The question whether corporations should be used as a means for administering distributive justice is crucial. There are two fundamental issues associated with this. Firstly, would the introduction of rules have any distributional effect? Secondly, what would be the efficiency cost? In this paper, we explore both questions with reference to a job-security corporate rule. We show that the job-security rule will always produce distributional consequences which are consistent with its objectives. However, whether or not it is a socially desirable (...) policy depends on whether the economy is at an efficient allocation and what motivated the policy. It can be shown that under some conditions, even if the initial allocation is efficient, yet not the socially desirable one, a corporate rule—like the job security one—may produce socially desirable gains. The same can be said in the case where the initial allocation is inefficient even in the presence of competitive markets (dueto incompleteness problems). However, these social gains would come at the expense of competitiveness. In an internationally open environment this may offset the initial social gains from this policy. Whether or not this happens would then depend on whether agents have a social dimension to their preferences or not. If they do, their response to the initiative may offset the initial loss of competitiveness. Alternatively, society may face the dilemma whether to remain open to uphold local conceptions of distributive justice. (shrink)

In spite of the numerous occasions on which Adam Smith expresses his reservations regarding the morality of commercial societies, there seems to be an agreement that he believed such systems to be fundamentally just. To some, this is so because they attribute to Smith a concept of justice which is narrowly confined to the ‘right to have [one's] body free from injury, and [one's] liberty free from infringement’ . In a world where people have an interest in the fortune of (...) others regardless of how selfish their motives for action might be, injuring someone else's body or restricting someone else's liberty is unlikely to be the behavioural norm. To others, natural liberty in the sphere of economic activity is just not only because individuals behind the system naturally comply with justice in its commutative sense, but also because the system itself generates justice in the distributive sense. Such arguments are based on either the working of the invisible hand — which produces the ‘same distribution of the necessities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants …’ — or on the approval of the ‘impartial spectator’ of the distribution which is associated with the natural price. (shrink)