Transaction ethics as root of social/libertarian disagreement

In order for two parties to enter a transaction, both have to benefit from it. However, the benefit can be distributed unequally. A potential transaction has a minimum price where it's still acceptable for the seller, and a maximum price where it's still acceptable for the buyer. The total value gained from a transaction is the spread between the maximum and the minimum.

An unfair, but still voluntary, transaction is one where the negotiated price is closest to one of the extremes, instead of closer to the middle. The result is that one party gains most of the benefit from the transaction. A transaction where one person gets 90% of the value, and the other gets 10%, is frequently seen as unethical by many people, and is described as "robbing" the other person.

You can see that people consider such transactions unethical in ultimatum games, such as the dictator game. In experiments, most people will accept a reward with a 40-60 split. But when offered a 10-90 split, a large proportion will choose 0% (no reward) just to punish the dictator.

The whole social democracy vs. brutally free markets disagreement rests on people recognizing, or not recognizing, the unfairness of unbalanced transactions. The brutal free market people argue that 10-90 transactions are voluntary, and therefore okay. Social democrats argue that it's unethical to foist such transactions on people just because you have negotiating power.

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