The Case for Egalitarian Intervention in Free Markets

Introduction

In engaging this question, this essay will posit and critically analyse an argument for applying the egalitarian ethics of fairness and respect in economic regulation in three parts. Foremostly, this essay will outline and contextualise the exploitative neoliberal nature of contemporary markets, engaging the works of Hammond (1992)  and Graafland (2007) to outline the utilitarian principles within current economic welfare theorems. Then, this essay will posit a functional criticism of current ethical principles and develop an alternative egalitarian account which furthers “market reasoning as moral reasoning” (Sandel, 2013). Finally, this essay will apply these principles and illustrate their functional relevance in grounding intuitive demands for regulations and restrictions against Satz’s (2010) conception of “noxious markets”, positing the case of prostitution. Thus, this essay reaffirms the need for ethical principles in deciding “the role and reach of markets” and argues for an appeal to egalitarianism when constructing moral markets  (Satz, 2010). 

Contextualising Markets Today

The crisis of neoliberalism

Neoliberalism today can be understood as the extension and installation of free competitive markets into all areas of life, including the economy, politics, and society.   Borne to replace bankrupt Keynesian cyclical economic policies that failed to explain the economic stagflation, neoliberalism was underpinned by erosion of confidence in government fiscal policies that necessitated a retasking of states to protect, facilitate and maintain stable markets and efficient competition through legal mechanisms (Plehwe et al, 2020). Emerging in the 1980s neoliberalism underpinned the policies of global leaders such as Thatcher (UK) and Reagan (USA). Consequently, this allowed neoliberalism to manifest within and form the basis of the global economy and its development policies, especially those promoted by the “Washington Consensus” of the World Bank, The International Monetary Fund and the US Treasury (Plehwe et al., 2020).

However, this essay posits that the expansion and reinforcement of the Homo economicus within neoliberal forms of governmentality and market regulation has resulted in immense social costs. Per Hammond (2009), the practice of neoliberalism has ultimately resulted in greater issues such as “wealth disparity”, “increased poverty”,  “environmental degradation” and the “political disenfranchisement of citizens”.  This essay argues that an example of neoliberal harm that has circumvented the scope of current ethical principles in economic regulations is the increasing function of neoliberalism as exploitation and domination. Per Cingonali (2019), links between capitalism and developments in ICT have permitted outsourcing and domination, through production and supply chain monitoring,  a decrease in transaction costs and the introduction of distant management, neoliberal organisations are able to extend their influence and control remotely while hiding “specific conditions of remuneration, informal or discriminatory practices.” The neoliberal processes of deregulated markets and trade barriers have resulted in modern-day exploitation and colonialism by shifting manufacturing operations to developing countries which have “few legal protections or minimum wage requirements”, in pursuit of lower production costs under the guise of mutually beneficial relationships (Schyllander, 2018).

Current principles of utilitarianism

Here, this essay highlights how the main task of neoliberalism was to address questions of morality within the free market. Per Bloom (2017), neoliberal ideology needed to project a moral character to ensure its political success recasting the welfare state as an alternative with consequences much worse than “simply a lack of economic productivity and growth.” Here, this essay argues that the ethical underpinning of neoliberalism was then utilitarian consequentialism which asserted welfare as the ultimate goal of state and market and “defended for its reliance on the notion of equal respect interpreted through giving equal weight to everyone’s interests” As a moral aggregation of one’s own happiness and that of all others, utilitarianism requires one to be as strictly impartial as a disinterested and benevolent spectator” (Graafland, 2006).

The utilitarian logic of neoliberalism injected a calculative mentality into new spheres of, healthcare, education, the family and communities which in turn continually harnessed technologies of measurement and quantified changes in welfare (Davies, 2021). Per Rodrigues (2013), neoliberal welfare arguments for rational preferences  “anchored in utilitarianism”  allowed individuals to appraise their actions within the social rules that frame them. This essay will now outline how utilitarian principles within welfare theorems furthered the neoliberalism agenda and connected positive and normative economic theories to justify the moral desirability of perfectly competitive markets “as good allocators of resources” within four claims (Hammond, 1992)

Firstly, within utilitarianism, it was assumed that well-being could be set according to the satisfaction of preferences. Here, as a “principle of minimal benevolence” held that cetiris paribus, it was morally good for any individual agents to be rendered better off, the first claim was such that Pareto improvements were moral improvements and thus morally desirable  (Graafland, 2006). Secondly, as the first welfare theorem stated that “equilibrium allocations are Pareto efficient provided that markets are perfectly competitive”, it stood to reason that competitive equilibria were morally good and market failures were morally undesirable (Hammond, 1992). Finally, by appealing to a second welfare theorem which asserted that “all Pareto efficient states can be obtained as competitive general equilibria” given correct distributions of initial endowments, the utilitarian ethical principles thus aggregated to assert the moral desirability of competitive unregulated economies, relegating moral concerns to adjustments of financial and human endowments within what this essay has argued as a neoliberalist agenda.

Criticisms of Utilitarian Welfare Principles

Here, Graafland (2006) posits two functional critiques of utilitarianism as an ethical principle in directing the restriction and regulations of markets. Foremostly, this essay argues that utilitarianism is unable to deal with distributions and allocations that relate to rights. Per Graafland (2006), the utilitarian approach would view rights “as merely instrumental to achieving other goods, in particular, utilities” in deciding marking regulations. Secondly, Gaarfland argues that such a driving ethical within the policy would lack a holistic contextualisation of intentions when assessing the desirability of actions, instead being limited to only aggregating consequences. This essay argues that this has allowed current market regulations to sidestep issues of exploitation and domination within contemporary markets. This essay will now outline a case for alternative egalitarian principles in directing market restrictions and regulations.

The Case for Egalitarianism

The intellectual inheritance of egalitarian principles is vast, from Rawls's prioritisation of primary goods to Sen’s concern with equalizing capacity to function, a thorough literature of egalitarian perspectives is beyond the scope of this short essay (Roemer, 1996). Hence, within its argument for egalitarian ethical principles against otherwise exploitative markets, this essay affirms egalitarian ethics which assesses the need for market regulations and restrictions on the basis of “the capacity of parties to interact as equals” (Satz, 2010). This essay will now present two arguments for its position.

Firstly, egalitarian principles would allow regulators to isolate and address situations of mutually beneficial and voluntary exploitation by extending a moral evaluation of market transactions that goes beyond the “well-being of the parties involved” (Reiss, 2013). Examples of this include the use of sweatshops as illustrated above or the commodification of women’s reproductive labour in less economically developed countries operating under the guise of consensual economic exchange and Pareto efficiency. Here, an egalitarian approach to deciding restrictions and regulations would recognise the need for counterfactual analysis against a “specific baseline for fair transactions” that would otherwise be offered in an ideal world.  Within this view,  unrestricted and unregulated markets which extend mutually beneficial and voluntary exploitative transactions demean participants who face asymmetries in bargaining power. Per Snyder (2013), when A offers terms of transactions to a disadvantaged B that are beneath the “duty of beneficence”, A demeans B, and treats her as though “she has a lesser moral claim” to the benefits of political and social institutions, the upshot of such market interactions left unchecked resulting in “morally problematic and exploitative patterns of behaviour”. 

Secondly, egalitarian principles would allow regulators to set limits on the commodification of human relationships and civic practices. Here an egalitarian argument in restricting markets recognises a need to affirm the intuitive nonmarket motivations behind individual interactions and transactions that would be degraded or crowded out if not restricted from being subsumed into the market relationship. An example given by Sandel (2013) would be the utilisation and trading of refugee quotas allowing mutually beneficial market outcomes wherein countries discharge their humanitarian obligations by “buying their way out”. Here, although a utilitarian account would assert that such schemes benefit all stakeholders, allowing refugees asylum, developed nations absolvement from their refugee duties and less developed nations a new source of national income, egalitarianism principles would reject the inherent inequality between the portrayed status of the parties involved within the commodification of humanitarianism. Per, Reiss (2013)   unrestricted market activities if intrinsically degrading cannot have their costs offset through the improvement of participants’ living conditions. Here, the utilisation of market exchange fails to provide the kind of valuation adequate for certain goods, and a lack of restriction in engaging in derogatory market exchanges of goods crowds out and ultimately undermines the “intrinsic value of goods and social practices”  (Sandel, 2013).

Applying Egalitarianism

The Case of Noxious Markets

In illustrating the functionality of egalitarian market ethics that goes beyond the scope of narrowly conceived efficiency and distributional equality, this essay posits an application within the example of noxious Markets. Per Satz (2010),  a noxious market represents a unique market failure that involves an   “overestimation of the market’s ability to self-correct”  and involves egalitarian problems involving the “standing of parties before, during and after the process of exchange.” Examples of this include markets in child labour, women’s reproductive labour and human organs. Here, although the transactions would adhere to utilitarian conceptions such as the “non-worseness claim” which emphasises the benefits created from such transactions, egalitarian principles of equality and fairness would instead recognise the need for the restriction and regulation of such markets if the “parties are to be equals as citizens in a democracy” (Snyder, 2013; Satz, 2010). This essay will now outline the theoretical parameters of such markets.

Foremostly, noxious markets are characterised by four parameters that can be distinguished between sources and the consequences of their operations. The two consequences of such markets are such that they are harmful not only to “participants or third parties”, but also to society as a whole, perverting the social frameworks which allow individuals to “interact as equals” (Satz, 2010). The two sources of noxious markets are then enrooted in participant asymmetric knowledge and agency and underlying extreme vulnerabilities of transacting parties. Per Skidelsky (2014), equal societies can be undermined by noxious markets either by their “supporting relations of humiliating subordination” or by the highly unequal “underlying conditions of market agents”. Consequently, noxious markets as reflected in these parameters question “the legitimacy of the democratic process” and begets ethical market considerations that affirm the effects of market transactions on the “relationships of equal status between people” (Satz, 2010).

The importance of an ethical principle for market regulation is to bridge the gap between idealised conditions and reality. Freedoms to equally participate in market relations should be tempered by an understanding that agentic capacities and decision-making abilities work in tandem with eclectic structural and societal forces.

Prostitution

Directions on the regulation and restriction of prostitution have invited arguments across the scope of “state protectionism”, “personal self-determination” and “socio-economic disparity” (Della Giusta, 2019). Within utilitarian economics, such arguments revolve around a quantitative focus on distributions of goods without reference to their intrinsic qualities focusing instead on the costs and benefits that accompany such sales. Per Satz (2010), an economic approach to exploitative transactions within unequal agents of noxious markets would justify inalienability rules in cases where there are costly externalities to transactions and in general where such transactions are inefficient, ignoring the gendered background distributive systems and disabling the ability to distinguish between goods beyond  “mere differences in the net sum of costs and benefits”. 

Here this essay argues that an egalitarian approach to market regulation would holistically contextualise the background distributive systems of  “prostitute customer relations”, recognising the noxious commodification of women's sexual labour as enrooted within unequal dominating relations made possible only “under conditions of gender inequality” (Benoit et al., 2019). In this view, determining the regulations and restrictions on prostitution would then address the need to counter the gendered inequality on two levels. Per Satz (2010), egalitarian ethics of fairness and equality would first be invaluable in accounting for and addressing individual inequalities in the “distribution of income, wealth and opportunity” and second in addressing the structural inequalities of women’s “standing in society”. The application is more holistic in encompassing “contextual reasons” contrasting the world as it is against the world as it might be when assessing the commodity of prostitution as intrinsically degrading and deeply enrooted in “stigma, unequal status and injustice” (Skidelsky, 2014).

Conclusion

In conclusion, this essay has provided a linear argument for the adoption of egalitarian principles in the regulation and restriction of markets. This essay has contextualised and provided an understanding of contemporary practices within neoliberal states and markets, outlined and posited arguments for an alternative egalitarian account and assessed its functionality, applying it to the ethical economic phenomena of noxious markets. Hence this essay has argued that an egalitarian principle in economics firstly corresponds to our moral intuitions and secondly better allows for the tackling of issues within states and markets.