Cooperating fairly

Abstract

As economics is deeply rooted in classical liberal thought, the term “solidarity” does rarely appear in economic literature. In mainstream economic analysis, this concept is neglected altogether. Moreover, market economies seem to be in stark contrast to this idea not only in theory, but also in practice. Critics blame the market system as being exploitative or at least generating huge and unjustified inequalities in income and wealth.

In this paper, we shed a different light on the social impact of market economies. First, we argue that economic interactions have a strong and positive impact on social integration and inclusion. The active participation in the process of social exchange does not only generate the economic means to pursue a self-contained life plan. Being part of the productive and wealth generating part of society is also decisive for a person’s social recognition and self-esteem.

Secondly, we elaborate on the conditions economic institutions must fulfill to make social interactions not only mutually beneficial, but also fair. In a system that aims at solidarity, rules and institutions are not only devices to stabilize mutual expectations and to enable interactions on anonymous markets. These rules must also meet the requirement of fairness. Fairness of social interaction is conceptualized as the equality of the initial bargaining situation and a balanced bargaining power. In a society with heterogeneous actors, an unequal distribution of incomes is likely to arise even when the institutional arrangements fully meet the requirements of political solidarity. In this understanding, solidarity is a non-egalitarian, liberal concept. However, liberal market economies and especially the system of international economic cooperation still fall way behind the demands of political solidarity.