The economics of equity and justice

Therein lies the rub. How exactly do we differentiate “simplistic” from “true” moral judgments - if it can be done at all? On the one hand, it is as easy to caricature serious ethics as it is to misrepresent economics: the one as camouflaged special pleading, the other as soulless quantification.

On the other, there are countless charlatans in both disciplines, with neither having a particularly firm link to empirical certainty. That said, the difficulty of reaching an objective understanding of what we might term economic morality is no reason to avoid the attempt. If anything, it makes the task more urgent.

The best approach, as usual, is to work from practical cases and Dr Henry’s question about allowable inequity is as good a starting-point as any. The commitment to maximising capabilities entails equality only in respect of those Sen identifies as absolute: proper nutrition, shelter, freedom from avoidable disease and the like. For the development of higher faculties and general social advance capabilities are relative - in terms both of community standards and individual aptitude. Not everyone can or would want to be a heart surgeon or tennis champion. But in today’s Australia any child lacking numeracy or literacy (including computer literacy) is deprived of certain basic abilities for being a full citizen. In between come the vast majority of us, our individual differences being as much a source of energy as potential division.

Naturally, there will be many disagreements at the edges about which capabilities qualify as “basic” as well as the extent of inequality that is compatible with a broader conception of equity or justice. Beyond the highest level of generalisation, and the satisfaction of truly absolute needs, there will never be full agreement. But that does not matter. The point is that we can and should have this kind of conversation - as a central element of economic debate.

That the head of Treasury is grappling with such problems is encouraging. The traditional distance between ethics and economics - or that between the community sector and business - was always artificial. We can not only learn from each other, we can speak the same language. We can even, with a bit of effort, share the same vocabulary.