Economic Justice in an Unfair World: Toward a Level Playing Field [Full Text]

Ethan B. Kapstein (Princeton: Princeton University Press, 2006), 272pp., $27.95 cloth

September 26, 2007

Economic Justice in an Unfair World: Toward a Level Playing Field

Richard Jolly(reviewer)

Economic Justice in an Unfair World is a stimulating, well-researched book combining economic analysis, political philosophy, and contemporary policy, all focused on one key question: What does one mean by economic justice in a world cut through by inequalities of income, bargaining power, and human poverty? It is an ambitious theme and the author pursues it with originality and an extraordinary wealth of quotations and references, exploring the specifics in four key areas of action: international trade, aid, migration and labor rights, and private investment.

In the preface and introduction, Ethan Kapstein sets out the key questions underlying his analysis: What possible meanings lie behind the frequently expressed assertion that "the global economy operates in a way that is fundamentally unfair, particularly to developing countries and to the poor within them" (p. 1), and what sort of policies would result from being clearer—and more rigorous-in defining these meanings?

Kapstein identifies three models for thinking about economic injustice:

  • The communitarian model, which focuses on the nation-state and seeks to ensure that equal opportunities for citizens within each country are not set back by global influences.
  • The cosmopolitan model, which focuses on the situation of individuals in the world, ignores nationality and country borders, and assesses global injustice in terms of the differing situations of individuals worldwide. Kapstein also identifies a subgroup of the cosmopolitans, which he calls the prioritarians. This group focuses on poverty reduction as the key remedy of injustice in the world today.
  • The liberal model, which focuses on the society of states and seeks faster economic growth and convergence as the central goals of policy.

Kapstein recognizes that these categories overlap somewhat. In particular, since the adoption of the Millennium Development Goals (MDGs) for global poverty reduction at the UN's Millennium Summit in 2000, the MDGs serve as the declared priority for many governments and, more particularly, for the Bretton Woods Institutions, even though "mainstream economic theory and public policy analysis reflects the communitarian perspective in important respects; after all, the state remains the privileged site of policymaking and the actor with the monopoly right to use coercive means over its own territory" (p. 9). In contrast, cosmopolitans focus directly on individuals, stress human beings as the ultimate units of concern, and make equality of status the driving force for policy. In line with this perspective, cosmopolitans take seriously the problem of failed states in a way that those working within other paradigms do not.

These paradigms are useful for understanding the different approaches that analysts and policy-makers use to consider issues of global inequality and what should be done about it. Perceptions certainly matter, but ultimately one is left wondering whether the conceptual frameworks lead to policy and action quite so clearly as Kapstein's logic and analysis seem to imply. Mainstream economics, for instance, suggests that free trade is in the interests of all countries. But though this has been preached endlessly to the developing countries, most of the developed countries practice protectionism and trade-distorting subsidies. It is not the logic of general theory but the power of domestic interests that explains this.

Kapstein's last chapter turns to policy. Emphasizing that the playing field of negotiation is far from level, Kapstein makes a number of proposals as to how the bargaining power of smaller, weaker, and poorer countries could be strengthened. The proposals are useful, though somewhat less original than the earlier sections of the book. Indeed, the main disappointment is that his agenda appears somewhat limited. Many other ways of strengthening the bargaining position of developing countries have at times been suggested, such as the provision of high-level independent analysis that is made publicly available to all parties, the creation of an ombudsman, and the use of arbitration. Even more important is to widen the whole field of action. Kapstein admirably recognizes that the world is extremely unequal-and growing more so, especially over the past quarter century.

Over the longer run, much bolder international policies in support of the poorest and least-developed countries are needed if convergence is to be achieved. In this regard, Kapstein poses the issues of growth and redistribution in an unnecessarily narrow manner. In his preface, he recognizes that some readers will argue that given "the fact of widespread poverty and destitution, and tremendous income gaps between rich and poor persons and countries, a case can be made that leveling the playing field requires a lot more than I offer here; it demands a significant reallocation of the world's wealth and resources" (p. xiii). Kapstein rejects such proposals because, he argues, actions that depend on economically meaningful redistributions from country A to country B would be welfare-reducing from the perspective of country A and thus politically unacceptable. Kapstein seems to ignore the fact that policies of redistribution with growth over time can be welfare-enhancing to all parties, by bringing economic and political benefits in the form of expanding markets and greater social and political stability. A range of policies could contribute to redistribution with growth on a global scale-more open trade, rising aid, support for pro-poor technologies, and a host of other measures that would support pro-poor growth in poorer developing countries. With these, poverty in poorer and least-developed countries could be reduced at an accelerated rate, while extremes of income distribution nationally and globally could be moderated. At the same time, the better-off groups in all countries could also gain, though by a lesser amount over time than might otherwise be the case. Kapstein ignores both such redistribution over time and the policies that might give rise to it. Admittedly, such policies are not easy and would require a different long-term vision than the leading world powers mostly display at present. But in economic terms, the budgetary costs would be a lot lower than current expenditures on war and conflict prevention.

By not exploring such options and the policies that could support them, Kapstein's final chapter is limited to little more than a carefully stated reiteration of present economic orthodoxy-which itself is too often argued for in theory and neglected in practice. It is this that makes the book worth reading but ultimately leaves the reader wanting more.

—Richard Jolly, Institute of Development Studies, University of Sussex