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Spring 2018 Stories

Matthew Henry. Used with permission.

Matthew Henry. Used with permission.

Economic Justice: Fairness in Context

Reflections from the 2016–18 Bannan Institute Faculty Collaborative

 


By William Sundstrom
Professor of Economics, Leavey School of Business
Bannan Faculty Fellow, Ignatian Center for Jesuit Education
Santa Clara University


Let’s start with a working definition of economic justice as the fair distribution of economic benefits and burdens. Fairness is what links economic justice to the common good. If economic institutions, processes, or outcomes are to serve the good of all, they must meet a standard of fairness that invites and sustains social solidarity.

The concept of fairness in the economic context is fundamentally contested. Some will emphasize procedural fairness in the marketplace: If everyone is playing by the same competitive rules in free and open markets, the distribution of rewards will reflect the contribution of each to the outcome. This libertarian version of fairness will strike many as philosophically inadequate, and unjust in its consequences. But even held up to this minimalist requirement of fairness, economic institutions in many parts of the world—including the United States—fall short. Political influence allows powerful economic agents to bend the rules toward their particular interests.

Beyond basic procedural fairness, many hope for institutions that can provide a level playing field in terms of equalizing life chances, or what the philosopher John Rawls called fair equality of opportunity. Here too we find reality wanting: A compelling body of recent research on intergenerational mobility shows that the United States fails to provide equal opportunity in this fundamental sense, and indeed falls short compared with many other developed economies. 

A third standard of fairness would insist on much greater equity in economic outcomes or wellbeing. Critics of egalitarianism in this sense often appeal to the norm of desert—that people should be rewarded in accordance with their effort or merit; and the importance of incentives—that redistributive policies would remove the incentives for striving that foster economic growth. But outcomes cannot reflect desert when the opportunity to succeed remains unequally distributed. Indeed, because life chances are a function of family resources in childhood, greater equality of opportunity for children may require greater equality of income for their parents. Although research on the disincentive effects of redistribution has not reached consensus, it is clear that a wide range of redistributive policy regimes can be consistent with modern economic growth and efficiency—compare, for example, egalitarian Scandinavia and unequal United States.

Matthew Henry. Used with permission.

Matthew Henry. Used with permission.

Any such framework for judging the fairness of economic institutions and practices must be implemented against the complex backdrop of an increasingly interdependent, global economy. Is our proper sphere of concern our own local or national community, or the global community? If the latter, what are our global ethical responsibilities in the areas of migration, trade, and international policy?

The participants in the Economic Justice Collaborative of the Bannan Institute have explored a number of these core concerns from an impressive range of disciplinary and methodological perspectives. Readers who are intrigued by the following synopses are encouraged to check out the Institutes’ podcasts!1

The genesis and evolution of fairness norms relating to economic institutions and distribution are explored in two of the projects. Catherine (Kitty) Murphy (religious studies) analyzes early Christian texts dating to a period of rapid economic change, globalization of economic relations, and consolidation of land ownership under Roman imperial power. In the face of these upheavals, the early Christian communities studied by Murphy embraced an ideology of mutual support and renewed their commitment to earlier traditions of a sharing economy and debt forgiveness. That these ideas may be seen as expressing simultaneously conservative nostalgia and utopian progressivism offers rich insights into the Gospels, with clear echoes in our own turbulent era.

Notions of fairness and decision-making norms are dynamic and context-dependent. In their experimental work on self-interested behavior, John Ifcher (economics) and his collaborator Homa Zarghamee exposed undergraduate students to brief economics lessons and used choice experiments to reveal the extent of self- vs. other-regarding preferences. Even brief exposure to a presentation emphasizing the assumption of rational self-interest increased self-interested behavior relative to alternative treatments. Attending to the common good over private interests, in other words, is itself a learned value that may be reinforced or atrophied by our teaching.

Widening income disparities are a direct concern to the extent that they arise from unequal opportunity and result in an unfair distribution of benefits and burdens. As I argued in my Bannan Institutes podcast, a further concern arises when concentration of income feeds back into concentration of political power, undermining the basic procedural fairness of the political process itself. This dynamic threatens to create a selfsustaining plutocracy.

In the United States, the use of political donations to buy influence is a potentially important contributor to this process. In her work on “surrogate representation,” Anne Baker (political science) examines out-of-state giving by political donors in congressional elections. These donors are highly ideological as well as motivated by policy concerns and seek to extend their political influence when their own party preferences conflict with those of their congressional representation.

The institutional underpinnings of fair equality of opportunity motivate the research of Laura Nichols (sociology) on the role of Catholic, Jesuit educational institutions in providing avenues of opportunity for young people from disadvantaged backgrounds. Can Catholic education be an engine for economic mobility? The challenges of balancing the expense of private education with serving economic justice and providing a preferential option for the poor are amply illustrated in Nichols’ analysis of the (economic) class composition at Jesuit universities.

Finally, the work of Sreela Sarkar (communication) demands that we “think locally” about justice in a globalized economy. Her ethnographic study, based at an IT training center in New Delhi, India, describes the efforts of “passionate producers”—white-collar corporate professionals—to extend the promise of the information society to marginalized groups. These efforts range from training in conventional computer skills to lessons in hygiene and “soft skills” that might ease the workers’ integration into the globalized corporate and technology sectors. Sarkar deftly documents the tensions that arise as globalized capital and professional norms are overlaid upon divisions of caste and class, tensions no doubt being played out in different ways around the world.

Is there a common theme that emerges from scholarship so diverse in disciplinary approach, context, and subject matter? For me, it has been an appreciation of the concreteness and social embeddedness of economic justice concerns. What counts as fair, procedurally or substantively, is determined within specific settings of time and place, whether in the first-century Middle East or 21st-century Delhi. Even as we strive to extend and deepen the reach of such universal values as equal respect and equal opportunity to thrive, we need to bear in mind that economic justice commitments in the real world are motivated by preexisting shared values. A conception of economic justice that serves the common good must, paradoxically, be one that takes seriously the particularistic values and judgments of people in their lived communities.

 

WILLIAM SUNDSTROM is professor of economics at Santa Clara University. He earned his B.A. from the University of Massachusetts-Amherst and his Ph.D. from Stanford University. His current research areas include the causes and consequences of poverty and income inequality in the Silicon Valley region, as well as relevant policy responses; the impact of climate change and poverty on food security and wellbeing of smallholder farmers in Nicaragua; and the development and impact of public libraries in the United States. Professor Sundstrom has taught a wide range of courses in economics, and he serves as the faculty director of undergraduate business programs in the Leavey School of Business. He is also president of the Santa Clara University Faculty Senate.

  

Notes


  1. Four seasons of the Bannan Institutes INTEGRAL podcast series are now available, including season two on Economic Justice and the Common Good: scu.edu/ic/programs/bannan-forum/media--publications/integral/
The Moral Margins of Poverty and Prosperity: Toward an Integrative Justice Model Home Gendered Theologies and the Common Good 

 

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