Questions of Fairness

IN SEARCH OF A JUST INTERNATIONAL ECONOMIC ORDER

"The predatory attitude has become the habitual and accredited spiritual attitude," the economist Thorstein Veblen said of the late nineteenth century. The same holds true today. A few years ago, Paul Volcker, the former chair of the Federal Reserve, remarked that "corporate greed [had] exploded beyond anything that could have been imagined in 1990." Paul O'Neill, the former U.S. treasury secretary, recently described the corporate world today as "an ethical vacuum space."

Yet even in a climate apparently so uncongenial to ethics, "global poverty" has shot up to the top of the agenda of international public policy since the late 1990s. The United Nations gave tangible expression to this new global mood in 2000 when it created the Millennium Development Goals and made "eradicating extreme poverty and hunger" the first of them. A recent report by the Organization for Economic Cooperation and Development identified an emerging "global anti-poverty consensus."

Academics who write about globalization and development usually avoid ethical questions. Ethan Kapstein's new book, Economic Justice in an Unfair World, marks an important exception: it is explicitly about ethics. And although indirectly, it arrives at a skeptical view of this "global anti-poverty consensus."

Focusing on poverty is inadequate, Kapstein argues, because it does not put relations between states front and center. "It is governments," he writes, "that sign treaties and agreements, impose sanctions and boycotts, and make war and peace, and it is governments that -- for good or for bad -- are ultimately accountable for their actions at home and abroad." In other words, a theory of global distributive justice must emphasize relations between states and the kinds of economic arrangements states subscribe to. Individuals are not the only moral agents; states are also moral agents, with duties and responsibilities to one another as well as to their citizens.

Kapstein's goal is to present an alternative framework of global justice, one that centers on equality of opportunity among states. He refers to this framework as "liberal internationalism" and calls for an international economic system that is "inclusive, participatory, and welfare-enhancing for all." This order, Kapstein writes, "would give the smallest and poorest states greater voice in the system than they have at present," including in the governance of international organizations.

Building on the work of the political theorist Charles Beitz, Kapstein distinguishes two different social compacts: the domestic one between a state and its citizens, which expresses a society's basic principles of economic justice, and an international one among states, which determines the context in which countries pursue their domestic compacts. Some theorists of international relations hold that relative power, especially military power, shapes the international compact entirely. But Kapstein points out that powerful states do not always operate with a bit-better-than-the-law-of-the-jungle morality. In fact, they often forgo immediate relative gains in the interest of building a system of interactions that all participants view as reasonably fair. The resulting stability of expectations brings benefits for powerful states while increasing the common good. By way of evidence, Kapstein cites studies of the Tokyo and Uruguay Rounds of trade negotiations finding that the most powerful countries did not press their full advantages. Steered by the goal of promoting greater market access for all countries, they gave up more than they got.

The social arrangement that, in Kapstein's view, guarantees inclusiveness and participation and is "welfare-enhancing for all participants" is a global regime of free trade. In other words, free trade is the social arrangement that has the potential to best achieve justice in interstate relations and to fulfill each state's domestic social compact.

Kapstein believes that free trade can generate the highest attainable economic growth -- because it maximizes the scope of opportunity and equalizes opportunities for all potential participants -- and that high economic growth is good for the poor as well as the nonpoor. But he is also aware that despite the expansion of free trade, the growth rates of poor countries have not converged with those of rich countries, as free-trade advocates had predicted they would (the experiences of East Asia and, more recently, South Asia notwithstanding). Some of the continuing disparity -- owing to persistent low growth in a majority of poorer countries -- results from domestic politics and policies and from geography. But a good part, Kapstein argues, is due to the fact that rich countries have rigged the trade regime; far from being a level playing field, it is distinctly tilted against producers in poor countries.

CONSENSUAL WISDOM

Kapstein presents a justice-serving reform agenda that he hopes will come to constitute a "fairness consensus." He rules out the agency of a global or supranational authority or an imperial power, arguing for interstate negotiation as the only viable means of reaching substantive, durable agreements. For agreements to be substantive and durable, they have to be considered fair. To be considered fair, they have to be seen as mutually advantageous. And states will see an agreement as mutually advantageous when it enables each of them to maintain its own domestic social compact -- in other words, when the agreement respects a state's sovereignty over social norms.