A democratic conception of fair exchange in markets

Abstract

In this lecture I defend a conception of fairness in labor markets. I will argue that we should take a procedural approach to the evaluation of fairness in markets. The procedural approach defended here goes beyond the traditional procedural view that requires only the absence of force and fraud. But it avoids the pitfalls of the other classical conception of fairness in the market: the idea of a just wage or just price. Fairness in markets is analogous to fairness in the democratic process, I contend. I lay out a conception of fairness that is based on the analogy with democracy. The basic procedural idea is that of equal power, understood in markets as a robust form of equality of opportunity and equal cognitive conditions. The procedural idea of equal power can be given an interpretation in perfectly competitive markets. I then develop the idea further in imperfectly competitive markets. I will show how this approach has implications for conceiving of how firms ought to be organized and for defining a fair process of wage setting in the essentially highly imperfect conditions of the labor market.