Abstract
Chapter 2 argues that the Rawlsian Law of People is much more useful to the debate on international distributive justice than is commonly assumed by many leading political philosophers (Pogge, Nussbaum, Sen, Beitz, Singer). I will show:
-
1.
that these criticisms are misleading insofar as they do not take the concept of basic structure seriously and reduce LP to an instance of ethical statism or acritical acceptance of cultural pluralism;
-
2.
that the basic domestic structures, and the principles that govern them, depend on the law of peoples and also its principles. Therefore it is not true that each basic structure is independent of what occurs in the international field;
-
3.
that, even though his argumentation is not clear, Rawls admits the use of distributive principles in the international domain, but only to some extent. Therefore, it is not true that his doctrine has no normative bite. On the other hand, the discussion has focused only on the application of the difference principle as the sole principle that should be applied even in the international domain, on the basis that it nullifies the influence of arbitrary factors such as birth in poor countries. However, as I will show later, this position assumes what Rawls has denied in many passages of TJ: that his doctrine is a form of luck egalitarianism;
-
4.
that the concept of basic structure as a set of institutions that can govern the entrance and exit of their members and their wealth is necessary in order to provide a normative evaluation of phenomena such as multinationals’ tax avoidance through the use of off-shore branches situated in so-called tax havens. Far from being suited to a “vanished Westphalian World”, Rawlsian doctrine can offer us moral guidance when we face these forms of free riding that threaten the integrity and stability both of national tax systems and, as we are experiencing right now, of the international economy.
Thus, I hope to show that, if my points are correct, there is room for a theory of international distributive justice that follows the principles formulated in LP.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
J. Rawls, The Law of Peoples with “The Idea of Public Reason Revisited” (Harvard: Harvard University Press, 1999).
- 2.
J. Rawls, A Theory of Justice (1971), rev. ed. (Oxford: Oxford University Press, 1999), hereinafter TJ.
- 3.
R. Nozick, Anarchy, State and Utopia (Oxford: Basil Blackwell, 1974), p. 183.
- 4.
Allen Buchanan, “Rawls’s Law of Peoples: Rules for a Vanished Westphalian World,” Ethics 110, no. 4 (2000): 702–703, and 716–720.
- 5.
Martha Nussbaum, Frontiers of Justice (Cambridge, MA: Belknap Press, 2007), pp. 248–250.
- 6.
T. Pogge, World Poverty and Human Rights. Cosmopolitan Responsibilities and Reforms (Oxford: Polity Press, 2002), pp. 110–115.
- 7.
Ivi, pp. 139–145, see also Nussbaum, cit. pp. 239–240.
- 8.
See Buchanan, cit., pp. 697–698, 716–720; C. Beitz, “Rawls’s Law of Peoples,” Ethics 110, no. 4 (2000), pp. 686–687; Cecile Fabre, Justice in a Changing World (Oxford: Polity Press, 2007), pp. 104–105; S. Caney, Justice Beyond Borders. A Global Political Theory (Oxford: Oxford University Press, 2007), pp. 81–84.
- 9.
It has been argued that Rawls claims the self sufficiency of states, something that is clearly contradicted by empirical and historical evidences. Buchanan, Justice, Legitimacy and Self Determination, cit., pp. 209–210, and 212–216. See also, P. Singer, One world, The Ethics of Globalization (New Haven: Yale University Press, 2002), pp. 9–13, Nussbaum, cit., pp. 234–237.
- 10.
A. Buchanan, Justice, Legitimacy and Self Determination. Moral Foundations for International Law, cit., p. 215.
- 11.
See also J. Rawls, Political Liberalism (New York: Columbia University Press, 1993), pp. 11–12 (hereinafter, PL); id. Justice as Fairness. A Restatement, ed. Erin Kelly, 55 (Cambridge, MA: Belknap Press of Harvard University Press, 2001) (hereinafter JF).
- 12.
In LP the topic of immigration is considered a consequence of the persistence of non-ideal conditions in the international domain, such as massive violations of human rights, extreme poverty, lack of access to international markets in fair terms. As soon as the ideal conditions are met, the question of immigration ceases to be relevant. LP p. 18. M. Nussbaum criticizes Rawls for not taking into account among the causes of emigration the economic inequality among peoples (cit. p. 239) and the discrimination of minorities (ivi, pp. 253–254). But she overlooks two passages in Rawls’ line of reasoning, which will be introduced with more details later; economic inequality in the international arena is morally acceptable if it is not too extreme and if it is the result of policies pursued by a well ordered society. Moreover, according to Rawls, the rights of minorities are respected in a decent society. These points are, in my opinion, overlooked by Eric Cavallero, “An Immigration-Pressure Model of Global Distributive Justice,” Politics, Philosophy & Economics 5, no. 1 (2006): 115; Fabre, cit., pp. 116–124.
- 13.
LP, sec. 1.3 and 4.3. See also D. Miller, National Responsibility and Global Justice (Oxford: Oxford University Press, 2007), pp. 244–247. The question of immigration opens up difficult issues, such as which position to take when a dictatorship, for reasons of economic and social crisis, decides to let, or incite, part of their population to leave the country, in order to force the neighbouring rich countries to help the government in need. This occurrence happens in Albania in the summer of 1991.
- 14.
The analogy of the basic structure with the state is affirmed by S. Freeman, Justice and the Social Contract (Oxford: Oxford University Press, 2007), pp. 268–270. He also affirms that there is nothing analogous to a basic global institution: “The rules and institutions that make global economic cooperation possible are national, and they apply internationally only due to agreements among peoples”, ivi, p. 307, an assumption that I will consider below.
- 15.
This point is often overlooked by those who criticize Rawls for his denial of the existence of a basic structure. See as an example Buchanan, “Rawls’s Law of Peoples: Rules for a Vanished Westphalian World”, cit. p. 705, and id. Justice, Legitimacy and self determination, p. 214. However, as we will see later, the existence of a basic structure does not suffice in providing an argument in favor of the application of the difference principle in a global scale.
- 16.
I believe that this “mechanical” interpretation of the relationship between the principles of justice in the three domains is claimed by Freeman when he affirms that “domestic justice, the justice of the basic structure, has a kind of priority over other forms of justice. (…) We can, however, specify the rights, duties and obligations that citizens of a democratic society owe to one another without first working out the terms of the Law of Peoples”. Freeman, cit., p. 270.
- 17.
On this point see Freeman, cit. p. 270.
- 18.
Thus, we could argue that the characteristics of a basic structure depend, among other things, on the principles that rule this structure. Being diverse, the principles applied to a structure from those who are applied to another one, we can say that the two structures are different.
- 19.
The question of paternalistic intervention in international politics has risen dramatically after the US invasion of Iraq. See, A. I. Applebaum, “Forcing a People to be Free,” Philosophy and Public Affairs 35, no. 1 (2007), 359–400. It is clear, then, how Rawls uses a “normative”, rather than sociological or ethnic, notion of “people”, in the sense that it is a group of individuals that freely recognise each other as members of a polity.
- 20.
See Freeman, cit. p. 314. However, it undeniable the deep influence that Hegelian legal philosophy has exercised on the concept of decent consultation hierarchy. See LP, sec. 9.2.
- 21.
Moreover Rawls does not state that decent and liberal peoples have the same moral values, since the latter are “guilty of injustice”. LP, pp. 62, 83. See also Freeman, cit., pp. 299–304.
- 22.
Freeman, cit. p. 278. For this reason I find the following Nussbaum position too hasty: “Any extension of human rights thinking, by which nations decide to change their structures in response to international debate, is precluded by Rawls’ assumptions.” Nussbaum, cit. p. 243. She cites as examples the provisions of the Convention on the Elimination of All Forms of Discrimination against Women, acronyms CEDAW. I think Nussbaum misunderstands Rawls. In fact, the Law of Peoples does not reject, as far as I know, the possibility that through a dialogue in the UN, a decent society might accept new legislation that reduces discrimination. The question is whether or not an external intervention for imposing these provisions is justified. This intervention is clearly rejected by Rawls, and by Nussbaum as well (Nussbaum, cit. pp. 255–256).
- 23.
Kok Chor Tan, “Liberal Toleration in Rawls’s Law of People,” Ethics 108 (1998), 276–295, Beitz, cit. pp. 686–687, Buchanan, Justice, Legitimacy and Self Determination. Moral Foundations for International Law, cit., pp. 40–44, 159–176, Caney, cit. pp. 81–82.
- 24.
The “practice dependent” nature of Rawlsian doctrine has caused many allegations of unjustified acceptance of the status quo, as we have seen at the outset. However, two points can be made. First, as A. James as showed, Rawls’ doctrine can be considered a form of constructive interpretation that strives to offer the best normative interpretation of a practice. A. James, “Constructing Justice for Existing Practice: Rawls and the Status Quo,” Philosophy and Public Affairs 33 (2005), 300–303. Thus, there is space for moral criticism of current practices. Secondly, it has been argued that practical dependent theories analyse questions of justice as problems of reciprocity, and not of some moral claims valid independently of the social relationships, as luck egalitarians affirm. See A. Sangiovanni, “Justice and the Priority of Politics on Morality,” Journal of Political Philosophy 1 (2007), 1–4. And Rawls rejects a luck egalitarian justification of principles of justice, as we will see later.
- 25.
Caney, cit., pp. 83–84.
- 26.
It is worth recalling that the normative concept of people, as a “competent collective agent”, which claims “the respect owed to any competent agent”, lies, and fall, with the recognition and guarantee of basic human rights and political liberties of all its members”. Applebaum, cit., p. 371; see also ivi, p. 388.
- 27.
On the influence of the background conditions on the justice of the basic structure, see M. Ronzoni, “What Makes a Basic Structure Just?”, Res Publica 14 (2008), 208–215, and id. “The Global Order: A Case of Background Injustice? A Practice-Dependent Account,” Philosophy and Public Affairs 37, no. 3 (2009), 247–249.
- 28.
See on this issue J. Stiglitz, Freefall. America, Free Markets and the Sinking of the World Economy (New York: W. W. Norton & Co., 2010), and especially, pp. 51–52, 80–81.
- 29.
J. Rawls, “The idea of Public Reason revisited” (1997), in id. Collected Papers, ed. by S. Freeman, Harvard, Harvard University Press, 2001, pp. 580–581.
- 30.
In this case, I think that the normative nature of “people”, as a community of citizens that enjoys political rights, is formally applicable to our society, but if we take a more in-depth look, it is not that clear how “free” our citizenry is.
- 31.
It is true that Rawls affirms in TJ p. 378 that the principles of the law of nations aim “to nullify their historical fate”. But this does not give a sufficient reason to affirm that international distributive justice must follow luck-egalitarianism.
- 32.
Singer, cit. p. 178.
- 33.
A. Altman and C. Heath Wellman, A Liberal Theory of International Justice (Oxford: Oxford University Press, 2009), p. 130.
- 34.
For this reason it has been argued that luck-egalitarians misinterpret Rawls’ doctrine insofar as they overlook the political or relational nature of justice as fairness. See, S. Scheffler, “What is Egalitarianism?”, Philosophy and Public Affairs 31, no. 1 (2003), 8, 24–28, Freeman, cit., pp. 118–119, and A. Sangiovanni, “Global Justice, Reciprocity, and the State,” Philosophy & Public Affairs 35 (2007), 29.
- 35.
I think that Rawls’ doctrine would not accept the practice of many rich countries of subsidizing their products, which then impedes poor countries to compete with them. See on the issue: M. Kurjanska and M. Risse, “Fairness in Trade II: Export Subsidies and the Fair Trade Movement,” Politics Philosophy Economics 7, no. 1 (2008), 29–56.
- 36.
I am not arguing that this is the actual function of the WTO, which is infamous for often being the institution that imposes unfair conditions on poor countries vis-a-vis their access to western markets, see Singer ch. 3 as an example, but I would like to point out how a possible reform of this institution, or of certain of its practices, can bring about huge effects in distributing resources among peoples. A more up-to-date and sympathetic evaluation of the role of WTO is offered by D. Moellendorf, “The World Trade Organization and Egalitarian Justice,” in Global Institutions and Responsibilities, ed. C. Barry and T. W. Pogge, pp. 141–158 (Oxford: Blackwell, 2005).
- 37.
Of course, the matter is that poor countries do not have the same opportunities to have a fair hearing in the organization, but this does not mean that a reform of this organization cannot produce, at the same time, a better implementation of the (cooperative) principles that these institution should enhance. For this reason, Moellendorf, among many others, proposes that the participation of the least- developed countries in the organization be subsidised. Ivi, p. 150.
- 38.
See Ronzoni, “The Global order: A case of background injustice”, cit., pp. 249–251, and 254–255.
- 39.
In this case we would take into account the issue of the use of workers that do not enjoy any form of labour rights. The result would be analogous to P. Van Parijs’ proposal of putting “patriotic tariffs” on those goods that are the result of exploitative labour relationship in countries in which labour rights are not respected. Philippe Van Parijs, Real Freedom for All. What (if anything) can Justify Capitalism (Oxford: Clarendon Press, 1995), 231–233. On the issue in general, see Mathias Risse, “Fairness in Trade I: Obligations From Trading and the Pauper-Labor Argument,” Politics Philosophy Economics 6, no. 3 (2007): 355–377.
- 40.
Daniel E. Lee and Elizabeth J. Lee, Human Rights and the Ethics of Globalization (Cambridge: Cambridge University Press, 2010), p. 211.
- 41.
“The law of nations, which is also known as international customary law formed by the general assent of civilized nations, is comprised of rules and principles that govern the relations and dealing of nations and of international organizations with each other; as well as some of their relations with persons, whether natural or juridical”, Ivi, pp. 212–213.
- 42.
Ivi, pp. 216–217. Another important case, that has reached an extra-judicial settlement, is John Doe I v. Unocal Corporation. A group of Burmese villagers accused Unocal of having hired army troops in order to secure the construction of a pipeline. These army troops eventually imposed forced labour on people living in that area. John Doe I was killed while attempting to escape, and his wife was raped. Although the exact amount of the compensation is unknown, it is believed that Unocal has paid 30 millions $ in damages. Ivi, pp. 229–230.
- 43.
Ivi, pp. 219–227. It is not a case that the more progressive trends in interpreting the Aliens Tort Claims Act have been strongly contrasted by the Bush administration. See ivi, pp. 230–231.
- 44.
John Rawls and Philippe Van Parijs, “Three Letters on The Law of Peoples and the European Union,” Revue de philosophie économique 7 (2003): 7–20, http://www.uclouvain.be/cps/ucl/doc/etes/documents/RawlsVanParijs1.Rev.phil.Econ.pdf downloaded the 1 of February, pp. 7–8.
- 45.
Ivi, pp. 9–11.
- 46.
Of course, the government that appoints those people is supposed to be accountable to its citizens. It is true that the same government can blame supranational authorities for the unpopular policies that are taken. However, it is not enough arguing that a certain policy is imposed upon a democratic government by supranational authority in order to consider it illegitimate. Other things must be considered, such as the merits of that policy, whether it is efficacious or fair even though it is rejected by the majority of the citizens, and whether the government does not want to be held responsible of taking unpopular measures, although necessary. Moreover, the people could exercise its right to exit from that institution, and therefore the supranational institution does not exercise any coercion. In this case, I would hasten to say that even though some of the recommendations provided by the institution might be considered illegitimate by the majority of the citizens, they might be morally binding, if the citizenry do not want to leave this institution.
- 47.
A. Abizadesh, “Cooperation, Pervasive Impact, and Coercion: On the Scope (not Site) of Distributive Justice,” Philosophy and Public Affairs 35, no. 4 (2007): 343. In this case we would reduce, as Abizadesh urges, the gap between site (which is local) and scope (which is global) of distributive justice; ivi, p. 320–321, 330, and it would not be confirmed the alleged (by him) inappropriateness of Rawlsian doctrine, ivi, p. 358.
- 48.
The case that has caught my attention concerns the famous rock band U2. Some journalist investigations and a French documentary (La gran evasion) disclosed that the band had set up a financial company hosted in a tax haven. The aim, legitimate as laws stand, was to reduce the taxes that had to be paid in the case that they would have maintained the site of the company in Ireland, which, by the way, has the lowest taxation on corporate earnings. What has produced indignation was the fact that the band was famous, among other things, for the humanitarian commitment of the singer, Bono, who was used, and he still is, to make public exhortation in favour of the duty of rich government in helping poor countries. Protesters accused the band of being hypocrites insofar as while they were criticising governments for not doing enough in helping poor people, they were avoiding their fiscal obligations towards their fellow citizens. See, with a short reply of the singer, “Tax protesters rattle U2 with hypocrisy jibes,” Sunday Times, March 1, 2009.
- 49.
According to the OECD definition, the “Tax haven criteria” are: “(1) there is no or nominal tax on the relevant income (from geographically mobile financial and other service activities); (2) there is no effective exchange of information with respect to the regime; (3) the jurisdiction’s regimes lack transparency e.g. the details of the regime or its application are not apparent, or there is inadequate regulatory supervision or financial disclosure; and (4) the jurisdiction facilitates the establishment of foreign owned entities without the need for a local substantive presence or prohibits these entities from having any commercial impact on the local economy”. Organization for Economic Cooperation and Development (OECD) Towards Global Tax Co-Operation: Progress in Identifying and Eliminating Harmful Tax Practices. Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on Fiscal Affairs (Paris: OECD, 2000) http://www.oecd.org/dataoecd/25/27/44430257.pdf, p. 10, n. 4, downloaded the 1 of February 2011. A taxonomy is offered by Lorraine Eden and Robert T. Kurdle, “Tax Havens: Renegade States in the International Tax Regime?”, in Law & Policy 27, no. 1 (2005): 101–102. We must take into account, however, that these characteristics can be realized in different ways and to diverse extents through the particular legal arrangements that are set up to guarantee the interests of those who want to escape high taxation and keep their wealth secret. What is of much interest is the fact that in the list published by these authors there are cited territories that are dependent on, or belong to, those governments that, supposedly, aim to eradicate or reduce the impact of harmful tax competition through the policy recommendation set up by the OECD. Ivi, pp. 111–112.
- 50.
Gillian Brock, “Taxation and Global justice: Closing the Gap between Theory and Practice,” Journal of Social Philosophy 39, no. 2 (2008): 165 at footnote 22 cites the case of Microsoft as paradigmatic. Microsoft succeeds in taking huge earnings (12.3 billion $ in 1999) without paying taxes in the US through complex transfers of all earnings into its branch hosted in a tax haven.
- 51.
I would like to point out that I am not affirming that Bill Gates is taking advantage of illicit practices. I simply wonder whether his philanthropic attitude is coherent with a practice that permits him to avoid paying those taxes that are imposed upon 99% of his fellow citizens. Given that those citizens’ wealth and earnings are less mobile, or not mobile at all, they cannot avoid taxation. Moreover, as the OECD report points out, they must bear the burden of the possible shift of taxation towards less mobile tax bases, such as labour, property and consumption. OECD, cit., p. 5. Thus, this practice has led to a huge unfairness towards the vast majority of the fellow citizens that cannot enjoy the same opportunity of transferring their earnings in a tax haven. Moreover, it can be argued that with this attitude the state’s same possibility of securing its functions, such as maintaining public security and enforcing property rights, is put under threat. And, as we will see below, the richest people take proportionally more advantage of these functions.
- 52.
Public goods are those goods that can be consumed collectively without reducing their value or their availability. Public security and public health are public goods since everyone can enjoy them without reducing their value. In public economics, it is well spread the idea that taxation is justified insofar as it ensures, through a mechanism of enforcement, the contribution for making the state able to produce these goods. Surely, the set of these public goods is not fixed once and for all; according to the evolution of society, this set may increase, and along with it the burden of taxation. See, A. Menendez, Justifying Taxes: Some Elements for a General Theory of Democratic Tax Law (Dordrecht: Kluwer, 2001), pp. 99–104.
- 53.
Menendez, cit., p. 66.
- 54.
As it was put clearly by Hobbes, fairness in allocating the burdens of taxation is of paramount importance in maintaining the “commonwealth” in peace. “The second factor, we have shown, which disposes men to sedition is the discontent that arises from poverty; even if their poverty results from their own extravagance or idleness, nevertheless they blame it on those who govern the commonwealth, claiming they are oppressed and exhausted by taxes. Yet it may sometimes happen that their complaint is justified, namely when the burdens of the commonwealth are imposed on citizens unequally. For a burden which would be light if all shared it, becomes heavy, and indeed intolerable, for the rest when many wriggle out of it. And it is not so much the burden itself that men object to as the inequality. The most contentious struggles are about tax exemptions and in those struggles the less successful envy the more successful as if they had been defeated in battle. It is in the interest of the public peace to remove a justified complaint, and consequently it is a duty of sovereigns to ensure that public burdens are equally borne. Besides, since the citizens’ contributions to the community are simply the price they pay to purchase peace, it is logical that those who equally enjoy the peace should pay equal shares, by contributing either money or service to the commonwealth. And the natural law (by III, 15) is that in assessing others’ rights every man should treat himself as equal to every other man; hence sovereigns are obliged by natural law to impose the burdens of the commonwealth upon the citizens equally”. T. Hobbes, On the Citizen, ed. and trans. Richard Tuck and Michael Silverthorne (Cambridge: Cambridge University Press, 1998), p. 147.
- 55.
Sandra Feldman, Human Rights Transformed. Positive Rights and Positive Duties (Oxford: Oxford University Press, 2010), p. 42.
- 56.
Thus, my interpretation of the “closed nature” of basic structure does not depend on the respect of the identity of the people that is governed by that basic structure. According to Miller, Rawls’ points about the “closed nature” of the domestic basic structure are due to his recognition of people’s common identity as a necessary condition for the effectiveness of any redistribution. See D. Miller, On Nationality (Oxford: Oxford University Press), pp. 90–93. By contrast, I offer a less “identity-based” (and more “politically-based”) interpretation of this characteristic of the basic structure. On the other hand, I would like to point out that these interpretations are not mutually exclusively, insofar as Miller’s interpretation is compatible with my emphasis on the duty of each citizen not to avoid domestic taxation. What I do not agree with is his point on the necessity of a shared identity for the success of a redistributive policy.
- 57.
Albert Hirschman, Exit, Voice and Loyalty (Cambridge, MA: Cambridge University Press, 1970).
- 58.
Ivi, pp. 15–18, 30–32.
- 59.
Ivi, pp. 36–41.
- 60.
In the preface to the Italian edition of this book, Hirschman states that one of the sources of the essay was to be found in his personal experience as a Jew fleeing from Nazi Germany. The feeling of loyalty can produce a form of paradox: the worse is the situation the more one person feels obliged not to leave the country in order to give their contribution to the community. But, the worse the things were going, the more difficult it was to leave the country, even if one were willing to. See also ivi, pp. 98–100.
- 61.
Ivi, pp. 100–105.
- 62.
Ivi, pp. 106–112.
- 63.
The example provided by Pogge concerns the owner of a building who wanted to make more profit from his estate, by evicting the old tenants and building up news luxury flats. However, he did not have the courage to face the reaction of the old tenants, so he hired a private company that will do the unpleasant job. Even though others carry out the job, the owner is nonetheless responsible insofar as they act for his profit. Pogge, cit. pp. 75–80.
- 64.
See, as examples, Global Financial Integrity (http://www.gfip.org/) and Tax Justice Network (www.taxjustice.net).
- 65.
As examples of lobbies against tax haven see Business and Investors Against Tax Haven Abuse at www.businessagainsttaxhavens.org; American Sustainable Business Council at http://asbcouncil.org; Business for Shared Prosperity at http://businessforsharedprosperity.org; Wealth for the Common Good at http://wealthforcommongood.org
- 66.
Brock, cit, pp. 162–164. The proposal of Global Resource Dividend can be found in Pogge, cit. pp. 204–214.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2012 Springer Science+Business Media B.V.
About this chapter
Cite this chapter
Biondo, F. (2012). Basic Structure and Tax Havens. In: Ballesteros, J., Fernández Ruiz-Gálvez, E., Talavera, P. (eds) Globalization and Human Rights. Ius Gentium: Comparative Perspectives on Law and Justice, vol 13. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4020-4_2
Download citation
DOI: https://doi.org/10.1007/978-94-007-4020-4_2
Published:
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-007-4019-8
Online ISBN: 978-94-007-4020-4
eBook Packages: Humanities, Social Sciences and LawLaw and Criminology (R0)