“Justice is the first virtue of social institutions, as truth is of systems of thought.”
John Rawls begins his seminal work, A Theory of Justice, with this thought-provoking sentence. It’s a great sentence for thinking about the economy, since the economy is a social institution and economics is a system of thought. In fact, it may be that the first barriers to economic justice are the falsehoods of much of current economic thought.
The truth of the matter is that the economy is a social institution, not a natural one. It is not guided by natural forces, but by social trends and human decisions. It is not self-organized, but organized by people who have been quite ingenious in managing economics trends to their advantage. If we are to have economic justice, we have to begin with the truth.
The economy is embedded in social and environmental systems, and actually depends on these systems for its existence. Like other social systems, its dynamics are complex, always moving in some directions, impossible to fully comprehend, and quite difficult to change. At the same time, we do have the capacity to redirect the economy through changing our beliefs about what we want from it, by changing who and what gets rewarded, and by the force of regulation.
There is a widespread belief that either we should not expect the economy to be fair or that a supply and demand, price-based market is fair. The first belief ignores the truth that the economy is not like the weather, which at least before global warming was a natural system, but is more like social systems such as urban housing or immigration.
The second belief—that a price-based market is fair—assumes that the economy is about property relations instead of human relations. As I argued in Civilizing the Economy, this assumption creates an “economics of dissociation” that splits off the misery of the real providers of wealth and then inhales the false optimism of “natural” market dynamics.
The real problem with using price as the measure of value is that it treats money as a commodity rather than as a means of exchange. The fact is that we do not work for money; we work to make a living. The amount of money a worker receives for a good day’s work, in other words, should not be determined by the lowest bid, but rather by the amount of money one needs to purchase the provisions for a good life. The exchange is between work and provisions, not work and money. This means that a just wage allows workers to live well—a living wage.
In a civic economy, workers would negotiate the exchanges in which they are involved. These exchanges would be based on reciprocity, which since Aristotle has been recognized as the justice appropriate for associations of exchange. If we want economic justice, the first step would be to recognize workers as citizens with the right to participate in the communities in which they contribute.