Abstract
After distinguishing between incentive providing bonus schemes and bonus schemes of two other kinds – schemes designed to recognize excellent performance and schemes that aim to provide compensation for the performance of unusually demanding tasks – I ask whether, and if so in what way, monetary incentive schemes can be justified from the standpoint of justice. Along the way I reject both (1) the idea that monetary incentive schemes necessarily generate (or exacerbate) economic inequality (understood as inequality of income or wealth) and (2) the idea that incentive-generated economic inequalities are bound to be unjust. Although economic equality is not itself an ideal of justice, I argue for a broadly egalitarian approach to questions of economic justice. Economic justice obtains when the distribution of income and wealth in society contributes to – or at any rate is consistent with – the realization of a number of equality ideals for which a justice rationale can be provided: equality of economic opportunity, social equality, equality under the law, political equality, and equality in educational and occupational opportunity.
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Notes
- 1.
John Cassidy, How Markets Fail: the Logic of Economic Calamities, Viking Canada (The Penguin Group), 2009, pp. 285–288.
- 2.
To say that a just distribution of income and wealth “must contribute” to the realization of several familiar equality ideals is to assume, of course, that a society’s economic distribution – that is, the distribution it secures of income and wealth – does in fact have an impact (for better or worse) on the prospects for the realization of these ideals. While the impact may often be indirect, it would only be possible to deny that there is any such impact if the conditions for the achievement of these ideals were wholly independent of the distribution of income and wealth. While many of these ideals are ostensibly non-economic ideals – in that they are focused on the achievement of forms of equality (social, legal, political, educational, etc.) that are not expressly economic – the idea that expressly economic and nominally non-economic distributive arrangements are not causally interconnected in various ways is clearly false.
- 3.
The employees may be in the private or in the public sector, but the distinction doesn’t matter to my discussion in this paper.
- 4.
For example, the goal – which may turn out to be either defensible or indefensible – may be to enhance profits for the employment-providing enterprise, or to boost the sale of its goods or services, or to increase (or preserve) its market share, or to improve the quality of the goods or services it makes available, and so on. And the question about the defensibility of such goals is a complex question. It includes, for example, the question whether the goal is consonant with “the public interest” – on some acceptable formulation of this often-invoked but variously interpreted standard. Of special interest in this paper is the question whether, and if so in what way, principles of distributive justice have a role to play in the assessment of the goals served by incentive providing schemes.
- 5.
Thus, a monetary incentive scheme will not be defensible if any of the following is the case: (1) the goal the adoption of the incentive scheme is designed to help realize is an unacceptable goal, (2) the tasks employees are being induced by the offer of a monetary incentive to take on are objectionable tasks, (3) even if employees take on the tasks, taking them on will not facilitate realization of the desired goal, (4) the employees are willing to take on these tasks without the monetary inducement provided by the scheme, (5) the monetary incentive on offer is insufficiently large to induce the employees to take on the tasks, and (6) a significantly smaller monetary incentive would suffice to motivate employees to take on the tasks.
- 6.
I continue to make – as in the example given of the incentives offered A, B, and C – the simplifying assumption that the incentive scheme offers the same monetary “reward” to all of those who are “targeted” (that is, all who are eligible to take advantage of the scheme) and that all of those targeted respond to the offer in a way that qualifies them for the reward and are thus recipients of the same bonus payment. In reality, of course, incentive schemes, when targeted (as they typically are; indeed arguably must be) at the members of a particular group, need not offer them all the same monetary inducement, and in any case “uptake” on the incentives on offer may not be uniform across the group.
- 7.
Sen, Amartya, The Standard of Living, Cambridge University Press, 1987.
- 8.
Op cit, pp. 15–16.
- 9.
It is of course a large and controversial question what the conditions are under which people can be said to have made fully responsible choices of these momentous kinds. I shall here assume, however, that even if it should turn out that the situations in which full responsibility for life-shaping choices can reasonably be imputed are few and far between, the class of such choices is not a null class.
- 10.
That is, the justification of the part of the justification for the monetary incentive scheme that consists in the justification of the objective served by the scheme. (As already indicated, more is involved in any full-scale justification of incentive-providing bonuses than specification of the rationale for the objective the bonuses are designed to serve. It must be shown, for example, that provision of the promises bonuses will in fact contribute to achievement of the objective, and also that the objective couldn’t reasonably be achieved by the offer of significantly smaller bonuses.
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Macleod, A.M. (2013). Monetary Incentives, Economic Inequality, and Economic Justice. In: Stacy, H., Lee, WC. (eds) Economic Justice. AMINTAPHIL: The Philosophical Foundations of Law and Justice, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4905-4_13
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