Free Markets and Social Justice

Free Markets and Social Justice

Free Markets and Social Justice

Free Markets and Social Justice

Synopsis

The newest work from one of the most preeminent voices writing in the legal/political arena today, this important book presents a new conception of the relationship between free markets and social justice. The work begins with foundations--the appropriate role of existing "preferences," the importance of social norms, the question whether human goods are commensurable, and issues of distributional equity. Continuing with rights, the work shows that markets have only a partial but instrumental role in the protection of rights. The book concludes with a discussion on regulation, developing approaches that would promote both economic and democratic goals, especially in the context of risks to life and health. Free Markets and Social Justice develops seven basic themes during its discussion: the myth of laissez-faire; preference formation and social norms; the contextual character of choice; the importance of fair distribution; the diversity of human goods; how law can shape preferences; and the puzzles of human rationality. As the latest word from an internationally-renowned writer, this work will raise a number of important questions about economic analysis of law in its conventional form.

Excerpt

We are in the midst of a period of mounting enthusiasm for free markets. This is of course true in many of the former Communist nations.It is true for much of the West as well, prominently including England and the United States.

Free markets are often defended as an engine of economic productivity, and properly so. But they are also said to be required for social justice, and here things become far more complex.Certainly there are connections between free markets and social justice. A system aspiring to social justice aspires to liberty, and a system of free markets seems to promise liberty, because it allows people to trade goods and services as they wish. In fact, a system of free markets seems to promise not merely liberty but equality of an important sort as well, since everyone in a free market is given an equal right to transact and participate in market arrangements. This form of equality should not be trivialized or disparaged. For example, race and sex discrimination has often consisted of exclusions of certain classes of people from the market domain.In both South Africa and the United States, discriminatory practices frequently took the form of incursions on free markets in employment.

An appreciation of the virtues of free markets has been an important part of the economic analysis of law, perhaps the most influential development in legal education in the last quarter-century, and a development with growing effects on public policy in the United States and abroad. As it operates in law schools, economic analysis is concerned above all with the consequences of legal rules. Often its practitioners have asked whether intrusions on free markets have desirable consequences. If the minimum wage is increased, what, exactly, will happen? What are the real-world consequences of bans on discrimination, legal rules for controlling air pollution, and rent control laws? There are limits to how much economic theory can say on such issues; empirical evidence is necessary.But by looking at the effects of law on incentives, economics can point in the right direction. Often it can show that the consequences of intrusions on markets will be unfortunate or even perverse. The economic analysis of law has produced significant advances, many of which are discussed in this book. Much remains to be learned.

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