Democracy and Exchange

Democracy and Exchange

Schumpeter, Galbraith, T.H. Marshall, Titmuss and Adam Smith

David Reisman

Democracy is the rule of the people. Exchange is supply and demand. Individualism, agreement, tolerance and choice are the underlying values that make possible the productive collaboration of the market and the state. This book assesses the theories of democracy and exchange of five interdisciplinary thinkers who tried to unite political and economic reasoning into a single theory of moderation and pragmatic management.

Chapter 9: T.H. Marshall: Citizenship and Social Distance

David Reisman

Subjects: economics and finance, economic psychology, history of economic thought, institutional economics, social policy and sociology, economics of social policy

Extract

Citizenship is a ‘principle of equality’ (Marshall, 1950: 20). Class, however, is a principle of distance. Marshall says that there is no a priori reason why economic layering has to be eliminated if capitalism is to be brought tolerably close to felt community: ‘Status differences can receive the stamp of legitimacy in terms of democratic citizenship provided they do not cut too deep, but occur within a population united in a single civilisation; and provided they are not an expression of hereditary privilege’ (ibid.: 44). Marshall’s first condition is that separation should not be excessive. Some inequality is ‘necessary and purposeful’: ‘It provides the incentive to effort’ (ibid.: 19). Too much inequality, however, is a pollutant, like a smoking chimney, that the ‘social conscience’ (ibid.: 20) deems to be an evil that must be abated. The second condition is that there should be a unifying way of life. This is the internalised sense of ‘community membership and common heritage’, of ‘common culture and common experience’ (ibid.: 25, 44). It binds together the fellow participants through the ideas and the values that they share. The third condition is that intergenerational inequities should be suppressed. People are willing to accept differences in income if opportunities are equal and selection is unbiased: ‘Inequalities can be tolerated within a fundamentally egalitarian society provided they are not dynamic’ (ibid.: 44). People are less receptive to unequal outcomes if the law is stratified, achievement unacknowledged, mobility blocked, privilege inherited. Citizenship is fully compatible with the ‘inequalities...

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