Neoliberalism and social justice? Reconciling Adam Smith and John Rawls
01:31:43 Share

Welcome to the LSE Events podcast by the London School of Economics and Political Science. Get ready to hear from some of the most influential international figures in the social sciences.

A very good evening to everyone. Thank you for joining us. My name is Brian. I'm the chairperson for tonight's lecture. I'm the co-director of the LSE HIAC program, which is hosting the proceedings today. So I'm also a research fellow at Stickert, School of Public Policy and Department of Philosophy, Logic and Scientific Method. So please be aware that this lecture tonight is being live streamed and will be uploaded as a YouTube video and probably also as an audio podcast.

I'm also obligated to inform you that the fire assembly point in case of fire is just outside the Saw Swee Hock building.

We also ask you to put your mobile phones in silent mode to avoid disruption. So it's my pleasure to introduce our guest speaker today, who is Dr. Nate Cohen, who is an associate professor in the School of Social and Political Sciences at the University of Lincoln, where he teaches courses on becoming criminologists, human rights, social issues and social justice, and crime and media.

His research explores the contributions of private enterprise and civil society towards crime prevention, social order, public health and the environment. Our discussant for today, Dr Paula Romero, is a political and moral philosopher from the Department of Philosophy, Logic and the Seinfeld Method at LSE. Her research has developed in political philosophy, moral philosophy and the history of political thought.

Dr. Cohn will first speak for approximately 45 to 50 minutes, followed by a short response by our discussant, Dr. Romero, followed by a Q&A session, which I will be moderating. We welcome both online questions. Those of you watching from the live stream, you have to type out your questions, as well as those in the audience today. So without further ado, let us welcome our speaker, Dr. Cohn.

Thank you so much for the introduction Brian and thank you so much for putting this event together. It's a really great pleasure to be speaking at a place, I think just this month was Hayek's birthday, to be speaking as part of the Hayek Programme at the London School of Economics is a real great pleasure. So thank you all for joining us for this discussion.

So the topic of this discussion is neoliberal social justice, reconciling Adam Smith and John Rawls. It's based partly on my book of the same title, and it's also got a bit of material drawn from some research I've done with colleagues at Lincoln and a little bit elsewhere as well.

Now there's quite a lot of moving parts to this discussion. It's classic philosophy, politics and economics all kind of like smooched together. So I thought it was important to kind of anchor the discussion just a little bit at the beginning so you know where I'm aiming to get to. And so this is the case that I want to kind of get through through a variety of routes in the next 45 minutes or so.

The case is simply that the institutions of commercial society, including markets, private property and private enterprise, are critical for the pursuit of social justice. And the reason that they are so important is because they help us scale up our natural moral motivations to the level of a political community.

And just to kind of give you an outline about what we're going to be thinking about, I'm going to first start a little bit high level with some meta-ethics or some maybe methodology about the way that I'm thinking about some of these problems.

I'm going to introduce the distinction between applied ethics and moral science, and then I'm going to move from showing what I think is valuable moral science to talking about robustness. Why robustness is a value that we should pursue when we're thinking about pursuing social justice. Then having kind of set up that kind of methodological outlook, my kind of initial meta-ethical outlook,

we're going to have a look at Rawls' theory of justice. Now Rawls is a totemic, massive kind of thinker with lots and lots of ideas, and I'm going to have to skip over a lot of them, but I'm a bit of a Rawls nerd, so if in the Q&A there are any other Rawls nerds, we can have a few minutes where we think about some of these things in a little bit more detail. This is going to be a bit of an aerial view in the initial presentation.

Then having introduced rules and thought about how that might relate to robustness, I'm going to talk about why good citizens need markets to cooperate. I've got a nice little thought experiment to try and illustrate that, a little bit of game theory

very light game theory to think about. And then I'm going to talk about how markets make better citizens. So basically what my account is coming at it from two angles. First, even good people really need markets to cooperate effectively at the scale of a political community.

And at the same time, participating in these institutions in the right framework, not in every framework, but if we can set up the framework correctly, we're going to end up with people behaving like better citizens as well.

Because we're going to be talking about pretty abstract theory and these sort of big philosophical debates for all the session And I am personally much concerned with you know with with social injustice You know today the things that we're the problems that we're dealing with today. I'm going to try and illustrate the themes from the rest of the the talk by showing how a Neoliberal approach to social justice would consider the high cost of social housing so

without further ado applied ethics versus moral science so um the the the the most sort of popular way in which many you know philosophers deal with ethics today is to kind of think about like well here's here's a particular problem um what's my my ethical position you know am i am i going to be a deontologist or a utilitarian today or some or something else and what would that position prescribe about that particular activity

And a kind of theme that one can denote from a lot of this literature, not all of it, but a great deal of it, is it tends to emphasize prescriptive moral duties. It tends to take a relatively critical stance of existing institutional arrangements. And one of the curious things is that very often the philosopher's intuitions stand outside the model.

So it's like the... Thomas Nagel sometimes talked about a view from nowhere, actually in terms of criticizing a little bit of this approach, to kind of say that we need to be able to put the philosopher inside the world in order to understand what's going on. And my kind of approach...

to reform or to thinking about social problems is more in the moral science tradition. And the moral science tradition instead offers an appreciative perspective on moral motivation. So the first question is, how is it that we can be moral at all? What is it that when we're behaving in a moral way in the real world, what does that mean to us?

We're curious about how real world institutions work. So there's a critical element to it. Certainly there are lots of institutional failings, but it's important to understand how they've emerged and what problems they do solve in the real world before we think about how to tweak them or maybe revolutionise them.

And critically, the worldly philosophers' moral intuitions are situated within their cultural context. So there's this idea that we have to position ourselves and understand our own weaknesses and fallibilities when considering moral questions. That can help us offer better answers, or at least answers that are going to be more robust when we're dealing with real world problems.

so to illustrate this idea this is a a thought experiment that will be uh familiar to to to a great to a great many of you um but uh an absolutely key idea in um in applied ethics is is peter singer's case uh for global justice where he kind of says that um uh we all have very strong duties to um uh to to rescue people around the world uh because basically

If you're rich, you're capable of donating to charities that can save a great deal of lives at relatively low cost. So things like the Against Malaria Foundation might be an example. And in order to try and zero in on this intuition to say that we have these obligations, he says imagine a thought experiment where you are walking past a lake, you're wearing an expensive suit, could be, I don't know, say a 2,000 pound suit,

You see someone, you see a child struggling in the lake. They're going to drown unless you rescue them. And he says, you know, obviously, if you're in this position, you wouldn't think about the cost of your suit. You'd go in and rescue and rescue the child. So, you know, it would be an act of absolute depravity to kind of weigh these differently.

And yet, every single day, every single minute, if we're kind of living slightly above our income level that we need to survive, we are supposedly making this decision.

because there are people in desperate need, the equivalent of drowning in war, in disaster. And if we aren't willing to help these people, then we are in the same situation. Then we are like this man who doesn't care about a human being right next to them. Distance doesn't really make any difference.

morally at least. So the only question is how we make sure that people understand these moral requirements. So

It occurred to me that in the moral science traditions, going back to Adam Smith, there's actually a similar kind of thought experiment, a parallel one. But Smith, thinking in this sort of interest in the way that people think and the way that people act, takes a little bit, a slightly less prescriptive way of thinking about it.

So he says, imagine an ordinary person, someone who is considered an upright citizen, perfectly well socialized and behaves morally generally. And they hear that there's been a horrible earthquake around the world. He actually dramatically says it's swollen up all of China in his thought experiment. But just imagine a horrific natural disaster on the other side of the world,

Now someone who is properly morally sympathetic will hear that and they'll be initially upset and they'll commiserate and they'll think, oh, what a horrible situation to be in and what kind of impact will that have on the rest of the world and oh, it's all very sad. Maybe there's something that we could do to help. But in terms of their emotions, they probably...

generally won't lose any sleep the next night, having heard the news of this absolutely huge disaster on the other side of the world. And I think we all kind of understand that this is, because we now have access to 24-7 news. We get this, we face these activities constantly. We get this news constantly. Smith notes that if someone were aware that they were going to lose the tip of their finger

the next day that they wouldn't sleep a wink. They would be extremely upset, extremely anxious, expecting that pain and suffering and the loss, the loss of the little finger the next day. It's a very big deal to lose your little finger.

So emotionally, you're going to be much, much more drawn to something that affects yourself and especially your body, especially the anticipation of pain. So they're weighing completely differently, not in terms of one's moral thinking, but in terms of your kind of emotional cognition, shall we say, the way that you're worried about these things.

And in order to kind of illustrate this point further, unlike Singer who's sort of just saying, well, this is a disaster and we're going to prescribe this difference, we need to kind of learn how to think paradigmatically differently. Smith says...

Of course, if someone were to learn that they could save a thousand or ten thousand lives or everyone in the earthquake by sacrificing their little finger, so say that there was some strange thing, some magical property to your little finger that meant if you were willing to lose it the next day, you could save all these lives, then, well, it's a strange situation to be put into, but once again, only a villain would refuse to make that exchange.

It has to be the tip of your finger in particular, not someone else's tip. But if it really is about you and this is your moment to make a moral decision, then you'll go, well, of course, I'll have to lose the tip of my finger to...

to do this. So there's a kind of mismatch between how people are feeling about a situation, how they're going to immediately react, but also how they would react if for some reason they were placed in a direct relation as an individual in that kind of situation. And I think this draws away the essence of the moral sentiments, which is something that we need to consider when we're thinking about building a society that scales up our moral motivations.

This is the key idea. We are emotionally far more invested in our own lives and those closest to us than even cataclysmic events that do not concern us specifically. But when we are assigned a specific duty or relevant position, we are prompted to act with other people's interests in mind, including, somewhat surprisingly, total strangers. People are morally motivated but have limited attention and some degree of selfishness.

and social institutions should be robust to these aspects of human nature. So this is like the key meta-ethical point that I'm drawing from Smith initially. So what exactly is robustness? So robustness is an idea that we should consider the range of human motivations and human behavior and human knowledge.

when considering what kind of policies to introduce. So we've got here policy one. Let's get the pointer out. Policy one is kind of like much, much higher peak. So in the ideal point T, it performs better than policy two.

But policy two performs worse in the ideal, so it performs worse than policy one at this little tip right in the middle, but it performs much better across a range of scenarios. And my argument is that there's a range of scenarios that we should take seriously.

when considering the sheer range of human behavior. And I can talk a bit more about that later as I've transitioned from being a political theorist to being a criminologist. So now I look at a lot more of some of our worst motivations. And robustness is just saying, look, let's take people as they are

understand their limited attention, limited knowledge, and degree of selfishness and opportunism when deciding what kind of institutions we're going to go for. So robustness sacrifices reaching the very best case in the ideal scenario for much better performance across a range of social environments. So let's see how that connects with Rawls' theory of justice. So just to go over...

the centrepiece where Rawls wants to argue for, what he would have put up at the beginning of his lecture if he was making his case. He wants a society that's arranged in such a way

that each person is to have an equal right to the most extensive total system of equal basic liberties compatible with a similar system of liberty for all. You can tell he's had to workshop that quite a bit. He did that over a number of years. It looks like it's like a constitution that he's kind of like setting up there.

And there's good reasons for each word being in there. We can go in, we can nerd on that later. But yeah. And the second idea, the second principle, social and economic inequalities are to be arranged so they are both to the greatest benefit of the least advantaged, consistent with the just savings principle. So that's sometimes commonly called this two part A is sometimes called difference principle.

and must be attached to offices and positions to open to all under conditions of fair equality of opportunity. This is this kind of constitutional framework for what a society based on social justice should look like. Now, Rawls is not merely an applied ethicist. He's certainly informing the applied ethics tradition.

but he is, in a sense, a political economist. He's very much a kind of political philosopher in his own right. He's not merely saying, this is the situation that should exist and we should push people towards it in some way. For Rawls, justice is a virtue of social institution. So it's not a comprehensive judgment of all human actions. There is a division between the public and the private sphere, according to Rawls. His aim is what he calls a realistic utopia.

a society that is both ideal and achievable in the real world, where institutions are stably reproduced over indefinite generations. The circumstances of justice, this is like a key idea that Rawls brings in while trying to understand how we're going to kind of reach this realistic utopia. He argues that his principles only apply in an economy and a society and an environment

where social cooperation is both possible and necessary for human flourishing. So this only applies in a realm where there's neither intractable conflict, where people have no common interests at all because everything is just a fight, nor a cornucopia where cooperation maybe isn't necessary because there's just so many wonderful resources and everything is kind of already available. So cooperation is both possible and necessary.

And he's got this idea, this further distinction of public reason. So it's not enough that people merely follow the principles of justice. Rather, they've got to follow the principles of justice for the right reasons. They've got to understand and feel that they're legitimate. In order to do this, citizens have to distinguish their own private beliefs from those that justify public policies and democracy.

So they've got to think, they've got to understand this notion of public reason and make arguments in a kind of publicly acceptable way. Citizens do not just follow the rules of justice, they also understand and endorse them.

I just sort of highlight a comment when trying to kind of introduce some of this architecture. This is like a very small snippet of Rawls' architecture, but there's a comment from Paul Waithman, one of Rawls' interpreters and interlocutors, who kind of compares Rawls' theory to being like a cathedral, because there's always something new and intricate every time you read him again. It's like going to see a kind of gothic cathedral where there's a different cranny to explore each time.

But these are some key points that I put on the table here because it's going to be important for understanding where markets fit into this architecture. Now, Rawls has his own way of applying his principles of justice. So he is quite adamant, he says this in his various books,

He changes his position on a number of things, but not on this. He argues that state socialism, laissez-faire capitalism, and welfare state capitalism are necessarily unjust. Instead, he has an idea that there's two possible regimes that on inspection turn out to be quite similar. But he calls them liberal socialism and property-owning democracy.

And these ones can be just, so these are the ones that might work. They haven't been shown to work, but they could work for Rawls's realistic utopia. Both, rather like state socialism, grant expansive regulatory and distributive powers to public administrators. And so as a result, they limit the scope for markets and private enterprise. Now, from my position, the problem here is that the justification...

here relies on an underlying theory of economic and political activity that lacks robustness to limited knowledge and self-interest. So we need to kind of bring in that robustness criteria at this point. At that point, we're going to end up with a slightly different set of institutional solutions. So

But my case here is that, you know, kind of we're, you know, we're kind of glancing at justice over the hill or up these steps. And we need to find a way of climbing these steps in order to kind of get, in order to kind of approach justice. And, yeah.

Rawls wants to go on this journey with us as well. So he is, in one sense, an ideal theorist. So everyone is presumed to act justly and to do his part in upholding just institutions. In other words, he's kind of ruling out criminality and unlawfulness in his institutional design there. But there are other ways in which people might fail to do the right thing than mere criminality.

Now, political economy deals with problems and conflicts in social life, you know, seeking ways to ameliorate them. This is certainly kind of the attitude when Adam Smith makes any normative position at all, he very often does not, but when he is, it's always about trying to ameliorate and improve on a situation rather than trying to set out some kind of ideal.

So according to some applied ethicists, political economy just might not be relevant for setting normative goals. A classic example might be Jerry Cohen, someone who always thought that rules gave up far too much to the real world when considering the nature of what justice requires.

But Rawls does need to be in this journey with us because he needs his theory to be feasible, not just ideal. It's not just a utopia, it's going to be a realistic utopia. And basically, markets support the feasibility of social justice, from my perspective, by one, helping good citizens to coordinate their actions and exchanges, and two, helping people become good citizens by facilitating positive interactions with diverse strangers.

And once we've made this argument, the institutions of welfare state capitalism is going to turn out meet the principles of justice under a more robust assessment. So let's just briefly show how good citizens need markets. The answer is that even altruistic cooperators can fail to produce good outcomes when they are uncoordinated. And I'm using a bit of game theory and a short story from O. Henry here to illustrate this.

So it's a story called "The Gift of the Magi" and I'd like you to imagine a loving couple, Della and James, and they need to buy Christmas presents for each other. But they're in very impoverished circumstances, they're completely broke, they have no possessions of their own. Very few possessions. But they want to show their love for each other nevertheless.

Della realizes that she's got this beautiful hair, that if she shaves off and sells to a wig maker, she could buy a gold watch chain to go with James's only treasured possession, his watch.

At the same time, James realizes that he could sell his watch. A big sacrifice, but he loves Della so much he'd like to do that. And he can buy a beautiful silver comb that would go very, very well with Della's hair. So it's a beautiful idea.

but it's not something that we'd like to see scaling too much. So this is like a coordination problem where we're dealing with altruists rather than self-interested agents as we would with the prisoner's dilemma. So here you'll see that I've kind of flipped the preferences. So in the cases,

Because each one, because Della and James love the other one so much, what they'd really like to do is be in a situation where they get to give a gift and they don't receive anything. Neither of them would like to receive the gift. This is a case where both agents want to be the ones to give the gift and they're going to be heartbroken if the other, if their partner decides to make a massive sacrifice to help them.

So in terms of outcomes, it would be better if they could coordinate and just not give gifts this year.

So they keep, Della keeps her hair, James keeps her watch. Maybe I'm not romantic enough for this, it could be, there might be a, but it's the, but generally their welfare would be improved if they manage not to coordinate in order not to do that. And the worst case is if they both sell their remaining possessions and give gifts which it turns out aren't even useful to the other, to their partner.

And this is just to show that even just and very moral people need institutions to coordinate at the scale of a society to act justly to one another.

and not to end up impoverished and exhausted. In other words, we need some mechanisms of coordination that allow people to express their preferences and for other people to detect them and to follow them. It does rely on people having some degree of, not selfishness, but self-interest, being willing to say, well, this is what I'd like. You can't be someone who says, well, I don't want anything.

You need to be someone who's willing to say, put yourself in the social calculus and say, this is what I need. But if you don't have some kind of coordination mechanism, then you're going to end up with lots and lots of goods that are unusable and people being starving and impoverished. And this just illustrates the very basic problem, as I say, of the great F.A. Hayek of this very program is

In a system where the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate their separate actions. So being able to put a price on these goods and services is very, very significant for being able to coordinate with people when you're not able to immediately communicate with them. Maybe with your partner you can communicate. You might try and surprise them, which might be a problem. But as the scale gets to a political community, you need to think about coordination. So how do markets make

How do markets make better citizens? So the answer is that markets make people learn to cooperate with strangers through their daily interactions. So here I'm thinking about how we reach rules as circumstances of justice, basically where we get into a position where we might be able to think about social justice at all at the scale of a political community. So rules need people to be able to endorse just institutions.

at the scale of a political community and this means that these institutions are going to protect and support people who are strangers to one another. But people can be inattentive, diffident or even hostile to strangers.

Now, a characteristic of commercial society is regular mutual reliance on people who are relatively unknown to each other or sometimes complete strangers. This is something that's quite distinctive to commercial society as opposed to, you know,

less developed economies where basically you know the people that you're working with from one day to another. So all your modes of cooperation are going to be mediated by leaders and by family members and maybe friends that you've grown up with. Commercial society puts you into contact with a great deal more people.

People who sometimes you're never going to meet again in the case of brief transactions that might take place if you're just buying coffee somewhere or something. Now, in engaging in these interactions, in these everyday dealings, people become alert to how their own actions and decisions will impact others' expectations. To engage effectively in trade and business requires imaginatively putting oneself in others' place and realising how weighty their interests are.

and how they will feel to them. And this forces people to calibrate their own desires and expectations against the observations and feelings of the rest of the community. So this is kind of like an important part of the learning process where people start to realize it's important to

to pay my taxes, it's important to think about what policies are good for other people and it's important to weight other people's interests in your moral thinking as well. In other words, to kind of attune your natural sympathies to help those closest to you to kind of realise that that is kind of scalable.

And I think there's something worth highlighting about strangers at this point, because there's been a speech by the Prime Minister Keir Starmer on this very idea that we wish, we apparently risk becoming a country of strangers.

We can discuss the element, how much shared culture is required for a political community to work. I mean, rules somewhat against many of his interludes thought that justice could only apply to a political community, that is a nation state. It couldn't really apply at the global level, unlike, say, Peter Singer.

And he also believed that a relatively homogenous community would be required for social justice. But I think there's one important point to begin with before we even start thinking about Keir Starmer's concerns. And the key point is that we are always, as individuals, strangers to one another at the scale of a political community. We don't know the people that we're dealing with.

Throughout a lot of our day, we're seeing people, sometimes we're interacting with people who we don't know their names, we won't remember their faces. And yet, very often, we can coordinate and cooperate. We can at least stay out of each other's way most of the time. And very often, we can supply key goods and services to them.

to one another and benefit each other without knowing who we are at all. So the idea that migration changes this, suddenly turns a society where we all know each other into a society where we don't know each other, that really doesn't work. The whole point here is that social institutions allow us

to cooperate basically with a degree of confidence that the vast majority of people we interact with are going to treat us in a reasonably fair way. So it's confidence in the community as a whole, not understanding individuals. And I don't see any particular reason why newcomers can't be included in that, so long as they're aware of the institutional framework that's supporting it.

So there is a way in which these kind of interactions, these commercial interactions are particularly important for achieving the kind of democratic society that rules is kind of looking toward. So for rules, all economic inequalities are arbitrary, yet some inequalities are compatible with justice. The difference principle allows for some inequalities if they improve the position of those who are relatively disadvantaged.

For example, doctors might have higher incomes and that can be just if it benefits less advantaged people by increasing access to medical care. So that would be like a classic way in which the difference principle might justify some degree of inequality. But there is something quite odd about these two ideas. On the one hand, that all inequalities are arbitrary, that's what Rawls is saying, and yet some are permissible. Because it basically means that...

you could end up in the least advantaged position under one set of circumstances, or someone else could end up among the least advantaged in another set, and both could potentially be just. So you're comparing these different states, these different regimes of the world. Maybe think about the way that people with excellent maths skills

were able to get much, much higher incomes in the last 20 or 30 years due to the boom in banking and finance and a few other areas of technology where that particular skill set was particularly valuable.

That's not like a natural situation. That's due to technology and the various other social situations. But maybe if people in those jobs are creating lots and lots of goods and services and they're paying taxes, maybe that's justifiable. It might be justifiable under the difference principle. Even under Rawls's relatively more socialist principle. But now consider the impact of AI.

AI might suddenly replace an awful lot of those kinds of roles. Suddenly it might turn out that that particular set of skills isn't going to be quite as valuable as it was before. Maybe some other group, maybe people who are particularly good at talking or particularly good at acting, or maybe musicians will come back or something, something that will be particularly valuable. We don't really know once the technology's shot that there's AI that comes in.

Now according to this kind of basic principle, none of that is really a matter of justice. They're all completely arbitrary and the inequalities might be quite clear and might be quite potentially a cause of anxiety. Nevertheless, they are just if it's a result of people following a broad set of rules that involves equality of opportunity and all the other elements that rules requires.

So it's a slightly odd situation to be in where you're kind of realizing that justice doesn't require a particular pattern. It requires this broad framework where the relatively disadvantaged are supported, but apart from that, anyone could be in any particular social strata. Now figuring out how to handle this notion of justice could also be supported with markets.

Competitive markets can produce gains for everyone through the increased availability of goods and services. But in any singular competition, some people will win and others will lose. So this might be profit and loss or getting a specific job or not being offered a job.

Participation in market activity is a good practice for participation in democratic politics, where we will inevitably experience being on the losing side of an issue or supporting an opposition party for much of our lives. We must see democracy as legitimate even when we reject specific outcomes. So this is something that happens when we think about the way that

When we're handling conflicting policies, conflicting political parties, we as good democratic citizens must understand that we are very often going to be on the losing side. Nevertheless, to be on the losing side in a democracy...

one that is following social justice on the whole is a good position to be in. So that's the kind of lesson that we can learn from our everyday interactions when we figure out that we are sometimes competing, sometimes cooperating in the marketplace.

Now, as I say, I promised you some quite high-level, some quite abstract thought. And I think that just to try and zero in on how a neoliberal thinks about social justice in one particular area could kind of help kind of drill down and kind of like maybe unpack some of these assumptions a bit further. So...

The big social injustice in the United Kingdom, obviously there are much worse injustices around the world, but I think the big social injustice in the United Kingdom of my generation, hopefully not of the generation of many people in the audience right now, I hope we'll find a way of

fixing this, is the cost of housing. And this is kind of a classic case where it's a problem for everyone, but it's a specific problem for those on lower incomes. So for those who are relatively disadvantaged under the current scenario. So it's something that rulesians and

and every other kind of egalitarian is worried about. There's a sort of rise in the costs of housing against people's income. And if you kind of go to, like, Shelter had a great sort of argument to kind of highlight quite how dangerous this, you know, this...

quite how urgent this injustice was by highlighting how we would think about it if we were looking at these kind of cost increases against expenditure on food. So people would be starving if the cost of food was rising alongside the cost of housing in the same way.

If you're... People on the left or socialists might say, well, it's just a case that markets are unable to supply such an important good as housing, so we ought to socialise it. Now...

The trouble with this kind of answer, and it's an answer that many rulesians might kind of point towards as well, I mean, either they would say we ought to have very large numbers of public housing or we should have a radical redistribution of housing wealth. But when we look at the available statistics, it doesn't appear that there's a very strong relationship between the amount of social housing

whether rent whether private or subsidized is is particularly affordable there's some it's not it's not that one doesn't cause the if there's not really a correlation one way or the other but as it happens the United Kingdom perhaps surprisingly has quite a high rate of social housing in this country so you know kind of yeah

you know, sort of Netherlands, Austria and Denmark a little bit higher than us. But after that, we are in the top range for social housing. And yet we're still facing this crisis. Hi, I'm interrupting this event to tell you about another awesome LSE podcast that we think you'd enjoy.

LSE IQ asks social scientists and other experts to answer one intelligent question, like why do people believe in conspiracy theories? Or can we afford the super rich? Come check us out. Just search for LSE IQ wherever you get your podcasts. Now back to the event. But let's consider a kind of a neoliberal approach instead. So

neoliberals would tend to emphasize the supply of housing regardless of whether it was private or not. Classical liberals would probably prefer private housing. Neoliberals, a little bit more even-handed, they'll be like, you know, private housing's good. If social housing is needed, we can go for that as well. But there is a history about the way that housing was provided in the United Kingdom. You kind of see here that from 1860...

with a break during World War I and then up again until World War II, there was a fairly consistent increase in housing growth, dominated by private housing because there wasn't that much social housing to be provided in those years.

So there was a kind of a supply of, a significant supply of housing that kind of took place during the industrialization and modernization of the United Kingdom. So you kind of, and as cities grew. This kind of stopped when permissions to build were nationalized under the Town and Country Planning Act of 1947.

And although you can see that there was a boom in social housing construction immediately afterwards, so people were very, very, you know, we're going to nationalize

is a public good and we're going to provide this using the public sector, there was an initial surge of activity and optimism, but it kind of never reached the heights that were present in the previous 50 years or the century before. So ultimately, when we're talking

When nationalization of the regulation of housing came in, we ended up providing an urgent social need much, much less quickly, much, much less effectively than had been done beforehand. And just to understand, this is indeed related to the cost of housing. As you can see, over the years in which there was this kind of...

large increasing supply of private housing there was a significant drop in house prices as a multiple average earnings. And so this is just to highlight that there is a stronger empirical connection between increasing the supply of housing and its price than variation in who is supplying it. So in other words,

Perhaps social housing can help, but the important thing is getting supply up. Now, that all could be ancient history. So I just want to highlight that although we probably can't go back to exactly the same way we built houses in the Victorian era and the Edwardian era,

much as some of those housing are very attractive, there is still lessons we can take from that and apply it to today. So we can take a country that in many ways, in terms of institutions, is quite similar to the United Kingdom. New Zealand allowed conversions of houses into flats and mixed-use development in many cities from 2016 and relaxed rules further in 2021, producing a record increasing supply of housing.

where implemented it reduced rents by 21 percent against a business as usual counterfactual so the key takeaway here is that private approaches to affordable housing is not merely historical accident we can have it again if we take a more permissive planning policy which is pretty central to the way that sort of neoliberals try and argue things things should should happen so just zooming out once again what's the broader lesson uh from from that little example

So the builders laying the bricks for a new house and the developers planning out a new neighborhood are not necessarily being public spirited. They are unlikely even to know the renters and owners of the houses that they built. They're strangers, fellow strangers. Nevertheless, when prices are allowed to guide them, they will help fulfill a pressing social need. So even though they're driven,

initially by self-interest, ultimately, hopefully, they're quite like the idea that they're helping other people, but initially by self-interest, that seems to produce that kind of housing boom that you don't get when you're reliant on the public direction, public guidance. Political incentives, by contrast, can privilege insiders. For example, existing homeowners, they tend to play a big role in our current democratic system at the local and national level.

and it can help insulate them from minor losses, for example losing a picturesque view where there might be some more housing that's been zoned to happen. And their needs might be, or their wants might be weighed more strongly than those in need of shelter under certain political frameworks. The experience of mutual gains from trade has a broader socialising force.

Recognizing that people make a living out of supplying strangers with essential goods expands our circle of sympathy. So when we actually do rely on voluntary exchange to achieve this, we can come to see, understand other people's rationality and reasonableness. These are things that rules thinks are particularly important. And so basically,

It's not only the fact that we can supply these essential goods and services using these kind of mechanisms, but moreover, participating in these mechanisms under the right overall framework, it's not the only thing that we need, but it's part of what we need, can also help us to become more cognizant of people's needs and their claims on social justice.

So ultimately this leads us to view the hypothetical stranger that is ultimately our fellow citizen as worthy of respect, dignity and social justice. So thank you very much for your attention.

like i say this is this is basically my case for commercial society and constitutional democracy um although this part of the research gender is kind of like i kind of take the lead on this i'm not the only person who is working on this my um my colleague eric schliesser at the university of amsterdam sorry my co-author eric schliesser at the university of amsterdam has recently labeled what we're kind of doing the lincoln school of political economy and i'm happy to take that to take that label um

So there's a book that will unpack a lot more of this if you're so interested. It's quite expensive, so if you're a student, ask your university library to order one to get it yourself. And there's a lot more free material available on my website and on Google Scholar. And here's three of my colleagues who are also very important for contributing to this idea of

of making social justice work in a kind of economically nuanced way. So we've got here Aris Tranditis, who's also at Lincoln, Carlo Quadasco, who's at the University of Manchester, and Charles Delmont, who's at the University of Michigan. We wrote a paper on tax justice together. So thank you very much. I'm looking forward to the discussion.

Thank you, Nick, for a great, great talk. Thank you, Brian, for the invitation. And thank you to the Hayek Forum for making this space as possible and for the stewards at the LSE tonight making this work. So I think that you could easily divide philosophers or political philosophers as giving sort of two types of talks, those who talk about who we are

and those who talk about who we should be. And I think that this talk very, very neatly dealt with both, and I think this is natural because of what Nick is trying to do, which is something like bringing back Adam Smith's theory of moral sentiments into Rawls' theory of justice.

So in my very short remarks, I want to focus on one of the questions that Nick put in his outline and that was discussed today, and that is the question of whether markets can make us better people.

and I want to bring back some further ideas that Nick offered in the book that it's here neoliberal social justice published in 2021 that were not another argument that he didn't present tonight so we can see how how it squares with the talk and it would enrich maybe the discussion afterwards or so I hope

I think the question of the relationship between market and individual morality is a particularly important one when thinking about social justice.

It seems to me that social justice, at least in a very broad level, is not just an aim or an ideal to be achieved in society, but also a way of understanding what is wrong in society. It's like a lens, it's like a methodology in some ways. And one of those wrongs, one could argue, is that market economy is by its very nature

or let's say capitalism more broadly, is inimical to a morality of solidarity, of care and of compassion to strangers and also to people that we know. So showing that market economy actually demands a set of moral virtues, as I think it's implied in Nick's account, and furthermore, that it couldn't operate successfully without them,

would be a very promising thing to achieve because it would show that social justice, political, social and economic equality amongst, I said among individuals, I'm going to say among strangers, is not only possible in a market economy but that it is best achieved in a market economy. That would be a more radical version of what you said today, I think, Nick.

And this is, I think, what Nick is trying to do in the book, and he's giving arguments today for parts of that claim, for the claim that market economy is at its most successful by being grounded in a certain set of moral virtues and moral exercise of virtues. But I think that this is only possible again, the idea that markets require a robust exercise of moral virtues. If we drop the idea that

of social justice as only limited or narrowly concerned with correcting past injustices. So something I've learned by thinking through Nick is that we tend to think of social justice as dealing with wrongs and primal wrongs of justice. But I think that social justice is much more than that and is the exercise of these psychological virtues, as I will call them in a second.

So Cohen offers at least two arguments of how social justice can be achieved in the context of market economy. One we saw today, and I'm going to call this the argument of public reason,

The idea is that when we engage effectively in trade, you put yourself in someone else's shoes. And we don't tend to think of commercial society in this way. And I think this is the Kantian insight in Nick, and you see it in Rawls adopting the idea of public reason and in Smith's impartial spectator.

So much is gained in adopting this universal standpoint. The interesting thing in Nick, in his account, is that he thinks that this universal standpoint is required if you want to engage in successful exchanges in trade and businesses. So it's a sort of enabling condition. So to put it differently, you can't be a Trasimachus guarding your interests and dividing and conquering.

you have to see how committed other people are to their own interests and as nick said to make it make it then your own however and this is a question to nick and you don't have to answer them i think the public's questions will be better but i'll just drop it there is how this development of market virtues to call them somehow square with the fact that not always but surely most of the time profit is the aim behind

these exchanges. So to put it in a sort of bumper sticker, how can you win and be virtuous in doing so? In the book, there is another argument for the moral stock available in market relations. And it is an argument that reflects on whether economic liberties should have a much more central role in the shaping of political communities.

whether economic liberties should be protected at the constitutional level in the same way as freedom of expression is a liberty that is protected or freedom of religion. So economic liberties amount to the right to engage in a wide range of voluntary contracts, a liberty to acquire, to possess assets, in addition to personal property.

So Cohen thinks that economic liberties are not just in the margin privileges for some, but a central equalizing force in society. And I think this argument is worth engaging with. So in that sense, the productive effect and free exercise of economic liberties becomes a condition of possibility of social justice, if not a requirement.

So he gives a series of indications of the types of activities and some of them are deeply psychological activities. We tend to think of trade and like ching-ching, money coming in, but this is like at the level of our self-understanding and our understanding of the way in which we relate to other people. It's in that sense that I'm calling them psychological. And the exercise of these economic liberties...

excuse me, the exercise of these psychological activities are triggered and promoted by the exercise of economic exchanges. So when we buy, when we sell, when we teach, because I think that in teaching we are providing a scarce good,

more and more so in our societies, when we invent, when we create, when we think critically, when we imagine, I think that even when we do art, I was thinking about it, we imagine alternative solutions to the problems of cooperation. We put ourselves in another people's shoes, we are forced to evaluate different perspectives to make the right choice,

We engage in social calculus, as you called it today. To successfully bargain, we require the ability to reflect on personal and business priorities. So there's a lot of self-knowledge and mutual understanding that goes into this.

And this is something I haven't seen and I think it's very distinctive of Cohen's argument, is that these kind of moral virtues that make social justice possible are deeply rooted in our capacity to be effective economic agents. And we could talk more about what are the limits of that agency or whether there should be limits to it and which.

So we tend to think that the building of political communities requires more political and social liberties and virtues. Bring on the economic ones would be the lesson here. So people will exercise their economic liberties in different ways, just like not everybody exercises their right to free speech in the same way and with the same intensity and with the same commitment and with the same expectations.

But the fact that we can so exercise them, that we can build, sell, ponder, negotiate, think critically, create and imagine,

and that we know that our economic liberties are somehow part of the constitutional makeup, that we have protections to exercise them thus and so, this becomes an equalizing force and I would say maybe as strong as the exercises of a political liberty. I would like to know what you think of this, of Nick's argument, and I buy it. One final thought.

I think that the standard picture of social justice, which Cohen wants both to enrich and to problematize, is one that thinks that what we need are economic rights, not economic liberties. It would be interesting to know what Nick and the audience thinks about this distinction or this expectation.

As I mentioned before, the underlying paradigm of one way of understanding social justice seems to be one where a primal injustice has been committed, and our effort from the point of view of justice is to remedy that injustice. So going back to your example of housing, there was a sort of strong neoliberal moment where

where that led to too much private housing was built that led to our current housing that would be a diagnosis.

So from this point of view, economic liberties are either too thin or too slow in accomplishing a more equal political community. Or I venture to say, economic liberties are still seen as privileges of the very few unless they are translated into effective positive economic rights.

And this is because economic liberties are deemed as dirty. And this is something that Nick talks about in the book. And this comes from a tradition where an amoral understanding of trade and commercial society has judged these economic liberties as being somewhat dirty.

As we have seen today, I think that through the argument about how creative thinking and critical reflection leads to the development of moral capacities and how getting into the habit of putting ourselves in other people's shoes and taking their interests seriously, becoming a universal spectator in Adam Smith's words, can help us clean the way

to a form of capitalism and market exchange that anthropologically aligns with who we are and is better capable of cultivating who we ought to be. Thank you, Nick.

Alright, great. Thank you Nick and Paula. It's now time for the question and answer session. So I'll first take questions from the audience. Please state your name and affiliation first and let's try to keep it clear and concise so we can take as much as possible and I'll then go on to the audience questions from online as well. Yes, gentleman in the white shirt.

Thanks very much. I'm Johnny. I'm just a member of the public. I just wondered on the terminology around neoliberal, what does the neo contribute in this? Why not liberal social justice?

Yeah, that's a good question. I think probably the easiest, there's a few ways in which you could take it. I think the easiest way of situating neoliberalism against liberalism or classical liberalism would be to think of like the economic freedom index, where they think about sound money, rule of law, property rights, approach to regulation, and size of government.

And one thing that is curious about size of government is it doesn't move as straightforwardly along with the other ones.

So there are quite a few countries that are pretty good on most of the metrics, good, you know, like in their sort of traditional classical liberal way, but actually have quite large governments. So Denmark and Sweden are kind of like classic examples of that. Switzerland a little bit less so, still quite small, but still quite large state sectors. And I think the answer is that a neoliberal is not so concerned about the sheer size of government, but rather about the scope of...

of government. So in other words, what kind of activities is it engaged in? If it's doing capable things and providing public services, then a neoliberal is going to be like, yep, that's fine. Let a capable and limited state do its thing. Whereas a classical liberal would be like, that's a leviathan in the waiting. So I think that's where the differences lie. Yes? Blue shirt with a sunglass.

Hi, thank you very much to both for sharing your ideas. I'm Ignacio Perinat. I'm here studying at the LSE, the Masters in Philosophy and Public Policy. Both of you seem to have used the terms markets and capitalism interchangeably. Do you think we should state some nuances for the argument to work or they can be used interchangeably?

I mean, that's a good point because, I mean, there's a big market socialist tradition that's kind of worth highlighting that kind of uses some of the mechanisms that I've tried to defend here. In the book, I kind of explain how...

At certain points, they're kind of not going to be able to manage the epistemic element without having some degree of private capital in there. So I try to explain where I think that they're close, but they're not quite going to solve the knowledge problem.

More generally, I think capitalism was sort of named by its enemies. This is often the case. So it's not the nicest sounding word. And I think if I were to be able to choose it, I would say that I support commercial society because that includes the notion that there's going to be some private property and there's going to be markets without necessarily saying that we want to put capital in the driving seat.

So that would be like my preference. But I think if we're looking at like what's good about capital, especially like what Jeffrey Hodson actually would say is kind of distinctive about capital, who's also been contributing to this series, it's basically the role of finance. And finance there in this context basically involves people being able to move goods and services around without having to pay for them immediately.

which of course businesses have to do all the time. Businesses have to buy stuff on credit on the basis they're hoping to make a profit out of them later on. And we as individuals do it as well when trying to access a very large good like a car or a house or education.

And there are injustices in those scenarios because as soon as you bring in these long-term contracts, there are greater risks. They ought to be looked at. But on the other hand, it's how we became rich by being able to...

have a degree of liquid capital that was able to allocate resources to people who want to be able to afford it but can't afford it yet. You have to pay for your education later on because the assumption is that you're going to be able to pay for it, you'll be in a better position to pay for it afterwards. And so that's where capitalism kind of comes in. And you're right, it's distinctive from having markets.

and i think that something that is um also interesting of the distinction is that you can have the kind of activities that we engage in the market and and i think this is a sort of marketplace right now given the exchange and the tacit rules of respect and so on and so forth is that well this couldn't happen if if we were in a in a totalitarian regime outside but it could happen in a socialist government government down the road so

Alright, I need to turn to an online question first. So let me just read out this question from Noah Robertson, student at St Paul's School. Could the robustness principle not risk entrenching existing prejudices, inequalities and power structures, lowering the bar to merely what is good enough in the status quo?

Yeah, that's a very challenging question. I appreciate it. Yeah, I mean, I think that would certainly be a risk when you're thinking about, you know, it's like we're holding off on the ideal.

for the sake of something that we know is kind of stable and works with people's existing moralities. But I tend to take a more polycentric view on progress. This is something that people like Michaela Novak are kind of working on. She's currently at George Mason University.

And there the idea is that a lot of social progress doesn't come from the center, from people prescribing it from the institutions. Rather it comes from people experimenting in new ways of living in a liberal society where people are allowed to engage in exchange and interact and experiment. So the hope would be that once you've got

your institutions set up in this robust way, so as you're avoiding the worst case scenarios, you're stopping immediate conflict and you're allowing people to trade and interact, then you're actually going to see social progress at the margins because the margins have been let go. They're allowed to do what they're doing. And that's when all of society kind of gets to learn.

So there is an optimistic side to robustness, which is basically saying if we get this platform correct, then you're going to see an awful lot of social progress, but not necessarily directed by the state or by philosophers. All right, let's go back to the fiscal audience. Yes, gentlemen at the end here. I'm Richard Samoudis of Queen Mary University.

So if I understand correctly, one way to summarize your ideas might be that any social need can be represented as a market need and a perfectly free market will fill all the social needs. So less regulation, better for more housing, better fulfillment of the need for housing. But even with no regulation, a market has limited resources to assign, otherwise we wouldn't need a market.

the needs that will be filled the most effectively or first will be the ones judged most important by the market, which effectively means the needs that are the most profitable. So we can argue about whether or not any specific need would be profitable to fill, like housing. How do you address the fact or the idea that this process necessarily privileges individuals and groups

who already have the most resources and the most power and whose needs therefore represent larger portions of the market? Thank you. Yes, it's a suitably challenging question. And so I would...

I'll begin by kind of just reframing how I kind of introduced. I'm kind of saying that I'd like a society with a substantial private property market, so an area where commerce is legal and supported and regulated. I'm not kind of going for a maximally free market.

in kind of my uh in in my argument so i'm quite quite easy going on the idea that like if there's certain goods that need to be provided uh by the state then that can be um you know that that's something that we can that i can support um i'm not sure if if um the the needs that get met are necessarily going to be the most profitable at the margin um so for example um

Grocery stores in the UK have pretty low margins, so pretty low profit margins. So they don't produce enormous amounts of profit on the whole.

But it's a pretty competitive market, and as a result, in comparison to housing, food costs have been going pretty consistently down as we've industrialized, as you'd expect with technological improvements and as things have gone on. So you'd say that just because something is not...

particularly profitable doesn't it will still be provided because at various margins it's still worth providing it in a in a suitably competitive market and as for sort of privileging yeah the existing people I mean I think that kind of most

bites when you're dealing with scarcity. So the reason I'm concerned about housing is because basically it's a case where if you've got a house, that's great. You've got a house in central London, even better. And you haven't got one, you're kind of excluded. Whereas

In most goods where there's a kind of competitive market that's constantly supplying new things, yeah, sure, you know, somebody will end up with a better smartphone, you know, a better car. Someone will be able to afford a Mercedes, you know, because they're privileged, because they're much more privileged. But if ultimately, you know,

uh you're kind of working your way down so everyone well not everyone but but more and more people can at least afford you know in my case a an 11 year old hyundai i10 then you kind of go like oh okay that's that's you know it's good good enough for getting around and that's kind of where where markets are working effectively they do try and supply you know as broad a range of people as possible and they drive down you know drive down price it's not not for the top

but for the version that does the job. And so that's something that, you know, I think compared to our current housing policy, is something to aim for. All right. Next question. Yes, lady in red dress. Hi. My name is Francesca, and I'm a former alumni. Well, I'm an alumni, sorry, from LSE. And I work with business and government on business and human rights. And my question is on...

How do we ensure that we get meaningful social justice that is actually centered on the needs of the most vulnerable and not on the needs of the market? Because this reminds me very much of the sustainable capitalism ESG sustainability debates, right? Which could be vehicles for just social justice, but it really fails. We see the rise of the entire ESG agenda. We see that businesses, the thing that they fail the most is on the access to remedy and social justice within the UN guiding principles for businesses, for example, and human rights.

That's the area that businesses just can't take accountability for. So what's going to change about this and it's not just going to validate some kind of performative social justice to make businesses and big agents feel better about how they currently exploit vulnerable people across value chains and communities.

Yeah, so that's a challenging idea. And I say that this is not quite the same as ESG. I mean, there is some overlap in terms of its aspirations. Because ESG is a kind of collection of values that have kind of been constructed by kind of intellectuals and sort of philosophers and various NGOs and the United Nations.

about what businesses ought to be doing and then businesses have said, "Yeah, this is the sort of stuff we'll sign up for." But it's quite a mix of values and they're not necessarily connected with the needs that are coming from the bottom up, from people who are in the supply chains who actually didn't develop the ESG.

I mean, I think that where we would, you know, if we were trying to encourage sort of business ethics, like more broadly construed, like, or more fundamentally, we'd place emphasis on autonomy. So we'd say that you want to say that you should only be dealing with people who,

are capable of making a choice of like working in particular lines of work. So the idea that you can, I mean, the ultimate version is of course slavery.

I mean, it was a fairly successful campaign, I understand, to abolish cotton slavery in Uzbekistan in the last few years. I teach it on my course in human rights. And that was a campaign that involved NGOs, a very old charity that was the original anti-slavery charity that kind of spearheaded it, plus a lot of companies that kind of got signed onto it.

And it helped improve the supply chain and is hopefully improving the situation in Uzbekistan as well. So I think that there are ways that this can be done, that businesses, partly because they wanted to, mostly because they were cajoled into by the consumers and by other actors, changed their attitude towards the way that they would handle the cotton production in Uzbekistan. So there are cases where things are incongruous

incrementally improving although there's you know worldwide there's a great deal more there's a great great deal more to do yeah Francesca right and I wonder if a response to the way you put it a kind of performative social justice of businesses is

a free market-like response coming from consumers. So sabotaging or boycotting, buying certain goods or consuming from certain companies is, at least from my perspective, something that is a form of

exercise of market economy because it's a form of exerting pressure. So maybe going back to the distinction between capitalism and markets, I think that this performative social justice of businesses could be on the side of capitalism and still there could be an argument for markets. All right, we have 10 more minutes, so a number more questions that we can take. Let's see. Yeah, the lady all the way in the back row in the middle, yeah.

Hello, I'm Madhu. I'm a graduate at LSE. So my question is, this might be quite rudimentary, but this was my first line of thinking when we think of how we can be profit-oriented and still be virtuous.

My question is, what even would be virtue when it is in a market economy? Because wouldn't it be what would be defined by those who win or those who do get the profit at the end of the day? Would it not be skewed? Wouldn't the meaning of social justice itself change by those who win? I think of this in the way of billionaires. Billionaires...

provide money for social justice causes. One could be for world hunger, poverty. One could be for going to Mars, which might both in some way be social justice. But who even decides what justice is? Wouldn't it be those who do get the profit after all? So market economy, in a way, is... The whole point of virtue itself would be very diluted, wouldn't it?

Yes, I think it's a challenging idea. I mean, I think for me, the virtue that comes from... Well, the virtue of business is kind of being honest and fair in your dealings. So, in other words, you want to...

Most people do relatively well in a market society by being straightforward. I mean, as a criminologist, I know plenty of people who manage to get by for a while, sometimes not forever, by being the opposite, by being deceptive and manipulative. But generally, if you're dealing...

if you're able to profit and you do so by delivering a good and service that other people are expecting and the other people in your supply chain you're paying correctly and that you're being careful about the way that the impact on the environment, then that would be kind of virtue in a market society. In terms of learning,

kind of virtue and how to appreciate social justice. I actually find the experience of losing, so being refused that job

the first business not working out, you know, kind of struggling in the markets or what have you, these are all important ways of learning how important, you know, like your own limits and the experience of realizing, you know, kind of your own frailties and fallibilities that apply to everyone else. And I think that it's that experience of being on the losing side

which one has often if you're participating in business and also when you're participating in politics is kind of is highly educative the people who Profit immediately and become billionaires and never lose. There's not that many of them But there are probably a few of them out there. Yeah, I'd be a bit worried about their about how educated they were I think I'd like it even if the wind I'd like it if the winners in a given generation have also had some experience of loss That's like my

my hope and people who inherit wealth that might present a bit of a problem as well but I would say that most billionaires most billionaires and billionaires who have won their profits in the market they are I'm much less worried about them than people who seek political power that's just my perspective sorry yeah all right we have time for a few more questions yeah the guy at the last row there yes

I'm Julian. I study across the street. Thank you very much for your refreshing insights. I would like to know how you would respond to Mark Fisher. As far as I understand, he would say that

neoliberal capitalism produced an identity crisis because of the focus on the individual and the plurality of moral values. So basically, if we don't know who we are and what our self-interest is, how can we exercise morality? I have to... That sounds like a really interesting criticism, but I'm not aware of the details of the...

critique. I mean, I've studied sort of the differences between individualist and collectivist societies, and there are advantages to both, but there are, I mean, there's a

there's a traditional notion of individualism that's quite sort of uh based on sort of max weber's uh in a study of kind of the protestant work ethic and that that tends to have quite a strong sense of individual identity so you know there's there's a lot of obligations and things which you're supposed to do under those under that kind of individualist framework perhaps it's possible that we've taken that it's gone too far um you know that people uh but perhaps um there does appear to be a bit of an identity crisis that's kind of going uh that's

sort of going on. I suspect that might be more related to our interactions with digital technology in recent years, which of course is part of neoliberal developments, but it's I would consider to be like an outcome rather than something that lies at the core of what I'm supporting here, which is a commercial society. Okay, some final questions. The gentleman in the pink. Evening. Adam Bayliss-West, Department for Business and Trade.

I was interested in this idea of strangeness that you've introduced or perhaps the Prime Minister has introduced. I wondered what you thought about perhaps the idea that for a society or a commercial society to be maximally just and effectively for coordination to work as well as it might, there needs to be a, to some extent, strangeness between participants in it so that...

Any economic actor effectively is going to be treating a counterparty in the transaction on more or less equal terms in a way that might not be so easily achieved in a more closely knit or perhaps you might say sort of clannish society. And to give that a sort of practical application, if you look at perhaps some of the...

regulatory changes that the government's currently considering in the rental market you can see perhaps an end state where smaller landlords will be shaken out of the market in favor of larger sort of more more rational and more efficient actors oh that's a very very interesting connection uh that that you've drawn that yeah because i think you know it sometimes is the case that that we we kind of um

Sometimes some problems that turn up in economic interactions at a small scale can be solved by aggregating to a slightly larger scale. And I think you're right, because what it does is it introduces rules and regulations that prevent, say, local bosses from exploiting their position. So a classic thing is that, you know, I'm lucky enough to work for a university, and there are plenty of people in that university who would surely like to exercise irrational, arbitrary authority over me.

but they can't because we have an HR department and we can afford one because we're at a particular scale. So I think that's an interesting observation. I think it's adjacent. It's not quite the same as this notion of clannishness because there's no clan when dealing with a bad line manager. It's just arbitrary capriciousness that you could be... So what I would...

But I think that you're right that there is a certain collectivist impetus in some societies which make commercial interactions hard

because many exchanges are kind of collusive. So it's like everything depends on who's a family member of who and that kind of thing. And a commercial society does rely on, you don't have to eliminate that entirely, but you need to kind of break it up a little bit and kind of make people think like, yeah, I'm not going to give my brother-in-law the best deal just because he's my brother-in-law.

that kind of thing. You need to kind of be, you know, these are my prices, I'm not going to discriminate. Yeah, and that's an important part of development. And you're right, yeah, that means that we do have to treat even people who are close to us in some scenarios, we have to agree to treat each other as if we're kind of strangers. It's true. Yeah, good point. Right, we have time for just one last quick question. Yes.

Hi, thank you. My name is Sunita. I am a member of the public. Thank you for that. That was very, very interesting. My question almost is sort of flipping the previous conversation on its head. I was wondering what you think about the idea of, so if this argument is around markets as a precondition for enabling people to act in a just and virtuous way,

what you think of sort of alternative models of living that exist where almost the opposite is the case. So the idea of wanting to live in a just and virtuous way and mutually benefit one another actually creates

a precondition for trade and commerce. So I'm thinking of examples like mutual aid-based models, things like community energy projects where communities invest money in building renewable energy projects that then generate money that can be reimbursed

redistributed within communities. Do you think that those offer a sort of different model that can still feed into this? Is that something that feels scalable to the level of a political economy or sort of wider society approach?

Very good question. And I think just slightly adjacent to that, in some of my work I kind of emphasise how important other civil society non-profits are to commercial society. So I talk about how partnerships, the John Lewis partnership would be kind of an example, and various other kind of legal forms like worker cooperatives. They can all participate in a commercial society, so long as they're voluntary.

And they're often going to be better than for-profits. So the more long-lived institutions might well not be based on a for-profit basis. So I think that there's certainly a large role for that. What I would say is that in terms of the sheer scale, so in other words, trying to develop a sense of social justice that's applicable to a political community,

they can contribute to the ecology but they're not going to be able to wholesale replace a commercial society. So that's kind of, in fact I see it as a part of commercial society rather than like a potential substitute as other people in the literature might suggest. But yeah, absolutely. Just because self-interest

helps us get off the ground up to a certain scale, doesn't mean that altruism isn't very important for the initial impetus for why we might interact with strangers in the first place. Absolutely. Thank you. We've now reached the end of our session, so thank you very much for coming, and let's give a round of applause to our speakers. Thank you.

Thank you for listening. You can subscribe to the LSE Events podcast on your favourite podcast app and help other listeners discover us by leaving a review. Visit lse.ac.uk forward slash events to find out what's on next. We hope you join us at another LSE Events soon.