A property-owning democracy

John Rawls offered a general set of principles of justice that were formally neutral across specific institutions.  However, he also believed that the institutions of a "property-owning democracy" are most likely to satisfy the two principles of justice. So what is a property-owning democracy?

In Justice as Fairness: A Restatement (2001) Rawls offered a more explicit discussion of this concept than was offered in A Theory of Justice: Original Edition (1971).  Here are several important descriptions:

Let us distinguish five kinds of regime viewed as social systems, complete with their political, economic, and social institutions: (a) laissez-faire capitalism; (b) welfare-state capitalism; (c) state socialism with a command economy; (d) property-owning democracy; and finally, (e) liberal (democratic) socialism.

Regarding any regime four questions naturally arise.  One is the question of right: that is, whether its institutions are right and just.  Another is the question of design: that is, whether a regime's institutions can be effectively designed to realize its declared aims and objectives.  This implies a third question: whether citizens, in view of their likely interests and ends as shaped by the regime's basic structure, can be relied on to comply with just institutions and the rules that apply to them in their various offices and positions.  The problem of corruption is an aspect of this.  Finally, there is the question of competence: whether the tasks assigned to offices and positions would prove simply too difficult for those likely to hold them.

 What we would like, of course, are just and effectively designed basic institutions that effectively encourage aims and interests necessary to sustain them.  Beyond this, persons should not confront tasks that are too difficult for them or that exceed their powers.  Arrangements should be fully workable, or practicable.  Much conservative thought has focused on the last three questions mentionsed above, criticizing the ineffectiveness of the so-called welfare state and its tendencies toward waste and corruption.  But here we focus largely on the first question of right and justice, leaving the others aside.  (136-137)

(Notice that these four questions converge closely with the feasibility conditions on reforms mentioned in an earlier post.)

There is similar but less developed language in the original version of the Theory of Justice:

Throughout the choice between a private-property economy and socialism isleft open; from the standpoint of the theory of justice alone, various basic structures would appear to satisfy its principles. (TJ, 258)

Rawls argues that the first three alternatives mentioned here (a-c) fail the test of justice, in that each violates conditions of the two principles of justice in one way or the other.  So only a property-owning democracy and liberal socialism are consistent with the two principles of justice (138).  Another way of putting this conclusion is that either regime can be just if it functions as designed, and the choice between them is dictated by pragmatic considerations rather than considerations of fundamental justice.

Here is how Rawls describes the fundamental goal of a property-owning democracy:

In property-owning democracy, ... the aim is to realize in the basic institutions the idea of society as a fair system of cooperation between citizens regarded as free and equal.  To do this, those institutions must, from the outset, put in the hands of citizens generally, and not only of a few, sufficient productive means for them to be fully cooperating members of society on a footing of equality (140).

Rawls isn't very explicit about the institutions that constitute a property-owning democracy, but here is a general description:

Both a property-owning democracy and a liberal socialist regime set up a constitutional framework for democratic politics, guarantee the basic liberties with the fair value of the political liberties and fair equality of opportunity, and regulate economic and social inequalities by a principle of mutuality, if not by the difference principle.  (138)

This last point is important:

For example, background institutions must work to keep property and wealth evenly enough shared over time to preserve the fair value of the political liberties and fair equality of opportunities over generations. They do this by laws regulating bequest and inheritance of property, and other devices such as taxes, to prevent excessive concentrations of private power. (51)

And concentration of wealth is one of the deficiencies of a near-cousin of the property-owning democracy, welfare-state capitalism:

One major difference is this: the background institutions of property-owning democracy work to disperse the ownership of wealth and capital, and thus to prevent a small part of society from controlling the economy, and indirectly, political life as well.  By contrast, welfare-state capitalism permits a small class to have a near monopoly of the means of production. (139) [also Collected Papers, p. 419]

The past thirty years have taken us a great distance away from the social ideal represented by Rawls's Theory of Justice.  The acceleration of inequalities of income and wealth in the US economy is flatly unjust, by Rawls's standards.  The increasing -- and now by Supreme Court decision, almost unconstrained -- ability of corporations to exert influence within political affairs has severely undermined the fundamental political equality of all citizens.  And the extreme forms of inequality of opportunity and outcome that exist in our society -- and the widening of these gaps in recent decades -- violate the basic principles of justice, requiring the full and fair equality of political lives of all citizens.  This suggests that Rawls's theory provides the basis for a very sweeping critique of existing economic and political institutions. In effect, the liberal theorist offers radical criticism of the existing order.

(Thomas Pogge's John Rawls: His Life and Theory of Justice has a good discussion of this topic.)