 The capitalist system came of age in the century from 1750 to 1850 as a result of three revolutions. The first was a political revolution, the triumph of liberalism, especially the doctrine of natural rights and the view that government should be limited in its function to the protection of individual rights, including property rights. The second revolution was the discovery of spontaneous order and the birth of economic understanding. Adam Smith and other economists demonstrated that a system in which individuals can produce and trade freely in pursuit of their private interests is more efficient and productive than any government could be in managing an economy. The third revolution was, of course, the industrial revolution. The political revolution, the triumph of the doctrine of individual rights, was accompanied by a spirit of moral idealism. It was the liberation of man from tyranny, the recognition that every individual is an end in himself. But the economic revolution was cast in morally ambiguous terms. The desire for wealth fell under the shadow of the Christian injunction against selfishness and avarice. The early students of economic order were conscious that they were asserting a moral paradox. The paradox, as Bernard Mandeville put it, that private vices could produce public benefits. The critics of the market have always capitalized on these doubts about its morality. The socialist movement was sustained by allegations that capitalism breeds selfishness, exploitation, alienation, injustice. In milder forms, these same accusations produced the welfare state, which redistributes income through government programs in the name of social justice. The effort to build a socialist society has now collapsed, bringing to an end a vast and tragic social experiment, which has demonstrated that a collectivist system is incompatible with prosperity, freedom, and justice. And it is now clear that the welfare state is subject to all the same problems that have made socialism unworkable. It creates perverse incentives among the people it tries to serve. It is run by a vast bureaucracy that is more interested in preserving its own power than in achieving results. Few people would now deny the economic virtues of the market. Yet capitalism has not escaped the moral ambiguity in which it was conceived. It is valued for the prosperity it brings. It is valued as a necessary condition for political and intellectual freedom. But few people seem prepared to assert that the mode of life central to capitalism, the pursuit of self-interest through production and trade, is morally honorable, much less noble or ideal. And despite the fall of socialism, the welfare state endures throughout the West, sustained not only by the momentum of vested interests, but also by the feeling that social justice demands it. Now, there is no mystery, I think, about where the moral antipathy toward the market comes from. It comes from the ethics of altruism, which is deeply rooted in Western culture, as in most cultures. By the standards of altruism, the pursuit of self-interest is, at best, a neutral act outside the realm of morality and, at worst, a sin. It is true that success in the market is achieved by voluntary trade, and thus by satisfying the needs of others. But it is also true that those who do succeed are motivated by personal gain, and ethics is as much concerned with motives as with results. What does altruism mean? To some, it means nothing more than kindness or common courtesy. To others, it means the complete submersion of the self in a larger social whole. These are the extremes. And the submersion of the self is what was the meaning that Auguste Comte intended when he coined the term altruism. To live for others, he said, to become in corporate with humanity, this is the cardinal virtue of the religion of humanity. My purpose in this discussion is, first, to isolate a particular principle of altruism that lies at the root of the demand for social justice. And secondly, I will try to show that this principle is wrong, it's false. My argument is based on the work of the American author and philosopher Ein Rand. Ein Rand is one of the leading theorists of free market, classical liberalism in the United States. In Europe, she is much less well known. For those of you who are not so familiar with her, I intend this discussion to be partly an introduction. And I have prepared a list of her works together with a list of the translations into European languages, which I have with me. You're welcome to have a copy for your later use. Let me say at the outset, my main conclusion is that I share with Ein Rand the position that we can have an idealistic moral defense of capitalism, only if we are willing to challenge the reign of altruism in ethics. So my concern is ethics more than political philosophy or law. Now let us begin by examining the concept of social justice. I believe there are two distinct forms of the idea of social justice. The first is I will call the theory of welfare rights. And the second is egalitarianism. According to the theory of welfare rights, individuals have a right to certain necessities of life, including minimal levels of food, shelter, clothing, medical care, and so on. It is the responsibility of society to ensure that all members have access to these necessities. But the theory says capitalism does not guarantee everyone access to these necessities, so we cannot have pure capitalism. At best, we can have the market with a welfare state. According to egalitarianism, the wealth produced by a society must be distributed fairly. On this view, it is unjust for some people to earn 15 or 50 or 100 times as much income as others. But laissez-faire capitalism, egalitarians say, permits and encourages these disparities in income and wealth, and is, therefore, unjust. So society must redistribute wealth. Now, the difference in these two conceptions of social justice is the difference between absolute and relative levels of well-being. The theory of welfare rights says that people must have access to a certain minimum level of standard of living, as long as they have that minimum level, according to this theory, it doesn't matter how far others may rise in their income or wealth. They are primarily concerned with programs that benefit people below a certain level of poverty. Egalitarians are concerned with relative well-being. The egalitarians have often said that of two societies, they would prefer the one in which wealth is more evenly distributed, even if the overall standard of living is lower. Better people should be more equal than that some should have more than others. So egalitarians favor government measures such as progressive income tax, which aim to redistribute wealth across the entire income scale, not merely at the bottom. Now, I'm going to discuss these two theories of social justice separately, but I will show that they rest ultimately on the same ethical principle. But I think it's interesting to see how the same principle is at work in the two branches of social justice. The fundamental concept of welfare, of the theory of welfare rights, is that people have rights to goods such as food, shelter, and medical care. That is, on this theory, people are entitled to these things. On this assumption, someone who receives benefits from a government program is merely getting what is due to him in the same way that a buyer who receives a good he has paid for is merely getting his due. When the state dispenses welfare benefits on this theory, it is merely protecting rights, just as it is when the state protects a buyer against fraud. In neither case is there any necessity for gratitude. The concept of welfare rights, or positive rights, as they are often called, is modeled on the traditional liberal rights of life, liberty, and property. In the famous United Nations Declaration of Human Rights, both kinds of rights are included together with no distinction. But in fact, there is a well-known distinction. The liberal rights are rights to act without interference from others. For example, the right of free speech is a right to speak without being prevented by someone else who wants to stop you from saying what is on your mind. But this right does not give you the right to have other people listen if they are not interested in what you have to say. The right of free speech doesn't mean that you will be able to afford a lecture hall. It just means the government cannot stop you. So the traditional liberal rights impose on other people only the negative obligation not to interfere with you, not to restrain you forcibly from acting as you choose. By contrast, welfare rights are conceived as rights to possess and enjoy certain goods, regardless of one's actions. They are rights to have the goods provided by others, even if one cannot earn them oneself. Therefore, welfare rights impose positive obligations on other people. If I have a right to food, then someone has an obligation to grow the food. If I cannot pay for the food, someone has an obligation to buy it for me. Now, the people who advocate welfare rights sometimes argue that the obligation is imposed on society as a whole, not on any particular individual. But society is not an entity. It is not a moral agent over and above its individual members. So any obligation that society has falls on us as individuals. Insofar as welfare rights are implemented through government programs, for example, the obligation is distributed over all taxpayers. From an ethical standpoint, therefore, the essence of welfare rights is the premise that the need of one individual is a claim on other individuals. The claim that it is imposed on you by someone else's need does not depend, according to this theory, on your personal relationship to that person. It does not depend on your choice to help. It does not depend on your evaluation of that person as worthy of your help. It is an unchosen obligation arising from the sheer fact of his need. But we need to carry the analysis one step further. If I am living alone on a desert island, then, of course, I have no welfare rights, for there is no one around to provide the goods. For the same reason, if I live in a primitive society where medicine is unknown, then I have no right to medical care. The content of welfare rights is relative to the level of economic wealth and productive capacity in a given society. And in the same way, the obligation of individuals to satisfy the needs of others is dependent on their ability to do so. I cannot be blamed as an individual for failing to provide others with something that I cannot produce myself. But now, suppose I can produce it and simply choose not to. Suppose I am capable of earning a much larger income than I do, and being an academic, I hope that's true, an income where the taxes would support a person who will otherwise go hungry. Am I obliged to work harder to earn more for the sake of that person? Well, I don't know any philosopher of welfare rights who would say that I am obliged. The moral claim imposed on me by another person's need is contingent not only on my ability, but also on my willingness to produce. Now, in one way, this is very good. It means the welfare rights theory does not regard me as a slave. But in another way, it reveals something not so good. It reveals that the focus of welfare rights is not really the need of those who have them or are said to have them, but rather the constraints that are imposed on those who produce the goods that are being distributed. If you value the satisfaction of human needs, then in all logic, you must value the activity of producing what we need, the activity of creating wealth by overcoming the obstacles that nature places in our way. The theorists of welfare rights seem strangely indifferent to this activity of production. They often have looked with yearning on more primitive communitarian societies with lower standards of living and shorter life expectancies, because in those societies, at least those who did survive benefited from help from the tribe. I believe the moral essence of the theory of welfare rights is not the satisfaction of need, per se. It does not assert an obligation to pursue the satisfaction of need, much less an obligation to succeed. The obligation is conditional. Those who do succeed in creating wealth may do so only on condition that others are allowed to share their wealth. The goal is not so much to benefit the needy as to bind the able. It is a philosophy which says that ability, intelligence, initiative, ambition are liabilities that impose on you special obligations not possessed by others. Now, if we turn to egalitarianism, we find that we arrive at the same principle by a different logical route. The ethical framework of the egalitarian is defined by the concept of justice rather than rights. Egalitarians rarely speak about rights. If we look at society as a whole, they say, we see that income, wealth, and power are distributed in a certain way. The basic question is, is the existing distribution fair? If not, then it must be corrected by government programs of redistribution. A pure market economy, of course, does not produce equality among individuals. But very few egalitarians have claimed that strict equality of outcome, equality of result, as we were discussing earlier this afternoon, is the ideal. For example, the English writer, R.H. Tony, wrote that inequality of circumstance is reasonable insofar as it is a necessary condition of securing the services which the community requires. In the same way, more recent theorists, the American writer, John Rawls, proposed what he called the difference principle, according to which differences in income and wealth are permissible only so long as they serve the interests of the least advantaged people in society. In other words, virtually all egalitarians, not all, I know some exceptions, but virtually all egalitarians, recognize that strict leveling would have a disastrous effect on production. They admit that not everyone contributes equally to production, to the wealth of a society. To some extent, therefore, they say, people must be rewarded. They must be given incentives in accordance with their productive ability, as an incentive to put forth the efforts they are capable of. But any such differences must be limited to those which are necessary for the public good. Why? What is the philosophical basis of that principle? Well, egalitarians often argue that it follows logically from the basic principle of justice. The basic principle is that people are to be treated differently only if they differ in some morally relevant way. Now, we discussed this principle in the previous session. Professor Volvers-Berger identified the principle. And in my comments, I noted that the reasons why it could not be applied to distribution. So I will just summarize quickly here. In order to apply that principle, that basic principle of justice, to issues of distribution, you must assume that society engages in some act of distribution. But it does not. In a market economy, incomes are determined by the choices of millions of individuals, consumers, investors, entrepreneurs, workers. These choices are coordinated by the laws of supply and demand. So it is no accident, for example, that a successful entrepreneur earns more than a day laborer. But there is no one person who pays the entrepreneur and who pays the day laborer. In 1989, the most highly paid entertainer in the United States was Michael Jackson, who earned $65 million. Why? It was not because society decided that Michael Jackson was worth $65 million. It was because millions of fans of Michael Jackson each decided that his albums were worth whatever they cost. Even in a socialist economy, as we now know, economic outcomes are not under the control of central planners. Even in socialism, there is a kind of spontaneous order, although it is a corrupt one, in which outcomes are determined by bureaucratic infighting, black markets, theft, and so forth. So we must abandon this picture of a giant pie which is being distributed and must therefore be distributed fairly. Once we do abandon this picture, what is left of the principle put forward by Tawny and Rawls and others? The principle that inequalities are acceptable only if they serve the interests of all. If this cannot be grounded in justice, then it must be regarded as a matter of the obligations we bear to each other as individuals. And when we consider it in this slide, we can see that it is the same principle that we identified at the basis of the theory of welfare rights. The principle is that the productive may enjoy the fruits of their efforts only on condition that their efforts benefit others as well. There is no obligation to produce, to create, to earn an income. But if you do, the needs of others arise as a constraint on your actions, your ability, your initiative, your intelligence, your dedication to your goals, and all the other qualities that make success possible are personal assets that put you under an obligation to those with less ability, initiative, intelligence, or dedication. In other words, every form of social justice rests on the assumption that individual ability is a social asset. And I might add that the philosopher John Rawls is quite explicit about this. He says that the principle he believes in represents an effort on the part of all of us to regard each other's personal talents, personal assets as a collective resource. This assumption is not merely that the individual must respect the rights of the less able. And it is not merely to say that kindness or generosity are virtues. It says something much more. It says that the individual must regard himself, in part, at least, as a means to the good of others. And here we come to the crux of the matter. When I respect the rights of other people, I recognize that they are ends in themselves, that I may not treat them merely as means to my satisfaction. This is widely regarded as the moral thing to do. Why, then, is it not equally moral to regard myself as an end? Why should I not refuse, out of respect for my own dignity, as a moral agent, to regard myself as a means in the service of others? Now, in questioning the ethics of altruism as I have, I want to do something more than simply raise these troubling questions. I want to outline an alternative ethical philosophy developed by Ein Rand. It is an individualist ethics, which defends the moral right, as well as the political right, of every individual to pursue his own self-interest. Altruists argue, typically, that life presents us with a basic choice. We must either sacrifice others to ourselves, or sacrifice ourselves to others. Self-sacrifice is the altruist way. And the assumption is that the only alternative is to live as a predator on other people. But this is a false alternative, according to Rand. Life does not require sacrifices in either direction. The interests of rational people do not conflict. And the pursuit of our genuine self-interest requires that we deal with other people by means of peaceful, voluntary exchange. To see why this is the case, let us consider how we decide what is in our self-interest. And interest is a value that we seek to obtain, whether it's wealth, pleasure, security, love, self-esteem, some other good. Rand's ethical philosophy is based on her insight that the fundamental value, the sumum bonum, is life itself. It is the existence of living organisms, and their need to maintain themselves through constant action to satisfy their needs that gives rise to the entire phenomenon of values. Imagine a world without life. It would be a world of facts, but not of values. It would be a world in which no condition could be said to be better or worse than any other. But as soon as we introduce a living organism into such a world, then some things are better and worse for it, because some things threaten its survival or help maintain its survival. So the fundamental standard of value, by reference to which a person must judge what is in his interest, is his own life. And by this, we mean not mere survival from one moment to another, but the full satisfaction of our needs through the ongoing exercise of our faculties. Man's primary faculty, our primary means of survival, is our capacity for reason. It is reason that allows us to live by production, and thus to rise above the precarious level of hunting and gathering. Reason is the basis of language, which makes it possible for us to cooperate and transmit knowledge. Reason is the basis of social institutions governed by abstract rules. In Rand's view, therefore, the purpose of ethics is to provide standards for living in accordance with reason in pursuit of one's own life. To live by reason, and here I must summarize an entire ethical philosophy very quickly, we must accept independence as a virtue. Reason is a faculty of the individual. No matter how much we learn from others, the act of thought takes place in the individual mind, and must be initiated by each of us by our own choice, and directed by our own effort. So rationality requires that we accept responsibility for directing and sustaining our own lives. To live by reason, also, we must accept productiveness as a virtue. Production is the act of creating value. Human beings cannot live by fulfilling lives by finding what they need in nature, or killing it, as animals do, nor can they live as parasites on others. As Ein Rand says, and I'm quoting here, if some men attempt to survive by means of brute force or fraud, by looting, robbing, cheating, or enslaving the men who produce, it still remains true that their survival is made possible only by their victims, only by the men who choose to think and to produce the goods which they, the looters, are seizing. Finally, to live by reason, we must accept honesty and integrity as virtues. Reason is a faculty of cognition, of knowledge. That's its biological function. It is our means of understanding the world for the sake of guiding our actions. To act without integrity, to act against our judgment of what is right, is to sever our actions from our mind. To act without honesty, by fraud or deceit, is to act in violation of our knowledge of what is true and to make ourselves dependent on the ignorance and the stupidity of others. The opposite of altruism is egoism. And the egoist is usually pictured as someone who will do anything to get what he wants, someone who will lie, cheat, steal, and seek to dominate other people in order to satisfy his desires. Like most people, Rand would regard this mode of life as immoral. But her reason is not that it harms others. Her reason is that it harms the self. Subjective desire is not the test for whether something is in our interest. And deceit, theft, and power are not the means for achieving happiness or a successful life. The virtues that I've mentioned are objective standards. They are rooted in man's nature and thus apply to all human beings. But their purpose, as she says, is to enable each person to achieve, maintain, fulfill, and enjoy that ultimate value, that end in itself, which is his own life. So how shall we deal with others? Rand's social ethics rests on two basic principles. A principle of rights and a principle of justice. The principle of rights says that we must deal with other people peaceably by voluntary exchange without initiating the use of force against them. It is only in this way that we can live independently on the basis of our own productive efforts. The person who attempts to live by others is a parasite. And it is only in this way that we can obtain the many benefits that come from social interaction. The benefits of economic and intellectual exchange, as well as the values of more personal intimate relationships. The source of these benefits is the rationality, the productiveness, the individuality of the other person. And these things require freedom to flourish. If I live by force, then I attack the source, the root of the values I seek. That's the principle of rights. The principle of justice is what Rand calls the trader principle. Living by trade, offering value for value, neither seeking nor granting the unearned. An honorable person does not offer his needs as a claim on others. He offers value as the basis of any relationship. Nor does he accept and unshows an obligation to serve the needs of others. No one who values his own life can accept an open-ended responsibility to be his brother's keeper. Nor would an independent person desire to be kept. The principle of trade, Rand notes, is the only basis on which human beings can deal with each other as independent equals. Now, what I have given you is only a very brief summary of Rand's ethical philosophy, the objectivist ethics, as she calls it. But I think it is enough to indicate that there is an alternative to the traditional ethics of altruism, an alternative that treats the individual as an end in himself in the full meaning of that term. And the implication of this approach is that capitalism is the only just and moral system. A capitalist system is based on the recognition and protection of individual rights. In a capitalist society, men are free to pursue their own ends by the exercise of their own minds. The only social constraint that capitalism imposes is the requirement that those who wish the services of others must offer value in return. No one may use the state to expropriate what others have produced. I said at the outset that capitalism was the outcome of three revolutions, the political revolution of individual rights, the economic revolution of understanding markets, and the industrial revolution which unleashed man's productive ability. Capitalism has been rediscovered in our own day through the economic failure of all the alternatives. But I believe that if it is to survive and flourish, we need a fourth revolution, a moral revolution that establishes the moral right of the individual to live for himself. Thank you.