Lisa Herzog

Persönliches Vertrauen, Rechtsvertrauen, Systemvertrauen

Abstract This essay analyses the role of different forms of trust in the context of financial markets. It argues that rather than being caused by a lack of trust, the financial crisis of 2007 can be characterized by a shift from personal trust, with its normative and epistemic implications, towards too much “systemic trust”. Through a process of legalization and formalization, loans became standardized, and lenders relied not on the trustworthiness of borrowers, but on their legal claims and the ability of markets to evaluate these correctly. As recent research in social philosophy and legal studies shows, however, markets built on “systemic trust” run into paradoxes, both with regard to their epistemic features and with regard to their ability to deal with the fundamental uncertainty of the future. This fact raises serious questions about the epistemic control of complex market systems, and about the justice of institutional structures in which only some people’s or organization’s trust pays off, while other people’s trust is betrayed.

Adam Smith's Account of Justice Between Naturalness and Historicity

adam smith1 is often taken to be an heir to the natural jurisprudence tradition, to which he explicitly refers in several places in his oeuvre.2 He combines it with an account of the moral sentiments, in which he sees the origin of morality and justice.3 The moral sentiments, as explored in The Theory of Moral Sentiments, are the basis for justice, which, embodied in positive law, is the framework for commercial society, the economy of which Smith explores in the Wealth of Nations. in this sense, Smith is seen by many scholars as a being a moral philosopher in the first place, and an economist in the second place.4 The challenge that remains, and

Fieldwork in Political Theory: Five Arguments for an Ethnographic Sensibility

This article makes a positive case for an ethnographic sensibility in political theory. Drawing on published ethnographies and original fieldwork, it argues that an ethnographic sensibility can contribute to normative reflection in five distinct ways. It can help uncover the nature of situated normative demands (epistemic argument); diagnose obstacles encountered when responding to these demands (diagnostic argument); evaluate practices and institutions against a given set of values (evaluative argument); probe, question and refine our understanding of values (valuational argument); and uncover underlying social ontologies (ontological argument). The contribution of ethnography to normative theory is distinguished from that of other forms of empirical research, and the dangers of perspectival absorption, bias and particularism are addressed.

Qualified market access and inter-disciplinarity

This note offers reflections on qualified market access (QMA)—the practice of linking trade agreements to values such as human rights, labour standards, or environmental protection. This idea has been suggested by political theorists as a way of fulfilling our duties to the global poor and of making the global economic system more just, and it has influenced a number of concrete policies, such as European Union (EU) trade policies. Yet, in order to assess its merits tout court, different perspectives and disciplines need to be brought together, such as international law, economics, political science, and philosophy. It is also worth reflecting on existing practices, such as those of the EU. This note summarises some insights about QMA by drawing such research together and considers the areas in which further research is needed, whilst reflecting also on the merits of interdisciplinary exchanges on such topics.

Eigentumsrechte im Finanzsystem

Abstract This paper asks how property rights in the financial system can be normatively justified. It argues that in the current financial system, we find property rights with very different normative bases, some of which are stronger than others. In fact, there is a systematic gap between the normative priorities (which property rights deserve protection?) and the de facto priorities (which property rights are in fact protected?). I draw on the three traditional approaches for justifying property rights, along Hegelian, Lockean and consequentialist lines, and ask how relevant they are for the property rights that one finds in today’s financial system. As it will turn out, Hegelian and Lockean justifications are better suited for the “real economy” than for the financial system; whereas the most promising approach for justifying many property rights within the financial system (if they can be justified at all) is a consequentialist one. This implies that reform proposals, for example with regard to higher capital ratios for banks, cannot be countered by holding that they interfere with property rights, for the property rights that are interfered with cannot claim to have stronger normative bases than the normative principles involved in the reform proposals.

Die Güter der Arbeit (jenseits des Geldes!) 1

John Rawls wurde dafur beruhmt, dass er Gerechtigkeit als die faire Verteilung der Nutzen und Lasten sozialer Kooperation beschrieb. In modernen Gesellschaft en ist eine der zentralen Formen sozialer Kooperation die bezahlte Arbeit. Die meisten von uns mussen arbeiten, um ihren Lebensunterhalt zu verdienen, und dies nimmt viel Zeit in Anspruch. Der unvermeidbare und zeitintensive Charakter von Arbeit impliziert, dass die Struktur von Arbeitsmarkten in mehreren Hinsichten gerechtigkeitsrelevant ist: Die meisten Menschen konnen bezahlte Arbeit nicht vermeiden, deswegen muss sichergestellt werden, dass sie nicht ihre Moglichkeit unterminiert, ein angemessenes Leben zu fuhren.

Durkheim on Social Justice: The Argument from “Organic Solidarity”

This article reintroduces a long-forgotten argument into the debate about social justice: Durkheims argument from “organic solidarity,” as presented in The Division of Labor in Society. “Organic solidarity” is solidarity based on differentiation. According to Durkheim, it grows out of the division of labor, but only if the latter happens “spontaneously.” Social inequality creates obstacles to such spontaneity because it distorts prices, such that they are perceived as unjust, and it undermines equality of opportunity. Hence, Durkheims argument connects commutative justice and distributive justice. The article argues that Durkheims argument is plausible, interesting, and relevant for today. After presenting the argument, discussing its structure and methodology, and evaluating its plausibility by drawing on related contemporary debates, it focuses on the problem of the perception of social justice and the possibility of ideological distortions. It concludes by sketching the research program that follows from Durkheims argument.

Higher and lower virtues in commercial society

Motivation crowding out can lead to a reduction of ‘higher’ virtues, such as altruism or public spirit, in market contexts. This article discusses the role of virtue in the moral and economic theory of Adam Smith. It argues that because Smith’s account of commercial society is based on ‘lower’ virtue, ‘higher’ virtue has a precarious place in it; this phenomenon is structurally similar to motivation crowding out. The article analyzes and systematizes the ways in which Smith builds on ‘contrivances of nature’ in order to solve the problems of limited self-command and limited knowledge. As recent research has shown, a clear separation of different social spheres can help to reduce the risk of motivation crowding out and preserve a place for ‘higher virtue’ in commercial society. The conclusion reflects on the performative power of economics, arguing that the one-sided focus on models of ‘economic man’ should be embedded in a larger context.

Desert in the Market – The Case of Adam Smith

The question of justice in the market has often been asked in terms of the notion of desert: can one say that (labour) markets give people what they deserve? While this idea has been criticized both from the right (Hayek, Nozick) and from the left (Rawls, Barry), it is very much alive in public discourse, and has recently been revived in political philosophy (Miller, Honneth). This paper, which combines history of economic thought with systematic reflection, analyses the applicability of the notion of desert to markets. It argues that in the writings of Adam Smith, the ‘father’ of economics, the market rewards certain virtues like honesty, probity and industry, while other virtues are rewarded in other spheres of the social world. The market can reward these virtues because under ideal circumstances the price mechanism resembles the process by which moral judgments are formed from the point of view of an “impartial spectator.” Market outcomes that result from these virtues can thus be called deserved. This is an aspect of the fact that for Smith the market society is a natural order created by a benevolent deity – if this system punished vice instead of virtue, it could not be considered just, and its author could not be seen as benevolent. But when analyzing Smith’s account more closely, one can see that the reward of what one might call the “bourgeois virtues” in the market depends on a number of structural assumptions. In particular, these concern the flexibility of human capital and the absence of imbalances of power. Although Smith describes perfectly “free” markets in which the market price “gravitates” towards the natural price, he is aware that these problems affect the equity of the market process and disadvantage the workers vis-a-vis the employers.This shows that it is problematic to apply the notion of desert to the contemporary economic world. But this concept is nevertheless useful for reflecting on the ways in which economic systems reward certain kinds of behaviour and punish others, and thus allows us to compare the character traits that are rewarded in the market with those we value from a moral point of view. It can thus serve as a kind of “regulatory ideal” about how the frameworks that surround markets should be structured.