Ch 4 Mgt3201 Business Ethics

8/3/2019 Ch 4 Mgt3201 Business Ethics

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LECTURE 4 JUSTICE AND

ECONOMIC DISTRIBUTION


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AN OVERVIEW

This lecture examines:

y The concept of justice;

y Rival principles of economic distribution;y The utilitarian approach to justice in general and

economic justice;

y The libertarian theory that places a moral priority on

liberty and free exchange;

y Rawls on fairness and moral equality of persons.


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LEARNING OBJECTIVESStudents should be able to

y to discuss the concept of justice, its relation to fairness,equality, deserve and rights.

y to differentiate the rival principles of economicdistribution

y to argue on the three different theories of justice ineconomic distribution


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THE NATURE OF JUSTICEJustice

a) Fairness

fair treatment of members of groups of people

(b) Equality

all persons are equal does not establish a directrelationship between justice and economic distribution

(c) Deserve

people get what they deserve

(d) Rights

injustice violation of the rights of some identifiableperson


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Rival Principles of Distribution

Distribution justice proper distribution of socialbenefits and burdens

Rival principles recommended as a basis ofdistribution are:

y an equal share

y according to individual need

y according to personal effort

y according to social contribution

y according to merit


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y Problems:

(a) If equal share of income guaranteed, the lazywould receive as much as the diligent

(b) Effort is hard to measure and compare

(c) One is able to contribute to society may depend

on ones luck in being at the right place at theright time

No single principle seems to work in enoughcircumstances to be defended successfully as the soleprinciple of justice in distribution.


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Theories of justice in economic distribution:

yThe Utilitarian View

yThe Libertarian ApproachyThe Rawlss (Egalitarian) Theory

Of Justice


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THE UTILITARIAN VIEWJustice is the maximization of happiness ultimatelydetermines what is fair and unfair.

Utilitarianism and Economic Distribution

y The utilitarian theory of justice ties the question of economicdistribution to thepromotion of social well-being or happiness.

y Deciding what sort of economic arrangements would bestpromote human happiness requires the utilitarian to considermany things, including

(1) the type of economic ownership

(private, public, mixed)

(2) The way of organizing production and distribution ingeneral

(pure laissez faire, market with government planning andregulation, fully centralized planning)


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(3) the type of authority arrangements(worker control versus managerial prerogative)

(4) the range and character of material incentives

(5) the nature and extent of social security and welfare provisions

y Utilitarians favourably view increased worker participation and moreequal distribution of income.

Worker participation

y Enhance productivity and promote fuller development and well-beingof the people involved

Greater equality of income

y Making the distribution of income more equal is a good strategy formaximizing happiness


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THE LIBERTARIAN APPROACH

y Justice consists inpermitting each person to live as he or she

pleases,free from the interference of others.

y No person, group, or government should disturb you inliving the life you choose.

Nozicks Theory of Justice

y People has certain basic moral rights.

y These rights refrain people from interfering with others beyond this we are not obliged to do anything positive foranyone else, nor is anyone required to do anything positivefor us.


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Nozicks Entitlement theory

y People are entitled to their holdings (goods, money, andproperty) as long as they have acquired them fairly without

violating other peoples right.

Principles of Nozicks entitlement theory:

(1) Concerns the original acquisition of holding

that is, the take over of unheld (own by no one) goods or the creation ofnew goods.

Individuals are morally entitled to the products of their labour.Example:

If you discover minerals from unowned land, then you have justlyacquired this new holding.


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(2) Concerns transfers ofalready-owned goods fromone person to another

y If a person possesses a holding because of a legitimate

transfer, then he or she is entitled to it.

Example: Acquiring things by purchase, as a gift

(3) No one is entitled to a holding except by acquiringit through no. (1) and (2).


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Non Entitlement Theory (Distribution D1)

The Wilt Chamberlain Example

Wilt Chamberlain is a basketball star signs a contract that guarantee himUS$5.00 from the price of each ticket sold to people who come to watch himplay.

If 1 million people attend his games, he will have US$5million. He will havemore income than anyone else in the society earns.

Situation D1 People have not given US$5.00 to Wilt Chamberlain.

Situation D2 People have given US$5.00 toWilt Chamberlain transferringparts of their share of money to Wilt Chamberlain willingly

To maintain the D1 situation will interfere with peoples freedom to use their

resources as they wish.

Non Entitlement Principle of justice can only be achieved by interferingcontinuously with peoples lives.


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The Libertarian View of Liberty

y Involves a commitment to leaving market relations - buying,selling, and other exchanges totally unrestricted.

y Libertarians are for economic laissez faire and against anygovernmental economic activity that interferes with themarketplace, even if the point of the interference is to enhancethe performance of the economy.

Example: Government subsidy for locally manufactured carsis considered an interference.

y Libertarians frequently contend that

(1) Private property is necessary for freedom and

(2) Any society that doesnt respect private property rights iscoercive.


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Markets and Free Exchangey A totally free market is necessary for people to exercise their fundamental

rights. However, unregulated market transaction can lead to disastrous

results.Example: Famine occurs because large numbers of people lack ofmoney to buy food.

y Justice may not requires someone rich to donate and it does not allows us toforce him or her to do so, but charity on his or her part would be a good

thing.

Property Rights

Nozicks critics argue that:

(a) Property is not restricted to material objects like cars or houses,

but include abstract goods such as dividends from a corporateinvestment, pension, and intellectual property.

(b) Property ownership involves a bundle ofdifferent rights, forexample, to possess, use, manage, dispose of, or restrict others

access to something in specified ways.


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RAWLSS THEORY OF JUSTICE

Rawls argues that people in the original positionwould agree on twoprinciples as the basic governing principles of their society:

(1) A guarantee offundamental liberties to each person Equal rightto a comprehensive set of civil liberties

(2) Social and economic inequalities are justified only ifinequalitiesbenefit the least advantagedmembers of society.

The Original Position

Rawls advocates that:

(a) Each individual chooses the set of principles for governingsociety that will be best for himself or herself (and loved ones),therefore, these principles are agreed to under conditions of equalityand free choice.

(b) People in the original position have no knowledge aboutthemselves or their situation that would lead them to argue from abiased point-of-view.


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Basic Principles of Justice:

(1)Each person is to have an equal right guarantees not only equal

freedom to individuals but also much freedom to individuals aspossible

Example: Permitting one to drive on either side of the road wouldonly interfere with other drivers who want to drive efficiently to theirvarious destinations.

Follow the left lane if the driver does not overtake another driver.

(2)Social and economic inequalities are to satisfy two conditions:

(a) Jobs and positions that bring greater rewards, there must beequality of opportunity in competition among individuals for those

positions in society.

(b) Inequalities work to the benefit of the least advantaged group insociety.

Example: Reducing income tax Will this benefit the least

advantaged members of society more in the long run than anyalternative tax policy?


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Fairness and the Basic Structure

y Rawls rejects utilitarianism because it might permit anunfair distribution of burdens and benefits.

y Contrary to entitlement theory, he argues that the

primary focus of justice should be the basic socialstructure, not transactions between individuals.

y He contends that society is a cooperative project for

mutual benefit and that justice requires us to reducethe social and economic consequences of arbitrarynatural differences among people.


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y Discussion Questions

(1) The gap in income between the rich and the poor is getting wider

by the day. Explain the various methods of distribution of economy andwhich do you think is best in promoting economic justice.

(2) There is a growing disparity in the earning power of the varioussections of society. Explain the various principles of economic

distribution and their respective advantages and disadvantages.

(3) Economic distribution should be fair. There must be equaldistribution of benefit and burden. Discuss.


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Answer:

Discuss the concept of Utilitarianism, Libertarianism and Rawls Theoryof distribution

Utilitarianism: - may result in unfair distribution of benefit and burden

Libertarianism: - non interference Nozicks theory

- inheritance is unfair.

(4) State accurately Rawls two principles of justice. How can thesetwo principles be applied in a given case?

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Ch 4 Mgt3201 Business Ethics