Nowadays, the gift economy leads a precarious existence, appearing mostly in commencement-day addresses in which graduates are exhorted to follow their dreams, while most of the poor things are worrying frantically about how to pay their debts. The family is a gift economy, and so is culture, including both the arts and the sciences, as well as the shrinking public and nonprofit spheres. Ever since that most fateful of innovations, industrial mass production, has become virtually universal, the market economy has progressively squeezed out the gift economy. In a mature capitalist society, competition grows in both extent and intensity—that is, both between and within economic units. Creativity and generosity are not forbidden but they are no longer self-justifying; they are, on the contrary, subordinated, like all activity in the non-public sphere, to the goal of increasing shareholder value. In the private economy, you can do whatever you like—create beauty, pursue truth, help others—as long as what you like to do makes someone a profit.
I said earlier that people in a market economy are rewarded in proportion to others’ willingness to pay. That willingness to pay is the measure of value in a market economy; and so, to say that a person deserves what she earns is to say that there is at least a rough correspondence between the value of what she produces and the value of what she receives. As Milton Friedman, the high priest of American capitalism, put it: “The ethical principle [underlying] the distribution of income in a free-market society is, ‘To each according to what he and the instruments he owns produces.’”
This notion of desert rests on the assumption that two distinctions can be made rigorously: first, that one person’s input—to any output or outcome at all—can be sharply distinguished from all other inputs; second, that merit can be distinguished from luck—that is, that diligence, good judgment, talent, and other productive qualities and character traits are not fully attributable to biological endowment, early environment, education, and other contingent and therefore morally arbitrary sources. I don’t believe those distinctions hold up.
Let’s take that CEO, and let’s assume we know somehow that she produces thirty or three hundred times as much as her average employee. Causation is a transitive relation, and production is a kind of causation. If A is a cause of B, and B is a cause of C, then A is a cause of C. If A contributes to the production of B, and B contributes to the production of C, then A has contributed to the production of C. Now, who has contributed to the production of our CEO and, therefore, to the production of whatever she produces? Clearly, her parents, spouse, teachers, fellow students, predecessors, colleagues, rivals, and friends, along with all their parents, spouses, teachers, fellow students, predecessors, colleagues, rivals, and friends, along with all those who created the physical, organizational, and cultural resources employed in the production of whatever our CEO produces, along with all their parents, spouses, teachers, fellow students, predecessors, colleagues, rivals, and friends, and, it goes without saying, all their parents, spouses, teachers, and so on through what is, if one wants to insist on the point, an infinite chain of causes.
I do want to insist on the point. Einstein famously wrote: “I have all along been standing on the shoulders of giants.” So has our CEO. Exceptional contributions, whether to art, science, or the Gross National Product, are prepared for by the whole previous development of the field. People who make brilliant, courageous, and illuminating mistakes, which may be indispensable to the ultimate success of a rich and famous artist, scientist, or entrepreneur, are not, in a competitive market system, retrospectively and proportionately rewarded for their contributions, even though Friedman’s definition of justice would seem to require it.
My point is that all production is social production. The productive assets of every age are the joint product of all preceding ages, and all those born into the present are legitimately joint heirs of those assets. And the same arguments for joint rather than individual inheritance of wealth created in the past apply to the distribution of income in the present. If this seems counterintuitive, it is perhaps because there persists a deep and ancient distinction between luck and merit, according to which we deserve praise and reward for our good actions, though not for our good fortune. But what if our good actions are the results of our good fortune?
