1. Just Rewards
My own hopes and intuitions are that
self-fulfilling and creative work is a fundamental
human need, and that the pleasures of a challenge
met, work well done, the exercise of skill and
craftsmanship, are real and significant, and are
an essential part of a full and meaningful life.
In any economy the collective efforts of all workers create the economic product. Imagine the total product as a gigantic apple pie. What size piece do you get for your particular labors? What do I get for mine? What determines everyones income, or how much pie we can each have? In fancier language, what is the economys norm for remuneration?
In capitalist economies people are remunerated profits for how much property they own and remunerated wages or bonuses for how much power they have or what they can negotiate or extort for the output they generate. Would we retain all these norms for remunerationproperty, power, output in a good economy, or would we eliminate one or more? And is there any other norm that we would add?
We can have democracy or we can have the concentration of wealth in the
hands of a few. We cannot have both.
- Supreme Court Justice Louis Brandeis
18 THINKING FORWARD
Possession is 9/10 of the problem.
It is unlikely that many folks reading this brief visionary and strategic book think that people should be rewarded for owning property. Rewards for property are called profit wherein individuals who own the means of production pocket profits based on the output of those means of production. You own some machines. The machines have high output that can be sold for revenues that exceed the costs of maintaining them. You pocket the difference, or profit. You neednt do anything other than keep track of your deed to your property, while sipping mint juleps, or dry martinis.
This leads to someone like Bill Gates (whose profit income in no way depends on his labors but only on his stock portfolio) having more wealth than the entire GNP of 5 Central American countries combined, or, if you prefer, 475 billionaires together having more wealth than half the worlds population. But rewarding property ownership not only leads to grotesquely exorbitant differentials of wealth and power that distort virtually all dimensions of social life, it also, even when not so exorbitant, doesnt reward a person for something morally worthy that he or she has done, nor even provide the most compelling incentives to do something desirable that he or she otherwise might not have done.
We inherit or amass property overwhelmingly due to luck in the parent lottery, or luck or guile in competition. We cant change anything regarding who our parents are and how much property they have to leave us. We are born to whom we are born. If we get lucky and happen to get a grip on a company that in turn gets a grip on a huge piece of a market yielding big or even gargantuan profits rewarding us with a huge swath of it is surely not morally warranted, nor incentive-warranted. In fact, it isnt even what most often happens, since most often, Bill Gates aside, operations become overwhelmingly owned by investors who do nothing but move money around from project to project with the people who founded the operations and built them retaining only a very small percentage of the holdings. At any rate, rewarding property with profits says that having a deed in your pocket is a one-way ticket to vast wealth. There is no moral or economic rationale for paying huge rewards for possession of a piece of paper other than aggrandizing the few.
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I never would believe that Providence had sent a few rich men into the
world, ready booted and spurred to ride,
and millions ready saddled and bridled to be ridden.
Folks reading this book probably also dont think that people should be rewarded based on their ability to extort a greater share of societys product due to their power. A thuggish economic actorusing racism or sexism or a monopoly on some asset or just plain old accumulated negotiating advantage of one sort or anothershouldnt be able to translate that power into otherwise unwarranted income via extortion. Sure, in an economy where extortion is the norm, we wouldnt want unions to forego using their power to win higher wages against the power of owners and others who would otherwise reduce them to abject penury. But in a good economy where everyone is subject to just norms and each actor is not relegated to having to battle for advantage against every other actor, surely we can agree that we wouldnt want owners or unions or any other actors to gain income based on their relative power. Quite obviously, rewarding power casts economic and moral logic aside to favor the norm of brute force. It yields the simple rule that he who is most thuggish and least concerned about the situation of those he tramples determines who gets how much of societys social product. Rewarding power, therefore, is no more moral, ethical, or economically efficient than rewarding ownership. So lets get on to norms that a person truly concerned about justice might find worthy.
20 THINKING FORWARD
We believe that most of the ills that afflict humankind
stem from bad social organization and that people
could destroy them if they wished and knew how.
The above two options were handled only briefly because we assume our readers already agree that rewarding property and rewarding power are not worthy norms for a desirable economy. Instead of about profit or power, controversy among leftists over Just Reward arises, if at all, regarding rewarding output.
Perfectly sensible and humane people feeling that we need a new and far more just economy might think, roughly, each economic actor ought to get back a share of output equal in value to what they themselves produce for the economy. This has even been the slogan of very radical and inspiring movements, for example the U.S. Wobblies at the turn of the twentieth century. After all, if you dont put much into societys economic product, why should you take much out? And if you put a whole lot in, why shouldnt you get to take a whole lot out? Why should someone else get the value you put in, or you get the value someone else put in, instead of each actor getting back only the amount of his or her own contribution? Think back to societys product being a big pie. If I add to the pie so-and-so much product, then I ought to get remunerated enough for me to buy back from the pie that same value slice, and likewise for everyone else. It seems fair, which is why a great many people who reject rewarding property and power think we ought to reward output. But lets look more closely.
Suppose Sally and Sam pick oranges. Sally has a good set of tools. Sam has a crummy old set. They go into the fields for eight hours. They work equally hard. They endure the same conditions. Sallys pile when the day is done is twice as big as Sams, her output is double Sams. Should Sally therefore get twice Sams income? If so, then we have rewarded her luck in having better tools. Is that moral? Yes, it is efficient and desirable that people use better tools if they are available. But do we have to provide a morally questionable reward to the person benefitting from having the better tools in order to provide economic incentive for socially optimal allocation of tools? Instead why cant we have an economy which requires sensible allocations of resources and tools and technology for remuneration to occur at all, but which doesnt then unjustly reward its actors?
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Suppose Sally is very large and strong and Sam is much smaller and weaker. This time suppose they use the same tools. They again go into the fields for eight hours. They again work equally hard. They again endure the same conditions. Again Sallys pile is twice Sams, this time due to her greater strength. Should Sally get twice Sams income? If so, then we have rewarded her luck in the genetic lottery that gave her greater strength. Is that moral or efficient? Certainly there is no moral logic. And while we want to get appropriate levels of output from people in light of their inherited endowments, we dont have to reward the size of their output to accomplish that, we only have to remunerate for appropriate output given tools and talents, as we will see below.
To continue, suppose we compare two people doing mathematics investigations, or creating works of art, or doing surgery, or doing anything else that is socially desirable. They work equally hard under the same conditions. One has more of some relevant natural talent and the other has less of it. Should the former be rewarded commensurately more than the latter? Clearly, there is no moral reason to do so. Why reward someone for genetic luck on top of the benefits that that genetic luck already bestowed on them? The person did nothing meritorious to gain the talented genes in the first place. More controversially, there is also no incentive reason to reward output per se. A potential recipient of bounty paid for innate talent cannot change her natural talent in response to the promise of higher pay. Everyones natural endowment is what it is, and being paid for output wont provide us incentive to change our genes to increase our natural endowment . We simply cant do that. There is no incentive effect on our talents of rewarding our talents. An economy does want us to utilize our talents, to be sure, but arent there ways to accomplish that other than providing morally and socially inappropriate levels of income?
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How about education or learned skills? Shouldnt improving our productivity be morally rewarded, it being a meritorious choice? And shouldnt we also want to promote such choices? That seems reasonable, and learning should be rewarded, yes, but not in proportion to the output the education permits, rather in proportion to the effort and sacrifice it required. In other words, we should always reward for the act undertaken, the oranges picked, the math problems solved, the art painted, or the schooling undertaken to enhance ones skills. And we should provide proper incentive for undertaking the productive acts, yes. But that is very different than looking at lifetime output and saying we will reward people in accord with that output.
Rewarding Only Effort and Sacrifice!
Farming looks mighty easy when your plow is a
pencil, and youre a thousand miles from the corn field.
-Dwight D. Eisenhower
Suppose we reward effort and sacrifice, not property, power, or output. What happens? Well, if jobs were like now, those doing the most onerous, dangerous, or otherwise debilitating work would be highest paid per hour of normal effort. In contrast, those with the most comfortable conditions and circumstances would be lowest paid per hour of normal effort. This choice is moral in that it rewards people for putting out in their work, and/or for enduring more hardship on behalf of enlarging or improving the quality of the social product. But does rewarding only effort and sacrifice mess up the economy by distorting incentives and thereby leading to defective or diminished social product related to the assets on hand?
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Put more specifically, one might ask: Shouldnt a surgeon get paid for all those years of schooling, as compared to a nurse or a janitor, who has less schooling?
Sure. The surgeon should be paid, while schooling, for whatever the level of effort and sacrifice the years of schooling entail. Later, the surgeon should be paid in accord with the effort and sacrifice expended at work, just like the janitor in the hospital should. In this event, each person should be rewarded according to the same normthat is, paid according to effort and sacrifice expended at a worthwhile job that contributes to society.
But then no one will be a surgeon, is the reply. Folks will prefer being a janitor because it pays more, and also why would anyone go the extra years of school to get paid less?
To see why, lets imagine you are just out of college. You now have to choosewill it be medical school for six years followed by being a doctor for forty more years, or would you prefer being a janitor in the local hospital for the full forty-six years? More exactly, how much do you have to be paid to go to medical school instead of being a janitor for the first six years, in light of the quality of life you will have during that period, and later? Or, vice versa, how much would you have to be paid to opt to be a janitor for the first six years rather than to go to medical school? And then, how much would you need to be paid to do either of the jobs, as compared to the other, for the remaining forty years?
To ask these questions is to answer them and to reveal that the motivational effects of payment according to effort and sacrifice are exactly right if we are discussing a world in which people are free to choose their jobs without encumbrances from history or from limiting institutions. Of course not everyone will seek these specific jobs, but the thought experiment is easy to translate to all other realms.
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In short, other things equal and all options open, you need and deserve more pay to provide you the incentive to do that which requires greater effort and sacrificeway more to be a janitor than a student. But you dont need nor do you deserve more pay to do something that is more fulfilling, more empowering, or yields more output, assuming it doesnt require greater effort and sacrifice. In fact, you need less to be motivated to be a doctor than a janitor.
It is a remarkable testimony to the malignant purpose, character, and affectivity of modern schooling that there is confusion about these matters. The malignant purpose is to inculcate notions and expectations consistent with maintaining social relations as they are. The malignant character is to make students passive regarding claims made by authorities. The malignant affectivity is born out by the results. So, go into any high school or college classroom. Create a relaxed and jovial tone. Announce that the average income for brain surgeons has risen to $300,000 a year. Announce that the average income for coal miners is at $60,000 a year. Describe the conditions of work for each, using coal miners of old, by the waywith black lung and risks of cave-ins, and all the rest (or you could substitute hospital orderly, janitor, sewage plant pump repair diver, sandhog, assembly line worker, etc.) Ask how many students would like a job more or less like that of the surgeon, in their preferred area, versus how many would like a job more or less like the coal miner. Then ask folks how come the surgeons income is so high. People will answer because he or she has to go to so many more years of school, because he or she makes such a valuable contribution to society, and mostly because he or she wouldnt do that job if he or she werent paid as an inducement.
Now there are all sorts of problemsthe true answer being because the surgeons have the power to extort that paybut for purposes in this chapter, the thing to pursue next is this. Pick any student, randomly. Tell them they are about to graduate into the workforce, or to choose to go to school for another six years. Tell them their choice $60,000 for the coal mining or similar job for the next forty six years, or six years of school with very low income and then a few years of slowly growing salary, and then forty years at $300,000 as a surgeon, or in some similar job. Now tell them you are going to change the rates and you want to know when they will switch from opting for more schooling and the high paying (highly empowering, highly admired, better work conditions) option to the more working class option. You will have to drop the surgeons salary well below $60,000 to get the wanna-be surgeon to prefer, instead, to go off and mine coal, if you can get them to change at all. You will be able to get the coal miner, however, to switch with no trouble, of course, even for a drop in pay rate. And in this little exercise, for those paying attention, the entire edifice of nonsensical rhetoric about needing to pay more to get people to be willing to go to school or do more pleasant and empowering work will drop away, pareconish insights rising in its place.
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Just reward, both morally and regarding economic incentives as well, requires that those who put out more effort and sacrifice at a needed set of tasks for society employing capacities and resources appropriately, get more income. Those who put out less effort and sacrifice for society, get less income. Output may often reasonably be an indicator of effort, of course, but output does not itself warrant reward. (For how effort is measured, beyond by looking at results, we have to wait until we get a little further in the overall picture of allocation but for who measures it, well, of course your peers, your workmates).
And what if someone cant exert due to health or other reasons? Even wage slave economies recognize that in such cases there ought to be remuneration anyway. Reasonable people could differ about how much there should be, of course, but if you cant work, receiving the average income so that you are not unduly gaining or losing economically due to your health, would seem proper.
And what if someone has some ailment requiring expensive treatments, or suffers some calamitynatural or otherwisethat destroys their holdings? Of course, a just society addresses these needs socially, insuring against them for everyone and not leaving individuals to suffer catastrophes alone.
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And what about children who cant/shouldnt work? Are they dependent on the income of parents, so that parents with three children have less per person than those with one child or none? One can imagine various attitudes about this, the most simple being that society provides income for all children unable to work as yet, just as for anyone else who is unable to work. This income allotment is average, perhaps with variations for age, rewarded simply for being human. The income for a family, then, is the income for the adults, plus the income that goes to children through the adults.
So in light of the above examples, the remuneration norm we advocate for a desirable economy is Just Rewards, which is payment according to effort and sacrifice or according to need when effort cannot be expended or when need is excessive due to disease or other calamity.