Euvoluntary or Not, Exchange is Just - Duke University.pdf

Euvoluntary or Not, Exchange is Just Michael C. Munger Department of Political Science and Department of Economics Duke University (munger@) Prepared for the Liberty Fund Symposium on “Liberalism and Capitalism,” April 29 – May 2, 2010, Hilton Garden Inn, Perrysburg, Ohio. I acknowledge helpful comments from Geoffrey Brennan, David Henderson, Clemens Kauffmann, Hans-Jörg Sigwart, and John Tomasi. All errors and misinterpretations are entirely my own responsibility. The (In)Justice of Euvoluntary Exchange, MC Munger – P. 1 There is a paradox in the analysis of the moral and ethical basis of capitalism. How can the sum of many individually moral actions be immoral in the aggregate? Most observers consider voluntary, informed exchange among equals to be morally unobjectionable, even praiseworthy. By definition, any truly voluntary (hereafter, euvoluntary) exchange leaves both better off than before. But differences in welfare that are the product of many exchanges, as in the case of a trader or “middleman,” are often held to be morally objectionable. Differences in wealth that result from many trades, even if each is euvoluntary, elicit calls for taxation or redistribution.. So how can the sum of many positives be negative? How can differences in wealth that result from exchanges that in every instance leave the other party better off be a justification for coercive policies designed to correct the inequity? 1 There are at least two answers in the literature. The first is the standard Rawlsian