Modern Monetary Theory and Distributive Justice [1st ed. 2023] 9783031433030, 9783031433047, 3031433033

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Modern Monetary Theory and Distributive Justice

Justin P. Holt

Modern Monetary Theory and Distributive Justice

Justin P. Holt

Modern Monetary Theory and Distributive Justice

Justin P. Holt Chicago, IL, USA

Disclaimer: The content of this book expresses the author’s views in their personal capacity and does not necessarily reflect the views or opinions of the Department of Labor, any of its agencies, or the U.S. Government. ISBN 978-3-031-43303-0    ISBN 978-3-031-43304-7 (eBook) https://doi.org/10.1007/978-3-031-43304-7 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover pattern © Harvey Loake This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

Contents

1 Introduction  1 2 What Is Distributive Justice?  7 3 What Is Modern Money Theory? 29 4 What  Insights Can Modern Money Theory Provide to Political Philosophy? 51 5 What  Are the Useful Limits of Modern Money Theory for Distributive Justice? 73 6 Closing Comments 97 7 Suggested Readings 99 Index103

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CHAPTER 1

Introduction

Abstract  This chapter discusses the goals of this book. The first goal is to show the importance of a recently developed framework of macroeconomics called modern money theory for the political philosophic discipline of distributive justice. The second goal is to develop two conceptions of distributive justice to argue the following. One, a minimal standard of distributive justice can be attained through the use of state spending to achieve a form of full employment to meet the minimal needs of persons and increase their minimal opportunities. Two, a more demanding conception of distributive justice, based on the work of John Rawls, is necessary in order for the democratic aspiration of social and political equality to be achieved. This chapter also contains a brief overview of this book’s chapters. Keywords  Modern money theory • Distributive justice • Political philosophy

1.1   Project Goals In this book, I argue two main points. First, I seek to show the importance of a recently developed framework of macroeconomics called modern money theory for the political philosophic discipline of distributive justice. Many of the macroeconomic assumptions of distributive justice theories © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_1

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are unstated and unexamined. The framework of modern money theory illuminates these assumptions and provides a useful vision of distributive justice analysis and prescriptions. In particular, modern money theory authors show that there is a distinction between nominal assets and real assets and state money as a nominal token can cause changes in real terms. In addition, modern money theory authors show that the macroeconomy has historically not operated at capacity. The important theoretical result of these positions is that state spending can bring about changes in the well-being of persons without traditional redistributive measures via taxation. This is in contradistinction to standard assumptions in the distributive justice literature, which assumes that the macroeconomy is at capacity. This assumption means that redistribution is the necessary policy tool for enacting improvements in well-being. The notion that redistribution is not necessary for improvements in well-being is a fundamental shift in how distributive justice can be conceived. Second, I develop two conceptions of distributive justice to argue the following. One, what I call a minimal standard of distributive justice can be attained through the use of state spending to achieve a form of full employment to meet the minimal needs of persons and increase their minimal opportunities. This can be done without the explicit use of redistribution. That is, persons can with their own labor meet their minimal needs and increase their minimal opportunities. I will argue that this is an attractive vision as it provides the means for persons to pursue their conception of the good. Two, I argue that a more demanding conception of distributive justice, based on the work of John Rawls, is necessary in order for the democratic aspiration of social and political equality to be achieved. This more demanding conception of justice is called justice as fairness by Rawls. I will follow Rawls in arguing that justice as fairness is the most acceptable conception of justice given all known competing conceptions of justice. Justice as fairness is the most acceptable conception of justice for persons who wish themselves and all other persons to be full participatory members in social cooperation. Also, I will follow Rawls in arguing that redistribution of wealth is potentially necessary in order for the democratic aspiration of equality to be achieved. Ultimately, I will argue that the minimal standard falls short of Rawls’s more demanding conception. This is the case even though the minimal standard provides an attractive vision of a social world where persons in social cooperation promote the means for all persons to seek their conception of the good. In short, in order for the democratic aspiration of equality to be achieved, potential forms of redistribution of wealth need to be considered.

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In order to show the above, I will argue that the conjectures of modern money theory have a large role to play in meeting our minimal interests and, in turn, allowing for justice as fairness to be realized. This is the case as modern money theory shows the potential for persons to use our trained talents in cooperation. That is, the improvement of our social and economic conditions is possible through our own labor. This self-­provisioning shows that conflict over resources can be minimized by employing persons to meet their and other persons’ needs and to increase their and other persons’ opportunities. This is possible based on the conjecture that in monetary economies there are commonly underutilized resources. The activation of underutilized resources allows for the meeting of needs and the increasing of opportunities. This conjecture that the meeting of the minimal interests of persons can be readily achieved is a valuable insight given the attractiveness of this outcome. But this realization that the meeting of minimal interests can be achieved makes apparent the feasibility and desirability of the more demanding Rawlsian egalitarian standard of distributive justice for persons who hold democratic aspirations. Thereby, I will argue that the feasibility and desirability of a Rawlsian egalitarianism is made clearer by the conjectures of modern money theory. Modern money theory is not a normative theory. It is a description of how a monetary economy operates. Modern money theory does not advance a particular argument for rules of social organization. Political philosophy is a set of normative theories, and political philosophy provides many arguments for the rules of social organization. Nevertheless, the conjectures of modern money theory provide political philosophers options for what kinds of social rules of organization may be possible and how these social rules can be achieved. Thus, modern money theory in conjunction with political philosophy helps to show that the minimal interest of persons can be fulfilled. In turn, the shortcomings of only meeting the minimal interests of persons become apparent when scrutinized according to our democratic aspiration of equality. This is not a criticism of modern money theory. Rather, the conjectures of modern money theory provide a clear view of what is needed for persons to meet the demands of a democratic ideal. That is, persons who consider the democratic aspiration of equality to be important need to take inequalities of wealth into account. Our identification of these inequalities moves our philosophic and economic analysis into areas where redistribution may be merited. In short, the ideas about the macroeconomy that modern money theory develops show the limits

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of distributive justice conceptions that do not take redistribution of wealth into consideration. I find that the project I wish to develop here is slightly complex. I seek to use economic and philosophic ideas to show the relative desirability of two conceptions of distributive justice. I argue that modern money theory has much to teach political philosophers about the constellation of ideas that we call distributive justice. Also, I endorse and criticize the minimal standard of distributive justice. Finally, my project is an exposition and defense of a Rawlsian conception of distributive justice. I engage in such a complex project because I find that contemporary philosophic conjectures about democracy in respect to the macroeconomy and private holdings of property need clarification. This includes that I need to clarify my own ideas and convictions. Notions of what is a democratic society and what is a full member of a democratic society need clarification. In particular, I show that a democratic society is composed of persons who can be full participants in social cooperation, and a full participant is an equal participant. Nevertheless, the notion of equality of participation needs to clarify what this notion requires of the members of a democratic society. And it needs to be clarified why equality of participation is desirable. These are difficult topics, which I discuss to a limited degree in this book. I discuss them at greater length in another ongoing project on a theory of political duties. It is challenging to the convictions of many persons, including my own, to realize that it is normatively unacceptable for persons not to be able to be full participants in social cooperation. Part of this realization is that many of our actions to provide advantages for ourselves and others are not democratic. That is, attempts to create certain kinds of advantages for ourselves limit the possibility of others to be full participants in social cooperation. The kinds of advantages that Rawls is concerned with, which I follow in this book, are the advantages of class position and the use of wealth to control the economy, information, and the political process. These inequalities of class and of wealth are undemocratic as they prevent persons from having equal opportunities for the development of their talents, accessing ideas and knowledge, participating in politics, and determining how our economy should be structured. That is, if persons are unequal in respect to class position and wealth holdings, then they are not full participants in social cooperation. I hope to show the importance of this egalitarian vision in this book.

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1.2  Chapter Overviews I have written this book with four main chapters, an introduction and conclusion that provide overviews of my main arguments, and a short chapter on suggested readings. In Chap. 2, I first consider conceptions about normatively desirable distributions from the history of political philosophy. I do this by reviewing brief sections from Plato, Aristotle, and J.S. Mill. This is not a history of distributive theories or a history of distributive justice. Rather, I seek to introduce the main distributive themes of this work. These include notions about distributive standards and concerns about the stability of social structure. Next, in Chap 2, I review John Rawls’s conception of justice that he called justice as fairness. As I discussed above, Rawls’s ideas are important parts of my arguments in this work. Accordingly, they merit a longer exposition. In Chap. 3, a macroeconomic framework called modern money theory is discussed in outline. Modern money theory is based on a set of ideas regarding the nature and logic of a state-issued nonconvertible currency, the possibility and persistence of demand gaps in monetary economies, and the importance of focusing on real resource uses. Modern money authors develop a notion of a job guarantee as a policy device to provide full employment and price stability. Full employment through a job guarantee is an important part of the argument for the minimal standard developed in Chap. 4. In Chap. 4, I will argue that sovereign spending powers can be used to achieve a distributive justice standard which meets minimal needs and increases minimal opportunities. A policy of this kind is generally not discussed in most of the distributive justice literature. Rather, in the literature there is a focus on gains for the least advantaged through redistributions from the most advantaged. I argue that a state that issues its own currency can activate unused resources to meet the minimal needs and increase the minimal opportunities of all persons. That is, the spending power of a state-issued currency can facilitate persons to meet their own needs and increase their own opportunities through social cooperation. Also, in Chap. 4, I show that the distributive justice models of G.A. Cohen and Ronald Dworkin assume full utilization of resources. This assumption limits the range of Cohen’s and Dworkin’s models. Finally, I show that John Rawls and Jean Drèze and Amartya Sen do consider distributive situations where the full utilization of resources is not achieved.

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In Chap. 5, I show that the new options that modern money theory provides do have limits to their usefulness for political philosophy. The distributive justice literature demonstrates the importance of redistribution for the achieving and maintaining of democratic societies of social and political equals. In short, there are useful new notions that can be added to the philosophy of distributive justice that modern money theory provides. At the same time, there are democratic goals traditional to the discipline of distributive justice that should not be ignored. I argue that if persons hold democratic aspirations, then redistribution has to be considered as a possibility in order for these aspirations to be achieved. This is the case since the inequalities of class position and wealth can prevent persons from being full participants in social cooperation. In addition, in Chap. 5, I argue that the conjectures of modern money theory provide insights as to how persons can realize the importance of the democratic aspiration of equality. That is, I argue that meeting the minimal needs of persons can make the practical rationality of the democratic aspiration of equality apparent. This is the case since the fulfillment of the minimal interests of persons reduces the potential for the losses of economic standing and social position. Here I build on Rawls’s psychological conjectures that the mutual benefits of social institutions can help develop convictions for reciprocity. I use these Rawlsian psychological conjectures to argue that a society that meets the minimal interests of persons makes clearer the rational adoption of the demanding conception of justice as fairness. In short, the macroeconomic conjectures of modern money theory provide a suitable theoretical framework for conceptualizing the building of an egalitarian social structure. In Chap. 6, I review my arguments for why the modern aspiration of political and social equality is of enduring importance and that modern money theory provides new insights for political philosophy. Chapter 7 is a brief discussion of further readings. I hope that this will provide readers new to these various literatures with avenues for further study. But given that this book is interdisciplinary in approach, I do think that many experienced and professional social scientists and philosophers will appreciate a brief overview of these literatures. I hope that my intellectual life spent between social science and philosophy can be of benefit for others.

CHAPTER 2

What Is Distributive Justice?

Abstract  The purpose of this chapter is to introduce the subject of philosophic theories of distribution. This chapter has two main parts. The first part is a brief overview of normative standards regarding the distribution of resources in the work of Plato, Aristotle, and J.S. Mill. The second part is an overview of the contemporary study of distributive justice centered around the work of John Rawls. Keywords  Distributive justice • Plato • Aristotle • Mill • John Rawls

2.1   Chapter Purpose This chapter’s purpose is to introduce the subject of philosophic theories of distribution. These include theories that are categorized as theories of distributive justice. Philosophic theories of distribution are normative. That is, philosophic theories of distributions are composed of arguments that show what distributions of resources are most acceptable for persons. Commonly, theories containing normative statements are called ethics or morals. In this book, I will use the terms normative, ethics, morals, and value theory interchangeably. This chapter has two main parts. The first part is a brief overview of normative standards regarding the distribution of resources in the work of Plato, Aristotle, and J.S.  Mill. This is not an exhaustive history of © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_2

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normative theories of distribution. Rather, the purpose of the first part is to provide a starting context for discussion. The second part is an overview of the contemporary study of distributive justice centered around the work of John Rawls. Both parts seek to present the main purpose of this chapter. That is, political philosophic theories of distribution and distributive justice are the normative study of the distribution of resources.

2.2  An Introduction to the Philosophy of Distribution This is a rather short book to consider two topics that have large literatures: philosophic conceptions of distribution and macroeconomics. What can be said about these topics in such a short space is quite limited. With this warning stated, in this section I will introduce the topic of philosophic theories of distribution. This encompasses discussions that are sometime considered as topics of justice. As discussed by Samuel Fleischacker (2004), the origin of what is usually considered to be distributive justice is a modern theoretical development. Fleischacker argues that Immanuel Kant and Adam Smith were some of the first authors to discuss distributive claims over resources as matters of justice. Nevertheless, discussions of what are normatively desirable distributions, even if not in terms of justice, have existed for millennia. A few of these philosophic theories of distribution will be discussed below to frame the discussion of the normative nature of these theories. The keynote to the philosophic study of distribution is analyzing what distributions of resources meet a particular normative standard. Philosophic theories of distribution are a branch of a larger discipline called moral philosophy, ethics, or value theory. This larger discipline seeks to define what are right actions and results, what duties should we perform, what are the good or goods that we should aim at, how should we make moral judgments, and what is justice. Part of this book will be limited to considering a small portion of the large and detailed discipline of moral philosophy that I call philosophic theories of distribution. The sub-topic of distributive justice will be of special concern since this is how most contemporary political philosophy considers the normative analysis of distribution. As an introduction, I will discuss the typical parameters of this normative analysis. These normative philosophic theories of distribution are composed of two aspects: a distribution and a normative standard. Those interested in

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a normative approach to distribution first argue for a particular normative standard. They then argue for a particular distribution that will meet this standard. As such, philosophic theories of distribution are composed of arguments showing why certain distributions are morally desirable. Distributive standards are arguments for how and why a specific set of distributions can realize these normative demands. Once these distributive standards are established, then a particular distribution of resources is normatively merited. There is a relationship between normatively correct distributions, political emotions, and political stability. This is the case since the consideration of a correct distribution has to consider the political emotions and the stability of a social order. This is a normative topic that is influenced by behavioral and social science. Philosophic theories of distribution have to take the findings of other disciplines into account. In particular, any theory of distribution has to evaluate if a particular distribution is too demanding on the psychological needs of individuals and if these demands result in social instability. In the sections below, I will consider the relationship between normatively correct distributions, political emotions, and political stability. Also, I will revisit these psychological dimensions of distributions in my discussion of egalitarianism in Chap. 5. In the next sections, I will focus on identifying these two components of the philosophic theories of distribution advanced by the authors below. First, a distributive standard will be identified, and second, a merited distribution will be explained. I do this in order to acquaint readers with the study of philosophic theories of distribution as a normative discipline.

2.3  Plato My discussion of Plato has a very narrow purpose; I wish to introduce the topic of distribution by focusing on how certain distributions meet or realize distributive standards. In this section, I will focus on one particular distribution and standard that Plato argues for in the Republic at two locations, lines 420 and 519. The second version of Plato’s argument is the best known. Plato refers back to the first and longer version of this argument with Socrates reminding everyone in the discussion. The first instance of this argument is at the beginning of Book IV right after Socrates argues that the guardians of the just city will own no property and possess no money. Adeimantus is upset by this argument since he finds that the rulers of a city should possess great wealth. This great wealth,

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Adeimantus argues, allows the rulers to be able to entertain wealthy foreigners and to make grandiose sacrifices to the gods. In reply, Socrates argues that a city is for the benefit of all and not for the satisfaction of any person’s particular preferences. But Adeimantus’s complaint, while unethical, has a point. If those who rule a society do not personally benefit, then what is the point in ruling? Socrates’s counterpoint is to show that moral standards are not identical, in themselves, with our preferences. Rather, moral standards show what are the limits of acceptable preferences. Thereby, the distributions that Plato argues for in these sections of the Republic are a realization of a particular moral standard. What is the standard and what is the distribution that Plato argues for? The standard that Plato uses is that the city as a whole should fare well or be happy, depending on the lines considered (1968, 519 and 420). This is in contradistinction to Adeimantus’s challenge that distributions of wealth in a city should be to the benefit of those who rule. A similar challenge is voiced by Adeimantus’s (and Plato’s) brother Glaucon at line 519. The distribution that corresponds to this distributive standard is diffusely discussed by Plato in a few locations before and after its initial presentation at line 420. Preceding the stated standard, Plato notes that the guardians in the city model will only possess what is necessary for them to be good at being guardians. Possessions beyond this, such as accumulating precious metals, are unnecessary for them to be good guardians (Plato 1968, 416 and see also 421). After this distributive standard is introduced, Plato provides further details that all persons should possess resources that allow them to perform their professions. In this section, Plato refers to professions other than the guardians, which extends his recommended distribution to other groups. Specifically, Plato argues that persons should have enough resources to practice their profession, but not so many resources that persons become exempt from laboring (1968, 421). Analysis of the various themes of the Republic is a complex and fascinating endeavor. Here I make no attempt at arguing what is the main argument of the Republic. Nevertheless, the distributive standard and the recommended distribution provided by Plato do have degrees of correspondence. Considering the standard, Plato emphasizes that distributions have to take the well-being of the entire city into account. Adeimantus’s challenge can be understood as a contrary distributive standard; the rulers of cities should have an inordinate enjoyment of the wealth of their society

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in respect to those who do not rule. Adeimantus’s standard seeks the satisfaction of persons who hold these kinds of preferences. This is not a standard that seeks the well-being of all the members of a city. The recommended distribution of resources, the performance of each person’s profession, does correspond to Plato’s distributive standard. The caveats that persons can be too poor or too rich correspond to the standard. That is, they have enough to afford the tools of their trade and to be healthy enough to perform it, and they are not so wealthy as to be exempt from laboring. This means that each person can assist in social cooperation for the well-being of all. Also, Plato finds that extremes of inequality are destructive to the solidaristic operation of a city. If people are too poor or too rich, then they become at odds with each other since they seek opposing outcomes. Plato mentions this concern later in the Republic during his discussion of the degenerate cities (1968, 552). These opposing outcomes are not in the interest of the whole city. Distributions that produce antagonisms are normatively undesirable. Thereby, there is a relationship between normatively correct distributions, political emotions, and political stability. In respect to Plato, there are two concerns for this topic. First, there are unendurable situations, such as extreme poverty. These kinds of situations strain people’s commitment to a political order. Second, there is a consideration of the kinds of emotions that should be cultivated for political stability. In particular, Adeimantus’s desire is contrary to a suitable distributive standard. As Socrates points out, Adeimantus’s desire is not conducive to a morally ordered regime. In light of Adeimantus’s position, Plato wishes to show that a normatively defended distribution can foster political emotions which lead to social stability. That is, Plato argues that a normatively suitable standard has to take the well-being of all members of a city into account. To review briefly and to take stock of what this means for this book’s project, I show that Plato provides a distributive standard of what distributions promote the happiness or well-being of the city as a whole. The kinds of distributions that meet this standard are distributions that allow people to perform their profession well and preserve mutuality and solidarity within the city. My presentation of Plato has introduced a particular example of a distributive standard along with a distribution that meets this standard. I provide similar presentations below, starting with Aristotle.

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2.4  Aristotle Aristotle held concerns similar to Plato regarding the desirability of a social order where mutuality and solidarity exist. Aristotle discusses this as a kind of friendship called concord, as opposed to conflict, in the Nicomachean Ethics (1999, IX.6). In this section, I will examine a distributive standard found in Aristotle’s Politics where a good city is one ruled for the “common benefit” (1998, III.7). This means that distributions meet this standard when the common benefit is served. There are several sections where Aristotle considers distributions that produce a common benefit. I will consider two sections in Aristotle’s Politics. The first is on the middle class, and the second is on aid to the poor. Aristotle’s discussion of when the middle classes are the ruling power of a city offers interesting reflections on distributions of property and political stability (1998, IV.11). The term middle classes can be difficult to use in a manner consistent with contemporary definitions. For Aristotle, the middle classes are persons who possess moderate amounts of property. There are other desirable goods the middle classes possess, which I will not discuss here. The middle classes possess property that is an intermediate amount when considered in light of the property possessed by the rich and the poor. This middle group have very stable convictions for the continuance of the city. Their convictions are stable because they possess sufficient amounts of property to prevent them desiring the property of others and others desiring their property. This is important since Aristotle found that there can be destabilizing emotions and convictions because of extremes of inequality. Accordingly, a correct distribution minimizes the arising of destructive conflict produced by destabilizing emotions. A correct distribution produces stabilizing emotions, which are to the common benefit. The desirability of a wide dispersal of property held by a sizeable majority of persons does not directly address what policies should be used to rectify the situation of the poor. Very similar to Plato’s concerns, Aristotle considers the poor to be a pauperized class who are excluded from work because of their lack of property (1998, V.1). The rebelliousness of these persons is identified by both philosophers. Aristotle’s remedy for the propertyless poor is redistribution toward their “long-term prosperity” (1998, VI.5). This is to be done by providing money to the poor to purchase productive assets to own a plot of land or to practice a trade. This redistributive policy for the inclusion of the poor in the economic mainstream of society essentially turns them into members of the middle classes. I

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think it is reasonable to assume that their political emotions become mediated as they now have something to lose in rebellion. Accordingly, the stability of the city is improved by mediation of politically dangerous emotions. Also, this stability producing mediation is to the common benefit. In review, Aristotle provides a distributive standard along with several examples of distributions that meet or do not meet this standard. Similar to Plato, Aristotle’s discussion of distributions considers how these distributions can produce emotions that may be politically destabilizing. Aristotle brings together several related goals: morally correct distributions, political emotions, and political stability. The provided standard of the common benefit is discussed in light of morally correct distributions. These morally correct distributions bring about justified political emotions that assist in producing a stable city. Distributions that are not morally correct bring about conflict and threaten the stability of a city. Interestingly, Mill revisits these concerns in his discussion of property distributions.

2.5   Mill J.S. Mill is mainly remembered today for developing his own version of utilitarianism and his defense of individuality and political liberties. Nevertheless, readers can find a variety of distributive standards in Mill’s works. A full appraisal and an attempt at rendering these standards commensurate are beyond the scope of my discussion in this section. In my short discussion of Mill’s distributive ideas, I will recount Mill’s endorsing of a more egalitarian distribution and a steady state economy as discussed in his Principles of Political Economy. A steady state economy is one where there is no net addition to the capital stock. But there can be alterations in the capital stock, such as for productive improvements and changes in industrial organization. Mill’s distributive standard is presented in Chapter VI of Book IV of the Principles of Political Economy: “the best state for human nature is that in which, while no one is poor, no one desires to be richer, nor has any reason to fear being thrust back by the efforts of others to push themselves forward” (1936, 748). This steady state society has developed its productive capacity to the point where there is no longer a need for continual economic growth and exclusionary competition. In the preceding and following sentences to the quoted section above, Mill discusses that the current state of affairs is one where persons are engaged in undesirable

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competition of exclusionary economic advance. This is when persons have an insufficient amount of subsistence and persons are not assured of the security of their economic lives. Mill argues that a steady state is desirable since this economy allows for the utilization of an individual’s time in ways that are impossible in a growth economy. This would be a society where persons would have “sufficient leisure.” The terminology used by Mill considers the steady state to be a situation where persons can engage in the “Art of Living” as opposed to the “art of getting on.” Also, there would be “as much scope as ever for all kinds of mental culture, and moral and social progress” (Mill 1936, 751). The economic organization of a steady state is where efficiency improvements are used to reduce time in necessary laboring. This is in contradistinction to efficiency improvements that are only used to increase consumption. A steady state economy can be an economy of technological development where increases in efficiency would be for individual development. In Mill’s vision of a desirable society, the development of capacities, talents, pursuits, and relationships are given primacy over increased consumption. The distribution that Mill recommends for achieving this social vision is a rough equality of fortunes (1936, 749). Mill argues for this distribution in order for persons to be able to shape their lives. Thereby, the distribution should fulfill the distributive standard where persons have sufficient and secure subsistence. Mill notes that fortunes only of the size that could be accumulated in one’s lifetime should be allowed. Accordingly, the degree of inheritance and gifts a person can receive are limited to “moderate independence.” Taxation on inheritance and gifts would be the means to implement this distribution. Such economic independence is a means to avoid undesirable work and overwork, which, in turn, allows for persons to have time to develop their individuality. Thereby, Mill recommends a distributive standard of rough equality of wealth that mediates what he finds to be undesirable forms of competition. These undesirable forms of competition are because of inequalities in wealth that produce striving for economic security. In addition, inequalities in wealth produce socially destabilizing emotions. The redistribution of wealth mediates these socially destabilizing emotions. Mill provides an analysis and solution to distributive problems that are in the constellation of ideas considered by Plato and Aristotle. In review, distributive standards are normative arguments used to recommend distributions of resources that realize these standards. Mill argues

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for a distributive standard where persons are secure enough in their economic position to feel free to develop their individuality. In order to feel free to develop one’s individuality, destabilizing competition needs to be mediated. The distribution that realizes this distributive standard of individuality development is a roughly equal distribution of wealth. This distribution can be achieved and maintained through the use of inheritance and gift taxation. These presentations of the three authors above have been a prelude to Rawls’s ideas, which I will discuss directly below. The relationship between normatively correct distributions, political emotions, and political stability will be considered in Rawls’s work. The presentation of this relationship will help set the stage for the main theme of modern money theory and distributive justice that I discuss in the following chapters.

2.6  Rawls The work of John Rawls plays a prominent role in orienting the distributive justice framework I develop in this book. As this work progresses, I will consider Rawls’s ideas in light of the proposed minimal distributive justice standard in Chap. 5. This section will briefly review Rawls’s contributions to the distributive justice literature. The political philosophy of Rawls thoroughly engages with the problems of distributive justice. All aspects of the conception of justice that Rawls developed, called justice as fairness, take account of the distribution of resources. As shown above, philosophers concerned with the distribution of resources argue that distributions can influence the functioning of a society, the developing of the interests of persons, and advancing of the conception of the good held by persons. In short, Rawls defines justice as concerned with how distributions of resources promote or frustrate the enjoyment of rights and benefits, the performance of duties, and the bearing of burdens (1999, §1). My presentation of Rawls’s distributive standard will have two main parts. First, I will show that Rawls orients the topic by presenting what he called the fundamental question of political philosophy for constitutional democracies. Second, I will show that the answer to this question is both Rawls’s method and the principles of justice as fairness. Below I have divided my presentation of these two main parts into several small sections.

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2.6.1   The Fundamental Question of Political Philosophy In his work, Rawls outlines a set of assumptions that he argues political philosophy in the modern age must consider. These assumptions are organized in his presentation of what he calls the fundamental question of political philosophy for constitutional democracies. These assumptions are democracy, constitutionalism, the fundamental interests of citizens, the normative status of future generations, and the acceptance of a conception of justice by citizens. An analysis of these assumptions is needed to show why Rawls’s conception of justice is reasonable. Rawls states these assumptions in the fundamental question of political philosophy for constitutional democracies: That question is: what is the most acceptable political conception of justice for specifying the fair terms of cooperation between citizens regarded as free and equal and as both reasonable and rational, and (we add) as normal and fully cooperating members of society over a complete life, from one generation to the next? (Rawls 2001, §2.3)

This question frames Rawls’s presentation of the most acceptable conception of justice for persons that consider themselves as part of a democratic society. It is built upon a set of value assumptions and an assumption of what is the best method to address these value assumptions. The assumption of method is the notion of acceptability, which will be considered last in my presentation. 2.6.2  Democracy The first value assumption is the value of democracy. Rawls assumes that governmental regimes will be democratic in his analysis. Why this is the case is due to the acceptance of notions of equal membership and self-­ rulership as reasonable. But this does not mean that the democratic aspiration of equality has been fully realized. Indeed, Rawls considered this notion may have not been fully realized within his own lifetime (Rawls 2001, §29.1n23). A refinement of what the modern commitment to democracy entails is needed. This is essentially why a conception of justice for persons who regard themselves as actual or potentially fully participatory members of a democracy needs to be clarified.

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2.6.3   Constitutional Democracy The acceptable range of democratic regimes only contain constitutional democracies. Why this is the case is addressed by Rawls in Justice as Fairness from a sociological point of view. Rawls argues that a constitutional structure that delineates, or embeds, principles of justice can, thereby, act as a moral force (2001, §44.3). That is, the public enshrining of a principle, such as the freedom of conscience, acts as a limiting force for the range of political volitions that will be considered legitimate. But in what Rawls calls a procedural democracy (such as a majoritarian democracy), the range of legitimate political volitions is only limited by what can be enacted through legislation (2001, §44.1). This means that a procedural democracy can suffer from the tyranny of majority problem. That is, the will of the majority determines what is law, no matter what is the content or effect of a law. But, and as odd as this may sound to many readers, a procedural democracy is undemocratic as it subverts the democratic aspiration of social and political equality. The arbitrary rule of a master is undemocratic no matter if it is by one person or the majority. Accordingly, democracy as rulership by the people should be properly understood as the protection of the minority position. Fulfillment of the aspirational notion of equality can only come about if social equality and political equality are indefeasible rights. In review, constitutionalism as a value assumption holds that certain outcomes should be enjoyed by all members of a society. This includes the least popular, those with the least natural abilities, those with little luck, and those who are members of a minority. 2.6.4   Fundamental Interests of Persons The first two assumptions of democracy and constitutionalism help illuminate Rawls’s very particular terminology in the fundamental question, specifically the terms citizens, free, and equal. Rawls’s philosophic model is limited to the notion of citizens. This is a simplification for presentation, and I will not consider this assumption in this work. The terms free and equal are references to the fundamental interests of persons that structure a political conception of the person. These are value assumptions that determine what principles of justice are the most acceptable. But before my exposition gets too far ahead of itself, a fuller elaboration of these fundamental interests and the conception of persons are needed.

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A conception of the person is a definition of what is a moral subject. How a person should be treated is determined according to what is of fundamental interest to a person. That is, if these interests are not realized, then this person suffers a moral failure. Rawls defines persons politically, which means that the interests of persons are defined according to what should be their public status in society (2001, §7.2). The fundamental interests of persons are based on the interests of public persons in a constitutional democracy. Accordingly, the public persons of a constitutional democracy have certain kinds of fundamental interests that allow for them to be these kinds of persons. This is why the fundamental interests of citizens are for persons to be free and equal. Citizens, as public persons, regard themselves and are regarded by others as free and equal. Given this, the next question that should be answered is what does it mean for persons to be free and equal? Rawls answers this question thoroughly in §7 of Justice as Fairness. I will give a short answer in two parts. Persons are equal in the sense that all citizens in a society can be understood as having sufficient faculties to participate in social cooperation (Rawls 2001, §7.3). These faculties are the two moral powers, which are having a sense of justice and a conception of the good. A sense of justice is to be able “to understand, to apply, and to act from … the principles of political justice” (Rawls 2001, §7.1). A conception of the good is “to have, to revise, and to rationally pursue a conception of the good” (Rawls 2001, §7.1). In brief, the two moral powers allow for persons to act according to the rules of their society, to pursue goals they prize as individually desirable, and to maintain institutions for the continued well-­ functioning of their society. In short, persons are equal as they all have sufficient capacities for the use of the two moral powers in social cooperation. Persons are free in two respects. One, persons are free to change their conception of the good as they wish without the loss of their status as citizens (Rawls 2001, §7.4). That is, persons can seek out, consider, and change what they find to be valuable to themselves, such as changing their religion. Two, persons are free in the sense that they are “self-­authenticating sources of valid claims” (Rawls 2001, §7.5). That is, if persons are free members of a society, then they are recognized as having a political status which merits that their statements about the public must be addressed. If citizens voice their statements in public terms, then they necessitate a public answer. This includes if citizens petition the state or initiate legal proceedings. If they do, then a result is required. Thereby, persons are not

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free persons if they are not recognized as being able to voice their public statements and these statements are not considered as meriting a required answer. If these fundamental interests go unmet, then persons are not treated in a rightful way. Also, it is impossible for persons to be full members of a constitutional democracy if their fundamental interests are not realized. This notion shows the necessary overlap between the value assumptions of interests and constitutional democracy. A constitutional democracy is a governmental regime that protects the rights of all individuals as indefeasible. These rights include that their fundamental interests are understood as indefeasible. This is the case since persons cannot be fully cooperative members of their societies unless they are regarded as free and equal. 2.6.5   Future Generations The last value assumption that I will discuss is that of future generations. This assumption is about the impact of current resource use on future generations. Rawls discusses this in two different manners in A Theory of Justice (1999, §44) and Justice as Fairness (2001, §49.3). The distinctions in Rawls’s presentation will not be addressed. Instead, the issue of the justice of future generations will be generally outlined. It is not assured that current persons will seek to meet the interests of future generations, such as the preservation of natural resources for future use. Accordingly, there is a moral imperative that currently existing persons have to take the interests of future generations into account. How can this be done? The problem of future generations is similar to limiting the power of political majorities. As discussed above, the means of limiting the overreach of a majority is the embedding of rights into a constitutional framework. This creates a force of moral motivation that limits the range of legitimate actions. A similar framework can be built to accommodate the interests of future generations. How such a force of moral motivation is possible is developed by Rawls through the thought experiment of the original position. 2.6.6   Original Position Given these presentations of value assumptions, especially concerns about persons in a minority position and future generations, an organizational question needs to be answered based on the notion of prudential desires.

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Prudential desires are outcomes that persons wish to achieve; ostensibly, persons think the satisfaction of these desires will make them happy or pleased. With this in mind, I will answer the following organizational question to explain Rawls’s method of acceptability: Would not a constitutional framework that protects the fundamental interests of current and future persons be contrary to achieving the satisfaction of an individual’s prudential desires? Rawls assumed method of acceptability addresses this question. Rawls argues that a constitutional democracy for current and future persons is the most acceptable to persons who regard themselves as free and equal. Exactly what principles of justice should animate this constitutional framework will be considered below. And why these principles are the most acceptable requires the introduction of a concept which is traditional in some characteristics and highly innovative in others. This concept is the original position with a veil of ignorance. Prudential desires that are not subject to limitation by moral maxims may produce practically unreasonable results, such as the domination of society by the powerful or the neglect of the interests of future persons. The determination of a set of principles has to avoid such unreasonable results. In addition, how can a set of principles be acceptable to all persons? This is especially a problem when powerful groups can coerce acceptance of unreasonable practical rules. Rawls approaches these problems of conflicts of prudential desires and reasonable acceptance between persons by developing a hypothetical model of agreement. This hypothetical model is a thought experiment of fair conditions and informational limits. Fair conditions are conditions where people can freely accept agreements without being coerced. Informational limits focus the range of outcomes so that a limited set of options preclude prudential conflicts (Rawls 2001, §6.2). The process that Rawls seeks, a model of persons freely agreeing to a set of foundational social rules, appears to be impossible. But this is where the traditional use of a social contract model with the addition of Rawls’s innovations comes into play. Rawls’s model shows that a fair theoretical agreement between persons is structured by two assumptions: the notion of an original position and the veil of ignorance. The original position is a nonhistorical conceptualization of the hypothetical selection of the foundational principles of justice by persons in a constitutional democracy who conceive of themselves as free and equal. The original position is similar to the formation of a commonwealth in the works of Thomas Hobbes and John Locke. As nonhistorical, the original position is a device for

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clarification of personal and public practical judgments. It is not an actual event (Rawls 2001, §6.3). One can understand the original position as providing a conceptual device to help us think about what should be our basic public values of political organization. It may appear to some that it is not fruitful to engage in a theoretical examination of what should be the fundamental principles for a society since the structural features of societies already exist. This intuition of the fruitlessness of examining fundamental principles attests to the difficulty of determining suitable principles. But this intuition ignores the practical necessity of judging societal institutions as morally desirable. A point of view that is abstracted from current structural features of a society is needed to offer guidance on the resolution of current problems and what public goals a society should seek. In short, a conceptual device, like the original position, is needed for practical analysis. The veil of ignorance is the second structural assumption to the hypothetical of the original position. It is a restriction on what the representatives of the original position know about themselves and their society (Rawls 2001, §6.2). Specifically, persons do not know their own personal characteristics or the characteristics of their society. They do know they will live in a society that is productive enough to institute principles of justice for a constitutional democracy (Rawls 1999, §22). This means that representatives know their society does not need to be rigorously regimented because of severe resource limits, such as the operation of a sea vessel. But they do not know the advantages and disadvantages of their society and themselves. For example, representatives do not know if they are rather intelligent or if they are socially well placed. Also, they do not know the history of their society and its particular conflicts. The result of these restrictions is that more advantaged persons are unable to use their advantages to coerce the less advantaged into accepting the advantaged persons’ prudential desires in a hypothetical selection of principles. As the knowledge of representatives in the original position is restricted, they can only make decisions based on the fundamental interests of persons in a constitutional democracy. It is impossible for people to make prudential decisions in the original position under the veil of ignorance since they have no knowledge of their inclinations. Instead, the decisions of representatives are based on a set of all-purpose primary goods that persons need to develop and maintain their fundamental interests (Rawls 2001, §17.1). Rawls holds that the restrictions of the veil of ignorance model the fair conditions for making a decision. The decisions made

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under the veil can be understood as fair to all parties since they favor no specific person but accommodate the fundamental interests of all persons. It may now be apparent that the conception of justice as fairness has this name because its principles are selected under the fair conditions of the original position. If the decisions made under the veil of ignorance are fair, then there are no reasonable grounds for complaint. Further, a complaint that one’s prudential desires are not allowable within a fairly selected set of principles does not have public moral bearing. (Is this the kind of complaint that Adeimantus voices about the kallipolis?) It is practically productive to seek a solution that treats all persons equally, promotes full participation in social cooperation, and shows what are allowable conceptions of the good. This is Rawls’s answer to reconciling the analytical goals of morally correct distributions, political emotions, and political stability. This involves an appraisal of what constitutes a reconciliation that is not imposed via ideological manipulation and the need to integrate all persons as full participants in social cooperation (Rawls 2001, §1.3n4 and §38). The original position under the veil of ignorance provides clarification of what are the most acceptable principles needed for this reconciliation and integration that are based on the fundamental interests of citizens. Rawls argues that the most acceptable principles of justice are those of justice as fairness. 2.6.7   The Principles of Justice as Fairness There are two principles to the conception justice as fairness, which I have reproduced directly below: (a) Each person has the same indefeasible claim to a fully adequate scheme of equal basic liberties, which scheme is compatible with the same scheme of liberties for all; and (b) Social and economic inequalities are to satisfy two conditions: first, they are to be attached to offices and positions open to all under conditions of fair equality of opportunity; and second, they are to be to the greatest benefit of the least-advantaged members of society (the difference principle). (Rawls 2001, §13.1) The details of what these two principles entail is quite vast. A full exposition of them would extend beyond the range of what can be addressed in this work. Readers who are interested should consider the book Rawls

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by Samuel Freeman (2007). Here the focus on the principles of justice as fairness will be to consider their application to distributive justice questions in respect to real and financial resources. Rawls’s comments on this question are rather direct. This allows for a distinctive consideration of the issues involved. Before I address these distributive justice concerns, I will provide a brief overview of what are the various areas of application of the two principles. The two principles can be considered as having three parts: equal basic liberties (principle a), fair equality of opportunity (first part of principle b), and the difference principle (second part of principle b). In the sections that follow, I will discuss why these principles would be selected by representatives in the original position. The equal basic liberties are the rights and liberties that persons need for the fulfillment of their fundamental interests of persons. Equal basic liberties are needed for persons to be free and equal persons, which is the development and the maintenance of their two moral powers (Rawls 2001, §13.4). With less jargon, this means that persons are able to have the means to develop and use their capacities to understand justice and pursue their conception of the good. Representatives behind the veil of ignorance would select these basic liberties in order to protect their capacity and their freedom to participate in social cooperation and their ability to select which goods to pursue (Rawls 2001, §29.2). Fair equality of opportunity is the notion that opportunities should be open to persons based on their talents and that the class position of a person does not determine the availability of their opportunities. Fair opportunity is directly redistributive since it requires that all persons have similar kinds of opportunities to develop their capacities. This necessitates that society make these opportunities available through education and cultural resources for all of its members. Why fair opportunity would be selected by representatives in the original position is not fully analyzed by Rawls. Nevertheless, reasons for fair equality can be developed from his work. In particular, Rawls notes that the two principles operate in tandem (2001, §13.5n10). That is, the two principles are co-supportive. With this in mind, representatives would select fair equality of opportunity as it protects and promotes equal basic liberties. In addition, a nontandem reason can be developed by considering that persons’ fundamental interests are served by having opportunities to develop their two moral powers. Rawls finds that the difference principle is a principle of reciprocity. This means that if inequalities obtain, then these inequalities are “to fulfill

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the condition of benefiting others as well as ourselves” (Rawls 2001, §18.3). To develop a more defined understanding of the difference principle, I reorganize and restate the definition of the difference principle in light of the fundamental question: The difference principle defines that particular inequalities are acceptable for free and equal persons if these inequalities are the greatest benefit for the least-advantaged members of society. Representatives in the original position would select a principle of reciprocity like the difference principle for the following reasons. First, the difference principle is co-supportive of equal basic liberties and fair opportunity. That is, the difference principle is a tandem principle. Allowable inequalities are those inequalities that do not disrupt the enjoyment of liberties and the occurrence of opportunities that fulfill the fundamental interests (Rawls 1999, §12 and §13). Second, Rawls argues that justice as fairness provides a vision of a society where all persons can be fully cooperating members of society (1999, xv). The difference principle is part of this vision. The greatest benefit entails that all persons are able to become fully cooperating members. This is opposed to a society where there is not the possibility for full cooperation by all (even if in such a society all persons may have their material needs and wants amply, perhaps even luxuriously, provided for). As such, the difference principle is an articulation of an ideal of democratic equality (1999, §13). 2.6.8   The Distributive Justice Outcomes of Justice as Fairness Now that the principles have been reviewed, I can outline how the principles of justice as fairness structure distributive justice claims. I will briefly revisit Rawls’s notions in Chap. 5, but here I will consider the topic in general form. Rawls provides a comparison between two economic regimes in order to give a detailed vision of justice as fairness and show what the “full force of the difference principle” entails (1999, xv). To fully understand what is justice as fairness, one has to consider it as an economic regime in light of is distributive justice effects. In comparing economic regimes, Rawls responds to a common misunderstanding that a welfare state has the kind of institutions that realize the principles of justice as fairness (1999, xv). Rawls argues that this is incorrect. The institutions of a welfare state do not realize justice as fairness. Instead of a welfare state, Rawls argues an economic regime called a property-owning democracy does realize the principles of justice as fairness.

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A welfare state does not realize the principles of justice as fairness because there are inequalities in ownership that are substantial enough to result in control of the political and economic life of a society by a wealthy elite (Rawls 2001, §41.4). The results of these inequalities are that equal basic liberties, fair equality of opportunity, and the reciprocity of the difference principle are not enjoyed. In short, the principles of justice as fairness are not realized. Persons have at least their basic biological needs met within a welfare state (indeed, persons may lead lives full of sumptuous delights), but not all persons are able to become fully cooperating members of their society. Rather, a welfare state is a class segmented society where inequalities in wealth and income prevent all persons from fully participating in social cooperation. If one considers a welfare state from the point of view of a hypothetical representative in the original position, then one cannot reasonably select such a regime as it does not fulfill the fundamental interests of persons. If the welfare state is considered in comparison to a property-owning democracy, then the hypothetical representatives in the original position would find the institutions of a property-owning democracy to be acceptable. A property-owning democracy has the following features which realize the principles of justice. Its distributive goals are to achieve the “widespread ownership of productive assets and human capital” (Rawls 2001, §42.3). This is done in order for all citizens to become fully cooperating members of their society (Rawls 2001, §42.4). Thereby, the overarching goal of justice as fairness is achieved through the institutions of a property-owning democracy. Why this is achieved can be seen in light of the key distinctions between a welfare state and a property-owning democracy: the absence of a wealthy elite that dominates politics and the economy and the availability of opportunities for all persons not based on their social origin. The widespread dispersal of property and educated talents (human capital) results in a society where persons own similar amounts of property and have different but complementary educations. These two aspects, property and education, will be considered individually. The amounts of property that individuals can own is limited by inheritance, gift, and progressive income taxes (Rawls 2001, §49.4). Rawls finds that these measures would prevent the emergence of a wealthy elite. In a property-owning democracy, persons do own private property. But in contrast to a welfare state, property is widely held.

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The education that persons receive in a property-owning democracy are intended for all persons to have opportunities to learn the political procedures of their society, an understanding of culture and science, and trained abilities to participate as productive members. In addition, this education provides persons with the knowledge to freely pursue their conception of the good (Rawls 1999, §17). That is, the purpose of this education is for persons to develop their two moral powers. Thereby, this kind of education is intended to facilitate the participation of persons in the political, social, and economic parts of society, and it is to help persons to freely pursue what they find to be good. The main result of this widespread ownership of wealth and widespread opportunities for obtaining an education are that a property-owning democracy is not a society where the class position of a person determines their degree of social participation. That is, the citizens of a property-­ owning democracy can be fully cooperating members. This means the aspirational democratic notion of social and political equality is its animating goal. This is in contradistinction to a welfare state where persons are not fully cooperating members. A welfare state does mediate the effects of poverty and extreme social exclusion. But a welfare state is a society where a person’s class position and the amount of wealth they possess determine the value of their political liberties and their opportunities. As such, a welfare state’s institutions are not the greatest benefit for the least-advantaged members of society. Accordingly, not all persons in a welfare state can be full participants. 2.6.9   Review of Rawls Rawls analyzes ideals of democratic equality in light of the distributive structures that would realize these ideals. The ideals that Rawls argues for are based on his analysis of modern history and a theory of constitutional democracy. The realization of these ideals requires a social and economic egalitarianism that is best expressed, given all known options, in the institutions of a property-owning democracy. Rawls’s work poses several challenges to commonly held notions about inequalities. In particular, Rawls’s method of the original position holds that distributions that do not conform to what would be decided in this hypothetical are unfair.

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In the fifth chapter of this work, I will revisit many of Rawls’s ideas regarding the desirability of the institutions of a property-owning democracy for persons who hold the democratic aspiration of equality. But a property-owning democracy will be contrasted with a different kind of economic regime that I consider to be more desirable than Rawls’s depiction of a welfare state. This more desirable regime I call a full-employment regime, and in Chap. 4, I argue that it has many desirable features. Nevertheless, I also argue that a full-employment regime still falls short in realizing the democratic aspiration of equality. Thus, I seek to show that an egalitarian redistribution is necessary for the realization of this aspiration. I find it useful to consider such comparisons for reasons similar to what are Rawls’s reasons for analysis: the examination and clarification of our personal and our public values (Rawls 2001, §6.4).

2.7   Chapter Overview: Normativity and Distributive Justice The study of distributive justice is the consideration of what are desirable distributions according to normative standards. This means that the evaluation of different distributions can only be established according to the kinds of moral standards that are used. In the fourth and fifth chapters of this book, two kinds of distributive standards will be compared. These two distributive standards are the center point of this book’s purpose. Before this comparison, in Chap. 3, I will provide an overview of modern money theory. Why there is an apparent diversion from the discussion of distributive justice by considering a macroeconomic theory of money will be elaborated over the remaining course of this book. For now, a short discussion is merited. Modern money theory provides a fruitful and contemporary entry point to introduce the discussion of contrasting distributive justice theories as it helps clarify two points. First, that a minimal standard of distributive justice (meeting the minimal needs and increasing the minimal opportunities for all persons) can be established with no direct redistribution of wealth. This is an interesting result that is somewhat unique in the history of philosophic theories of distribution. Second, and even given this result, the absence of redistribution will not allow for the fulfilling of the principles of justice as fairness. That is, the most acceptable distribution that fulfills justice as fairness necessitates that the

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redistribution of wealth is morally necessary. As such, questions of redistribution cannot ultimately be avoided if we take distributive justice standards seriously. I find this to be an important result, as this result shows the importance of considering egalitarianism in our discussions of the philosophy of distribution.

References Aristotle. 1998. Politics. Trans. C.D.C. Reeve. Indianapolis: Hackett. ———. 1999. Nicomachean Ethics, 2nd ed. Trans. Terence Irwin. Indianapolis: Hackett. Fleischacker, Samuel. 2004. A Short History of Distributive Justice. Cambridge, MA: Harvard University Press. Freeman, Samuel. 2007. Rawls. Routledge. Mill, J.S. 1936. Principles of Political Economy. London: Longmans Green and Co. Plato. 1968. The Republic. Trans. Allan Bloom. Basic Books. Rawls, John. 1999. A Theory of Justice, Revised ed. Cambridge, MA: Harvard University Press. ———. 2001. Justice as Fairness: A Restatement. Cambridge, MA: Harvard University Press.

CHAPTER 3

What Is Modern Money Theory?

Abstract  The purpose of this chapter is to introduce the main theoretical claims of modern money theory. The following questions will be answered to achieve this purpose. What is the nature of a state-issued currency? What is the role of taxation? What is the role of state bonds? What are demand shortfalls? What is full employment? What is a job guarantee? What kind of work would be performed by job guarantee workers? Are there alternatives to a job guarantee? Why does modern money theory focus on real resources? And what are some potential criticisms of modern money theory? This chapter will end with a brief review of these topics. Keywords  Modern money theory • Taxes • Bonds • Demand • Real resources • Full employment • Job guarantee

3.1   Chapter Overview The purpose of this chapter is to introduce the main theoretical claims of modern money theory, sometimes called modern monetary theory. Modern money theory is a set of conjectures about the nature and logic of a state-issued nonconvertible currency. These conjectures take into consideration the policy possibilities related to a state-issued currency. Analyzing these possibilities allows for examination of the functions of traditional macroeconomic topics such as taxation, state bond issues, state © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_3

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spending, and full employment. An examination of the nature of a state-­ issued currency allows for rather unique and unexpected considerations of these topics. Ultimately, analysis of the nature of a state-issued currency provides insights for philosophic theories of distribution that are, usually, under acknowledged in the literature. These insights will be the topic of the next chapter. But this chapter on modern money theory sets the stage for a new point of view to analyze the traditional concerns of distributive justice. It is impossible in the scope of a short book to sufficiently address theories of money and the history of money. Instead, this chapter is focused on an important feature of the nature of a state-issued currency; that is, a state-issued nonconvertible currency, as a nominal thing, can produce real effects. A nominal thing has a socially determined value. This is perhaps obvious if one considers the actual value of the ink and paper of a paper note or the actual cost of maintaining an electronic account balance. But a state-issued currency can create real changes, even though it is relatively valueless. For example, a person spends nominal money things, a paper note or an electronic transaction, and they slowly purchase a house or quickly buy a sandwich. A legislature decides to build a bridge or develop a moon capsule, so they offer payments in their state-issued currency to produce what is wanted. This aspect of the nature of a state-issued currency, the nominal produces real effects, sets the stage for the interesting and unique result discussed in the next chapter; that is, the spending of a state-issued currency (nominal things) can meet the minimal needs and increase the minimal opportunities (real effects) of all persons without explicit and intended redistribution, all else held equal. In order to show the above, I will answer the following questions in this chapter. What is the nature of a state-issued currency? What is the role of taxation? What is the role of state bonds? What are demand shortfalls? What is full employment? What is a job guarantee? What kind of work would be performed by job guarantee workers? Are there alternatives to a job guarantee? Why does modern money theory focus on real resources? And what are some potential criticisms of modern money theory? I will end this chapter with a brief review of these topics.

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3.2  What Is the Nature of a State-Issued Currency? A sovereign state-issued currency, commonly called a fiat currency, is a currency issued at the central state or federal level. Currently, there are many examples of a sovereign or fiat currency, such as the Japanese yen, the British pound, the United States dollar, and the euro of the European Union. A sovereign currency is a currency issued by a state and is used in its official fiscal accounting (Wray 2012, 42). In the United States, the federal government issues the dollar through the state central bank, the Federal Reserve. This is done by the Federal Reserve electronically crediting the U.S. Treasury’s account or the accounts of private banks. When the Treasury’s account at the Federal Reserve is credited, then the federal government spends dollars into circulation. The relationship of state spending, taxation, and bond issuance will be considered below. For now, what is of importance is that a sovereign state can create its own currency and spend it into circulation. A fiat currency is not collected through revenue or borrowing and then spent. Rather, it is created by a sovereign state and then spent. This will most likely appear to many readers to be counterintuitive. Nevertheless, this is one of the important features of how a nominal thing, a fiat currency, can create real effects, such as building a school. This topic will be returned to shortly. Sovereign states and federations that issue their own currency are called currency issuers. Whereas political entities, private associations, or persons that do not issue their own currency are called currency users. The currency situation in the United States can serve as an example of these distinctions. In the United States, the federal government, understood as the combined entity of the Federal Reserve and the Treasury, is the currency issuer. That is, the federal government creates its own currency, the dollar, and spends these dollars into circulation. All other political entities, private associations, or persons in the United States are currency users. These users include states of the United States, municipalities, private businesses, associations, families, and individuals. These currency users cannot create dollars and spend them into use. Instead, they must accumulate dollars first before they can spend. How these dollars can be collected by a currency user depends on its own particular powers. For example, a state of the United States can accumulate dollars through levying taxes, borrowing, selling goods and services, or through issuing fines and fees. Such powers of dollar collection are not available to all currency users. A family,

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for example, cannot levy a tax or assess fees from their neighbors (Wray 2012, 170). A sovereign fiat currency is a currency that can only be convertible into itself (Wray 2012, 45). That is, a currency that can only be converted into itself is the same as a nonconvertible currency. In contradistinction, a convertible currency is a currency that can be converted on demand into another currency or a particular commodity, most commonly a precious metal (Wray 2012, 45 and 76). When a nation issues a nonconvertible currency, this means that payments due in that currency to or from a nation will only be paid in that currency issued by that sovereign nation. A nation that issues a promise to pay in its own issued currency does not agree to pay in any other money or any other item. For example, if the nation of Japan agrees to pay you in yen, then one cannot demand payment in euros, silver, or oil. Not all national currencies are nonconvertible. Some nations have agreed to pay on demand an amount equivalent to their own currency in a foreign-issued currency. If this is the case, then a state cannot create this foreign currency. Rather, this foreign currency must first be accumulated before a nation can settle its payment obligations. In this instance, a sovereign nation is a currency user in respect to currencies that it does not issue itself. That is, it must first accumulate these currencies before it can spend to fulfill its obligation.

3.3  What Is the Role of Taxation? As mentioned above, a nation that issues its own nonconvertible currency does not have to accumulate this currency before it spends. Instead, it creates this currency and then spends it into circulation. This is the case since the origin of a state-issued currency is the state itself. So, why does a state set taxes in a currency that it creates itself? There are essentially two reasons why a state that issues its own currency would issue different kinds of taxes: to create a demand for its issued currency and to create various social and economic effects. Each of these reasons will be considered below. A state that issues its own currency needs to create demand for this currency. Why someone will want to accumulate a state-issued currency is if they need to use it. This need is created when a state levies a tax that is only payable in its state-issued currency (Wray 2012, 48). If people must pay a tax in a state-issued currency, then they will seek to acquire that currency to fulfill their tax obligation. Additional obligations can be put into place to drive demand for a currency, such as fines and fees that are only

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payable in a state-issued currency. For example, a state that owns an asset, such as a roadway, could charge usage fees in its own currency to create demand for this currency. If persons are to be able to pay a tax, fine, or fee only in a state-issued currency, then this currency must be available. That is, this currency must be in circulation already or the state must be ready to spend or loan its money to persons. To put the case in simple theoretical terms, a sovereign state that issues its own currency spends and then taxes. Whereas a political entity that uses the currency of an issuer (such as a nation that has adopted the euro) taxes in order to spend. A historical sidenote, I find to be interesting, Kant in his Metaphysics of Morals, published in 1797, argued that tax obligations create demand for a state-issued currency (Kant 1996, 426, 6:288). As noted, a tax payable in a state-issued currency creates demand for that currency. People and associations want to accumulate this currency in order to pay this tax. A state wants to create this demand for its currency not simply to create social and economic effects, which will be discussed below. Instead, a state wants something to be done, such as children taught, roads built, and research conducted. To achieve this purpose, a state offers payments in its own currency. If its currency is well established and used for regular transactions, then people will accept these state offers of payment for their private economic exchanges. But this avoids the consideration of how a state-issued currency becomes well established. Theoretically, the original need to acquire a currency for persons has to be generated. This is what levying the tax does. I find that these considerations lead to an important question: Why would a sovereign state not simply use a commonly traded commodity or the money of another issuer? These non-sovereign currencies need to be accumulated by a state first in order to be spent. A state will need to levy a tax in these currencies or buy them in order to spend them. The process of first accumulating a currency and then spending it is done by all non-­ sovereign entities in monetary economies. California taxes, businesses borrow, and individuals earn wages so that they can spend. What is different about a sovereign state spending in its own currency is that it does not have to accumulate this currency first. Rather, a sovereign state spends first. A state-issued currency is a nominal thing. And this nominal thing being spent can produce real effects: harbors dug, retirees housed, and distant stars mapped. This means that a state can produce real effects directly through the spending of its own currency. If a sovereign state

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spends in its own currency, then a sovereign state does not have to accumulate any currency first. The avoidance of accumulating a currency to spend allows for a state to drive its own currency with a tax. Taxation to collect a currency, selling state-owned assets, or borrowing domestically or internationally are not needed if what is to be purchased by a state is priced in its own currency. Thereby, a state that issues its own currency does not have to accumulate this currency in order to spend. A nation that issues its own currency does not necessarily have to sell its real resources or assume a debt in a foreign currency to produce real effects. But this may not be the case for nations that are unable to trade in their own currencies for imports they cannot produce themselves or exchange their own products for these imports. Even with these reservations, a nation can use its own resources and labor force to produce real effects through the spending of its fiat currency. This is an intriguing result that I will discuss in greater depth in future chapters. Now I will discuss the second function of taxes, which is to produce social and economic effects. This section will follow the work of Beardsley Ruml (1946). Ruml’s work has been used by modern money authors (Tcherneva 2020, 70). My presentation diverges slightly from Ruml’s analysis. I identify to a finer degree the various kinds of social and economic effects that taxation can produce. These effects are regulating the range and kind of economic inequality, controlling the price level (creating and limiting inflation and deflation), limiting or promoting certain kinds of economic development (e.g., fuel taxes or research tax credits), limiting or promoting certain behaviors (e.g., sin taxes or educational tax credits), assigning costs of use to certain persons or associations (e.g., roadway taxes or property taxes), and designating the accruing of particular benefits (e.g., social security taxes). None of these functions of taxation are for the generation of revenue. Accordingly, there are various social and economic effects that taxes can produce. I am not recommending any particular kinds of effects or kinds of taxes in this section. Of course, what effects are sought and what taxes are used to produce these effects are ultimately subject to legislative decision. Distributive justice authors have recommended certain kinds of taxes for their particular effects, such as Mill and Rawls recommending inheritance and gift taxes. These taxes limit the range of wealth inequality and limit kinds of economic inequalities (e.g., the size of dynastic fortunes). There is no directly obvious system of taxation that should be used. This

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is why a philosophic theory of distribution is needed to propose why certain persons, objects, or activities should be taxed (Murphy and Nagel 2002).

3.4  What Is the Role of State Bonds? If a nation that issues its own fiat currency spends and taxes to create demand for its currency or taxes to produce particular social and economic effects, then why would such a nation issue bonds? Are not bonds a form of the state borrowing from the private sector or other nations? Rather, if a nation issues bonds in its own issued fiat currency, then bonds are not a form of borrowing to fund spending. Instead, bonds issued by a nation in its own currency are to regulate the interest rate (Wray 1998, 85; Wray and Nersisyan 2020). The buying or selling of bonds by a central bank add or remove state money held as reserves by financial institutions. This, in turn, controls the interest rate for lending between banks. If bonds were not issued by the state, then state spending would cause the interest rate to fall to zero (Wray 1998, 87; Forstater and Mosler 2005). Accordingly, if a central bank seeks to keep an interest rate above zero, then some policy device has to be used. The issuing of bonds by the state is the traditional device.

3.5  What Are Demand Shortfalls? In a monetary economy, people are paid in money and work to obtain money. They may have real saving interests, such as the purchase of land, and nominal saving interests, such as retirement spending. But both real items and nominal accounts require money for savings. Thereby, if people desire to save, then they seek to save money. In addition, all the money incomes in the nonstate sector are equal to all the money spending in the nonstate sector. That is, all persons in aggregate will receive the income of the aggregate amount of spending. If this spending is considered overtime, then a model of what is a demand shortfall can be shown. Since persons usually have an interest in saving, they will not spend all of their income. An analytical example will show the results of a desire to save by individuals. If we consider that all persons at time A spend only a portion of their income, then at time B there will be less income for persons to save. Thus, all the spending in the current period will not equal all the income received in the previous period. If this is the case, then there will be a shortfall in

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demand since not all incomes are being spent. Readers interested in estimates of actual demand shortfalls can refer to the work of Mitchell and Muysken (2008), Dugger and Peach (2013), and Nersisyan and Wray (2021). Also, readers interested in a detailed treatment and a discussion of the history of the concept of effective demand can refer to Mitchell et al. (2019). A shortfall in demand is undesirable since there are persons who wish to be employed, but these persons cannot find offers of employment because of this shortfall in demand. That is, there are persons who are involuntarily unemployed. If there are involuntarily unemployed persons, then full employment does not obtain. Even given this general definition of full employment, greater details on what constitutes full employment are needed. In the next section, I will discuss why greater details on what constitutes full employment are needed, and I will outline the definition of full employment used in this book.

3.6  What Is Full Employment? Modern money authors commonly seek the twin goals of full employment and price stability in their policy prescriptions. Of these two goals, price stability is simpler to define as an acceptable range of changes in price indexes over a given time period. These indexes are widely published and, in some respects, easy to comprehend. Full employment is not directly observable. Statistical agencies publish several measures of labor utilization, but they do not publish a measure of full employment. The determination of full employment can be done with the use of labor utilization measures in conjunction with a definition. One could, with good reasons, define full employment when a labor statistic or determination of labor utilization is at a particular level. In this section, I will outline what are good reasons to define a specific point in time with a determination of labor utilization as full employment. In order to do so, I will first review two definitions of full employment. Next, I will analyze the reasons for these definitions of full employment. An important work in labor economics that developed an early definition of full employment was William H. Beveridge’s Full Employment in a Free Society (1945). Beveridge argues for the state to take a leading role in facilitating and maintaining full employment. Beveridge was concerned that the absence of full employment will, to paraphrase the epigraph of his book, produce misery and hate. Interestingly, Beveridge’s concerns about

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the social stability that full employment can produce are similar to the goals of the philosophies of distribution reviewed in the first chapter. That is, full employment can help facilitate social inclusion and the mediation of rebellious political emotions. To avoid a society that produces a miserable and hateful populace, full employment must meet certain requirements. Here is Beveridge’s definition of full employment: It [full employment] means having always more vacant jobs than unemployed men, not slightly fewer jobs. It means that the jobs are at fair wages, of such a kind, and so located that the unemployed men can reasonably be expected to take them; it means, by consequence, that the normal lag between losing one job and finding another will be very short. (Beveridge 1945, 18)

Thereby, full employment obtains where there is a minimally desirable offer of employment for all persons at jobs that offer wages that are sufficient. Following J.M. Keynes’s work, Beveridge found that the state can achieve full employment by spending an amount sufficient to overcome the demand shortfalls of a monetary economy (Beveridge 1945, 29 and 96). This is also discussed by Abba Lerner (1943). Nevertheless, there is ambiguity in Beveridge’s definition of full employment, especially in the determination of wages, the avoidance of inflation, and the capacity for the private sector to produce sufficient numbers of positions for all claimants. These concerns have led modern money authors to develop a different definition of full employment. Modern money authors are interested in both full employment and price stability. A fuller consideration of their discussion of price stability will be below in the section on the job guarantee. A state spending in order to produce full employment may spur inflation before all persons who wish a job are employed (Kelton 2020, 63). Tcherneva argues that the kind of generalized state spending endorsed by Beveridge will lead to a bidding up of the price of labor for persons with desirable skills and established work histories (2011, 14). This may result in producing inflation (Wray 1998, 134). Thus, generalized state spending can produce price instability without employing all persons who wish to be currently employed. This problem of spending that is not targeted to employ all persons under suitable conditions has led modern money authors to provide a definition of full employment that takes this problem into account.

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With these concerns in mind, L. Randall Wray provides a definition of full employment (which I call suitable full employment in this book): Full employment and zero unemployment are defined as a situation in which all who wish to work at a nominal wage fixed by the government will be provided with a full-time job. (Wray 1998, 14)

Thereby, full employment is defined as when all persons who wish to work at a set wage can accept an offer of full-time employment. In addition, Wray’s definition shows how modern money authors conceptualize that full employment and price stability can be achieved at the same time. The policy that achieves these twin goals is the use of a policy called a job guarantee, which is the offer of employment to all claimants at a set wage. In the next section, I will focus on how a job guarantee meets these two goals of full employment and price stability. Also, I will discuss considerations of the work done in a job guarantee and what is the set wage of a job guarantee.

3.7  What Is a Job Guarantee? A job guarantee provides an offer of employment to all claimants at a set wage. This means that all persons who find such a wage to be desirable will receive an offer of employment. Not all persons will accept this offer of employment since they may wish to be employed performing a different kind of labor or find the wage offered to be too low. Also, the kind of work that is available in a job guarantee may not be the best fit for all workers (Wray 1998, 125). This offer of employment is also based on work performance, so persons will be let go from their job if they do not show up for work or if they do not perform their assigned work tasks (Wray 1998, 125). In addition, there can be the use of sheltered workshops for employing persons who cannot be employed immediately in most job guarantee positions (Harvey 1989, 61). Thereby, a job guarantee will provide work for all persons who are able to perform the tasks of a job guarantee and find the wages to be desirable. Also, a job guarantee helps maintain price stability by producing a wage floor, smoothing the business cycle, and expanding the pool of trained workers. A wage floor means that a job guarantee wage will become the de facto minimum wage in a society that implements a job guarantee (Wray 1998, 128). This wage can include in-kind benefits, such as health

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insurance, paid vacation, and a pension. Most jobs that have wages lower than that offered by a job guarantee position will have trouble finding applicants. This means that most employers will have to provide compensation that is comparable to what is offered in a job guarantee. This is the case since a job guarantee will offer employment to any person who can perform the work available. If a job guarantee can employ persons with a large range of abilities, then this increases the effect of a job guarantee wage on the wage structure. A job guarantee could substantially increase compensation on the bottom end of the pay scale. As such, there is the possibility that there will be a one-time increase in the price level when a job guarantee is introduced (Wray 2012, 226). Modern money authors hypothesize that the fixed structure of a job guarantee wage, its role in smoothing the business cycle, and its expansion of the labor force will have price stabilization effects. A job guarantee wage should not be indexed to inflation, but the job guarantee wage should be set at a decent level (Tcherneva 2020, 89–90). This means that the job guarantee wage acts as a price floor in periods of economic expansion since the wage is not to be competitive with private sector wages or wages in the regular public sector. Many persons who lose their employment will be able to find work in the job guarantee during economic downturns as the job guarantee will employ all claimants who can perform the work. This buffer stock feature of a job guarantee provides a price floor during periods of economic contraction and economic expansion (Mitchell 1998). The number of persons employed in a job guarantee will increase during economic contractions and decrease during economic expansions. These employment and fixed wage features help smooth the business cycle by providing counter-cyclical spending during expansions and contractions. That is, spending on the job guarantee would increase during contractions and decrease during expansions. Finally, the job guarantee expands the pool of trained and experienced workers. One of the main functions of a job guarantee is to increase the number of workers that will be attractive to private sector and regular public sector employers (Wray 1998, 127). This increase in the supply of experienced workers can help reduce wage pressures during an economic expansion when the number of unemployed workers declines.

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3.8  What Work Would Job Guarantee Workers Perform? Now that the full employment and price stabilization features of a job guarantee have been reviewed, I will discuss the kind of work the employees of a job guarantee would perform. This is important since job guarantee workers should produce useful goods and services that are currently not provided by the private sector or the regular public sector. This is the case even when the private sector and the public sector are in expansion. For example, if there is a large amount of spending on infrastructure, then many private sector jobs external to a job guarantee would be created (Heintz, Pollin, and Garrett-Peltier 2009). Also, if there was an expansion of regular public sector employment, then these new jobs would be external to a job guarantee. In such instances, the number of persons employed in a job guarantee would decrease as job guarantee workers left for other jobs. While during periods of economic contraction, the number of persons employed within the guarantee would increase. Readers interested in estimates of the fluctuating amounts of employment in a job guarantee can consider the work of Mitchell and Watts (2020); Wray et al. (2018); and Harvey (1989). As noted above, one of the main functions of a job guarantee is providing training opportunities. This is so persons can become suitable applicants for jobs in the private and regular public sectors. But if there is prolonged slack in the labor market, then persons may hold job guarantee positions for lengthy periods of time. This means that a job guarantee is not merely a training program. Rather, it is the policy of a job guarantee to first train and then employ persons as long as they wish to stay within the guarantee. Given these various strictures, what kinds of work would be performed in a job guarantee? Authors who have argued for a job guarantee, modern money authors and others, have considered a wide range of work that could be performed. Harvey (1989) and Minsky (2013) each uses New Deal era work relief programs as a model. Wray (1998) and Tcherneva (2020) have considered the kinds of tasks job guarantee workers would do at length in their respective research. In particular, job guarantee authors argue that there is an under provisioning of the following goods and services: environmental conservation, public cleaning, care services, companions to the elderly, public safety, low-income housing restoration, public park restoration, public gardening, public health support, teaching assistants, library

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assistants, sports coaches, recreation assistants, research project assistants, public performances of theater and music, and public art displays (Wray 1998, 142–143; Mitchell and Fazi 2017, 245; Tcherneva 2020, 92–96). The notion is that these goods and services are currently not provided or provided on a sufficient scale. Many of these jobs should be provided regularly in order to be done properly. But others can be planned for and saved for implementation during economic downturns (Harvey 1989, 95). These jobs would be structured as opportunities for training since one purpose of a job guarantee is expanding the supply of experienced workers. For example, history, library, and social science projects could employ assistants who wish to learn skills for archiving, interviewing, writing, editing, and statistical tabulation; or childcare service projects could employ people who wish to learn about the development of children and educational practices. It is a legitimate concern that job guarantee tasks could be unproductive or unnecessary. Most of the strictures placed on the selection of tasks to provide under-provisioned goods and services and the primary purpose of training may alleviate some of these concerns. If these goods and services are under-provisioned, then there are unmet needs or wants. Also, a worker in training, by their very nature, is not as productive as a trained worker. So, if training is designated as unproductive, then this misses its purpose. There are two additional considerations about the productivity of job guarantee employment. First, Tcherneva argues that “the productivity of the unemployed is actually negative” (2020, 103). Employing people in occupations where they gain experience and training is more productive than persons in a condition of unchosen idleness. Second, Mitchell and Fazi find that a new notion of productive work is needed (2017, 245). They discuss the employment of artists and athletes in activities such as producing art or playing a sport as potential work tasks in a job guarantee. Mitchell and Fazi note that artists and athletes can provide performances, training, and coaching at schools and in their community. Large-scale infrastructure projects may appear to be conspicuously absent in the list of potential job guarantee projects. I list no projects related to transport, energy, communication, or public buildings. The construction projects listed are restoration projects for low-income housing and public parks. Why there are very few infrastructure construction projects listed is that they should be provisioned as needed (Tcherneva 2020, 91). Infrastructure provides the basis for any society to operate. It should not wait for economic downturns in order to be built or maintained.

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Finally, a job guarantee is financed by the central or federal government of a sovereign currency issuing nation. But a job guarantee does not have to be administered by a central government. Tcherneva argues that decentralized administration is needed given the large number of persons that may potentially be employed in a job guarantee (2020, 90). Local governments and nonprofits can place requests for projects with a projection for costs and numbers of workers that would be employed. The main requirement for proposals is that the work done provides useful outcomes which do not replace regular public sector or private sector jobs.

3.9  Is There a Viable Alternative to a Job Guarantee? I will answer this question by briefly discussing an alternative to a job guarantee. The alternative I consider is composed of the following policies: formal schooling and vocational training that is free at the point of service, student and trainee stipends, subsidized wages at private firms and nonprofit associations, an expansion of employment providing regular public services, increased funding for research, adequate infrastructure spending, and a reduced workweek. These policies can be considered to be desirable as they would likely increase employment, opportunities for education and leisure, and the availability of public amenities. But even given these possible results, there is no assurance that all persons who wish to work will find employment. As such, there is no policy measure listed above that will provide suitable full employment. But does it matter if there is an absence of suitable full employment? There are two matters to consider in answering this question. First, if persons wish to be employed and there are no opportunities for their employment, then this can be understood as a normative failure to integrate persons into the lives of their communities. This is a failure that was identified by the distributive authors discussed in Chap. 2. Many of these authors’ redistributive recommendations were to alleviate such exclusion. Second, unemployment is unproductive as noted by Tcherneva (2020, 103). Persons who wish to be in paid employment could be providing goods and services that are currently not produced. Thereby, there are a normative reason and an economic reason why the absence of suitable full employment is unacceptable.

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3.10  Why Do Modern Money Theory Authors Focus on Real Resources? There is a focus by modern money theory authors on the use of real resources (Mitchell and Fazi 2017, 190; Tcherneva 2020, 71–76; Kelton 2020, 157–190). There are two reasons for this focus. First, people use real resources to meet their needs and wants. Thereby, any reasonable person will be interested in if and how these needs and wants are fulfilled. This consideration, on the one hand, is rather mundane. But, on the other hand, a focus on real resources for the meeting of needs is distinctive from financing in money terms. That is, a good and service can be provisioned if there are real resources (labor, equipment, and material) for its production. The financing of production in terms of a sovereign-issued currency is not an actual limit to production. A state can afford anything that is priced in its own issued currency (Wray 2012, 112). There are good reasons why a state should not purchase any and all goods and services as will be discussed below. But goods and services can be provided through state spending within the boundaries of available resources. This means that savings in money is not needed for a sovereign state to purchase goods and services in its own currency. This is the same reason why a state that issues its own currency does not need to collect revenue or borrow to spend in its own currency. If a state seeks to provide a good or service, then it spends in its own currency to do so. Saving by a state in its state-issued currency is not needed since the state creates this currency as it spends. An example of affordability in real terms is the funding of public pensions. Modern money theory authors argue that the financing of public pensions is about the availability of real resources and not about saving in money terms (Mitchell and Mosler 2006). This means that the provision of a public pension is about whether there will be sufficient amounts of goods and services for retirees to use. Saving money to be spent in the future is not how a nation should prepare to care for its future pensioners. Rather, a nation should structure its currently available resources for the future use of retirees. For example, persons in the present can devote their resources to building homes for retirees, training persons to care for them, and developing labor saving technology. Saving money for future spending is not only unnecessary for a state that issues its own currency, but it can also be irrational. This is the case since taxing money from persons to use in the future will create a demand

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gap. Not only will unemployment be a likely result, but the economy could also operate at less than full capacity. This means that society is not using all of its available resources in order to meet the needs of its members currently and in the future. This is the case for any future preparations, such as the care and education of the young. In short, saving in money for future spending by a state that issues its own currency can be socially and economically irresponsible (Wray 1998, 158). Second, real resources are a focus of modern money authors because limits in the use of real resources are one of the prime causes of inflation (Mitchell et al. 2019, part D; Kelton 2020, 70–72). This is the case since there are real limits to how many resources can be used at any point in time. If spending exceeds the available supply of real resources, then inflation may result. For example, if the sum of public and private spending in a society exceeds the amount of available labor, equipment, and material, then the prices of productive inputs will likely increase. A society using all of the resources that are available while avoiding inflation is desirable so as to meet the needs of its members. Modern money authors argue that the role of the state in these circumstances should be to adopt policies that will maintain price stability as real resource limits are approached. These policies include a job guarantee, budgeting for inflation control, and the use of taxation for inflation control. But it is important to note that these three policies do not exhaust the possible policies for attempting to control inflationary circumstances; readers interested in other policies can consider Lerner (1973) and Galbraith (1980). A job guarantee will act as a price anchor and as a means to expand the supply of trained and experienced labor. And a state can adopt budgeting that takes inflation into account (Kelton 2020). Finally, a broad taxation base can be used to reduce demand pressure. In particular, a payroll tax that defers compensation could help achieve this purpose (Nersisyan and Wray 2021). But it is important to point out that deferred compensation, such as a pension, is not financed by the payroll tax. Rather, the payroll tax creates a demand leakage, and this leakage is intended to reduce inflationary pressures as available resource limits are approached. These pensions will be paid for in real terms when they are used since the pensioners will be consuming real resources. To review, modern money theory focuses on real resources for two reasons. First, the meeting of needs is through the provision of real resources and not through saving a state-issued currency. If a state is purchasing goods and services denominated in its own issued currency, then

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it can purchase these things as it chooses. The state should spend on the meeting of the current and future needs of its members. Second, a state has good reasons to meet the needs of its population, but this should be done without creating price instability because of approaching the real resource boundary. Thereby, policies that seek to meet the needs of a population without creating price instability have to take real resources and their availability into account.

3.11  What Are Some Potential Criticisms of Modern Money Theory? There have been several critiques of modern money theory. A good overview of many of these criticisms can be found in Fullbrook and Morgan (2019). In this section, I will discuss a set of criticisms presented by a very helpful anonymous reviewer to the proposal for this book. The reviewer was concerned that modern money theory does not adequately address the topics of an independent central bank, state spending-induced inflation, and problems related to state-led planning. I will discuss each of these topics below. First, the concern of central bank independence pertains to coordination between central bank actions and governmental spending. A central bank’s interest rate policy has to be conducive to the fiscal stance of the government in order for a combined fiscal and monetary policy position to be effective. There is the possibility that a central bank and the government can be acting in contrary ways. Usually, the concern is that the central bank will not accommodate an expansion in governmental spending by keeping interest rates too high or by raising rates. But the opposite is often the case. The government may be interested in cutting or not increasing governmental spending, but the central bank may be interested in setting lower rates. These are generally considered contrary macroeconomic actions. A reduction in spending by the government can lead to a macroeconomic contraction, whereas the reduction in rates by a central bank are intended to promote or maintain a macroeconomic expansion, all else held equal. The coordination between a central bank and the government is important for the effectiveness of any economic policy. There is nothing unique in modern money theory proposals that results in this concern taking on greater proportions. A central bank can be accommodative or not, within

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legal limits, to governmental actions. Central bank independence is a concern for the coordination of state economic actions; this is always the case. There is nothing unique about modern money theory and its recommended policies in this respect. Second, inflation can be caused by public spending. Nevertheless, why public spending can be inflationary and under what conditions are important to consider. It is good to note that any spending, public or private, can be the source of inflation. This is the case because spending can cause inflation if it is greater than the available supply of goods and services, as noted above. Too much spending by the state or by private firms and persons can drive inflation when the supply frontier is approached. This means that state spending is not the only source of spending caused inflation. As discussed previously, there are policies that can be used to regulate spending caused inflation, such as budgeting for inflation control, a job guarantee, and taxation policies structured to control inflation. There is nothing unique about state spending used for demand management in respect to the price level. Even spending by the state not specifically for the purpose of achieving full employment can move the macroeconomy into the supply frontier, such as spending on infrastructure, military items, or education. Accordingly, budgeting for price stability and the use of price stabilization policies are needed if a nation seeks to maintain full employment and does not wish to use created unemployment as a price stabilization device. Also, these measures would be of use if the source of spending-induced inflation was public or private. Third, I will consider three reasons why state-led planning in a market economy can be a concern: the ignoring of price signals by the state, state selection of development paths, and the problem of state functionary self-­ interest. These three problems will be discussed together since they are related. The state can ignore market determined prices to attempt to achieve its goals given its fiscal and regulative powers. But within the framework of market theory this is inefficient since the state is ignoring the optimal allocation of resources. Thereby, state action that subverts allocation by markets results in inefficiencies. This is a cogent concern, but this critique depends on the conjecture that markets optimally allocate resources in all cases. But there are two reasons to consider this as unrealistic. One, even when markets are competitive, they only operate based on price signals. These price signals do not contain all relevant information since not all relevant information is contained in prices. This is called market failure. Examples of market

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failure include negative externalities, crowding, over investment in private goods, under investment in public goods, unemployment, and the absence of intergenerational accommodation in resource use. Thus, state action is needed to minimize or prevent market failures. Two, contemporary industrial economies are based on large concentrations of capital with technologically sophisticated plants that require long-term public and private planning and the assistance of the state for their success (Galbraith 2007). A commodity can take years to develop, and the development of commodities may require the financial assistance of the state in their research phase. Purchase subsidies may be needed to facilitate the adoption of a new technology. Many commodities need the state to provide infrastructure and regulation for their use. In addition, the state is a main provider of the training and education of workers, and the state provisions the intermediate goods of policing, monitoring, and legal arbitration. These interactions between private firms and the state are not determined by market forces. Rather, these actions create and shape markets for goods and services. These requirements for the operation of an industrial economy necessitate that elected officials and functionaries have to make decisions regarding how and when the state acts. In light of the above, the correct area of consideration is not if the state should plan. This is inevitable since the state has always been part of any economy. Rather, the pertinent question is: What is effective state planning? This is ultimately a normative question concerning what goals the state should seek and what motivations are desirable for private persons, office holders, and functionaries to hold. This is a question of what distributive standard should determine the goals of state action and private associations and the motivations persons should hold. This means that state action is justified if it fulfills a designated standard, and effective planning is planning that fulfills this standard. It is important to note that this does not involve the state replacing the private production of commodities. My comments here are premised on the notion that the state’s role is to assist private economic actions, not replace them.

3.12   Chapter Review This chapter’s purpose was to provide a brief introduction to the ideas of modern money theory. Modern money theory is a conjecture regarding the nature and logic of a state-issued nonconvertible currency, which is commonly called a fiat currency. A fiat currency does not have to be

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acquired by a sovereign state before this state spends. Rather, a fiat currency is spent into existence. Accordingly, a state that issues its own currency does not have to issue a tax in this currency to collect it. The use of taxation for a sovereign state is to create demand for its own currency and to create desired economic and social effects. Modern money theory authors hold that a monetary economy can have demand gaps caused by demand leakages. In order for a monetary economy to fully utilize its available resources, the state has to activate these resources through spending. Nevertheless, it is unlikely that the full employment of labor will occur without the use of a targeted employment policy, such as a job guarantee. In addition, a job guarantee can help maintain price stability by anchoring the wage, increasing the supply of trained labor, and minimizing fluctuations in the business cycle. Modern money theory focuses on real resources for two reasons: people consume real resources and an economy that approaches the real resource limit can be a cause of inflation. There are several important criticisms of modern money theory. But these criticisms are not unique to modern money theory. Rather, these criticisms apply to some of the problems of technologically advanced monetary economies with independent central banking systems. This introduction to modern money theory was intended to set the stage for the next chapters where two distributive justice standards are developed and placed in comparison.

References Beveridge, William H. 1945. Full Employment in a Free Society. New  York: W.W. Norton. Dugger, William M., and James T. Peach. 2013. Abundance Denied: Consequences of the Great Recession. Journal of Economic Issues 47 (2): 351–357. Forstater, Matthew, and Warren Mosler. 2005. The Natural Rate of Interest is Zero. Journal of Economic Issues 39 (2): 535–542. Fullbrook, Edward, and Jamie Morgan, editors. 2019. Modern Money Theory and Its Critics. Real World Economics Review 89. Galbraith, John Kenneth. 1980. A Theory of Price Control. Cambridge, MA: Harvard University Press. ———. 2007. The New Industrial State. Revised Edition. Princeton University. Harvey, Phillip. 1989. Securing the Right to Employment: Social Welfare Policy and the Unemployed in the United States. Princeton: Princeton University Press. Heintz, James, Robert Pollin, and Heidi Garrett-Peltier. 2009. How Infrastructure Investments Support the U.S. Economy: Employment, Productivity, and Growth. Political Economic Research Institute, University of Massachusetts, Amherst.

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Kant, Immanuel. 1996. Practical Philosophy. The Cambridge Edition of The Works of Immanuel Kant. Cambridge: Cambridge University Press. Kelton, Stephanie. 2020. The Deficit Myth. Public Affairs. Lerner, Abba. 1943. Functional Finance and the Federal Debt. Social Research 10 (1): 38–51. ———. 1973. Flation: Not Inflation of Prices, Not Deflation of Jobs. Penguin Books. Minsky, Hyman P. 2013. Ending Poverty: Jobs. Levy Institute: Not Welfare. Mitchell, William. 1998. The Buffer Stock Employment Model and the NAIRU: The Path to Full Employment. Journal of Economic Issues 32 (2): 547–555. Mitchell, William, and Thomas Fazi. 2017. Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World. London: Pluto Press. Mitchell, William, and Joan Muysken. 2008. Full Employment Abandoned: Shifting Sands and Policy Failures. Edward Elgar. Mitchell, William, and Martin Watts. 2020. Investing in a Job Guarantee for Australia. Centre of Full Employment and Equity. The University of Newcastle. Mitchell, William, and Warren Mosler. 2006. Understanding the Economic Fallacies of the Intergenerational Debate. Australian Journal of Social Issues 41 (2): 159–170. Mitchell, William, L.  Randall Wray, and Martin Watts. 2019. Macroeconomics. Macmillan International and Red Globe Press. Murphy, Liam, and Thomas Nagel. 2002. The Myth of Ownership: Taxes and Justice. Oxford: Oxford University Press. Nersisyan, Yeva, and L. Randall Wray. 2021. Can We Afford the Green New Deal? Journal of Post Keynesian Economics 44 (1): 68–88. Ruml, Beardsley. 1946. Taxes for Revenue Are Obsolete. American Affairs 8 (1): 35–39. Tcherneva, Pavlina R. 2011. Permanent On-The-Spot Job Creation—The Missing Keynes Plan for Full Employment and Economic Transformation. Review of Social Economy: 1–24. ———. 2020. The Case for a Job Guarantee. Polity. Wray, L. Randall. 1998. Understanding Modern Money: The Key to Full Employment and Price Stability. Cheltenham: Edward Elgar. ———. 2012. Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. New York: Palgrave Macmillan. Wray, L. Randall, and Yeva Nersisyan. 2020. Does the National Debt Matter? The Japanese Political Economy 46 (4): 261–286. Wray, L.  Randall, Flavia Dantas, Scott Fullwiler, Pavlina R.  Tcherneva, and Stephanie A.  Kelton. 2018. Public Service Employment: A Path to Full Employment. Bard College: Levy Institute.

CHAPTER 4

What Insights Can Modern Money Theory Provide to Political Philosophy?

Abstract  The purpose of this chapter is to show that the conjectures of modern money theory provide unique innovations for use in distributive justice analysis. In this chapter, first an argument is developed for a minimal distributive justice standard based on meeting minimal needs and providing minimal opportunities for persons. Second, it will be shown that one of the profound results of modern money theory’s analysis of demand gaps and state spending is that people can be employed to increase their well-being. Third, it will be shown how the insights from modern money theory are distinctive from several standard theories, but not all, within the contemporary distributive justice literature. Keywords  Political philosophy • Modern money theory • Ideal theory

4.1   Chapter Overview This chapter’s purpose is to show that the conjectures of modern money theory provide unique innovations for use in distributive justice analysis. In the first part of this chapter, I will argue for a minimal distributive justice standard based on meeting minimal needs and providing minimal opportunities for persons. The meeting of these minimal needs and the provisioning of these minimal opportunities enable individuals to pursue © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_4

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their conception of the good within reasonable practical boundaries, prima facie. I will argue that this minimal standard can be met without directly redistributive measures because of perpetual demand shortfalls and the underutilization of labor within modern economies. A policy of state spending can meet this minimal standard by the activation of real resources, the creation of public amenities, and the full employment of all those who wish to work. Provision of care services for the inclusion of persons with caregiving responsibilities in paid employment is part of this policy. The full-employment policy that I outline can provide work opportunities for persons with a disability. The greatest beneficiaries of these policies would be those who are regularly excluded from employment, who are unable to work, and those who currently do not enjoy basic goods and services. In the second part of this chapter, I will show that one of the profound results of modern money theory’s analysis of demand gaps and state spending is that people can be employed to increase their well-being. In short, well-being is improved by employing people to make goods, services, and public amenities. Redistribution from the most advantaged is unnecessary. Meeting the minimal distributive justice standard will provide additional goods and services for all persons with the least advantaged receiving the greatest benefit. Third, I will show how the insights from modern money theory are distinctive from several standard theories, but not all, within the contemporary distributive justice literature. This section has two parts. It begins with a consideration of the respective work of G.A. Cohen and Ronald Dworkin on the necessity of redistribution. I will argue that these authors’ considerations only hold when all resources are fully utilized. But if demand gaps are pervasive in monetary economies, then these arguments for the necessity of redistribution are only applicable to the case of the full utilization of real resources. The latter part of this section will show that the work of John Rawls and Jean Drèze and Amartya Sen do consider situations of demand shortfalls. An analysis of policies to activate resources is more robustly presented in Drèze and Sen’s work than in Rawls’s work. This shows that the idea of the activation of resources without redistribution is already present in the contemporary distributive justice literature.

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4.2  A Minimal Distributive Justice Standard In this section, I will argue that a minimal distributive justice standard of meeting minimal needs and increasing minimal opportunities for all members of a society can be achieved without direct redistributive measures. I will show that this minimal standard can be met without direct redistributive measures because of perpetual demand shortfalls and the underutilization of labor within monetary economies. Fulfilling the minimal standard provides opportunities for mutual advantage. All persons can gain from the activation of underutilized resources. Fulfilling the minimal standard is not altruistic (altruism is defined as actions that are performed with no benefit to the performer of the action). Rather, the fulfillment of the minimal standard provides opportunities for persons to better their own condition and the conditions of others at the same time. Thereby, the moral demands of the minimal standard are rather low given the potential for mutual advantage. The standard of minimal distributive justice is a practical conjecture that is developed for two reasons. First, the minimal standard is presented in order to bring clarity to desirable outcomes that require no direct redistribution. Second, the minimal standard is presented to highlight the moral necessity for a more redistributive standard based on Rawls’s conception of justice as fairness, which is developed in the next chapter. This chapter and the next are an exercise in philosophic modeling. That is, I am working through a thought experiment. Philosophic thought experiments are a practice of ideal theory. They have a very long history in philosophy, such as Plato’s kallipolis in the Republic or Mencius’s child-well example (see Book of Mencius, 2A6). I follow Rawls in using thought experiments for the ideal and systematic appraisal of practical philosophic problems and for guidance on non-ideal concerns (Rawls 1999, §2, 2001, §5.1). In order to develop a thought experiment that will meet the reasons listed above, I will take the following steps. First, I will present a hypothetical set of social conditions. In particular, I will discuss problems of unmet minimal needs, a lack of psychological commitment to the organizational rules of one’s society, the social instabilities of rebellion and revolt, and social, economic, and political inequalities. No actual society is used as a point of reference in developing these conditions. Rather, I follow some of the hypothetical sets of social conditions that are typical in political philosophy.

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Second, I will present the minimal interests of persons who hold the democratic aspiration of social and political equality. The minimal interests of persons are defined as such: persons are interested in seeking their good and reducing conflict with others who are also seeking their good. This presentation of minimal interests is in light of Rawls’s development of the fundamental interests of citizens, which is the development and maintenance of the two moral powers of persons who consider themselves to be free and equal. This use of minimal interests, as opposed to using Rawlsian fundamental interests, is to help advance the second reason of this modeling. That is, the minimal interests of citizens are insufficient to capture what are the interests of persons in a democratic society. This is done to help show that a more egalitarian and redistributive theory is needed to fully address the ideals of people who hold the democratic aspiration of social and political equality. Third, I will show why the fulfillment of the minimal standard of distributive justice is achieved by meeting the minimal interests of persons. Minimal interests are assumed to guide what a minimal distributive justice standard should achieve. The minimal standard fulfills the minimal interests of persons by meeting their minimal needs and increasing their minimal opportunities. The minimal needs are sufficient nutrition, public health, public safety, a livable environment, basic health care, climate appropriate housing, and climate appropriate clothing. The minimal opportunities are movement, education, work, and leisure. These needs and opportunities are minimal needs and minimal opportunities since their enjoyment allows persons to be able to pursue their conception of the good while reducing conflict with others who are also seeking their good. Fourth, I will describe the social-economic model that fulfills the minimal standard. The model will be called a full-employment regime. This involves a discussion of the social and economic policies that meet this standard without explicit redistribution. The development of this social-­ economic model is where the insights of modern money theory come into use. In particular, the model I will develop uses the features of a state-­ issued currency to bridge demand gaps. This is done by employing persons to activate real resources to meet the minimal needs and increase minimal opportunities for all persons.

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4.3  Hypothetical Conditions The conditions that I use in this thought experiment are to address the typical concerns held in philosophic theories of distribution: inequalities exist that are not mutually advantageous or reciprocal, persons do not accept the social rules of their society, and, because of this, social instability occurs. These kinds of concerns were identified by many of the authors in Chap. 2. Distributive theories are developed as a means to understand, clarify, and guide on matters related to unstable, resentful, spiteful, and potentially rebellious societies. Distributive theories, including distributive justice, are not intended to be ideological or placate a population. Instead, distributive theories are to show what are the moral standards a society should aspire to. This can both mediate persons’ grievances about their society and show that a society has unjust institutions and outcomes. In short, distributive justice theories and distributive theories, in general, seek to show what are morally correct standards for political orders. The conditions that the minimal standard responds to are indicative of the traditional concerns of the literature. This will show that the innovations brought about by incorporating modern money theory ideas into political philosophy provide new understandings that are useful in addressing these traditional concerns. The conditions of the hypothetical model are as follows. There are substantial inequalities in wealth holdings and income received. This society is a class society; this is where a person’s family origin has a strong determination of their social, economic, and political position as adults. There is a shortage of goods and services to meet persons’ minimal needs and minimal opportunities. These minimal needs and opportunities are under-­ provisioned because of society operating at below capacity. That is, demand gaps exist in this society because of an insufficiency of targeted demand. I follow the findings of William M.  Dugger and James T.  Peach (2009, 2013) in this work; that is, Dugger and Peach show that the closing of demand gaps can achieve adequate living standards for all persons. Finally, some persons in the hypothetical scenario are rather adverse to redistributive taxation. It is assumed that it is politically untenable for such redistribution to be implemented. Even given the above conditions, the persons of this hypothetical society do consider it to be democratic. That is, persons conceive of themselves and others in society as socially and politically equal. This is in the sense that persons consider notions of natural hierarchy to be untrue.

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Persons in this society agree that people should be able to participate in politics, social life, and private associations as they wish. But as is implied in the previous paragraph, persons are deeply divided on how economic and social goods should be used in order for people to participate. As such, I assume that persons hold a conception of their minimal interests as persons. These minimal interests are that persons are interested in seeking their good and reducing conflict with others who are also seeking their good. These interests take into account two features. First, it is assumed that persons can have a conception of the good, and they wish to fulfill this conception. There is no singular conception of the good that people are assumed to hold. That persons wish to pursue a conception of the good is an assumption of what is part of the public values in a democratic society. That is, it is publicly acknowledged that persons have their own conceptions of the good. This is not an endorsement of any particular conception of the good by the public. But it is publicly understood that persons have their own conceptions of the good that they find valuable. As I will show below, the minimal interests of persons shape what are minimal needs and minimal opportunities for these persons. This means that a set of needs and opportunities are selected so that people can pursue their conception of the good while reducing conflict with others who are also seeking their good. Second, persons have an interest in coordinated social activity that allows for persons to seek their good. That is, persons do not actively and overtly seek forms of domination that would be contrary to persons being able to seek their own good. Nevertheless, persons do consider that perfect coordination is not possible. Thus, limitations on actions are needed via rule setting and the decisions by courts to resolve conflicts. But even in the absence of desires that seek to institute a social order where pursuit of an individual’s good is disregarded, persons can be unaware that there are pronounced inequalities for persons to seek out and fulfill their conception of the good. This lack of awareness of inequalities is part of the conflict over the use and distribution of resources in this hypothetical society. The distributive justice standard developed from the minimal interests of persons is called the minimal standard. The minimal standard is the meeting of minimal needs and the increasing of minimal opportunities. These needs and opportunities are to help fulfill the minimal interests of persons. That is, if these needs and opportunities are provisioned, then persons can pursue their conception of the good and the possibilities for conflict are reduced. The minimal needs are sufficient nutrition, public

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health, public safety, a livable environment, basic health care, climate appropriate housing, and climate appropriate clothing. These needs are minimal needs since their enjoyment allows persons to be able to pursue their conception of the good while reducing conflict with others pursuing their conception of the good. The minimal opportunities are movement, education, work, and leisure. The listed opportunities are general purpose and, thereby, allow for persons to pursue their conception of the good while reducing conflict with others pursuing their conception of the good.

4.4  The Full-Employment Regime Model The social-economic model that will realize the minimal distributive standard is called a full-employment regime. This is the case since the achieving and maintenance of suitable full employment is the key policy to meet the minimal distributive justice standard without explicit redistribution. There are three features of the full-employment regime. The first feature is a suitable full-employment policy facilitated by the spending powers of a nation that issues its own nonconvertible currency. Suitable full employment here will be achieved through a job guarantee to provide all claimants with work at a set wage. The job guarantee wage will include a standard set of benefits including a retirement plan, the provision of health care, leave time, care services, and social insurance payments. Job guarantee wages will help to stabilize prices (other price stabilization policies may be needed). Any person who wishes to perform the work of a job guarantee at the set wage will be offered employment for an unlimited duration. This allows for persons to use employment to meet their minimal needs and to use the opportunity of work for their own purposes. The wage received from working allows for persons to meet their minimal needs and take advantage of opportunities as they wish. A job guarantee will seek to directly produce goods and services that will partially meet persons’ minimal needs and increase their opportunities. In addition, the goods and services produced by a job guarantee will benefit all persons. So, a suitable full-employment policy helps fulfill the minimal interests of persons who work in a job guarantee and those who do not. The second feature of a full-employment regime is the use of state spending coordinated with a suitable full-employment policy to fulfill a person’s minimal interests. That is, state spending should be used generally to meet a person’s minimal needs and increase their minimal opportunities. The state should set its budgets to achieve full use of resources and

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price stability. Not all state spending should seek to employ as many persons as possible. As such, the provision of amenities to meet persons’ minimal interest does not always have to seek the purpose of employing all persons. The achievement of suitable full employment is the purpose of the first feature of the full-employment regime, the job guarantee. These two features of a full-employment regime, a job guarantee and general state spending, are coordinated to meet the minimal needs and increase the minimal opportunities of persons. These two features do not replace each other. Thereby, state spending can provide a wide set of goods, services, and income streams based on the policy selections of elected officials. For example, persons can be provided with income support; public goods and public amenities can be produced; and research can be funded. State spending is practically desirable if it helps in the fulfillment of the minimal interests of persons. This is the case even if this spending’s explicit purpose is not to provide suitable full employment. The third feature is the use of regulation and adjudication to meet a person’s minimal interests. Regulation and adjudication of activities and outcomes allow for persons to seek their conception of the good while reducing the possibility of conflict. If the minimal interests of persons are to be fulfilled, then there is a need for regulation to guide actions and adjudication for the negotiation of conflicts and the redress of injury. Regulation and adjudication cannot replace or be replaced by suitable full employment and general state spending. Persons can have their minimal needs met and enjoy increasing opportunities, but there is still a need for publicly understood limits, third-party mediation, and redress. A full-employment regime will fulfill a person’s minimal needs. The key feature of a full-employment regime is the maintaining of suitable full employment. That is, a full-employment policy that uses a job guarantee and spending to achieve suitable full employment promotes persons to meet their minimal needs through their own laboring. The minimal needs of nutrition, health care, clothing, and shelter can be met through a person’s own labor or as a publicly provisioned benefit (directly provided or purchased through subsidies). The minimal needs of public health, public safety, and a livable environment are public goods. The state has to provide these goods directly or purchase these goods from private sources for public use. Also, the state has to regulate actions for the meeting of all the minimal needs. Overall, the state has direct and

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indirect roles in making sure that the minimal needs of persons are met. It is an injustice for all persons not to have their minimal needs met. Thus, the state is ultimately responsible for all persons having their minimal needs met. The three features of a full-employment regime assist in increasing the availability of the minimal opportunities of movement, education, work, and leisure. The conjunction of state spending and private associations can provide the opportunity of work. The state can directly employ people in a job guarantee, in regular public employment, or in a sheltered workshop. Indirectly, state spending on purchases can result in increasing employment. The state can increase the minimal opportunities of education, leisure, and movement by funding or subsidizing the building of amenities (e.g., schools, care centers, libraries, leisure spaces, transportation systems, and other supportive infrastructure). Also, the state can purchase or subsidize services that provide opportunities, such as educational, informational, and care services. These minimal opportunities require state regulation and arbitration in order to minimize conflicts of use. Also, regulation is needed to audit public and private services. It is an injustice for the minimal opportunities not to be available. Thus, the state is ultimately responsible for minimal opportunities to be provisioned and available for all persons. Those who will benefit the most from the three features of a full-­ employment regime will be those who have skills in limited demand, limited work histories, disabilities, and care work to perform. Stateprovided care services, the production of new public amenities, the purchasing of the private production of goods and services, an offer of employment, and training at a set wage for all claimants will be of great benefit to those usually excluded from employment in the private and public sectors. I hope to show why this is the case by considering the example of persons with care work to perform. Persons who care for children, the sick, or the elderly will have many impediments to meeting their needs and taking advantage of opportunities. But if these persons can accept an offer of work because care services are provided, then they will be in a better situation to fulfill their minimal interests. This will be the case for all persons whose attachment to formal employment is limited in the absence of a job guarantee.

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4.5  Redistribution Is Not Needed to Achieve the Minimal Standard A full-employment regime does not explicitly redistribute resources. This is the case since a state that issues its own nonconvertible currency can activate unused real assets to meet the minimal standard. State spending can activate real resources and employ persons to meet their own minimal interests through their collaborative efforts. A full-employment regime facilitates the meeting of the minimal interest by persons themselves. That is, persons fulfill their own needs and furnish their own opportunities through social cooperation. This means that the minimal interests of persons are fulfilled by their participation in a collaborative effort. In addition, the minimal interests of persons who cannot work or should not work will be fulfilled through these collaborative efforts. Taking a longer-term view into account provides a framework to consider how collective provisioning fulfills the minimal interests of persons by meeting their minimal needs and increasing their minimal opportunities. All production is a combined effort through social cooperation. The vast array of goods and services that are produced within modern economies are the product of multiple persons. In addition, the education and training of persons that occurs overtime is for the continuity of social cooperation. Thereby, persons themselves produce the goods, services, and skilled persons for continuous societal operation. Such a process can go awry; persons may not be adequately educated and trained; persons may not be employed; and a set of goods and services may not be produced that meet the minimal interests of persons. If modern money theorists and other demand management theorists are correct, then misallocation and under provisioning can be avoided through targeted demand management. An important upshot of this understanding is that social cooperation partially involves persons who are working for pay and persons preparing to work for pay. Persons provide for themselves through their collective efforts over the life course. Given the conditions for the hypothetical model under consideration, a demand shortfall implies that there are underutilized resources of equipment, material, and labor. Also, there are unmet needs, and opportunities are not increasing. These underutilized resources can be activated by the spending power of the state with properly targeted policies to employ people in paid work. That is, persons employed with a suitable full-employment policy can meet their own

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needs and increase their own opportunities and meet other people’s needs and increase other people’s opportunities over the life course. This is work done in social cooperation. That is, a single person cannot meet all of their own needs and provide all of their own opportunities. This self-provisioning through social cooperation by bridging demand shortfalls does not explicitly redistribute any goods that are currently owned by any person. Also, it does not involve the conscription of persons to perform any service. Rather, unused and underused material, equipment, and labor produce new goods, services, and public amenities. Many of these goods and services will be produced by private firms responding to the spending of those who are newly employed. If this is part of the demand management policies decided on, then there could be direct provision of traditional public amenities by the state: for example, education, public health, parks, safety, and transportation. Persons employed in a job guarantee will receive training and produce goods, services, and public amenities directly. In short, redistribution is not necessary to fulfill the minimal interests of persons. As discussed in Chap. 3, a state that issues its own nonconvertible currency will not need to tax to fund its spending. The main functions of taxation for a fiat currency issuing nation are to create demand for its currency and to help regulate the price level. The other functions of taxation (allotting benefits, regulating behavior, regulating inequality, and assessing the cost of use) can be performed at the same time. Accordingly, a tax policy can be developed that meets the particular requirements of the hypothetical scenario. The taxation only of persons who have large wealth holdings and high incomes may be ineffective if these wealthy persons are adverse to bearing such burdens. Even though the wealthy may have the greatest ability to bear the burden of taxation, such a usage of taxation may be ineffective to control the price level (Nersisyan and Wray 2021). A tax on wealth, a tax on land holdings over a certain size, or a progressive income tax can regulate inequality and drive the currency. But the use of such taxes may have little effect on controlling the price level since there are a few number of persons who are wealthy enough to pay these kinds of taxes. There may be no need for taxation to regulate the price level as the modeled economy is operating under capacity. But there could be capacity limitations in specific industries, so it is best to have an effective policy in place. As discussed by Yeva Nersisyan and L. Randall Wray, consumption taxes and payroll taxes will cover a large number of people within the

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economy (2021, 84). Thereby, these kinds of taxes will have the broad effect that a price level regulating tax should have. Nersisyan and Wray argue that the kind of tax that may be the most acceptable would be a payroll tax related to deferred compensation, such as for social insurance. This deferred compensation would be enjoyed as a future benefit. Thus, a deferred compensation payroll tax would allot benefits, help control the price level, and create demand for a state-issued currency. It is important to point out that such a broad tax would be in addition to self-provisioning through social cooperation. Persons activate real resources in social cooperation in order to fulfill their minimal interest. That is, persons bear the burden of fulfilling their own interests and the interests of others through social cooperation. Also, persons bear the burden of creating demand for a state-issued currency, providing for their own future consumption, and regulating the price level by paying a deferred compensation payroll tax. It is important to recall that persons pay for their own future consumption not by saving money. Rather, the real investment in research, caring, education, and infrastructure in the present will allow for future consumption. A current payroll tax helps to stabilize the price level by removing current spending. This removed spending thereby allows for spending on goods and services that will only be consumed sometime in the future, such as homes for retirees, medical treatments, or schooling. Even though there is no direct redistribution in this model, there will be a change in the relative distribution of personal income and wealth and in access to various public amenities. In particular, there will be a narrowing of the range of inequalities in income and an increase in the enjoyment of in-kind goods. The full-employment regime is focused on fulfilling the minimal interests of persons. But all persons in society will enjoy expanded production of privately enjoyed goods and services and newly constructed public goods and public amenities. The most pronounced effects will be for those who do not have their minimal needs and opportunities met. But others who already have their minimal needs and opportunities met will benefit too. For example, all persons will enjoy improved infrastructure, newly built or refurbished leisure spaces, improvements in public health, expanded educational opportunities, and increased work options. Private firms and public agencies will have access to an expanded supply of trained, educated, and healthier workers. Also, private firms and public agencies will benefit from improvements in infrastructure systems.

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The indirect effects of the policies of a full-employment regime will be enjoyed by all persons in the aggregate as incomes are raised and, possibly, positive externalities are produced. Persons not employed in a job guarantee or receiving transfers will benefit from the indirect effects of these policies through the multiplier effect. If the policies of a full-employment regime produce positive externalities, then these positive externalities can improve the lives of third parties. For example, positive externalities can be realized with improvements in health, education, and mobility. A full-employment regime provides mutual advantages for all of its members in respect to the fulfillment of the minimal interests of persons. More private goods and services are produced, and more public amenities are provisioned. All persons enjoy the public amenities, whether they work in the job guarantee or not. Also, all persons can enjoy an increase in the production of private goods and services. A full-employment regime will narrow inequalities by fulfilling the minimal interests of all persons. Those whose minimal interests are currently unmet will be the largest beneficiaries. But all persons will receive benefits from an expanding economy and the direct and indirect effects of a full-employment regime’s policies. Thereby, the policies of a full-employment regime improve the condition of all persons in respect to the minimal interests of persons. The improvement in the position of those with less advantages is in respect to the minimal standard. No redistribution of assets has occurred. The change of relative position of particular persons may shift because of these policies. And there will be changes in the amenities enjoyed, income received, and the values of privately held assets. If the minimal standard is realized, then all persons will enjoy at least a baseline living standard set by the minimal standard. No matter the changes in the distribution, the result will always be that all persons enjoy a set of outcomes at or above the level of the minimal standard. The more advantaged have reasons to accept the policies implemented in a full-employment regime because these policies can assist them in their pursuit of their good. If the more advantaged are considered as the best placed to take advantage of the changes brought about by the policies of a full-employment regime, then the more advantaged could substantially gain from these policies. Why this is the case can be conceived of in two senses: developed talents and historical advantages. If the more advantaged have talents developed through training, then they are best able to take advantage of new opportunities. Also, the more advantaged can have advantages because of their personal history, such as their occupation,

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personal connections, or their accumulated property. Thereby, the more advantaged are well placed to enjoy changes in the economy brought about because of the policies of a full-employment regime. These potential gains for the more advantaged means that they have reasons to endorse the policies of a full-employment regime. The more advantaged will neither lose out in their economic position in respect to the minimal standard nor their advantages of talent and history be transferred from them. But this does not mean that the inequalities of opportunity that exist between the least advantaged and the more advantaged have been eliminated to a degree that is acceptable to people who hold the democratic aspiration of equality. This issue, what is acceptable to people who hold the democratic aspiration of equality, is part of the critique of the minimal standard and hypothetical regime that is conceptually built to examine it. This critique will be finalized in the next chapter. In review, the policies of a full-employment regime will meet the minimal interests of all persons. Those who currently do not have their minimal interest met will have the largest benefit from the policies. Persons with more advantages will gain directly and indirectly from these policies. All persons will benefit from the policies of a full-employment regime either through the job guarantee, the production of new or refurbished public amenities, or through the increased production of goods and services by private firms, private associations, or public agencies. That is, a full-employment regime’s policies are mutually advantageous. But even if the policies of a full-employment regime are acceptable to both those with more and those with the least advantages, this does not mean that these policies are the most acceptable. In short, the full-employment regime model is developed to clarify the demands of distributive justice according to the most rigorous democratic standard of the democratic aspiration of social and political equality. In the next chapter, I will show the normative limits of the policies of a full-employment regime.

4.6  How Is the Minimal Standard Distinctive from Traditional Distributive Justice? The minimal standard is developed as a unique alternative to traditional distributive justice models. As will be argued in the next chapter, the policies that realize the minimal standard can be utilized as a thought

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experiment to conceptualize a transition from a full-employment regime toward a society where the most acceptable distributive standard of all known standards would be realized. The hypothetical of a full-employment regime allows for modern persons to conceptualize and clarify their democratic ideals. Politics does not provide opportunities for actual experiments in the world. As such, one of the functions of political philosophy is clarification of hypothesized social structures that persons can conceive of as fulfilling their ideals. This can only be done with a philosophic thought experiment with the aid of the sciences. This use of ideal theory allows for a discussion of the unique advantages of the minimal standard and the ideas of modern money theory for political philosophy. As shown above, the realization of the minimal standard can be brought about through the spending power of a state that issues its own nonconvertible currency. This allows for minimal needs and minimal opportunities to be fulfilled for all persons with no explicit and intended redistribution. This insight is unique in respect to most traditional theories of distributive justice. This section will discuss four theories to demonstrate this point. The work of two authors, Ronald Dworkin and G.A. Cohen, will be considered to show the standard position of distributive justice theory. Whereas the work of John Rawls and the work of Jean Drèze and Amartya Sen will be considered to show that the insights of modern money theory have been anticipated to some degree by them. Nevertheless, it is representative of much of the contemporary distributive justice literature to model the macroeconomy with resource use at full utilization and to consider that those with greater advantages are the only source for meeting the interests of the least advantaged through redistribution. For references beyond Cohen and Dworkin consider the work of Liam Murphy and Thomas Nagel (2002, 181–184), Philippe van Parijs (1991, 122–125), and Robert Nozick (1974, 170). Also, see the work of William Mitchell and Martin Watts (2005) for a presentation that has several similar features to the one I develop below on macroeconomic assumptions. For simplicity, I will discuss the interest of persons as the previously defined minimal interests. The assumption of the full utilization of an economy’s resources is a perfectly cogent modeling of particular problems. But this assumption is not representative of most macroeconomic situations where the full utilization of resources does not occur because of demand shortfalls. If demand shortfalls can exist, then restricting distributive justice analysis only to models where full utilization occurs limits the

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scope of analysis. If the macroeconomy operates at full utilization, then resources must be redistributed in order to fulfill a distributive standard that is not currently met. In respect to the spending power of a state that issues its own nonconvertible currency, there are no resources to activate in such a situation of modeled full utilization. But the state could use its taxation powers to redistribute real and nominal wealth claims to fulfill a distributive standard. Below, the distributive justice ideas discussed by G.A.  Cohen and Ronald Dworkin are clear and relevant for modeled situations that assume the full utilization of resources. But if such situations are not exhaustive of potentially instructive distributive justice models, then they are not the definitive casting of distributive justice problems and solutions. As such, the presentation here is not a criticism of Cohen’s and Dworkin’s philosophical analysis. Rather, I put their ideas in comparison with the assumptions used to develop the full-employment regime model to gain a broader view of distributive justice problems. As with all philosophic concerns, it is up to readers to judge what assumptions, ideas, and models provide the most clarification. I will consider only a small portion of the groundbreaking work of G.A.  Cohen. Here the basis of my presentation is one of Cohen’s final works, Rescuing Justice and Equality. In the first part of this work, Cohen considers the cogency of a standard incentive argument; if one wishes for the more advantaged to provide the greatest output, then they cannot be taxed too much for the support of those with lesser advantages (Cohen 2008, for a specific instance see 59). Cohen casts this incentive argument as a dilemma: either society can tax the most advantaged less and get greater output from them or it can tax the most advantaged more and get less output from them. Another way of casting the dilemma is between a society that is wealthier in the aggregate with less support for the least advantaged and a society that is less wealthy in the aggregate with more support for the least advantaged. Cohen is interested in examining if these incentive arguments are true and if the results are morally justified. I will focus on considering what are the macroeconomic assumptions of Cohen’s distributive dilemma. The dilemma assumes three important features: all resources are activated, the only resources that can be redistributed are from the most advantaged, and only the most advantaged are a source of productive goods and services. There are cogent reasons to find that the first and second assumptions do not always hold, and the third assumption holds only in exceptional circumstances.

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Beginning with the third assumption, the most advantaged are the only source of productive output, would appear to apply only in distributive situations involving persons who can work and those who cannot, such as the very young. In scenarios that are more commonplace, there are diverse sets of skills held by a large number of people which produce a vast range of goods and services. Thereby, the assumption that only the most advantaged can provide productive goods and services is an inaccurate description of actual social cooperation. The second assumption, only the most advantage have resources that can be redistributed, would apply only to the most unequal of distributions. This would be a situation where a vast majority of persons are at the absolute subsistence level and a very small portion of persons own all other resources. Also, this assumption would only apply for models that do not take a time-based view. That is, if one takes time into account, then there can be the production of new resources. But the modeling of immediate distributive situations is useful. This does correspond to certain situations, such as dire survival circumstances. Nevertheless, the modeling of only immediate distributive options does not exhaust the plausible range of modeling scenarios. The first assumption, the macroeconomy is operating at full resource utilization, does not have to be the case. As discussed in Chap. 3, it appears that the macroeconomy can persistently operate at less than the full utilization of resources. If the macroeconomy is not operating at full utilization, then there are unused resources that can be activated in order to fulfill the minimal interests of persons. Now I will show that Cohen’s dilemma is not an accurate approximation of all distributive justice problems. I will pose an alternative version of Cohen’s problem using the assumptions of the full-employment model. The problem, which is approximate to Cohen’s rendering of the problem, is that there is a shortfall in meeting the minimal needs of all persons. The following assumptions will be held: the macroeconomy is not at full utilization, both those with the greatest advantages and those with the least advantages provide productive output, and a state issues its own nonconvertible currency. If these assumptions are used, then the state can purchase goods, services, and labor to meet the minimal needs of all persons. There does not have to be any redistribution from one person to another. Also, additional use of taxation, if any, will be used primarily to control the price level. There is no reason to tax the most advantaged under these assumptions.

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This contrast between different macroeconomic assumptions shows that these alternative assumptions clarify distributive justice topics. Cohen’s assumptions are cogent, and his analysis of the plausibility of incentive arguments is illuminating. Nevertheless, there are good reasons to consider his approximation of distributive justice problems to be limited in their range of application. An appraisal of the distributive justice ideas of Ronald Dworkin can show a similar clarification. Dworkin developed a novel redistributive scheme based on hypothetical insurance markets (2000, 106). These insurance markets would emulate a close to equal distribution of resources by allowing persons to insure themselves against disadvantage. The average outcomes for this insurance model would be a rough balancing between those who are more advantaged and less advantaged. The first central macroeconomic assumption used by Dworkin is that all resources are utilized. This is the case since the desirability of insurance markets for the disadvantaged are premised on nonavailability of resources for use. These hypothetical markets become less desirable if the economy operates below capacity. Second, Dworkin considers the macroeconomy to not be technologically dynamic with resulting productivity gains. This assumption by Dworkin is a vision of an economy that is cogent for short-term considerations of distributive problems. If the economy is at capacity and nondynamic, as assumed by Dworkin, then any disadvantages that persons endure have to be rectified with redistribution. If these two assumptions are held, then the hypothetical insurance markets are rational to choose given that persons do not know the outcome of their life course. As argued above in respect to Cohen, these assumptions about the macroeconomy used by Dworkin are cogent. And they are rather instructive as to why it is rational to accept redistributive schemes that insure persons against loss. But if these assumptions are changed, then the role of insurance markets for the disadvantaged becomes less clear in their purpose. I will show why this is the case by using the three assumptions of the full-employment regime model again: the macroeconomy is not at full utilization, the most advantaged and the least advantaged provide productive output, and a state issues its own nonconvertible currency. If the state can purchase goods, services, and labor, then the potential losses for both the less advantaged and the more advantaged can be decreased. This will be achieved by employing persons to provision their own and others’ needs and build the conditions for increasing opportunities. This dynamic

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activation of resources by using the spending power of the state involves no redistribution from the more advantaged to the less advantaged. Nevertheless, in the circumstances of the full-employment regime, there is a place for insurance schemes. But their role is not to address disadvantage on their own. Rather, insurance, whether private or social, is an additional policy mechanism to meet minimal needs and increase opportunities. In short, Dworkin’s distributive justice model provides insights into distributive problems under particular assumptions about macroeconomic conditions. Altering these assumptions provides a different framework to analyze, which allows for new ways of considering the problem of disadvantage. Both views are philosophically valuable, as they allow for a fuller consideration of distributive justice problems and solutions. These brief overviews of Cohen and Dworkin’s macroeconomic assumptions provide a demonstration of a common position within the contemporary distributive justice literature. As discussed, these overviews are not intended as criticisms of the distributive standards developed. The arguments developed by Cohen and Dworkin are rather effective in considering problems of distribution in an economy at full utilization. This assumption is cogent, but it does not best picture the common conditions of the macroeconomy. Even if the assumption of full utilization of resources is commonplace, it is not held universally among contemporary political philosophers. Two sets of authors that do consider the possibility of an economy not operating at full capacity are John Rawls and Jean Drèze and Amartya Sen. As I discussed in the second chapter, Rawls’s main focus is to argue what is the most acceptable conception of justice for persons who conceive of themselves and others as free and equal. As I will show at greater length in the next chapter, Rawls is concerned that forms of economic inequality may prevent persons from being able to engage in social cooperation as free and equal persons. Rawls argues that redistribution of resources has to be taken into consideration in order for the conception of justice as fairness to be realized. Even with this concern with redistribution, Rawls does identify the need for demand management and full-employment policies (Rawls 1996, lix, 1999, §43, 2001, §53.2). Thus, there is an underdeveloped framework within Rawls’s writings that can be potentially built into a more nuanced distributive justice standard where multiple assumptions of the macroeconomy are considered. Even with these possibilities present in Rawls’s work, they are not fully developed by Rawls into a range of policies. On a related note, my analysis of Rawls is a change in my

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understanding of his work. In an early version of the arguments developed in this book, I argued that Rawls did not sufficiently identify the need for demand management and full-employment policies (Holt 2017). My earlier understanding of Rawls’s consideration of the need for demand management and full-employment policies was mistaken. In this book, I begin to provide a dynamic and theoretical account of distributive justice standards that, I hope, expands the range of what Rawls and others develop. Accordingly, it may be the case that a much broader set of distributive standards are possible that are related to each other. As I will argue in the next chapter, these are not equivalent proposals. But they can be understood as proposals that serve two conceptual functions. One, they provide greater clarity regarding the desirability of conceptions of distributive justice. Two, they provide developmental possibilities for conceptualizing and clarifying democratic social change. These two functions of the related proposals will be explored in the next chapter. Jean Drèze and Amartya Sen in their work Hunger and Public Action consider how fluctuations in output, prices, and employment can adversely affect people’s ability to gain essential goods. This is called entitlement failure (Drèze and Sen 1989, 22). Hunger and Public Action is primarily an empirical work analyzing the role of the state and civil society in avoiding and rectifying entitlement failures. Nevertheless, the work of Drèze and Sen is a useful contribution to the philosophic literature on distribution. They show how nations have attempted to prevent famines and correct basic health deprivations. Their work takes demand shortfalls and coordination failures between goods markets, labor markets, and consumers into account. As part of their analysis, they document the use of public employment as a means to protect entitlement satisfactions (Drèze and Sen 1989, 113–161). Also, they document developing nations’ direct provision of food, basic health care, and education (Drèze and Sen 1989, 226–253 and 270). Drèze and Sen’s documentation and analysis provides real-world examples of public interventions that provide new avenues for thinking about distributive justice.

4.7   Chapter Review In this chapter, I show the following. First, I develop a distributive justice standard that seeks to fulfill the minimal interests of persons as a moral concern. I assume in modeling this standard that demand gaps exist and not all resources are fully utilized. If this is the case, then the minimal

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interests of persons can be fulfilled without explicit redistribution. Second and in order to show the unique contributions of the above, I analyze the distributive justice theories of G.A.  Cohen and Ronald Dworkin. This analysis shows that it is common within the contemporary distributive justice literature for there to be a macroeconomic assumption that resources are at full utilization. This assumption is perfectly cogent for considering a specific kind of distributive situation. But I argue that this assumption limits distributive justice analysis to only a redistributive solution of resources from the most advantaged to the least advantaged. If the assumption that the macroeconomy is not at full utilization of resources is held, then the meeting of minimal needs and the increasing of minimal opportunities are possible without the use of redistribution. This insight, which modern money theory provides, is an important addition to the distributive justice literature. It does not replace the clarifying work that has developed over the past century. But it does provide alternative frameworks for conceptualizing distributive justice problems. In short, the distributive justice theory of minimal interests modeled in the full-­employment regime scenario provides a framework to extend the range of distributive justice analysis. The theory of minimal interests does this by considering alternative macroeconomic assumptions. The dynamic and developmental importance of these assumptions will be explored in greater detail in the next chapter.

References Cohen, G.A. 2008. Rescuing Justice and Equality. Harvard. Drèze, Jean, and Amartya Sen. 1989. Hunger and Public Action. Oxford. Dugger, William M., and James T.  Peach. 2009. Economic Abundance: An Introduction. Routledge. ———. 2013. Abundance Denied: Consequences of the Great Recession. Journal of Economic Issues 47 (2): 351–357. Dworkin, Ronald. 2000. Sovereign Virtue. Harvard. Holt, Justin P. 2017. Modern Money Theory and Distributive Justice. Journal of Economic Issues 51 (4): 1001–1018. Mitchell, William, and Martin Watts. 2005. A Comparison of the Macroeconomic Consequences of Basic Income and Job Guarantee Schemes. Rutgers Journal of Law & Urban Policy 2 (1): 64–90. Murphy, Liam, and Thomas Nagel. 2002. The Myth of Ownership: Taxes and Justice. Oxford.

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Nersisyan, Yeva, and L. Randall Wray. 2021. Can We Afford the Green New Deal? Journal of Post Keynesian Economics 44 (1): 68–88. Nozick, Robert. 1974. Anarchy, State, and Utopia. Basic Books. Rawls, John. 1996. Political Liberalism, Paperback Edition. New York: Columbia University Press. ———. 1999. A Theory of Justice. Revised Edition. Cambridge, MA: Harvard University Press. ———. 2001. Justice as Fairness: A Restatement. Cambridge, MA: Harvard University Press. Van Parijs, Philippe. 1991. Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income. Philosophy & Public Affairs 20 (2): 101–131.

CHAPTER 5

What Are the Useful Limits of Modern Money Theory for Distributive Justice?

Abstract  The purpose of this chapter is to present and discuss a distributive justice standard that exceeds the minimal standard of Chap. 4. This new standard will be based on an adaptation of John Rawls’s work. The focus of this adaptation will be a consideration of what is a democratic society and what constitutes full participation in a democratic society. Also, it is shown that the use of modern money theory provides a framework for mediating distributive conflicts. In order to show this, the following conjecture is developed: the use of the policies of demand management and suitable full employment to meet the minimal standard may make it more likely to realize Rawls’s conception of justice. This conjecture is based on two assumptions. One, these policies may help mediate social conflict over material goods. Two, these policies may encourage the acceptance of kinds of social organization that foster support for the ­democratic aspiration of social and political equality. Keywords  Political philosophy • Modern money theory • Ideal theory • John Rawls

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_5

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5.1   Introductory Comments on Equality and Distributive Standards A society that is intuitively attractive to persons of the modern world can be developed using the insights of modern money theory. But this intuitively attractive society falls short of the most acceptable political philosophic standards for persons who hold the democratic aspiration of social and political equality. In shorthand form, I have occasionally called this aspiration the democratic aspiration of equality in previous chapters. It is a notion that people are politically and socially equal because they have roughly equal capacities of intellect. In this chapter, I will take these considerations into account to develop a conjecture about convictions and liberal democratic egalitarianism. I will argue that the possibility of a society that meets the most acceptable standards for people who hold the democratic aspiration of equality is dependent on persons having a conviction to seek such a society. That is, persons must decide that they should create, maintain, and refine their social institutions to meet the standards that are the most acceptable to persons who hold the democratic aspiration of equality. In this chapter, I will present a distributive justice standard that exceeds the minimal standard of Chap. 4. This new standard will be based on an adaptation of Rawls’s work. My focus in this adaptation will be a consideration of what is a democratic society and what constitutes full participation in a democratic society. This is stressed by Rawls in many locations, especially in the Preface to the Revised Edition of A Theory of Justice (1999, xv). Thereby, I seek to show that the importance of full participation of persons in political and social life is a fulfillment of the democratic aspiration of social and political equality. The Rawlsian standard of justice as fairness has more stringent demands that exceed the demands of the minimal standard. The achievement of the egalitarian society that meets the requirements of justice as fairness requires convictions for the mediation of self-interest. These convictions exceed the demands of a society based on the minimal standard. In order for the Rawlsian standard to be realized, I will argue that persons have to freely accept limits in the use of privately held property for political and social influence. As I show below, I am following Rawls in arguing for these limits. Persons must hold moral convictions that exceed what the minimal standard of distributive justice demands of us in order for the democratic aspiration of equality to be realized. Convictions to establish and maintain a justly ordered society are

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needed to meet the highest demands of distributive justice for a democratic society. This chapter will have the following parts. First, I will review Rawls’s conception of justice as fairness. Second, I will argue that justice as fairness is more acceptable to persons who hold the democratic aspiration of equality than the minimal standard. Third, I argue that it is important to understand the role of ideal political philosophic theories in achieving the democratic aspiration of social and political equality. Fourth, I show that the use of modern money theory provides a framework for mediating distributive conflicts. In order to show this, I forward the following conjecture: the use of the policies of demand management and suitable full employment to meet the minimal standard may make it more likely to realize justice as fairness. I argue for this based on two grounds. One, these policies may help mediate social conflict over material goods. Two, these policies may encourage the acceptance of kinds of social organization that foster support for the democratic aspiration of social and political equality.

5.2   Why Is Justice as Fairness the Most Acceptable Distributive Justice Standard? In this section, I will show that justice as fairness is the most acceptable distributive justice standard for persons who hold the democratic aspiration of equality. This section builds on many of the ideas introduced in the short overview of Rawls’s work in Chap. 2. In particular, I will seek to show that the distributive justice standard of justice as fairness is the most acceptable since it requires that all persons are able to be fully participatory members in social cooperation. Rawls argues that if the two principles of justice are fulfilled, then persons can be fully participatory members of their society. Rawls shows this outcome through his presentation of the economic regime that he calls property-owning democracy. That is, the institutions of a property-owning democracy allow for all persons to be full participants in social cooperation. This is the case since persons who are able to be full participants in social cooperation enjoy the realization of the two principles of justice as fairness in their society. In this section, I will show the following. First, I will provide a brief review of the institutions of a property-owning democracy. Second, I will show that these institutions allow for the realization of the two principles

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of justice as fairness. Finally, I will argue that if persons agree with the democratic aspiration of equality, then these persons must rationally accept justice as fairness as the most acceptable distributive standard. It is good to note that Rawls argued that justice as fairness is the most acceptable standard of distributive justice within the range of all known conceptions of justice. Rawls shows this in several locations (Rawls 1999, chapter III, 2001, part III). This is the case since there is the possibility that new conceptions of justice and new distributive standards can be developed. I argue that justice as fairness is the most acceptable standard of distributive justice based on the aspiration of equality. This is a slight adaptation of Rawls’s arguments. The institutions of a property-owning democracy are the wide dispersal of property and the general acquisition of education (Rawls 2001, §42.3). The wide dispersal of property is maintained by a system of inheritance taxation, gift taxation, and a progressive income tax (Rawls 2001, §49.4). Tax rates are set to encourage the wide dispersal of property. For example, at the end of a person’s life their property would be widely distributed when the tax structure encourages dispersal of property in small amounts (Meade 1993). Thereby, persons would disperse their property widely in order to distribute their property as they wish. The general acquisition of education would be provisioned through state spending and subsidies (Rawls 1999, §43). The purpose of this education is to assist all persons in the development of their two moral powers (Rawls 1999, §17). It is important to note that Rawls recommends taxation on consumption to fund state spending (Rawls 2001, §49.4). But a consumption tax is not necessary to fund spending by a state that issues its own non-convertible currency. Nevertheless, a consumption tax would be effective in helping drive demand for a state-issued currency and regulate the price level as it would encourage saving instead of spending. A consumption tax could be set above a certain amount of spending, and particular kinds of consumption could be tax exempt. These institutions, the wide dispersal of property and the general acquisition of education, promote full membership in social cooperation in two ways. One, the wide dispersal of property prevents a wealthy elite from controlling the economic, social, and political life of society (Rawls 2001, §41.4). Two, the general acquisition of education prepares all persons to understand the political, cultural, humanistic, and scientific components of their society; to participate in social organization; and to develop a conception of the good (Rawls 1999, §17, 2001, §47.4). Thereby, these

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institutions of a property-owning democracy attempt to promote the full membership of all persons in social cooperation. This is achieved in a negative and a positive sense. This is done negatively by preventing a wealthy elite from dominating social organization. This is done positively by ensuring that all persons are able to acquire the knowledge and skills to understand the organization of society and to participate in its operation. If Rawls’s considerations are correct, then the institutions of a property-­ owning democracy promote the full membership of persons in social cooperation. Thus, these institutions of a property-owning democracy fulfill the fundamental interests of persons to be free and equal persons: to hold a sense of justice and to pursue a conception of the good. As such, persons can develop and maintain their two moral powers in the widest possible sense if the two institutions of the wide dispersal of property and the general acquisition of education exist. This can be shown in greater detail by considering how the institutions of a property-owning democracy realize the two principles of justice as fairness. First, the two institutions allow for basic liberties to be enjoyed by preserving the equal worth of liberties (Rawls 2001, §45). If politics is not dominated by a wealthy elite or a coercive majority, then persons are able to engage in the political process on a footing of equality. Also, the reception of an education on the political structure and the culture of one’s society allows for all persons to enjoy their basic liberties. This education enables persons to understand the political process and what has historically been politically and culturally important. In addition, an education in the humanities and sciences allows for persons to understand, in respect to politics, theories, and the natural basis, the social and psychological structures of the world (Rawls 1999, §17, 2001, §47.4). Constitutional democracies are orchestrated by persons through their reasoned deliberations. An education of political structure, culture, humanities, and science provides the means for persons to engage in reasoned deliberation. In addition, understanding moral philosophy and political and cultural history provides reasons for why the protections of a constitutional democracy for minorities are rationally desirable. Second, the two institutions of a property-owning democracy allow for the realization of fair equality of opportunity in two ways. One, the broad distribution of property prevents the compounding of arbitrary advantages through inherited property. Persons will always enjoy advantageous family circumstances based on the characteristics of their family members

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and their family’s acquaintances. But it becomes less likely that unequal opportunities will develop when the redistributive policies of a property-­ owning democracy are used. Two, the general acquisition of education allows for persons to enjoy roughly equal conditions to develop trained abilities. Thereby, the two institutions of a property-owning democracy provide for fair equality of opportunity when taking natural abilities and the propensity to cultivate them into account (Rawls 1999, §12). Third, the two institutions of a property-owning democracy allow for the inequalities that obtain to be to the greatest benefit for the least-­ advantaged members of society, which is the difference principle. The least advantaged benefit from a wide dispersal of property in two ways. One, all persons, no matter their abilities, enjoy ownership of personal and private property. Two, the widespread ownership of property prevents the creation of large inherited fortunes. If inherited fortunes disrupt the full participation of all persons in social cooperation, then the least-advantaged members of society would be less likely to enjoy the greatest benefit (Rawls 2001, §38.4 and §41.4). The least-advantaged members of society would receive the greatest benefit from the general acquisition of education in three ways. One, they would be able to develop their trained abilities to participate in social cooperation. If all persons have access to education, then there will not be an excluded class of persons because of unequal educational opportunities. Two, the least advantaged would benefit from the education and training of others. The goods, services, and ideas produced by others in society with the general acquisition of education would be greater than in a society that did not seek to educate and train all of its members. Thereby, a property-owning democracy is more desirable for the least-advantaged members as it provides for the general acquisition of education and training for all of its members. The least-advantaged members of a society have the most to gain in a society of educated persons. Three, the general acquisition of education provides people with the all-purpose means to develop a conception of the good (Rawls 1999, §17). Now I will argue that justice as fairness is the most acceptable distributive standard. Justice as fairness, as realized in a property-owning democracy, is the most acceptable distributive standard for persons who hold the democratic aspiration of the social and political equality of all persons. That is, all persons can only be free and equal persons in their society if there are no barriers that prevent them from full participation in social cooperation. The kinds of barriers that can exist are indicated by the two

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principles of justice. First, full participation of persons in social cooperation can be frustrated by the absence of equal liberties and their fair value. Second, there is the possibility that class position will prevent fair opportunities from being enjoyed. Third, economic inequalities can prevent the least advantaged from being full-participatory members in society. Any social scheme that does not allow for the full participation of all persons in social cooperation falls short of the democratic aspiration of social and political equality. If a social scheme does fall short, then this means that not all of the members of this society are full-participatory members. The prospects of their lives are determined by majority rule, class position, or the most advantaged. This is an unacceptable result based on the democratic aspiration of equality. As such, justice as fairness, given all known conceptions, is the most acceptable conception of justice for persons who hold the democratic aspiration of equality. In addition, the distributive justice standard that follows from justice as fairness is the most acceptable distributive standard.

5.3   Why Is the Minimal Standard Insufficient? Now I will compare the distributive justice conceptions of justice as fairness and the minimal standard. Why I make this comparison is to show that a more demanding egalitarian distributive justice standard is needed to fulfill the democratic aspiration of equality. There are several important results shown when I make this comparison of these two standards. First, the minimal standard, the distributive standard of the full-employment regime, is insufficient to meet the ideals of democracy. Second, the conception of the person used to construct the institutions of a full-­ employment regime is an inadequate conception of a person who is a member of a democracy or aspires to democratic institutions. Third, egalitarian economic institutions are needed in order to fulfill the conception of a person that is suitable for a democratic society. In order to show the above, this section will have the following parts. First, I will review the interests and institutions of the minimal standard and justice as fairness. Second, I will compare the two sets of interests. Third, I compare the two sets of institutions. Fourth, I will argue that the interests and institutions of justice as fairness are more desirable for persons, given the democratic aspiration of equality. Fifth, I will argue that an egalitarian and redistributive economic regime is the most desirable for persons who hold the democratic aspiration of equality.

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5.3.1   Review of the Two Standards In review, I will consider two distributive standards: the minimal standard and the distributive standards of justice as fairness. Both standards are composed of a set of assumptions about the interests of persons. In turn, these interests of persons are used to select the kind of social-economic institutions that fulfill these interests. The interests of persons assumed within the minimal standard are that persons are interested in seeking their good and the minimization of conflict with others seeking their good. These minimal interests of persons are fulfilled by meeting the minimal needs and minimal opportunities of persons. A full-employment regime has social-economic institutions that fulfill the minimal interests of persons. The institutions that are implemented in a full-employment regime are state-led spending for demand management and the purchase of goods and services, a job guarantee for the maintaining of suitable full employment, and regulation and arbitration to minimize conflict and maldistributions. The purpose of these institutions is to meet persons’ minimal needs (sufficient nutrition, public health, public safety, a livable environment, fundamental health care, climate appropriate housing, and climate appropriate clothing) and to increase opportunities (movement, education, work, and leisure). When these needs are met and these opportunities increased, then the minimal interests of persons are fulfilled. This is done in several ways. One, state spending helps close the demand gap, which results in incomes being increased in the aggregate. Two, the purchase of goods and services provides in-kind amenities and money incomes. Three, suitable full employment is provisioned with a job guarantee. Four, the state provides regulation and arbitration services to facilitate persons pursuing their conception of the good and to minimize conflict between persons in their pursuit. In the conception of justice as fairness, the fundamental interests of persons are to be free and equal persons. Free and equal persons have two moral powers: a sense of justice and a conception of the good. These fundamental interests are fulfilled when the two principles of justice are enjoyed. In shorthand form, the two principles are composed of equal basic liberties, fair equality of opportunity, and the difference principle. When the two principles fulfill the fundamental interests, then persons are able to be free and equal persons. This is the case because equal basic liberties protect the capacities of persons to pursue a conception of the good

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and have a sense of justice. Fair equality of opportunity minimizes the class distinctions of birth that prevent persons from having an equal chance of taking advantage of opportunities. Finally, the difference principle requires that the greatest benefit for the least advantaged is for them to be able to be full participants in social cooperation. The economic institutions that would realize the two principles are those of a property-owning democracy. These institutions are the wide dispersal of property and the general acquisition of education. These institutions provide for all persons to be fully participatory members in two ways. First, the general acquisition of education enables persons to understand the politics and culture of their society and to participate in social cooperation. Second, the wide dispersal of property prevents a wealthy elite from controlling politics and the economy. These institutions would promote the full participation of all persons in social cooperation. 5.3.2   Comparison of Interests A comparison between the minimal interests of the minimal standard and the fundamental interests of justice as fairness will demonstrate why a conception of the person must conceptually realize the democratic aspiration of equality. In review, the democratic aspiration of equality is a notion that people are politically and socially equal due to having roughly equal capacities of intellect. Thus, persons have the capacity to be equal participants in political and social life. This aspiration is also a response to the kinds of social and political exclusions that have existed within political and social life. Accordingly, an aspiration for social and political equality is a theoretical response to persons’ rough equality of capacities and a practical response to eliminate or prevent social and political exclusions. I will use the potential for the democratic aspiration of equality to be conceptually realized so as to compare the desirability of minimal interests and fundamental interests. Both conceptions of the person, minimal and fundamental, have to address the democratic aspiration of equality. A conception of the person has to address the democratic aspiration of equality to be cogent and reasonable for modern persons. In order to show that the fundamental conception of persons is a more suitable conceptual realization of the democratic aspiration of equality than the minimal conception, I will first examine what the minimal conception entails in respect to social and political exclusions. The minimal conception holds that it is in the interests of persons to be able to pursue

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their conception of the good with minimal interference. But the minimal standard does not require that persons have equal chances to pursue advantages and that they have an equal chance to influence public life. Indeed, the minimal conception has no requirement of equality of social and political standing. Persons who are excluded from social and political life can have their minimal needs met and have increasing opportunities, but this does not entail that persons are social and political equals who can fully participate in the organization of their societies. I will consider what I call the private life argument in order to show the undesirability of a situation where persons have their minimal interests fulfilled but are excluded from equal engagement in social and political life. The private life argument holds that social and political exclusions are normatively allowable if persons can pursue their conception of the good in their private lives. This is, at first approximation, a desirable state of affairs since persons can create their own private communities and associations where they seek their goods with their compatriots. But this outcome can be mistaken as a reasonable position as it is easily confused with the freedoms of conscience, thought, movement, and affiliation. I will show below that this is not the case. The private life argument disavows the necessity of full participation in the social life of all persons as equals. Rather, it holds that inequalities are acceptable in public life as long as one’s private life is secured. But this is impossible since, ultimately, the securing of a private life is dependent on equal participation in public life. The private life argument has three problems. First, the private life argument has a personal bias; it cannot be turned into a public norm. It essentially holds that what is the greatest good for all persons is a private life that cannot be affected by public life. But this is not the case. Many persons find their engagement in public life to be what they hold as their good or a part of their good. Second, the private life argument does not consider the importance of public equality to achieve one’s conception of the good. For example, all persons have access to education and movement, but not to the same extent as the most advantaged. Thereby, all persons may be unable to engage in the kind of private life they wish because of their exclusion from particular amenities. Third, the private life argument is unstable as it is based on the good will of those who control our social and political lives. A world of stable private lives is dependent on those who control political and social institutions maintaining this situation. If the excluded have no equal standing publicly, then they cannot effectively petition to defend or refine the resources they do have access

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to. Essentially, those without equal standing are political subjects; they are not full-participatory members in social cooperation. Rawls argues that free and equal persons can only exist if there is a sense of justice held by persons generally that seeks the full participation of all persons in social cooperation (Rawls 1999, §72). The minimal standard does not conceptually realize persons as free and equal. It holds as valuable increases in persons’ abilities to seek a conception of the good, but it does not take the effects of a class society, inherited advantage, or majority rule into account. These social and political dynamics affect the possibility for persons to be fully participating members of their societies. The minimal standard can be augmented to include a set of political liberties and rights. But such an augmenting will result in the minimal standard essentially becoming justice as fairness. I find that there are two arguments that can attempt to avoid the necessity of converting the minimal standard into justice as fairness. First, one has to show that a class society, inherited advantage, and majority rule do not prevent persons from becoming full participants. Second, one has to give up the requirement that persons should be full participants as free and equal citizens. Both arguments are not sound. The former argument is contrary to historical experience, and the latter argument is contrary to the democratic aspiration of social and political equality. In short, these arguments are not acceptable to modern persons who hold the democratic aspiration of equality. In review, the desirability of the minimal conception is based on an unrealistic and unstable notion called the private life argument. As such, the minimal conception does not address the democratic aspiration of equality and the history of political exclusion. 5.3.3   Comparison of Institutions The institutions that are used in each respective distributive justice standard will again be considered in light of the problem of exclusion. The institutions of the minimal standard are demand management with state spending on goods and services, a suitable full-employment policy, and a structure for regulation and arbitration. The institutions of a property-­ owning democracy are the wide dispersal of property and the general acquisition of education. In this section, I will focus on the exclusions of a class society to compare institutions.

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The exclusions of a class society are due to inequalities in the ownership of property. These inequalities are detrimental to full participation of all persons in social cooperation. First, large holdings of property that are concentrated in a few hands can exclude others from economic decision making by monopolization of production, distribution, and investment. Second, those who possess or benefit from large fortunes may be able to subvert the fair equality of opportunity. Third, people that possess large fortunes have the potential to outbid others for scarce goods that cannot be produced and that are in limited supply, such as land. Fourth, persons with large fortunes may be able to control, or at least dominate, the dissemination and production of information through media, research institutions, and educational institutions. Fifth, those who hold large fortunes may be able to exert inordinate control over politics through contributions to candidates and political parties. Now I will consider if the institutions of the two distributive standards can mediate these inequalities of a class society. The institutions of the minimal standard, the full-employment regime, will be considered first. These institutions do not mediate the holding of large fortunes directly. Taxation in the full-employment regime is primarily for price control. As such, taxation is focused on consumption and not property holdings. This means that there is not a mechanism to limit the size of such holdings. The institutions of a full-employment regime do focus on meeting minimal needs and increasing minimal opportunities. In particular, the expansion of opportunities for work, leisure, transport, and education would allow for persons to gain information and assemble with others. State spending can be used to shape and direct economic development that is under provisioned by private investments. Finally, the building of public amenities through state spending can build livable communities for all persons. Thus, the institutions of the minimal standard can act as a complement to private spending on scarce goods, such as land. But the institutions of the minimal standard do not provide for full participation in social cooperation because of a detrimental range of wealth inequalities in respect to political influence. As such, a full-employment regime is desirable, but it falls short of fulfilling the democratic aspiration of equality. In contradistinction, the institutions of a property-owning democracy are specifically developed to meet the modern democratic aspiration of equality. This is not an attempt at philosophic sleight of hand. Rather, the institutions of a property-owning democracy show the importance of egalitarian institutions in providing and maintaining the full participation of all

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persons in social cooperation. The two main institutions of a property-­ owning democracy, the wide dispersal of property and the general acquisition of education, confront the problems of a class society directly. This is most obvious in the effects of the wide dispersal of property. This maintenance of a roughly equal distribution of property prevents the creation of large inherited fortunes. This limitation in the concentration of property in a few hands prevents individuals or small groups from controlling politics, education, research, and the economy. Also, these egalitarian measures prevent opportunities from being hoarded by the few. Limiting the size of fortunes makes it less likely that individuals and small groups can outbid others on all scarce unreproducible resources. So, the wide dispersal of property would allow for the general building of communities and associations by all persons. The general acquisition of education is important in meeting the democratic aspiration of equality and addressing the problems of the modern world. Persons who receive such educations can be roughly equal competitors for scarce opportunities in social cooperation. The general acquisition of knowledge will allow for all persons to be full participants in a range of activities. This is the case as persons who lack knowledge of their societal institutions cannot effectively understand their operation. Also, persons who have no practical education cannot participate in the general productive activities of their society. This exclusion prevents them from engaging in the full range of social cooperation. Accordingly, the general acquisition of education is intrinsic to being a fully participating member of society. This education provides persons with the theoretical and practical training to engage in the tasks of societal operation. It is as important as the wide dispersal of property. In review, the institutions of the full-employment regime of the minimal standard are desirable as they fulfill minimal needs and opportunities. But they do not confront the problem of a class society where institutions and opportunities are controlled by a wealthy elite. The modern democratic aspiration of equality needs to be adequately fulfilled by a distributive justice standard. A property-owning democracy is directly constructed to address this modern aspiration.

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5.4   Why Is Justice as Fairness Desirable? The distributive standard of justice as fairness, realized in the economic regime of a property-owning democracy, is desirable since it seeks to meet the modern democratic aspiration of equality. This means that persons who are acquainted with the political and social egalitarianism of modern political philosophy and the problems of exclusion prevalent within modern history will be interested in justice as fairness as a distributive justice standard. How this can be the case given the large range of ideas, opinions, doctrines, and conceptions held by persons needs to be shown. This section will consider the reasons for persons to be interested in justice as fairness as the most acceptable distributive standard. Persons have reasons to support a public set of institutions that promote and preserve their capacity to be full participants in social cooperation. Here I review Rawls’s original position argument which shows that persons have reasons to promote the full participation of all persons in social cooperation. This argument shows how a limitation of what a person can know will shape their decisions and clarify concerns about public institutions. As was discussed in Chap. 2, the original position argument uses a thought experiment called the veil of ignorance to argue for the desirability of justice as fairness. This device is a hypothesized restriction of knowledge about one’s characteristics, one’s position in society, and the history and institutions of one’s society. That is, a person is conceived of as making decisions with no knowledge of what are their advantages or disadvantages, what they value, or the kind of society they will live in. The result of the veil of ignorance is that the hypothesized decisions that persons make cannot take their own particular advantages and disadvantages into account. This means they have no way to select rules that are to their particular benefit. Rather, they can only select social rules that are of benefit to all persons generally. This is to select rules that meet their fundamental interests as free and equal persons. As discussed above, the social rules that meet these interests are the principles of justice as fairness. I will consider in greater depth why this is a fruitful argument. The original position argument is in response to the impossibility of being able to determine principles of justice based on a concept of absolute value or an intuitionistic concept of value (Rawls 2001, §6.1). Rawls argues that there is no shared agreement on absolute or intuitionistic concepts. Accordingly, agreement must be established based on commonality between persons. Interestingly, the commonality that persons have is the

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modern condition of a pluralism of values that appear irreconcilable. All persons are in the same condition of unshared absolute or intuitionistic principles between them. But these persons all live together in the same societies and need each other to participate in social cooperation. Accordingly, they have a rational interest in creating and maintaining the conditions for full participation of all persons in social cooperation. Thereby, the interests of persons in the modern social condition are shaped by the modern democratic aspiration of equality. The argument of the original position addresses this aspiration by presenting an argument based on the modern commonality of persons. Thereby, justice as fairness is the most reasonable conception of justice given the importance of full participation in social cooperation in a social situation where persons hold irreconcilable conceptions of what is of absolute or intuitionistic value. Rawls’s later work Political Liberalism is devoted to this argument (1996). But persons can read a short version of this argument in Justice as Fairness (Rawls 2001, §11). Rawls’s argument is reliant on the condition that it is necessary for persons to make their own judgments regarding what they find to be good. In order for persons to make their own judgments about what is good, there must be social conditions that allow for persons to make these judgments. As such, there are reasonable limits to the sets of general rules that can be considered. These general rules include the requirements that persons need to be able to make decisions freely, equally, and in peace. These requirements are best expressed in the conception of justice as fairness, given all known conceptions of justice.

5.5  Egalitarianism and Redistribution Inequalities are desirable and allowable if they do not prevent anyone from being full participants in social cooperation. Also, an egalitarian distribution of property is desirable if it facilitates full participation in social cooperation. In this section, I consider why does the distribution of property affect whether or not the democratic aspiration can be realized? Above, this question has been addressed in various ways. In this section, this question will be reconsidered with a focus on egalitarian distributions. Inequalities of consumption are not a moral concern if all persons have sufficient resources to be full participants in social cooperation. Inequalities in the consumption of goods and services are morally allowable if this consumption does not prevent persons from being full participants in

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social cooperation. It is not the appearance, scope, or uniqueness of consumption in itself that is at issue. Consumption of particular kinds or amounts may strike certain persons as being in bad taste, but taste is not at issue here. Rather, it is the availability of resources for persons to be full participants that is the concern. This conclusion would hold whether society was operating at full utilization of resources or not. Thereby, consumption that is commonplace, does not violate our mores, and fully utilizes available resources can be problematic if this use of resources prevents full participation. If this is the case, then redistribution in the use of resources is necessary to allow for all persons to be full participants. Again, the concern is the general availability of opportunities for all persons to be able to be full participants. In light of this, if the economy is operating at full utilization of resources and all persons are not able to become full participants, then redistribution is merited. This provision of opportunities for all persons to become full participants may result in reduced opportunities for some. For example, maintaining the opportunity for all persons to become full participants may reduce persons’ opportunities to dominate politics and the economy as they wish. If redistribution does reduce the opportunities of some while allowing all persons to have the opportunities needed to become full participants, then this is a normatively allowable form of redistribution. If such redistribution did not occur, then not all persons would be full participants in social cooperation. In the absence of redistribution, only some people would be able to participate in society fully. This absence of full participation by all persons is contrary to the democratic aspiration of equality. Redistribution is morally desirable if this redistribution allows for all persons to be full participants in social cooperation. This conclusion clarifies our ideas about a democratic society and our own democratic convictions. In short, these theoretical arguments about the desirability of egalitarian distributions provide a means to clarify what we should rationally seek if we take the democratic aspiration of equality seriously. In this section, I argued that redistribution may be necessary if inequalities in the holding of property prevent all persons from fully participating in social cooperation. Inequalities in the holding of property may make it unlikely that the democratic aspiration of equality can be realized. If persons take this aspiration seriously, then inequalities in the holding of property should be considered to be of moral concern.

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5.6   What Is the Role of Moral Convictions? John Stuart Mill analyzes the possibility that democracies may become subject to tyrannical majorities of politics, culture, and taste in On Liberty. Mill finds that the only counter to this political problem is the holding of moral convictions to seek what is desirable for all persons (1978, 13). This section will show the importance of moral convictions in order for the democratic aspiration of equality to be achieved. In order to show this, I will first consider Kant’s analysis of the need for moral convictions to replace the natural social organization of society. Next, I review Rawls’s discussion of the importance of reconciliation and moral ideals. Finally, I provide a general statement on the need for moral convictions in order for the interests of persons to be fulfilled and the democratic aspiration of equality to be achieved. Here I will focus on Kant’s Idea of a Universal History with a Cosmopolitan Aim from 1784 to show the importance of moral convictions in realizing democratic and egalitarian institutions. In this essay, Kant brings together notions of practical anthropology, the philosophy of history, international relations, democracy, and moral philosophy to argue for the necessity of moral convictions. I will not address this wide range of topics. Rather, I will focus on Kant’s argument for why the natural inclinations for social organization need to be superseded by intentional moral convictions. That is, Kant juxtaposes a natural tendency in humans to form social organizations with a moral ordering of social cooperation. Interestingly, this conjecture holds that this form of natural social organization is coordinated and competitive at the same time. Kant calls this tendency “unsociable sociability” (2007, 111, 8:20). This unsociable sociability is an antagonism between the natural need humans have for each other and their propensity toward conflict and domination. Kant argues that this antagonism can be overcome by developing “determinate practical principles and hence transform a pathological compelled agreement to form a society finally into a moral whole” (2007, 111, 8:21). This conception of the need for moral standards that benefit all members of society has been a regular theme of mine in this book. The creation of a society that benefits all of its members has to be intentionally sought after. Kant notes that current societies are not chosen, rather they are a compelled coordination. This coordination has to be replaced with a freely chosen social order. These freely chosen societies are a moral whole. Rawls makes a similar point in Justice as Fairness (2001, §2.2). That is, a society

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of a moral whole is a society purposefully organized according to rational practical concepts. Following Kant’s analysis, such societies are produced by rational decisions, which restrain our natural, but pathological, tendencies to compel and dominate others. Thereby, it is only by having an idea of a freely selected conception of society that allows persons to supersede social institutions that do not benefit all of its members. These natural, but immoral, societies are structured according to inherited advantages, domination by majorities, and inequalities that do not benefit all persons. These detriments can only be minimized or eliminated through persons seeking to fulfill their moral obligations. That is, persons must seek to act contrary to their own exclusive advantage if their advantage does not maintain a morally ordered society. In short, moral ideals that are rationally selected must guide the development of moral convictions. Intentionally withholding the use of majority power for the protection of all persons is needed for the preservation of a morally ordered society where all persons can participate in social cooperation. I find that this is the moral whole that Kant is arguing for. Rawls addresses the problem of moral convictions with the use of the original position. This thought experiment clarifies our notions of morally desirable social rules. Persons are fairly situated in the original position. Thus, justice as fairness and its egalitarian requirements are selected under fair conditions. If persons outside of this thought experiment do not uphold the demands of justice as fairness, then this is unfair (Rawls 2001, §29.3). This unfair deviation from the principles of justice as fairness shows the importance of moral convictions. The only desirable way to prevent deviation from principles is if persons hold moral convictions. That is, principles can only be maintained through self-enforcement. The problems of the powerful few or a tyrannical majority can be minimized only through the acceptance of moral principles. A powerful few or a majority cannot be effectively regulated by actions of observation and force, and the use of such actions is contrary to treating persons as free and equal persons. Accordingly, there is a need for persons to reflect on the importance of limiting their actions that would subvert outcomes of full participation in social cooperation. This would include not taking advantage of situations where their power can be entrenched or where the fulfillment of the fundamental interests of any person is ignored. Rawls shows the necessity of moral convictions as one of the roles of political philosophy. This is called the role of reconciliation: “political philosophy may try to calm our frustration and rage against our society and

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its history by showing us the way in which its institutions, when properly understood from a philosophical point of view, are rational” (Rawls 2001, §1.3). Reconciliation does not mean that persons must accept any institution as rational. This would be a form of ideological obfuscation (Rawls 2001, §1.3n4). Rawls argues that it is rational to accept institutions that fulfill the fundamental interests of all persons. And it is irrational to subvert or disregard such institutions as this is contrary to the free and fair acceptance of institutions that fulfill the fundamental interests of persons. The free acceptance of rational institutions requires persons to decline to take advantage of situations where they can disregard the fundamental interests of persons. In respect to distributive justice, this would be the rational acceptance of the redistributive devices of inheritance and gift taxation, progressive taxation, and institutions that facilitate fair equality of opportunity. People who acquire fortunes that can be used to disrupt persons becoming and staying full-participatory members of society should freely consent to redistributive measures. That is, if persons have the capacity to create dynastic fortunes, control political discussions, direct research based on their personal advantages, and create their own private associations at the expense of the full participation of others, then persons should forgo these actions. Accordingly, there are moral imperatives to create and maintain institutions that allow for all persons to be fully participatory members in social cooperation. To ignore the hypothetical of the original position is to disregard principles determined in a fair situation. In addition, the ignoring of this hypothetical is to disregard the free and equal moral status of persons. As such, free consent to redistributive measures is necessary for the egalitarian principles of distributive justice to obtain. When these principles are obtained, then the fundamental interests of free and equal persons are fulfilled. Persons should freely consent to these principles in order not to disregard the moral status of persons. If the moral status of persons is disregarded, then this would be to treat them unfairly. It is up to individual persons to consider the results of their actions and to alter them as they see fit to meet the demands of distributive justice. These alterations would include promoting changes in institutions to correct shortfalls in the distribution of property and the provision of measures for rectification (Rawls 2001, §15.1 and §42.3). As shown by Kant and Rawls, the creation and maintenance of a justly ordered society requires the free acceptance of moral principles. This is the case since a society that is acceptable to persons who regard themselves as

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free and equal can only be based on the free acceptance of reasonable moral principles. A society where persons are coerced into supporting redistributive institutions is not a freely chosen society. It is also an unstable society. If persons do not accept the institutions of their society as legitimate, then they will not support their longevity and may actively seek to change them. This concern about developing convictions for the creation and maintenance of just institutions will be considered below in light of modern money theory.

5.7   What Is the Enduring Philosophic Importance of Modern Money Theory? In this section, I will argue that the ideas of modern money theory make the transition to an egalitarian society a clearer and more defined choice. This is the case because the possibility of social and economic changes that fulfill the minimal interests of all persons is clearly displayed in demand management and full-employment policies. These policies provide the institutional grounds for an egalitarian society. That is, they show that all persons can receive a general education, paid work, and leisure time. Also, they show that social conflict can be reduced so that all persons can become fully participatory members in social cooperation. Nonetheless, what is absent in this vision is the acceptance of moral convictions for democratic egalitarianism. Thereby, modern money theory shows that a more egalitarian society is possible on the institutional side. The side of moral convictions requires individuals to consider how their own intentions can facilitate or frustrate whether all persons can become fully participatory members in social cooperation. Modern money theory’s policies for the macroeconomic stability of society lower the stakes and risks of social life. Thus, they make persons less reliant on the need to out compete others for a decent standard of life. This can make it more apparent that egalitarian policies are to the benefit of all persons. If these policies obtain, then there are always opportunities for work to fulfill the minimal interests of persons no matter a person’s luck, ability, or training. These institutions make the transition to egalitarian structures a clearly rational course of action and correspond to Rawls’s social psychology. That is, if we consider it rational to fulfill the fundamental interests of persons defined as free and equal, then the ideas of modern money theory

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show that such a rational society is possible. In other words, it becomes apparent that we can reconcile our ideal of a rational society with its actuality. As a person’s goals are achieved within their society, they, first, develop attachments to these institutions (Rawls 1999, §71). Second, persons develop an interest in aspirational standards of justice to be instituted and maintained (Rawls 1999, §72). That is, Rawls argues that the successful operation of social institutions produces a rational psychological fidelity to these institutions and an interest in the further development of just institutions. Now that I have outlined an initial answer, I will provide a more procedural answer as to why modern money theory is of enduring interest to political philosophy. First, and on the one hand, modern money theory presents an understanding of the macroeconomy as commonly operating below capacity, which means that minimal needs and minimal opportunities can be fulfilled without redistribution. On the other hand, it shows that the building of economic institutions that support an egalitarian society is possible through the use of suitable full-employment policies. Second, modern money theory shows that the purpose of taxation is to meet the normative goals of a society. Third, modern money theory shows that organized action to provide goods and services is based on the laboring of persons using real resources. Fourth, the institutions of any society are the product of the social cooperation of its members. Modern money theory shares this conception of social cooperation with contemporary political philosophy. That is, social institutions are possible that allow persons to reconcile their ideal of a rational society with its actuality. In short, the institutional basis of a just society, such as a society that realizes the principles of justice as fairness, is shown as possible in the concepts of modern money theory. Modern money theory shows that institutions for achieving the democratic aspiration of equality are economically possible. But this clarity of economic possibilities also shows the importance of rational moral convictions in respect to our inclinations. That is, the economic possibility of mutually beneficial outcomes is not in itself sufficient for the achieving of the democratic aspiration of equality. As I argue above, persons have to freely develop convictions for democratic and egalitarian institutions for morally rational ideals to be achieved. Modern money theory provides clarity on the opportunities and the limits of our macroeconomy in respect to achieving our ideals. This is not a criticism of modern money theory. Rather, modern money theory, as with some other economic theories, provides part of the means to achieve

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the Enlightenment project of improving the lives of all persons. Just as Adam Smith sought to demonstrate the potential for organized action to meet needs, modern money theory demonstrates this anew. But this Enlightenment project is not simply a project of economic organization for the material improvement of persons. As Kant argues in Idea of a Universal History with a Cosmopolitan Aim, the Enlightenment project is the purposeful striving toward creating a society that would be choiceworthy for free and equal persons. But a choiceworthy society for modern persons can only be an active choice. It can only be the product of intentional action guided by philosophic analysis in conjunction with the results of our sciences. The choice of the egalitarian institutions of justice as fairness is desirable for persons only if the conditions for their creation are apparent. This is where the insights of modern money theory become rather important. When all people have their minimal interests fulfilled, it becomes apparent that a more demanding standard of the fulfillment of fundamental interests is possible. Further social reform toward egalitarian institutions becomes apparent and desirable once persons realize that their minimal interest can be fulfilled in all circumstances. That is, political stability and mediation of destructive political emotions are more likely to develop in a society where the minimal interests of persons are met (Rawls 2001, §38). Thereby, the further refinement of distributions to meet the most demanding moral standards is possible in favorable circumstances of mutual advantage. My argument is based on the traditional goals of philosophic theories of distribution in conjunction with Rawlsian principles of social psychology. I review these traditional goals in Chap. 2, and I outline these Rawlsian social psychological principles above in this chapter. In order to achieve these traditional distributive goals and for Rawlsian psychological principles to have advantageous conditions to take root requires that the minimal interests of persons are fulfilled. The achievement of egalitarian institutions that fulfill our fundamental interests should be considered in a dynamic and developmental sense. This means that the right social conditions for the rational acceptance of egalitarian institutions are needed. I argue above that these right social conditions can be produced if the institutions of a full-employment regime are developed. That is, the optimal conditions for the rational development of institutions that fulfill the fundamental interests of persons are when the minimal interests of persons are already fulfilled. The fulfillment of the minimal interests of all persons

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lowers the stakes of material, social, and political loss. In turn, this makes further changes toward egalitarian institutions that fulfill the fundamental interest of persons to be a rational selection. Individuals have no rational reasons to oppose the development of egalitarian institutions when it becomes apparent that these institutions will allow for the fulfillment of the fundamental interests of persons.

5.8  Closing Comments  In this chapter, I argue two points. First, I argue that the most acceptable distributive justice standard for modern persons who accept the democratic aspiration of social and political equality is justice as fairness. Second, I argue that the conjectures of modern money theory are of enduring importance for political philosophy as they make the selection of the most acceptable standard of distributive justice to be more apparent. The policies of demand management and full employment allow for the fulfillment of the minimal interests of all persons. Once it is apparent that material, social, and political losses can be minimized within reasonable bounds with the use of these policies, then the development of egalitarian institutions are rational in their selection. Modern money theory provides an institutional basis for the rational selection of egalitarian institutions and to develop convictions for their creation. In short, macroeconomic analysis by modern money theory authors provides insights as to how contemporary political philosophy can be expanded and enriched. In particular, the realization that the minimal interests of persons can be fulfilled in the absence of direct and overt redistribution of property opens up new vistas for philosophic research. This includes research on social conditions that clearly show the selection of institutions that realize the democratic aspiration of equality as rational.

References Kant, Immanuel. 2007. Anthropology, History, and Education. The Cambridge Edition of The Works of Immanuel Kant. Cambridge: Cambridge University Press. Meade, J.E. 1993. Liberty, Equality, and Efficiency. New  York: New  York University Press. Mill, J.S. 1978. On Liberty. Hackett.

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Rawls, John. 1996. Politically Liberalism. Paperback Edition. New York: Columbia University Press. ———. 1999. A Theory of Justice. Revised Edition. Cambridge, MA: Harvard University Press. ———. 2001. Justice as Fairness: A Restatement. Cambridge, MA: Harvard University Press.

CHAPTER 6

Closing Comments

Abstract  This chapter is a brief review of this book’s goals. Keywords  Modern money theory • Distributive justice • Political philosophy This is a rather short book on what I find to be a very important topic: the interdisciplinary use of political philosophy and economics in order for democratic aspirations to be achieved. The particular vantage point on this large topic that I wish to, and I am able to, focus on is the use of modern money theory in conversation with contemporary distributive justice. There are several insights that I think modern money theory can provide to contemporary distributive justice, and I think that contemporary distributive justice can provide insights into how our macroeconomy should be organized. These brief closing comments will focus on the contribution that macroeconomics can bring to political philosophy and political philosophy can in turn bring to macroeconomics. Modern money theory holds that a state that issues its own nonconvertible currency can use the spending and taxation power of a state to fully utilize available resources. That is, modern money theory shows that monetary economies can be organized to close a persistent demand gap and employ all persons who wish to work at a set wage. The insight that this conjecture provides to distributive justice is that the spending power © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_6

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of a state that issues its own nonconvertible currency can employ persons to meet unfulfilled needs and to increase opportunities without the direct use of redistribution. This can be of interest to distributive justice authors since the spending power of a fiat currency issuing state can achieve a limited set of the goals commonly favored in the distributive justice literature. The insights distributive justice provides for economics has been indirectly emphasized in this book. The insights of macroeconomic theory can be implemented in numerous ways. In particular, how demand gaps should be bridged and what people should be employed to do are questions that political philosophy answers with supportive reasons. In this book, I argue that the economic tools that modern fiat currency issuing states have at their disposal should be used to fulfill the interests of persons who hold democratic aspirations. That is, our economic policies should be scrutinized based on whether they do or do not advance and maintain our democratic ideals. Ultimately, I argue that the ideal of persons being full participatory members in social cooperation is the most suitable democratic ideal. Thereby, the use of our economic tools should be analyzed according to the following question: Do our economic tools advance and maintain the full participation of all persons in social cooperation? To end this book, I wish to reflect on the common intellectual origin of the modern versions of economics and political philosophy. They are ancient disciplines, but they have been reconstituted in the modern period. Both disciplines have a common origin in the ideals of the Enlightenment. In particular, the ideals that inquiry into our natural, social, and psychological worlds and analysis of our ideas can provide two results: one, an understanding of natural and social phenomena and, two, knowledge of how to improve conditions for moral beings, specifically humans as rational beings. Both modern economics and modern political philosophy are sets of conjectures about how the social world operates with the other sciences, what does improvement in the lives of rational beings require, and how can we bring about improvements for rational beings. Thereby, I find that the two essential goals of the pursuit of knowledge are to understand our world and to improve our lives. It is my hope that I can advance the realization of these goals by writing this book, even if this advance is a small one.

CHAPTER 7

Suggested Readings

Abstract  This chapter contains a short list of suggested readings on modern money theory, distributive justice, the work of John Rawls, and the job guarantee. Keywords  Modern money theory • Distributive justice • John Rawls • Job guarantee Below I suggest a short set of works that touch on the main themes I have emphasized in this book. Most of the readings are recommended for those who are new to the various fields that I discuss. It is my hope that these works can serve as a basis for deeper study. Also, I attempt to provide works mainly written in the new century, so readers can have a contemporary account of the discussions.

7.1   Modern Money Theory Modern money theory authors have produced several book length accounts of their conjectures. I list four sources for readers new to the topic. The book by William Mitchell, L. Randall Wray, and Martin Watts is a comprehensive intermediate-level macroeconomics textbook. The books by Stephanie Kelton and L. Randall Wray both offer thorough discussions of the ideas of modern money theory for persons with little to no © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. P. Holt, Modern Monetary Theory and Distributive Justice, https://doi.org/10.1007/978-3-031-43304-7_7

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economic training. William Mitchell and Thomas Fazi’s book discusses modern money theory and the capacity of states to bridge demand gaps and meet the needs of their members.

7.2  Distributive Justice I suggest that readers who are new to studying distributive justice consider the two following sources. They are both very readable and accessible. Samuel Fleischacker’s book provides an argument that distributive justice is primarily of modern origin; it was developed in the work of Adam Smith and Immanuel Kant. Fleischacker’s historical approach will help orient readers to distinctions between different arguments about distribution within moral philosophy. Jeppe von Platz discusses the main theoretical branches of distributive justice. Von Platz’s book is structured around the work of particular authors who are representative of the contemporary range of distributive justice arguments.

7.3  Rawls There is a large amount of work that has been done on John Rawls. I mention here only two excellent sources for those starting their study. Samuel Freeman’s book is a clear and comprehensive account of the phases of Rawls’s work with an excellent discussion of the secondary literature. Leif Wenar has written a general encyclopedia article on John Rawls’s work for The Stanford Encyclopedia of Philosophy. These articles are freely available online and are updated regularly with discussions of recent research.

7.4   Job Guarantee An employer of the last resort, public-service employment, or a job guarantee has been a policy recommended by persons other than modern money theory writers. The work by Phillip Harvey is a gem of a book on the topic. Harvey provides a history of New Deal work relief programs and outlines a contemporary work relief policy. Mathew Forstater provides an account of the place of the job guarantee in environmental policies. Pavlina Tcherneva has written a very accessible discussion of the reasons for a job guarantee based on the premises of modern money theory.

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William Mitchell and Joan Muysken provide a detailed account of the job guarantee in light of the debates surrounding theories of full employment and unemployment.

Suggested Reading Modern Money Theory Kelton, Stephanie. 2020. The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy. Public Affairs. Mitchell, William, and Thomas Fazi. 2017. Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World. London: Pluto Press. Mitchell, William, L.  Randall Wray, and Martin Watts. 2019. Macroeconomics. Macmillan International and Red Globe Press. Wray, L. Randall. 2012. Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. New York: Palgrave Macmillan.

Distributive Justice Fleischacker, Samuel. 2004. A Short History of Distributive Justice. Cambridge, MA: Harvard University Press. Von Platz, Jeppe. 2020. Theories of Distributive Justice: Who Gets What and Why. London: Routledge.

Rawls Freeman, Samuel. 2007. Rawls. London: Routledge. Wenar, Leif. 2021. John Rawls. In The Stanford Encyclopedia of Philosophy, ed. Edward N. Zalta.

Job Guarantee Forstater, Mathew. 2003. Public Employment and Environmental Sustainability. Journal of Post Keynesian Economics 25 (3): 385–406. Harvey, Phillip. 1989. Securing the Right to Employment: Social Welfare Policy and the Unemployed in the United States. Princeton: Princeton University Press. Mitchell, William, and Joan Muysken. 2008. Full Employment Abandoned: Shifting Sands and Policy Failures. Edward Elgar. Tcherneva, Pavlina R. 2020. The Case for a Job Guarantee. Polity.

Index

A Aristotle, 5, 7, 11–14 B Beveridge, W., 36, 37 Bonds, 29–31, 35 C Cohen, G.A., 5, 52, 65–69, 71 D Demand, 3, 5, 9, 30, 32, 33, 35–37, 43, 44, 46, 48, 52–55, 59–62, 64, 65, 69, 70, 74–76, 80, 83, 90–92, 95, 97, 98, 100 Democratic aspiration of equality, 2, 3, 6, 16, 27, 64, 74–76, 79, 81, 83–89, 93, 95 Distributive justice, 1–28, 30, 34, 48, 51–57, 64–71, 74–95, 97, 98, 100

Distributive standards, 5, 9–15, 27, 47, 53, 57, 65, 66, 69, 70, 74–76, 78–80, 84, 86 Distributive theories, 5, 54, 55 Drèze, J., 5, 52, 65, 69, 70 Dworkin, R., 5, 52, 65, 66, 68, 69, 71 F Fazi, T., 41, 43, 100 Fleischacker, S., 8, 100 Full-employment, 2, 5, 30, 36–38, 40, 42, 46, 48, 52, 57, 58, 60, 67, 70, 75, 80, 83, 92, 95, 101 Full-employment regime, 27, 54, 57–60, 62–66, 68, 69, 71, 79, 80, 84, 85, 94 Fundamental interests, 16–25, 54, 77, 80, 81, 86, 90–92, 94, 95 J Job guarantee, 5, 30, 37–42, 44, 46, 48, 57–59, 61, 63, 64, 80, 100–101

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Justice, 2, 5, 8, 15–25, 69, 75–77, 79–81, 83, 86, 87, 93 Justice as fairness, 2, 3, 5, 6, 15, 22–27, 53, 69, 74–81, 83, 86–87, 90, 93, 94 K Kant, Immanuel, 8, 33, 89–91, 94, 100 Kelton, S., 37, 43, 44, 99 M Mill, J.S., 5, 7, 13–15, 34, 89 Minimal interests, 3, 6, 54, 56–65, 67, 70–71, 80–82, 92, 94, 95 Minimal opportunities, 2, 5, 27, 30, 51, 53–60, 65, 71, 84, 93 Minimal standard, 2, 4, 5, 27, 52–56, 60–70, 74, 75, 79–85 Mitchell, W., 36, 39–41, 43, 44, 65, 99–101 Modern money theory, 1–6, 27, 29–48, 51–71, 74–95, 97, 99–101 N Nozick, R., 65

P Plato, 5, 7, 9–14, 53 Property-owning democracy, 24–27, 75–78, 81, 83–86 R Rawls, J., 2, 4–6, 8, 15–27, 34, 52–54, 65, 69, 70, 74–78, 83, 86, 87, 89–94, 100 Real resources, 5, 30, 34, 43–45, 48, 52, 54, 60, 62, 93 S Sen, A., 5, 52, 65, 69, 70 Sovereign currency, 31, 42 T Taxes, 25, 31–35, 44, 48, 61, 62, 66, 67, 76 Tcherneva, P., 34, 37, 39–43, 100 W Wray, L.R., 31, 32, 35–41, 43, 44, 61, 62, 99