The Poverty of Divestment

My alma mater will vote tomorrow in a referendum on whether the university should divest from the so-called “fossil fuel industry.” I say “so-called” because a better sense of the term is energy industry, which happens to be heavily concentrated in coal, oil, and natural gas. Some interesting philosophical commentary has focused on the motives and tensions within the anti-divestment movement:

“For it is entirely question-begging of the contra-campaigner to assert that long-term financial stability is at odds with concerns about the environment and its future.  It is also plain wrong. The divestment campaigners present a stark fact and draw a straightforward consequence from it: we are either to be complicit in the burning of fossil fuels to an extent that tips the biosphere into a social, ecological, economic, and security disaster; or we are to take whatever stand we can to oppose it.

But built into their views about economic reality are, I think we can discern, some assumptions also about authority.  These can be teased out by considering the motivation for their resistance, which seems, in fact, to involve two different sorts of thought that stand in some tension with one another.  On the one hand, they articulate concerns of the form “Suppose everyone did as you wish…” in which eventuality, it is suggested, the lights would go off and the economy would be at risk of collapse.  On the other hand, there is the worry that the financial flourishing of our institutions would be compromised if we allow information about the ecological basis of their operations to be factored into our decision making.  This looks like double think: it is claimed that the people seeking divestment don’t give enough thought to the wider future socio-economic implications of their proposal; it is also claimed we must not allow thoughts about wider future socio-ecological implications to influence our decisions.  Or is there perhaps just not enough thinking – about how the ultimate destiny of our economy lies in the same world as our ecology?  Why is it thought that the campaigners for divestment can do real harm whereas business as usual generates a presumptive balance of benefits over costs?”

The alleged tension among the anti-divestment movement, then, is its stated emphasis on the long-term financial stability of the university while ignoring the long-term threats that climate change poses to the university’s finances. The anti-divestment movement criticizes the long-term effects of divestment on the university’s finances, while at the same time ignoring the long-term ecological effects of climate change on the university. This “double-think” is irrational, the author continues, because climate change poses a threat to the long-term financial health of the university and is thus problem on the anti-divestment movement’s own terms.

It’s worth observing what the author’s argument assumes: it’s certain that ecological catastrophe will result from the continued burning of fossil fuels, and only choice facing the university is whether to be complicit in the disaster. If on the other hand you deny that catastrophe is coming (which is a pretty weak claim), you might think that the harms from divestment on university finances are more certain than the harms from climate change.

Pro-divestment campaigners are at pains to emphasize that the financial impact of their proposed change is likely to be small. However, they also emphasize that their campaign is part of a concerted political campaign to delegitimate the fossil fuel industry by shaming these companies, creating uncertainty about their finances, and ultimately turning fossil fuels into a class of “stranded assets.” It’s therefore a mistake to think of a vote for divestment as merely “symbolic” when the end goal of the divestment campaign is nothing short of destabilizing an entire industry.

At this point, the divestment movement is likely to call out a tension in my argument–I seem to have admitted that socio-political considerations matter when it comes to the health of industry, but denied such considerations matter in the case of the environment. Actually, though, the contexts are different–one involves a deliberate political plan to reshape the energy industry, while the outcome in the other context is uncertain and contains some opportunity for adaptation.

The divestment campaigners are clear about what their plan entails–forcing universities to “take a side” in the climate change debate and committing the university to a particular set of political objectives. This fundamental feature of the divestment campaign is also the most pernicious. It is a radical attack on the principles of scholarship and academic freedom and threatens open debate in higher education. What would a commitment to divestment do campus debates about how governments should respond to climate change? Would it create a chilling effect on controversial and unpopular research and speech? Would it enhance or obstruct academic freedom? Harvard’s president Drew Faust put it well:

“We should, moreover, be very wary of steps intended to instrumentalize our endowment in ways that would appear to position the University as a political actor rather than an academic institution.  Conceiving of the endowment not as an economic resource, but as a tool to inject the University into the political process or as a lever to exert economic pressure for social purposes, can entail serious risks to the independence of the academic enterprise.  The endowment is a resource, not an instrument to impel social or political change.”

I hope Yale students emphatically reject divestment and the politicization of their institution.


“Questions for Free Market Moralists”: A Response

Amia Srinivasan’s “Questions for Free Market Moralists” has generated much attention among defenders and critics of free markets. Srinivasan argues against what she calls “free market moralism” by way of rejecting Nozick’s entitlement theory. While “free market moralism” goes undefined in the original post, I think it’s fair to define it as the view that free market institutions are morally defensible. Her argument, reconstructed, is as follows:

1) If Free Market Moralism is true, then the Nozickian entitlement theory must be true.
2) The entitlement theory must answer “yes” to questions 1-4
3) According to common sense morality, it is absurd to answer “yes” to questions 1-4
4) We must reject the entitlement theory (reductio ad absurdum)
5) So Free Market Moralism is false. (1, 4)

In this post, I want to address steps 2) and 3), building on several previous commentaries, as well as one that has received less attention–step 1). So let’s turn to 2).

1. Is any exchange between two people in the absence of direct physical compulsion by one party against the other (or the threat thereof) necessarily free?

As Mario Rizzo observes, fraud is a clear example of an unfree exchange in the absence of physical compulsion. Freedom to form beliefs without interference matters as well as freedom to act without interference. If A misrepresents or causes B to have a false belief about the exchange, A has obstructed B’s epistemic relationship with A and we can meaningfully say B has made an unfree choice.

Srinivasan is  concerned by unfree choices under limited alternatives, such as a woman in dire poverty who chooses to engage in sex work. The entitlement theorist, she argues, must claim that a desperate woman who is forced choose between starvation, theft, and sex work freely chooses to engage in sex work.

But that isn’t what the entitlement theory holds. The entitlement theory doesn’t hold that all choices with limited alternatives are necessarily free, only those where the alternatives are restricted by person(s). As G.A. Cohen notes in “Robert Nozick and Wilt Chamberlain: How Patterns Preserve Liberty,” “[the entitlement theory] holds that Z is forced to choose between working and starving only if there is a person (or person)  thus restricting his alternatives” (19). So if someone is indeed forcing the woman to choose between starvation, theft, and sex work, then the woman is indeed forced to work on the entitlement theory. The entitlement theory is a “historical” theory, which means on the woman’s freedom in a situation with limited options depends on the causes that brought about the situation, and whether any person(s) caused it to come about by restricting alternatives.

Srinivasan may of course dispute the view that no one forced the woman to choose among starvation, theft, and sex work. But that commits her to the view that circumstances themselves can force, which is no longer obvious to common sense morality. The upshot is that we cannot conclude this question unambiguously embarrasses the entitlement theory.

2. Is any free (not physically compelled) exchange morally permissible?

No. One free but morally murky exchange Nozick considers involves one party failing to disclose their full intentions in an exchange, and where the other party would not exchange had they known those intentions. There are plenty of exchanges that an entitlement theorist can think are morally blameworthy, without believing that those exchanges should be prohibited by physical coercion or threats.  The entitlement theory does not encompass the entirety of moral philosophy. It is rather a theory of political philosophy which, Nozick notes, “is concerned only with certain ways that persons may not use others; primarily, physically aggressive behavior” (32).

A skeptic might say that a right to morally blameworthy conduct looks like a “right to do wrong,” which many find a paradoxical idea. But this isn’t necessarily so. An “external right” is a right we have because prohibition would be too costly to enforce, not because the agent ought approve of his exercise of that right. External rights don’t create a “right to do wrong” since it is still wrong for, in Srinivasan’s case, a landlord to exploit her tenant.

3. Do people deserve all they are able, and only what they are able, to get through free exchange?

No. Nozick denies that the entitlement theory is a theory of desert. Desert is one among many permissible “principles of transfer” under the entitlement theory, alongside others like love, productivity, and need.

This question reflects a common misconception about the entitlement theory–it is simply a naïve theory of capitalist morality. But as Nozick argues in Part III of Anarchy, State, and Utopia, the entitlement theory is in fact compatible with a wide variety of forms of economic organization. One useful way to think about the entitlement theory is a set of side constraints on distributive patterns, just as Nozickian morality is a set of side constraints on the pursuit of goals.

4. Are people under no obligation to do anything they don’t freely want to do or freely commit themselves to doing?

The inspiration for this question is the apparent incompatibility between the entitlement theory and obligations of benevolence. If the entitlement theory denies we have obligations of benevolence, then isn’t this a mark against the entitlement theory?

To expand on Charles Johnson‘s response to Srinivasan, question 4 equivocates on the meaning of “obligation.” If obligation entails a permission to force, then the entitlement theorist denies we have enforceable obligations beyond side-constraints. But if obligation means something weaker, like a reflectively approved power, then an entitlement theorist can consistently hold we have obligations beyond side constraints.

The stronger sense of obligation would appear to embarrass the entitlement theorist, who must then deny that benevolence can produce obligation. But does it? Common sense morality tells us that it’s wrong to physically force or threaten people to engage in acts of benevolence.

We can see now that step 2) in Srinivasan’s argument is false. Her questions do not accurately reflect the entitlement view or its implications, and they do not embarrass free market moralism compared to common sense.

But suppose they did, and we reject the entitlement theory–whither “free market moralism”? Here we turn to step 1). While Nozick’s entitlement theory has gained the most attention in arguments about distributive justice in recent years, it is important to remember that the entitlement theory is not co-extensive with “free market moralism.” The entitlement theory is one among many possible justifications for broadly free market institutions, including natural rights, public reason, and social justice theories. We should think of “free market moralism” as a view free market institutions are morally defensible because multiple independent moral theories converge upon them.

The term “free market moralism” is unfortunate because it suggests that naïve belief that the free market is itself a moral theory in which  “the market will take care of morality for us.” Smart defenders of markets do not defend markets because they constitute the whole of morality, but because support for free market institutions follows from independently justified moral views.

Free markets, finally, are not unique in this regard–all economic orders are in themselves morally naïve. Srinivasan reminds us that all economic orders require philosophical justification, not just the market view. We may argue about economics, but philosophy does have the last word.