With: Steven Pearlstein, Robinson Professor and Pulitzer Prize Winning Economics Columnist at the Washington Post.
The genius of capitalism is that it delivers a higher standard of living for the society as a whole when workers, consumers, entrepreneurs and investors all act selfishly, in their own individual interest, to maximize their income. Even Adam Smith and Charles Darwin, however, understood that this competitive dynamic works only if greed is tempered by a set of moral intuitions that favor cooperation, trust, fairness and even altruism. With its relentless focus on maximizing shareholder value, American capitalism has upset that balance.
We are willing to accept as fair the unequal distribution of income by the markets if that distribution reflects the value of an individual’s contribution and because everyone has an equal opportunity to succeed. In reality, however, the market divides the pie not simply according to some objective measure of economic contribution but also according to subjective rules and norms that are socially and politically determined. Equality of opportunity, meanwhile turns out to be neither possible nor even desirable in the real world. Why redistribution is moral and necessary.
Defenders of market justice argue that a sufficiently unequal distribution of income is necessary to provide the right incentives to maximize a society’s income and minimize poverty. Logic and experience, however, suggest that inequality in the United States may have reached the point of diminishing return, and that most of us could be richer and happier with a more equal distribution. An agenda for creating a more prosperous and more just society.