What’s Wrong with Rawls’ Defence of Capitalism?

I’ve always found it a bit strange that Rawls considered the question of whether free markets, or socialism, could better fulfill the principles of justice. It appears plain to me that “free markets” are anything but, and modern capitalism is a political system where power is concentrated in the hands of economic actors, primarily high finance. To understand Rawls’ defence of capitalism’s moral possibility, it’s necessary to make a distinction between markets in ideology and markets in reality. Rawls’ idea of capitalism is:

… [a] system of markets [that] decentralizes the exercise of economic power. Whatever the internal nature of firms, whether they are privately or state owned, or whether they are run by entrepreneurs or managers elected by workers, they take the prices of outputs and inputs as given and draw up their plans accordingly. When markets are truly competitive, firms do not engage in price wars or other contests for market power. In conformity with political decisions reached democratically, the government regulates the economic climate by adjusting certain elements under its control, such as the overall amount of investment, the rate of interest, the quality of money and so on. There is no necessity for a comprehensive direct planning. Individual households and firms are free to make their decisions independently, subject to the general conditions of the economy. (241)

Why does Rawls fail to inspire?

Today I’ve been reading Rawls’ “The Law of Peoples”. This work is differentiated from his other two main works, “Theory of Justice” and “Political Liberalism” by it’s scope: no longer how to rationally arrange the liberal state in a just manner, nor to justify the liberal conception of the good, but rather to discuss how liberal states should relate to each other, and also to non-liberal states.

Generally the account is nicely comprehensive, is well intentioned, and deduces out of his conception of liberalism (*so long as one doesn’t take T.O.J. to justify radical egalitarianism). However, the whole project rests on this notion that states will want to give up their sovereignty as states. Specifically, he thinks they will give up the right to wage war when it is in their self-interest. It is difficult to see how a state can give up this right, because it isn’t a right, it’s a descriptive claim about what states do. International agreements impose conditions on states, and breaking the agreements can have consequences – this alters, sometimes severely, when it would be in the best interest of the state to engage in an offensive war. However, it is unclear why a state would neglect to prosecute an offensive war when it was in its interest, even if it had claimed to have given up this “right”. One can talk all one wants about sanctions and UN military intervention, China can still invade Taiwan, and will, if China really believes that the invasion, along with all its consequences, is in its best interest. Now, China is not a modern liberal democratic nation, but it is unclear why a democratic China would act differently given the situation.

One might say that the specificity of the situation with Taiwan cashes out of the kind of regime China is – authoritarian fascist under the guise of communist rhetoric. But that simply means that states won’t engage in offensive wars because the kind of government they ought to have will produce in people none of the feelings or desires that take countries to war. If it really were possible for a state to cultivate the lack of such feelings, so that it never would be in the best interest of the state to go to offensive war, it is still unclear why the “right” to go to war has been given up – it seems much more that a duty has been imposed to avoid the conditions in which the duty to go to war would be invoked.

There is a larger point to all this war talk – international agreements do not exist in perpetuity, they exist only as long as the parties in them have it in their best interest not to break the treaty. Rawls can make it a duty all day long for states to cultivate the internal general feeling that the Law of Peoples is of value, and that citizens of the state are also citizens of the world. However, whether the state can maintain these feelings is contingent, and Rawls himself admits that “the institutional process [of the Law of Peoples] may be importantly weaker when allegiance to the Law of Peoples is also weaker”(18).

Inasmuch as the ability of states to maintain allegiance to the Law of Peoples (i.e. the Utopian version of the UN) is contingent and imperfect, the Law will break down, states will act in accordance with a set of interests which come into conflict with the autonomy of other states, wars will occur.