ȃȅȇ Partʺʺ: Politics and Philosophy
hard work, ingenuity, or alertness in meeting consumer tastes. Large in-
comes obtained by force, fraud, restraint on competition, or dishonest
advertising and salesmanship are indeed open to question. More precisely,
it is the illegal or immoral activities themselves that deserve attention; to
focus on the sheer size of the resulting incomes beclouds the issue. Large
incomes due to inheritance of talent or energy or beauty or connections
or wealth, or to sheer luck, pose a trickier question: why should some not
particularly virtuous people enjoy luxury while millions of harder-working
and worthier people must scrape to make ends meet? In partial reply, one
may ask another question: If the processes of allocating the services of
persons and property into the lines of most intense consumer demand
yield very large incomes for some not especially deserving persons and for
their heirs, who is actually hurt and entitled to complain? In an innovat-
ing, enterprising society, total real income is not a fixed pie; larger slices
for some do not necessarily mean smaller slices for others. Perhaps peo-
ple with lower incomes are harmed in the sense that their taxes would
be lower if the rich paid still higher taxes. But this “harm” is different
from harm positively inflicted by the rich. As for rich persons innocent
of illegal or immoral activities, the demand that they justify or forgo their
exceptional incomes raises fundamental questions about what prerogatives
of organized society are compatible with liberalism. Like busybodiness, it
is perhaps a human trait to begrudge one’s fellows whatever exceptional
good luck may come their way—I say “perhaps” because the general pub-
lic does not seem to bear grudges against lottery winners and against the
exceptionally glamorous rich—but grudges about good luck are unworthy
of being dignified as the basis of public policy.
Note that I am not accepting—instead, I explicitly reject—the “mar-
ginal productivity ethics” of John Bates Clark and his followers, a doctrine
rightly dissected by Frank Knight and other liberal economists. Ļe mere
fact that a man’s own work or the services of his property happen to have
an exceptionally high market value does not mean that he is especially
deserving, in any ethical sense, of an exceptionally large income. Market
value is not a measure of ethical merit, and people in general would be
happier if this fact were explicitly recognized.ȅMy concern is with what
sort of a politico-economic system would replace capitalism if productiv-
ity and market-value considerations were set aside as a basis of income
distribution. More specifically, in this paper, I am concerned about the
ȅOn this point, see HayekȀȈȅǿ, chap.ȅ.