Free Riding on Fairness
Works Cited
Index
Social Contract, Free Ride
“You get what you pay for.” As often as not, however, you do not. If you did, the world would be a simpler place. It would be wholly ruled by exchange relations. All would bear the full consequences of their actions and nobody would suffer or profit from “spillovers” he1 did not cause. Politics would be a redundant activity, and as a subject of study it would be swallowed up by economics. All social co-operation would be regulated by contracts, none by commands. Individuals would be sovereign, each deciding all matters for himself.
Yet it is of the essence of social coexistence that a person can get more than he pays for, and also that he can be made to pay for more than he gets. When this is the case, the advantage of mutually agreeable exchanges fails to explain fully why co-operation takes the forms it does. Certain acts and forbearances, goods and services are bought and sold; others are “provided.” It is believed that there are goods, such as national defense, traffic lights, clean air, or union bargaining, whose intrinsic characteristics predestine them to be collectively provided, for they cannot be doled out in driblets to individuals willing to buy them nor be withheld from those who will not pay for them. However, the dividing-line between public provision and private exchange does not run according to the textbook distinction between public and private goods. Intrinsically private goods, like health care and education, are in large part publicly provided in most societies that are regarded as democratic, and in some that are not. Both individual exchange and collective provision require contributions of resources, efforts, good conduct, and good sense. Contributions give rise to benefits to be enjoyed. But the relation governing how contributions are transformed into benefits is different between “exchange” and “provision.” In the realm of exchanges, value is received for value rendered; some firm nexus links any single individual’s benefit to his own contribution. He gets a good if he pays its price. In the realm of public provision, however, the individual nexus is relaxed or uncoupled altogether; only aggregates remain firmly linked. For the group, the town, or the nation, total contributions match total benefits. Within such communities any individual can be a free rider as long as at least one other will be a sucker. Only by sheer accident does one’s contribution “fairly” match one’s benefit and it is not the purpose of public provision that it should. If anything is intended it is the contrary, for non-market provision is as much an exercise in making selected goods and services freely available as in helping some members of a “public” at the expense of others. The uncoupling of individual benefit from contribution which is intrinsic in “publicness” designates it as the redistributive engine par excellence—an engine that keeps churning away unstoppably, impervious to sporadic attempts to throttle it back.
Social anthropology is in two minds about the institution of private property and the historical evidence, such as it is, of “what came first” (or mattered more) —exchange and giving in the firm expectation of receiving a due return, or provision according to some principle of sharing. The balance at any time between the two ways of going about getting what one wants determines the character of a society in more ways and probably more decisively than anything else in the political culture. It suffices to conjure up the ideal image of the classical liberal market order at one Platonic extreme and full communism at the other, to size up the potential effect of the balance shifting one way or the other, as it appears to have done from time to time since our earliest days. It is a curious and imperfectly understood feature of modern societies, however, that when the balance does shift it now shifts only one way, towards wider and more diverse collective provision by central and local governments and quasi-voluntary associations, leaving a shrinking relative role to private exchanges. This tendency, discernible for at least the last century or so, is one no political regime of any persuasion has yet reversed, though more than one have proclaimed the vital need to try. One of the puzzles the present book seeks to unravel is why contemporary societies end up with “more government” both when they seem to want more and when they claim to prefer less.
Harder to unravel, though of the same design, is the puzzle of why groups of interdependent persons seem unable to attain certain outcomes that are perfectly within their reach and that each member of the group would prefer. Public provision has long been held to be such an outcome. The diagnosis dates back at least to Hobbes, who taught us that it is impossible to assure civil order by way of voluntarily agreed mutual respect for life and property, for covenants to keep the peace would be but “vain breath” in the absence of an all-powerful, sole contract-enforcer. All would like civil peace, but each would like it better still that all others should keep it while he remained free to breach it. Hence, none could have civil peace unless all laid down their arms and submitted to the threat of public coercion in the enforcement of agreements. Their willingness to submit—essentially, their acceptance of the social contract—is the direct consequence of their want of a good that can be provided out of mandatory contributions or not at all.
What Hobbes deduced from the preference for a single good—civil order—later theorists have extended to any good from which an individual can benefit without contributing to the cost of producing or maintaining it. The implied incentive structure gives rise to a dilemma in that contribution is both advantageous and irrational. Contributing to public goods is interpreted as a particular case of the notoriously destructive “prisoners’dilemma,” in which the pursuit of self-interest is an insurmountable obstacle to its own success, and rational conduct leads to needlessly poor and wasteful outcomes. If so, people would naturally rather be forced into individually unappealing conduct permitting better outcomes than accept the inferior ones that would perversely result from their free choices. On this reasoning is founded the legitimacy of the social contract and the related proposition that, generally, without mandatory contributions there can be no publicly provided goods (or, in a variant of the proposition, only inefficiently small supplies).
It is by taking this proposition as self-evidently true that public goods theorists from Wicksell and Lindahl to Samuelson have felt free to treat the Hobbesian problem of the unenforceable covenant as one that could be dealt with in terms of optimum taxation and optimum allocation of state expenditures. In their hands, a conundrum of political philosophy became a technical question of welfare economics. There is, of course, no call to object to this reduction on the ground that it is “reductionist.” It is by successful reduction of problems that, with luck, we solve them. This particular reduction, however, is not successful, depending as it does on an underlying interpretation of the alternatives confronting men in the state of nature that does not stand up to scrutiny. The point of this book is to demonstrate that there is no public-goods dilemma in Hobbes’s fatal sense—a sense adopted by subsequent thought in law, politics, and economics (impoverishing each) —for voluntary contribution to shared benefits can be fully consistent with the successful pursuit of narrow self-interest. Willing surrender of free choice in the matter, as social contract theory would have us do, cannot be accounted for by our desire to attain purportedly better states of affairs than our uncoerced self-seeking could bring about.
The antithesis between building social co-operation on free contracts and on obedience to legitimate commands lies at the base of the cleavage between individual and social choice. It is only when his benefit is matched by his contribution and he “pays for what he gets and gets what he pays for” that an individual’s choice is solely, or at least predominantly, his own business and no proper concern of others. When, in co-operative situations, his benefit exceeds or falls short of his contribution he plays a de facto free-rider or sucker role, bound up with either the tolerance or the pressing encouragement of others who, by right or force, get a say in the matter. Unless they are fatuous (a redundant adding together of identical wishes), collective decisions involve the will, preference, or interest of one part of a collectivity
