Against the Economic Pie: How “Redistribution” Limits Political Economic Analysis

Martha T. McCluskey –

Economic-Pie.jpg

What gets lost when we describe social or environmental justice as redistribution?   This retrenches a fundamental binary—maximization versus distribution—in which maximizing logically comes first. By initially producing a bigger “economic pie,” law will be able to provide more generous slices to those who currently receive too little.

The term “re-distribution” makes explicit the hierarchical, temporal ordering of this binary. As part of a framing dualism, the term leads us to imagine that law sets up an essential baseline distribution, which afterward may be modified to advance contingent and secondary concerns about fairness, equality, or a healthy and stable environment. This presumed secondary and supplemental position leads to the common conclusion that these justice-oriented goals are best addressed not by substantive legal change disrupting the baseline order, but instead through a second-order, ancillary process of government taxation and spending.

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Against the Economic Pie: How Economic “Maximizing” Skews Legal Analysis

Martha T. McCluskey –

Should law maximize or divide the “economic pie”? Law students learn that smart thinking begins by asking this question. But this question skews legal analysis against a political economy perspective. It implicitly presumes a hierarchy where an abstract idea of economic gain normally stands above and beyond political and moral concerns, bigger in size and first in order.

Economic-Pie.jpgA recent New York Times commentary by pundit Thomas L. Friedman exemplifies the ideological work of this binary. Friedman contrasts the “redivide-the-pie” political left with various “grow-the-pie” political visions grounded in what he presents as the more realistic understanding that private economic power, not egalitarian democracy, is the foundation of good jobs and general prosperity. Similarly, legal academics often use terms like “economic efficiency” or “economic welfare” to define the optimal legal order as a matter of maximizing economic gain aside from fairness or the well-being of particular persons. For example, students learn to use efficiency to rationalize tort law limits on corporate liability for consumers’ injuries from risky products, or to justify contract law rules upholding agreements that produce harsh or exploitative results.

This first of two posts on this framing question challenges the implicit spatial metaphor embedded in the distinction between maximizing and dividing the economic pie. By definition, the whole is always greater than any particular part. We skip over many hard and important questions when we imagine the societal “whole” as a maximum “pie,” that can then be sliced and distributed for particular interests. The efficiency-distribution binary distorts legal analysis in three ways. First, the image of “maximizing” emphasizes quantity, rather than quality; second, it presumes economic gains normally and objectively expand rather than tightens the boundaries of prosperity and well-being; and third, it represents gain as a sum of separable parts, rather than as an interdependent system.

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Toward a Law and Political Economy of Gender Violence

Martha T. McCluskey –

What does political economy have to do with the issue of gender violence that roiled Kavanaugh’s Supreme Court confirmation?  One answer is that law should not separate economics from the social inequalities that mediate power.  Violent enforcement of social hierarchies has long been a core capitalist strategy for securing selective economic advantage, as Angela Harris and Frank Pasquale have written in this blog.

The recent #Metoo movement suggests the strong arm and insidious shadow of physical force is common, not marginal, to the everyday economic lives of many women, a factor to bargain with in the process of securing opportunities for education or work, housing or health care.  Conventional law and economics tends to assume a background of private voluntary exchange that belies continuing contests over the power to gain through violence. In contrast, a political economy perspective recognizes that government does not monopolize force. Instead, government enables and distributes private force by how law defines, punishes, monetizes, and immunizes private acts of violence.  Neither formal law nor social norms have firmly settled the questions of what forcible acts and impacts count as normal, excusable, trivial, implausible, or invisible.

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Economic Human Rights, Not Tough Policy Tradeoffs

Martha McCluskey —

According to conventional law and economics wisdom, problems of economic inequality are best solved with targeted redistributive spending, not universal human economic rights. A political economy perspective suggests the opposite: that legal rights are crucial for economic justice.

Orthodox law and economics tellsus: all rights have a cost.  Law allocates economic gain, but cannot generate it, in this view.  From this premise, any new economic rights aimed at supporting those who are disadvantaged must come at the expense of some other economic gain.  For example, a universal right to affordable health care would simply mask an inevitable tradeoff in public and private spending:  fewer resources for education or jobs.  In addition, in this logic, an economic entitlement to receive basic human support will replace market discipline with incentives for waste, reducing economic resources overall.

What orthodox law and economics doesn’t tell us:  all costs have a right.  That is, any costs associated with new economic rights arise not from essential economics, but instead from contingent legal and political arrangements. Particular legal and political regimes produce, organize and limit access to human needs like education or health care. Law itself shapes the economic forces that appear to be disrupted when law re-allocates rights to advance general human needs.

On the question of health care, for example, a complex system of legal rights and institutions already protects economic gain for some at the expense of health and economic security for others.  Legal systems distributing risks and rewards in health care include patent rights, insurance regulation, corporate governance rules, antitrust law, criminal law, and tax policy. Moreover, these legal rights are not firmly settled or self-evident, but instead are continually questioned and modified, especially in response to lobbying, litigation, and advocacy by industry interests.  New rights to egalitarian economic support can similarly re-arrange economic gain and loss as a legitimate and beneficial function of democracy.

Further, we should not presume human economic rights amount to zero sum transfers or costly economic distortions.  That conventional law and economics thinking rests on the myth of an essential market order that transcends law and politics, thereby closing off analysis of how re-structuring the market could generate far better economic conditions.  But a more complete law and political economy view recognizes that entitlements do not come at the expense of naturally productive market activity; instead, entitlements generate and govern market production. New legal rights can give people new power to resist existing market constraints, and that transformative power can lead the economy to new levels of prosperity and stability. Continue reading