Economic Disequilibrium: A Philosophical Analysis of Economic Inequality, Property Rights and the Future of Democracy

Title: Economic Disequilibrium: A Philosophical Analysis of Economic Inequality, Property Rights and the Future of Democracy
Authors: Morley, Marie Constance
Date: 2019-09-18
Abstract: The problem of extreme economic inequality, publicly recognized since the 2007 – 2009 Financial Crisis, gives rise to divided political and economic ideological views often leading to conflicts. Analysis of inequality in the Post-World War II era reveals that the historical process of financialization is due to market deregulation, technological changes, innovation of financial instruments, increased investment activities and bundles of claim rights traded around the world. Orthodox economics treats rights and conflicts as exogenous to the traditional equilibrium model that collapses a property right into a choice and market determined prices. Without explicit justifications, laws can favour traditional property rights for large corporations and investors over rights of labour, as seen in corporate bankruptcy settlements paying-off investors before pensioners. This thesis draws from literature bases in economics, conflict studies and philosophy. This thesis argues that Alan Gewirth’s theory of rights and epistemological foundation in generic rights to freedom and well-being required for action, offer a framework to explain how degrees of need and risks of self-contradiction are involved in economic and political decisions and actions. Human rights require that needs be met in conditions of possibility for productive agency required for purposeful action-taking in everyday life. Our economic literature review describes struggles explaining historical cycles. Post-Keynesian and Kaleckian economists rely on disequilibrium to explain reality whereas in orthodox economics market equilibrium assumes reconciliation of all conflicts over rights, and cycles are caused by unexpected exogenous shocks. Another economic review reveals foundational problems and difficulties in public policy-making to manage liquidity, interest rates, currency values, and unemployment. All these factors can negatively affect real-life situations for the least developed and indebted nations and all humans struggling to meet basic needs. The prevalence of social choice theory supports the use of orthodox equilibrium models that lead to devastating austerity policies based on preferences. Potential for devaluation of labour raises questions of the relations between money, humans and property rights and claims to wealth. An evaluation of research findings using Gewirth’s epistemology reveals how a range of different economic approaches remain tied to traditional economic equilibrium, property rights and the competitive individual that sustains conflictual relations between rights and community. The antecedentalist and consequentialist justifications of property rights form the bases of Gewirth’s analytical framework. Gewirth’s two justificatory bases of rights are used to gain insights into conflicting economic approaches. Gewirth’s philosophy and conceptual framework are used to explain inequality and describe economic disequilibrium dividing wealthy and poor, yielding social space for conflicts that can spiral out-of-control. Gewirth’s generic rights to freedom and well-being are needed for mental equilibrium, and form the bases of political democracy and economic democracy. Historical evidence of financialization and mounting inequality along with theoretical evidence problems related to market fundamentalism rooted traditional rights, shows that capitalism is threatening democracy which can be usurped by totalitarian or fascist leaders. We conclude that Gewirth offers an alternative ideal in social relations built upon mutuality of actions and rights, leading us to a concept of equilibrium based on political and economic democracy.
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