Chapter 3 of Why Not Capitalism? explains why Cohen’s argument for the intrinsic moral superiority of socialism fails. Even though I agree with Cohen that we should not dumb down the requirements of justice to accommodate ignoble motivations, his argument for socialism rests on a few mistakes, the first of which I call the “Cohen Fallacy”.

Recall that Cohen tries to establish the moral superiority of socialism by having us imagine a camping trip. In the socialist version of the camping trip, he stipulates that everyone is fully motivated by morally good attitudes and ends. In the capitalist version, the campers act like selfish, callous, egoistic jerks. The socialist version is clearly better. Cohen then asks, wouldn’t it be great if we could somehow make the whole world like the socialist camping trip? Most people say yes, but then dispute whether that’s possible. But, as Cohen rightly points out, 1) whether something is desirable doesn’t depend on whether it’s possible, and 2) a society motivated by kindness and generosity is eminently possible. In defense of 1, consider: It would be awesome if I could cure AIDS by snapping my fingers, even though I can’t. In defense of 2, Cohen admonishes us not to confuse “can’t” with “won’t”. People easily could be kind and generous; they just aren’t. People could choose not to take advantage of power or to free ride on each other; they just don’t. Asking people to do the right thing is not like asking them to jump to the moon or to lift 10,000 pounds.

So far, so good, I think. But that doesn’t help Cohen defend socialism. Cohen’s argument is:

1. The socialist camping trip was better than the capitalist camping trip.
2. It would be desirable to make the world run like the socialist camping trip—having the world run like the socialist camping trip would be better than the way the world actually is.
3. Therefore, socialism is intrinsically more desirable than capitalism.

The problem is that even if we grant Cohen’s premises (1 and 2), his conclusion (3) does not follow.

What Cohen did was construct an imaginary microsociety in which everyone is stipulated to have morally perfect motives and to always act upon those motives in the correct way. He then compared this to a version of that society in which people have the flawed mix of motives real people have. He’s right that the version in which everyone is stipulated to be perfectly virtuous was better. But that doesn’t tell us much.

On further inspection, his argument is little more than this:

1. Socialism with morally perfect people is better than capitalism with flawed people.
2. Therefore, socialism is better than capitalism.

But 2 doesn’t follow from 1. After all, Cohen’s manipulating 2 variables at once: 1) how virtuous and good people are, and 2) what political-economic regime they live under.

Suppose I repeated Cohen’s style of argument. I asked you to imagine a perfect kingdom ruled by a omnibenevolent, all-wise, perfectly efficacious king, and then compared that to pathological real-life democracies, such as France, the United States, or Greece. I then concluded that monarchy is better than democracy. You’d balk. You might agree that idealized monarchy is better than realistic democracy, but that leaves open whether idealized democracy is better or worse than idealized monarchy, and whether realistic monarchy is better or worse than realistic democracy.

So, dub the Cohen Fallacy the fallacy of making an argument like this:

1. Socioeconomic regime X with perfect people is better than socioeconomic regime Y with real people.
2. Therefore, X is intrinsically better than Y.

Bad argument.

Cohen’s Why Not Socialism is in that sense a compelling argument that ideal socialism is superior to non-ideal capitalism. But Cohen doesn’t compare like to like. The relevant comparisons are ideal socialism to ideal capitalism, and real socialism to real capitalism.  Cohen thus fails to consider whether ideal capitalism might be superior to ideal socialism. If Cohen wanted to show socialism is intrinsically superior to capitalism, he would need to compare his socialist camping trip to something like the Mickey Mouse Clubhouse Village. He has not done so.

In chapter 4, I go on to explain why even though the Mickey Mouse Clubhouse Villagers are morally good enough to make socialism work in a nice way, they get additional value from being capitalist. Everything socialism can do capitalism can do better; capitalism can do everything better than socialism. Yes it can. Really, thanks to the Mickey Mouse Clubhouse argument, we bleeding heart libertarians can now regard the lovely folks at Crooked Timber as far right-wingers; we can look down upon them the way they look down upon conservative Republicans.

Now, Cohen also argues–or, more precisely, asserts repeatedly without evidence–that capitalism encourages bad motivations. But, as I point out, that’s a social scientific question, and the evidence shows that Cohen is not only wrong about this, but has it backwards. If anything, capitalism makes us better people by Cohen’s standards.

By the way, John Rawls also commits the Cohen Fallacy, even though he admonishes us to avoid it:

…in both A Theory of Justice and Justice as Fairness: a Restatement, Rawls argues that certain political-economic regimes can instantiate his theory of justice while others cannot. However, if you look carefully, you’ll see that when Rawls discusses his favored regimes, he imagines that people have perfectly just motivations, and he explicitly imagines away many of the problems those regimes would face in the real world. But when Rawls brings up reasons for rejecting his disfavored regimes, he invokes the kinds of problems that would only occur if people had imperfect motivations, the very motivations he asked us to imagine they don’t have.

So, for instance, Rawls knows that in the real world, the social insurance, redistributive, and regulatory institutions he favors would lead to moral hazard and rent seeking. But, he dismisses these concerns, because he is doing “ideal theory,” in which we imagine people have a perfect sense of justice. Yet, not a page later, Rawls says that certain other regimes he dislikes are unjust because they might encourage people of great wealth to use their wealth to buy government power for their own ends. But, by Rawls’s ground rules, we’re suppose to be doing ideal theory, and imagining that people have a perfect sense of justice. And if people had a perfect sense of justice, they would not buy government power for their own selfish ends, since by hypothesis this is unjust. So, like Cohen, Rawls doesn’t play fair. When Rawls argues for one set of institutions over another, he continuously commits the Cohen fallacy. Rawls’s argument for why property-owning democracy is superior to welfare state capitalism thus is a kind of cheating. Rawls sets out some rules for thinking about institutions, and then violates them in order to generate his preferred conclusion.

Oops! Jim Buchanan to Rawls: “Hey, POD will encourage exploitative rent seeking.” Rawls: “I’m doing ideal theory. In ideal theory, people are just. They wouldn’t abuse the system.” Buchanan: “Great, so why not capitalism?” Rawls: “Because people would use their extra money to buy power for themselves.” Buchanan: “Wait, I thought we were doing ideal theory.” Rawls: “Ha, ha, ha. I decide the rules, Jim.”