Sources & Extracts

 Review this excerpt and then go back to the main thread.

John Rawls is often thought of as a philosopher who provided a justification for the contemporary welfare state. Rawls disagreed. He distinguished between the "capitalist welfare state" and what he called a "property-owning democracy." Although he never described his concept of a property owning democracy in great detail, he did discuss it in one or his final works, Justice as Fairness: A Restatement. Here are some excerpts from that work.
41.1 I now want to survey what would seem to be the main features of a well-ordered democratic regime that realizes those principles [i.e., Rawls's two principles of justice] in its basic institutions....

One reason for discussing these difficult matters is to bring out the distinction between a property-owning democracy, which realizes all the main political values expressed by the two principles of justice, and a capitalist welfare state, which does not. We think of such a democracy as an alternative to capitalism....

41.2 Let us distinguish five kinds of regime viewed as social systems, complete with their political, economic, and social institutions: (a) laissez-faire capitalism; (b) welfare-state capitalism; (c) state socialism with a command economy; (d) property-owning democracy; and finally, (e) liberal (democratic) socialism....

41.3 When a regime works in accordance with its ideal institutional description, which of the five regimes satisfy the two principles of justice?

[Rawls rejects the first three types of regimes.]

This leaves (d) and (e) above, property-owning democracy and liberal socialism: their ideal descriptions include arrangements designed to satisfy the two principles of justice....

42.3 The contrast between a property-owning democracy and welfare-state capitalism deserves closer examination, since they both allow private property in productive assets. This may tempt us to think they are much the same. They are not.

One major difference is this: the background institutions of property-owning democracy work to disperse the ownership of wealth and capital, and thus to prevent a small part of society from controlling the economy, and indirectly, political life as well. By contrast, welfare-state capitalism permits a small class to have a near monopoly of the means of production.

Property-owning democracy avoids this, not by the redistribution of income to those with less at the end of each period, so to speak, but rather by ensuring the widespread ownership of productive assets and human capital (that is, education and trained skills) at the beginning of each period, all this against a background of fair equality of opportunity. The intent is not simply to assist those who lose out through accident or misfortune (although that must be done), but rather to put all citizens in a position to manage their own affairs on a footing of a suitable degree of social and economic equality....

42.4 Note here two very different conceptions of the aim of the background adjustments over time. In welfare-state capitalism the aim is that none should fall below a decent minimum standard of life, one in which their basic needs are met, and all should receive certain protections against accident and misfortune, for example, unemployment compensation and medical care. The redistribution of income serves this purpose when, at the end of each period, those who need assistance can be identified. Yet given the lack of background justice and inequalities in income and wealth, there may develop a discouraged and depressed underclass many of whose members are chronically dependent on welfare. This underclass feels left out and does not participate in the public political culture.

In property-owniing democracy, on the other hand, the aim is to realize in the basic institutions the idea of society as a fair system of cooperation between citizens regarded as free and equal. To do this, those institutions must, from the outset, put in the hands of citizens generally, and not only of a few, sufficient productive means for them to be fully cooperating members of society on a footing of equality.

[John Rawls, Justice as Fairness: A Restatement, p. 135-140. Brackets added.]