover, if luck

egalitarianism became wedded to a substantive and more general conception of political

equality, it would risk losing the kind of organizing supremacy some of its staunchest

supporters claim for it. 9 A deeper exploration of this important possibility cannot be

taken up here. In any case, it is not obvious that an appeal to the kind of reciprocity (if

that’s what it is) which the market does respect is sufficient to resolve the tension

between luck egalitarianism’s rejection of luck-generated inequalities and the distributive

mechanisms which comprise the heart of the market.

Conclusion

I have argued that market-generated distributions are, from the perspective of any given

agent, subject to the same kind of arbitrariness which luck egalitarians, in other contexts,

seek to remedy. I reviewed several responses to this argument and found each of them

lacking. I conclude that luck egalitarians have reason to be skeptical about the role an

economic market may play in a just society.

8 This claim is largely inspired by Elizabeth Anderson’s influential critique of luck egalitarianism. See Anderson, “What is the Point of Equality?”, Ethics 109, January 1999, pp. 287-337. (After writing this paper, I found very similar concerns about the relationship between luck egalitarianism and the market expressed by Elizabeth Anderson in her paper, “How Should Egalitarians Cope with market Risks?”, Theoretical Inquiries in Law, Volume 9, Number 1, January 2008, pp. 239-270. Anderson’s view is that her account of democratic equality is consistent with the market, so long as market outcomes are constrained. Anderson’s account makes room for the market by putting less moral weight on luck. I find myself in great sympathy with Anderson’s overall view, though I remain unconvinced that distributive inequalities, when unjust, are only derivatively unjust, and that relations of reciprocity are sufficient to establish egalitarian relations among citizens.)

9 I am thinking here of what Richard Arneson says in response to Anderson’s contention that democratic equality must take precedence over the kind of distributive equality sought by luck egalitarianism. See Arneson, Richard, “Luck Egalitarianism Interpreted and Defended”, Philosophical Topics 32, Nos. 1 & 2 (Spring-Fall 2004 [actually published September, 2006]), p. 27

References

Anderson, Elizabeth, “What is the Point of Equality?” Ethics 109, January 1999, pp. 287-

337.

Anderson, Elizabeth, “How Should Egalitarians Cope with Market Risks?”, Theoretical Inquiries in Law, Volume 9, Number 1, January 2008, pp. 239-270

Arneson, Richard, “Luck Egalitarianism Interpreted and Defended”, Philosophical Topics 32, Nos. 1 & 2 (Spring-Fall 2004 [actually published September, 2006])

Dworkin, Ronald, "What is Equality? Part 2: Equality of Resources," Philosophy and Public Affairs 10, pp. 283-345

Lippert-Rasmussen, Kasper, “Egalitarianism, Option Luck, and Responsibility”, Ethics, Vol. 111, No. 3 (Apr., 2001), pp. 548-579

Temkin, Larry, Inequality, Oxford: Oxford University Press, 1993