Artificial Intelligence and Artificial Problems: At Project Syndicate

Why Is There Economic Injustice?: DeLong FAQ

I think the basic problem is that you expect—in some sense—that the market economy should be "fair". It isn't. In fact, it cannot be.

The market economy rewards those who happen to:

  1. own particular things
  2. that are useful in making things
  3. that rich people really want
  4. if it is also hard to reproduce or make more of those particular things.

A market economy can be very useful. It provides people who want to get rich or even comfortable with powerful incentives to focus like laser beams on figuring out how to make and then making more of those particular things that are hard to make and are useful in making things rich people really want. Since non-rich people tend to want a lot of the same things, this makes the economy more productive, and makes more stuff available for everybody. And provided that it is not divided up in an even-more-unequal way, pretty much everybody becomes better off as a result of this process.

But "fair" or "just"? It is not. It cannot be. As economist Friedrich von Hayek said, the economy rewards those people who are and own things that are useful to the rich in the present and the future; fairness and justice rewards (or punishes) you appropriately for what you have done in the past; and those are very different things.

"Fairness" and "justice" are things that politics and morality has to put on top of the economy. They cannot be designed into it.