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Justice the Capitalist Way
Toward a meaningful concept of justice

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Justice the Capitalist Way

cortes
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Posted 07/03/08 - 09:00 AM: Subject: Justice the Capitalist Way	#1
It's unfortunate that the concept of justice has been so corrupted by socialism. Outside of the legal context, justice tends to mean social justice which means egalitarianism. The other problem with the concept of justice is that it tends to be divorced from real choices and associate, instead, with idealistic political discussions. ("If I were king of America there would be social justice".) So it's refreshing to see a more down to earth use of the word, which I came across in a review of the book Spiritual Enterprise: Doing Virtuous Business: The overthrow of the labor theory of value, and the recognition of the role of the entrepreneur and risk-taker, and the development of capital theory have all helped refute those old and resentful pictures of capitalism. Enterprise is a cooperative venture, founded in contract, in which rewards are distributed according to the risks undertaken and the responsibilities incurred, and in which every member has an interest in according to others their due. In other words, justice is the internal binding principle of an enterprise, and where it is absent the enterprise is in jeopardy. http://www.weeklystandard.com/Content/Public/Articles/000/000/015/298ntpgd.asp So justice here is that distribution of responsibilty and rewards which attracts and retains the full particiption of valued individuals in contributing to the success of the venture. It is a practical definition because those of us involed in starting companies face the issue each and every time and not only at the start but as the company grows. Let me make a number of interesting observations here: 1) There is no imputation of equality or even proportionality. 2) The choice is a real one, not an idealistic hypothetical, made by the founders. (Nothing focuses the mind on alternatives as much as the prospect of living with the consequences of a choice.) 3) The shared goal is the success of the venture. If the venture tanks, nobody gets anything. Justice is driven, in part, by that goal. 4) Generally speaking, responsibility is a function of ability and reward is a function of responsibility (value) and risk (actual and opportunity costs). Thus, in general, those who join the venture earlier get more. Those who are critical to success get more. Those who join latter when the venture is safe and a salary is insured get little, if any, equity. 5) Individuals are always free to opt out if they don't like their compensation.
Copyright (c) 2008 Hernan Cortes, Sociedad de los Conquistadores. cortes@conquistador.org http://www.conquistador.org

Tad
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Posted 07/03/08 - 10:30 AM:	#2
So justice here is that distribution of responsibilty and rewards which attracts and retains the full particiption of valued individuals in contributing to the success of the venture. It is a practical definition because those of us involed in starting companies face the issue each and every time and not only at the start but as the company grows. This is an example of business elites using examples of their own behavior as justification for those behaviors. Absurd, self-justifying aggrandizement. 1) There is no imputation of equality or even proportionality. Sure there is. Justice is proportional to "the full participation of valued individuals in contributing to the success of the venture". Those who are more "responsible" and who contribute more to the success of a business are those who ought to deserve more as a matter of "justice". This says nothing of course for those individuals who may be harmed by the "responsible" use of resources and labor. The choice is a real one, not an idealistic hypothetical, made by the founders. (Nothing focuses the mind on alternatives as much as the prospect of living with the consequences of a choice.) What distinguishes a "real choice" from an "idealistic hypothetical choice"? This appears to be a totally unnecessary distinction. 3) The shared goal is the success of the venture. If the venture tanks, nobody gets anything. Justice is driven, in part, by that goal. Why does justice depend upon the success or failure of a venture? What about those individuals who are not associated with venture? Are those individuals somehow not included within the scope of justice? For instance, if a company choses to dam a river for hydro-electric power, but this action destroys a local community downstream. Is this not a matter of justice? Is destruction what that community deserves a matter of strict justice? 4) Generally speaking, responsibility is a function of ability and reward is a function of responsibility (value) and risk (actual and opportunity costs). Thus, in general, those who join the venture earlier get more. Those who are critical to success get more. Those who join latter when the venture is safe and a salary is insured get little, if any, equity. Responsibility is fulfilling ones obligations. This means obligations towards those who are not within the "venture". The fantasy world you have constructed bears no resemblemce to normal moral or political discourse. Your conceptions of space, time, and justice are far too narrow. You cram them into a free-market world view which hamstrings your efforts to say anything meaningful or helpful. That is the irony of your whole argument.
Empty cages, not larger cages.

cortes
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Posted 07/03/08 - 10:53 AM:	#3
Tad wrote: What distinguishes a "real choice" from an "idealistic hypothetical choice"? This appears to be a totally unnecessary distinction. This is perhaps the most important point so pay close attention: I actually make choices about distribution of equity and about accepting offers of equity for participation. That's a real choice. While I have fun debating "social justice" that is not an issue on which I make actual choices (unless you count voting). That's a idealistic hypothetical choice. If I were king (or at least a Supreme Court Justice), that perhaps would be a real choice. Tad wrote: [quote=cortes]Sure there is. Justice is proportional to "the full participation of valued individuals in contributing to the success of the venture". Those who are more "responsible" and who contribute more to the success of a business are those who ought to deserve more as a matter of "justice". You are overlooking the fact that responsibility is assigned as part of the offer package. An employee cannot command a greater equity stake merely by being more responsible or even by contributing more. Justice, then, is a matter of prudence on the part of the founders, executive, and managers to obtain commitment and contribution. Tad wrote: Why does justice depend upon the success or failure of a venture? Because the shared goal is success. Justice is subordinate to that goal. Tad wrote: What about those individuals who are not associated with venture? Are those individuals somehow not included within the scope of justice? Yes, outside the scope of the subject. Tad wrote: Responsibility is fulfilling ones obligations. This means obligations towards those who are not within the "venture". There is no justice outside, only inside. There is no obligation to outsiders.
Copyright (c) 2008 Hernan Cortes, Sociedad de los Conquistadores. cortes@conquistador.org http://www.conquistador.org

180 Proof
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Posted 07/03/08 - 11:52 AM:	#4
There is no justice outside, only inside. There is no obligation to outsiders. This expresses nothing but atavistic, chauvanistic, tribalism (i.e. pre-Capitalist )
If faith is irrational, then it is rational to dismiss "faith-based claims" out of hand. If faith is rational, then "faith-based claims" must be testable and/or sound -- but they are neither. If faith is a-rational, then "faith-based claims" are inexplicable and thus cannot explain anything.

Tad
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Posted 07/03/08 - 11:52 AM:	#5
cortes wrote: This is perhaps the most important point so pay close attention: I actually make choices about distribution of equity and about accepting offers of equity for participation. That's a real choice. While I have fun debating "social justice" that is not an issue on which I make actual choices (unless you count voting). That's a idealistic hypothetical choice. If I were king (or at least a Supreme Court Justice), that perhaps would be a real choice. So can you tell me the difference between a "real" choice and an "idealistic hypothetical" choice? What do you mean when you say "distribution of equity and about accepting offers of equity for participation"? I'm not convinced you've offered a meaningful distinction between the two yet. You appear to trying to make a distinction between real and imaginary, with your opponent turning out on the side of imaginary. Thus, any discussion between you and your opponent is rigged in your favor since you only speak of "real" things while your opponent speaks of fantasies. Just another example of an absurd, self-justifying philosophy. You are overlooking the fact that responsibility is assigned as part of the offer package. An employee cannot command a greater equity stake merely by being more responsible or even by contributing more. Justice, then, is a matter of prudence on the part of the founders, executive, and managers to obtain commitment and contribution. What is an "offer package"? You really must disentangle your concepts from what appears to be corporate-speak. Responsiblity is not a concept that solely applies to the business world. There is no logical or conceptual barrier to applying the concept to relationships beyond your idealized world. Because the shared goal is success. Justice is subordinate to that goal. You haven't demonstrated that with any success. If justice is subordinated to that goal, what stops the "captians of industry" from brutally exploited people? How is your vision of social cooperation different from that of communists? You have a philosophy of history which attends to an end point, and all resources (human and material) can legitimately be subordinated to the end of "success". It's a totalitarian philosophy. Yes, outside the scope of the subject. That's quite a conclusion. We have no obligations outside business relationships. I could just put it another way: We have no obligations outside the state. There is no justice outside, only inside. There is no obligation to outsiders. I think you are alone in on this one. You have a totalitarian philosophy. It is what it is.
Empty cages, not larger cages.

cortes
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Posted 07/03/08 - 12:23 PM:	#6
180 Proof wrote: cortes wrote: There is no justice outside, only inside. There is no obligation to outsiders. This expresses nothing but atavistic, chauvanistic, tribalism (i.e. pre-Capitalist ) A corporation is a voluntary tribe.
Copyright (c) 2008 Hernan Cortes, Sociedad de los Conquistadores. cortes@conquistador.org http://www.conquistador.org

cortes
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Posted 07/03/08 - 12:38 PM:	#7
Tad wrote: So can you tell me the difference between a "real" choice and an "idealistic hypothetical" choice? This is perhaps the most important point so pay close attention: I actually make choices about distribution of equity and about accepting offers of equity for participation. That's a real choice. While I have fun debating "social justice" that is not an issue on which I make actual choices (unless you count voting). That's a idealistic hypothetical choice. If I were king (or at least a Supreme Court Justice), that perhaps would be a real choice. Tad wrote: What do you mean when you say "distribution of equity and about accepting offers of equity for participation"? I'm not convinced you've offered a meaningful distinction between the two yet. Think about the classic startup situation: I have an idea so I'm starting a new venture. First I need to put together a founding team so I look for a handul of people who complement my skills so that, together, we have expertise in marketing, sales, engineering, operations, finance, etc. Immediatly we have to decide how the corporation shares are divided among us. There is no a priori reason to distribute the shares equally. The criteria is, instead, what distribution will get the right people to get involved because people can choose whether or not to accept the offer. If, instead, I offered shares on an equitable basis then people most likely to accept will be the ones who don't have anything better to do. I'll get the least competent people. Moreover, if I were joining a startup I would prefer a startup which attracted "heavy hitters" even if that meant I got less shares because it increases the chance that my shares will be worth something. This issue comes up continuously as the venture grows. Tad wrote: You appear to trying to make a distinction between real and imaginary, with your opponent turning out on the side of imaginary. Thus, any discussion between you and your opponent is rigged in your favor since you only speak of "real" things while your opponent speaks of fantasies. Just another example of an absurd, self-justifying philosophy. The only matter on which I have made the "real" vs. "imaginary" distinction is on the issue of choice. A real choice is one I can actually make. I can actually choose how the shares are distributed or whether to join a particular startup. Tad wrote: What is an "offer package"? You really must disentangle your concepts from what appears to be corporate-speak. Responsiblity is not a concept that solely applies to the business world. There is no logical or conceptual barrier to applying the concept to relationships beyond your idealized world. For our purposes here, lets define an "offer package" as a job position (title, responsibilities, authority) plus common shares (which typically vest over time so they work like a salary) plus (at a later stage) a salary. Of course, I think all of these ideas generalize but here we have real choices. Tad wrote: You haven't demonstrated that with any success. If justice is subordinated to that goal, what stops the "captians of industry" from brutally exploited people? How is your vision of social cooperation different from that of communists? You have a philosophy of history which attends to an end point, and all resources (human and material) can legitimately be subordinated to the end of "success". It's a totalitarian philosophy. By "subordinated" I mean justice is defined in part by the goal of success. What stops "exploitation" in this context? The simple fact that joining a venture is a voluntary act. If you don't like what you're offered, walk away. But, of course, the fact that you can walk away is the reason that a just offer will be made. Tad wrote: That's quite a conclusion.We have no obligations outside business relationships. I could just put it another way: We have no obligations outside the state. In this context, we're looking at justice within a corporation. If you want to generalize to a state then, yes, there are no obligations outside the state (e.g. to noncitizens). That's pretty standard stuff.
Copyright (c) 2008 Hernan Cortes, Sociedad de los Conquistadores. cortes@conquistador.org http://www.conquistador.org

Thomistic
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Posted 07/03/08 - 12:40 PM:	#8
I have read a lot on Justice from Aristotle's perspective. I tend to agree with his categories. I do believe that the foundation to law is human reasoning. What kind of a legal system has irrational laws? A bad one. That being said, I think communism and capitalism hold truths - but at the most are incomplete. Communism is by far the worst, but capitalism is far too individualistic and therefore certain anthropological concerns tend to arise from my view point, since we are social beings. I think there is a middle-ground between the two extremes. And when discussing Justice, its always takes into consideration two categories: Distributive Justice and Commutative Justice.
"Truth Being and Beauty are all the same, but differ in the mind," - Aquinas "You cannot put a price on awesomeness" - Kung Fu Panda

cortes
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Posted 07/03/08 - 12:49 PM:	#9
Thomistic wrote: I have read a lot on Justice from Aristotle's perspective. I tend to agree with his categories. I do believe that the foundation to law is human reasoning. What kind of a legal system has irrational laws? A bad one. That being said, I think communism and capitalism hold truths - but at the most are incomplete. Communism is by far the worst, but capitalism is far too individualistic and therefore certain anthropological concerns tend to arise from my view point, since we are social beings. I think there is a middle-ground between the two extremes. And when discussing Justice, its always takes into consideration two categories: Distributive Justice and Commutative Justice. I'm not up on Aristotle's justice but what's interesting about Malloch's concept of justice is that it takes the community (in this case the corporation) into account. It is a meeting of individual desire and community goals. A just distribution is one that aligns individual and community goals. The virtue in this context is that we get so see look at choices where they are realistic and affective. People don't choose equality when their personal assets are on the line.
Copyright (c) 2008 Hernan Cortes, Sociedad de los Conquistadores. cortes@conquistador.org http://www.conquistador.org

swstephe
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Posted 07/03/08 - 06:29 PM:	#10
I've been a part of a few Fortune 500 companies and venture startups. What is being described as "virtue" sounds more like the marketing brochure than the reality. Inside a company, it is a feeding frenzy where everything and anything is fair game. It is what we tell shareholders and potential new hires, but in the end money is the ends and the means of the drive of any corporation -- complicated by a lot of self-interested individuals. Any controls over a company are only maintained as long as their is competition, and as this is an external control, would be an invalid control of these capital ethics. I keep thinking about the number of huge monopolies or near monopolies which are virtual dictatorships over their vertical markets. By definition, they become essentially socialist organizations as they crush competition and manage to get controlling interest over all means of production. Even if competition exists between large corporations, you get a lot of wasted efficiency. I have a theory that governments, (even the crude and socialist ones), are just another form of corporation. They just don't have the luxury of hiring and firing, (although they might try to attract "heavy hitters" through immigration laws). I think governments would be much more efficient once people accept that they are shareholders, not citizens.
Ethics is the measuring of morality. Morality is the measuring of good. Good is the measuring of benefit. Benefit is the measure of values.

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