Tag: wrong

Justice and Morality

It seems there’s a difference between justice and morality.  I’ve never quite come to a comfortable conclusion about the nature of the two concepts and their relationship, but it’s worth exploring.

Suppose you jump in someone else’s car parked in the valet entrance at a hotel and speed away to get your wife in for an emergency C-section.  You’ve saved the baby and possibly the mother.  It would be strange to call this immoral.  In fact, it might be very moral, even heroic.  But it also seems clear that the owner of the car has been wronged.  She was unable to make her meeting in time, some of her gas was used up, and maybe you even got a few dings in the door.  She has suffered an injustice.  So even though you acted morally, it’s possible you acted unjustly.

Let’s say you have a deep hatred for your neighbor.  One day an envious rage takes over so you pick up a rock and throw it at his new car, hoping to shatter the window.  You miss.  No one sees the action, and the rock rolls harmlessly into the weeds.  It seems likely you’ve acted immorally by trying to destroy his property.  But it would be odd to say any injustice was done.  Your neighbor hasn’t suffered a wit from your failed attempt at vandalism.

Justice is about living with other people, while morality is about living with yourself.  Justice is about right relation to others as measured against the mores of society, while morality is about right relation to right itself, as measured against your own beliefs.

Whether or not justice exists objectively or is entirely a social construct, it has an unmistakable universality.  The particulars, and the process of discovering and remedying injustice differ in each society, but the basic tenets are the same.  No society has ever praised or rewarded breaking a promise, stealing, or murder.  There are instances where such acts are called by other names or given a pass under special circumstances, but that’s just it; they always require justification.  The default human position is that coercion is bad, and social systems evolve to mitigate it.

What would justice demand from you in the car theft scenario?  The nice thing is, we don’t have to decide in the abstract.  Justice always takes place in a social context, and the process seems just as important as the outcome.  For productive cooperation, the systems that determine and deal with injustice are best when they are transparent, stable yet flexible, knowable in advance, and not applied preemptively.

Even though everyone may acknowledge that your theft of the car was unjust, if the process allows arbitrators to consider circumstances, they may let you off, or they may ask only that you pay the owner a small fee.  These contexts are rich, and the owner has a lot to consider as well.  Perhaps she hears your story and decides not to pursue any recompense.  Maybe she is really ticked and wants to, but realizes the social approbation she’ll get for doing so isn’t worth it, even though she would win her case.  Since justice exists only in a social context, and for the use and benefit of humans, even if it is violated, there needn’t be black and white, always-and-everywhere rules demanding uniform punishment.  Though a uniform and recognizable process is needed, uniform outcomes don’t seem to be.  This is why common law is so much more effective than legislation at maintaining peace.

Morality is trickier.  I might be using the term differently than most people in this post (I have often used it more loosely myself, many times on this blog…don’t hold it against me!), but I think morality is something that exists in all of our minds, whether or not it exists “out there” objectively.  We have a conscience.  We have beliefs about right and wrong that are distinct from our sense of justice.  That’s why nearly everyone would agree that you acted immorally in story number two, even though justice demands nothing of you.  Our sense of morality changes over time, and is very different from person to person.  Part of life’s journey is discovering it and constantly adapting to it.

I’ve known people who genuinely believed it was wrong to have a drop of alcohol.  Whether or not I agree, it was clear that if they did, they would feel a lot of guilt.  They would be violating what they know to be right.  Some of those same people’s views changed over time, to where years later they no longer thought it wrong to drink, and they could do it with a clear conscience.  Morality doesn’t seem to be about the acts themselves like justice does.  It seems to be about whether or not a person is violating their own sense of right.  Many spiritual traditions talk of being in unity with oneself, being of one mind, or having an undivided heart.

It’s easy to conflate justice and morality, in part because we deliberately do so with children.  It’s more convenient to wrap everything up into right and wrong, and train kids to do and don’t do based entirely on these words.  I don’t think it’s helpful for kids in the long run, but it requires less work, so most adults do it.  Kids are told to say hi when someone says hi to them for the same reasons they’re told not to take Johnny’s toys; because it’s the right thing to do.  Yet the first is not unjust and probably not immoral, while the second is definitely unjust and probably immoral.  Children are also trained to obey the law because it’s right to do so.

They’re not often told that justice demands an abstention from coercion, even if the law doesn’t, or that the law may ask them to do something they feel is deeply immoral.  This oversimplification and lumping everything into basic right/wrong categories has the potential to result in atrocity.  Those who allow the law to be a shortcut for justice or morality, for example, can find themselves rounding the neighbors up and sending them off to prison, or worse.

There’s more to be explored on this topic, but I’ll save it for another day.

UPDATE: Check out this post with a handy-dandy 2×2 matrix to visualize these concepts.

Was Adam Smith Wrong?

Here’s an article I originally wrote for the Prometheus Institute.

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Disagreeing with a man whose face appears on the necktie of many a freedom-lover is perhaps dangerous, but sound reason can’t be sacrificed on the altar of great men – and Smith was a great man.

Indeed, Adam Smith, in his depiction of the division of labor in a pin factory and his timeless prose on the invisible hand and the self-interest of the butcher, offers some of the greatest explanations and defenses of capitalism ever written, even some 230 years later. I consider Smith a great thinker, and a hero of liberty. That doesn’t mean he was never wrong; particularly when it comes to the question of value.

Smith’s thoughts on the derivation of value in his Wealth of Nations laid the groundwork in this area for later thinkers like David Ricardo (another brilliant mind who was right about many other things) and eventually Karl Marx. In the case of the latter we have clearly seen how bad ideas can have horrific real-world consequences. As John Maynard Keynes famously remarked,

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”

I might add too the bad ideas of otherwise good economists.

Smith essentially, though somewhat confusedly, argued that the value of any good was ultimately derived from the amount of labor it took to produce. Money or commodity prices reflected only the nominal but never the real value of a good. In this way he described the different prices of different goods as a simple formula:

“If among a nation of hunters, for example, it usually costs twice the labor to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer.” (The Wealth of Nations, Book I, Chapter VI)

Smith elaborated further by describing other costs of producing a good, including the role of the entrepreneur and capitalist and the profits they require. Unlike Marx, Smith never denigrated the role of the capitalist or the profits they earned, but his conception of value resulting from the cost of production (ultimately labor) opened the door for the idea that anything charged or earned above the cost of real inputs is unnecessary; excellent fodder for anyone anxious to obtain power by appealing to an envious middle class.

The problem with Smith’s analysis is not that the cost of production has no link to the value or money price of a good – indeed, the two are closely connected. He merely had the relationship backwards.

In reality, prices reflect the money equivalent of the value a buyer places on a good. That is to say, an individual who wishes to have a good places an entirely subjective value upon that good as compared to other goods, and the difference is typically expressed in terms of money. If in Smith’s example no one cared for beavers, the cost of killing a beaver wouldn’t matter; the beaver would sell for little or nothing. There is no one value of a good, but each individual values each good differently, as compared to other goods. It is the same for Smith’s supposedly changeless measure of value, labor. An hour of the same kind of labor may be valued (or disdained) to different degrees by different people.

It is for this reason that price is merely the reflection of the amount of money an individual was willing to give up to obtain a given good in the most recent exchange.

However, Smith was correct in seeing a relationship between the cost of production and price: Once a producer or entrepreneur has an indicator of what someone was willing to pay for a good, he can speculate how much others will be willing to pay in the future. He may be incorrect, but he will start with an estimate based on past experience and hope to get an equal or higher price. It is the estimated price (which reflects the value others place on the good) that will dictate how much he can spend on production. If a producer expects a good to sell for $1, he will be willing to spend up to $0.99 to produce it. (This is obviously a simplification, as he may be willing to take short term loss if he expects long term gains, he may want more than a $0.01 profit, etc.) In other words, the amount of labor and other costs of production flow from the expected sale price of the good, not the other way around. No one will spend more to produce an item than they believe others will be willing to pay to buy it.

Smith correctly saw that the various costs which go into production must be paid by the sale price of the final good. What he failed to see is that the costs of production do not create the price of the final good or imbue it with some objective value, but that the subjective value that each consumer places on the good sends signals backwards to producers and tells them how much they can expend on production without suffering a loss.

That Smith saw the factors which go into the production of a good as the cause of the price, rather than the effect, may seem like a small error. But economics, like all attempts to study the behavior of human beings, is a subtle science which requires great attention to the correct logical progression of actions. A misunderstanding between cause and effect can be fatal.

A slight adjustment to the angle of a satellite signal can, when extrapolated over thousands of miles, result in a beam nowhere near its target location. Likewise, looking at an economic phenomenon, such as the price of a good, from an even slightly incorrect angle can result in consequences far greater than imagined when spread over time and by different minds in different cultures. I would never single-handedly blame Adam Smith for the horrors of socialism. But his backwards theory of value contributed, over time and space, to a set of ideas which laid the theoretical groundwork for socialism – a philosophy completely contrary to the views of Smith.

I still admire and respect Adam Smith as one of the world’s great minds and a positive force in the battle for liberty. His conclusions and prescriptions were correct, even though his methodology was sometimes flawed. However, the lessons to be gleaned are to never let admiration for a great mind blind you to areas in which they are in error; and that even correct conclusions, if based on incorrect reasoning, can be dangerous.