The first pillar of an economically just society is that the State in the Just Third Way should only exercise an extremely limited role in the economy. Being made by people for people, although consistent with human nature and ordinarily necessary for our full development as persons, the State is nevertheless only a tool — a highly specialized and extremely powerful tool, but still only a tool. When the State no longer serves the purpose for which it is designed and intended, it must be reoriented and repaired so that it once again functions properly.
With respect to economics, the proper role of the State is to ensure as far as possible that all citizens have the same opportunity to participate in wealth creation on an equal basis with everyone else. Generally construed as providing "a level playing field," the State's job typically consists of establishing and maintaining a strong juridical order consistent with the natural moral law (the "rule of law"), setting standards for weights and measures — including the currency — policing abuses, and enforcing agreements when parties to a contract have a dispute or disagreement concerning the "meeting of the minds."
The State's task is not to initiate, create, or control persons, institutions, relationships, or anything else, although it does have a limited role in clarifying and promulgating definitions of institutions and specifying how rights are to be exercised. This is usually by the State putting its "imprimatur" on what "public opinion" (A. V. Dicey's term) has already decided. Never, however, does this extend to the State having the sort of absolute power that claims the ability to change definitions, develop new definitions, or in any way (in Keynes's words) "re-edit" the dictionary. State absolutism is the basis for Keynes's claim, in his Treatise on Money (1930), developed out of the tenets of the British Currency School, that the State alone has the power to decide of what "money" consists, who may contract and for what, and who may participate in the common good on a more or less equal basis.
On the contrary, even the corporation, specifically a "creature of law" is not, in social justice, created by the State, but by private citizens organizing, and obtaining official sanction and protection of their acts as a corporate body. The State is supposed to regulate transactions and relationships that stray too far from acceptable norms established by consensus, and, as far as possible, bring matters back into conformity with human nature when failure to conform to these standards has a materially harmful effect on individuals, groups, or the common good as a whole. The State does not have the power to create anything, especially money, as that claim effectively abolishes private property and freedom of association.
Further, as a human creation itself, the State is compelled to act in the best interests of its citizens, even those instances in which a majority wishes to override or abolish the rights of a minority, or a minority seeks to use its political or economic power to oppress the majority . . . especially if the minority believes it to be for the majority's own good. While there is a wide area in which the majority or minority should rule, and may do so in fact, there is a line that must not be crossed. That line is crossed whenever those in power seek to use the State's monopoly over the instruments of coercion for its own advantage, and in contravention of the natural moral law to abolish or inhibit the free exercise of natural rights in ways not demanded by the common good or the individual good of persons and groups.
The State's job is to promote the general welfare, not the particular welfare of any individual or group to the disadvantage of others, no matter how large or important the group presumably being benefited. One of the premises of capitalism is that the State can safely ignore its responsibility for the general welfare by taking a laissez faire approach to particular welfare. Socialism, on the other hand, assumes that the general welfare is best promoted by having the State take care of each individual's particular welfare. Both socialism and capitalism assume that the general welfare is the sum of society's particular welfares, and that what best promotes particular welfare automatically secures the general welfare.
Both capitalism and socialism thereby manage to be wrong in the same way, and so, while seemingly diametrically opposed, always end up as virtual mirror images of each other. Both, by one route or another, end up at the Servile State, with an indistinguishable private or State elite in charge, and the great mass of people in a condition of utter dependency on that elite. Thus, both capitalism and socialism, whatever we might call them or try to argue otherwise, offend against essential human dignity at the most basic level. Both capitalism and socialism are "top down" and fail to respect people as people, attempting to impose their respective (if indistinguishable) visions of what is good by force, and maintain it through coercion.
In contrast, the Just Third Way approaches matters from the "bottom" up. The underlying problem in the difference between capitalism and socialism, and the Just Third Way lies in our understanding of the common good, a more precise and meaningful term than general welfare. (The reasons the American Founding Fathers used "general welfare" instead of "common good," and "pursuit of happiness" instead of "acquiring and developing virtue," while important, would be a diversion, and are peripheral to our main point, anyway. They will not be covered in this discussion.)
The common good is not a vague concept, nor is it automatic collectivism. Instead, the common good is something that can be defined with scientific precision and in a manner consistent with essential human nature. The common good is not the collection of particular goods of individual persons or groups. Instead, the common good is the network of institutions within the overall framework of the social order — and, in fact, that largely make up the social order — within which humanity, as "political animals," acquires and develops virtue, thereby becoming more fully human. The specific job of this institutional network is to assist individuals to acquire and develop virtue: "pursue happiness." By this means individual human beings realize their human potential to the optimum degree possible without harm to other individuals, groups, or the common good as a whole.
When our institutions are flawed to such a degree that they either do not assist us in pursuing happiness, or actively and materially inhibit us in the task of realizing our fullest human potential, it becomes our individual responsibility to organize with like-minded others and work to reform our institutions. Our goal is twofold: 1) restructure our institutions so that they once again assist us in our pursuit of happiness, and 2) ensure that our understanding of happiness conforms to universal standards of virtue.
The means by which we reform our institutional environment to conform it to the Just Third Way is the "act of social justice," ably summarized by William J. Ferree, S.M., Ph.D., "America's greatest social philosopher," in his short work, Introduction to Social Justice (1948). Briefly, it is clear that individuals are frequently helpless when faced with unjust social structures and problems that afflict the whole of society. Faced with the impossible task of trying to change things individually, the rational person will not destroy him- or herself in a hopeless struggle, however gallant and virtuous it might seem, but will give up, and go along to get along. No one, after all, is required to do the impossible.
As Ferree demonstrates, however, the individual is far from helpless — but only when he or she organizes with others, and carries out directed acts of social virtue. This cannot be done as individuals, but as members of a group in an organized and coherent program of specific reform. Ferree identifies certain "laws and characteristics" of social justice by means of which we are empowered to act directly on the institutions of the common good.
The first "law" of social justice is that the common good must be kept inviolate. That is, "in all private dealings, in all exercise of individual justice, the Common Good must be a primary object of solicitude. To attack or to endanger the Common Good in order to attain some private end, no matter how good or how necessary this latter may be in its own order, is social injustice and is wrong." (Introduction to Social Justice. Washington, DC: Center for Economic and Social Justice, 1997, 35.) If what we propose to do violates anyone else's rights, or harms the common good in any material fashion (e.g., abolishing the institution of private property, or redefining another individual or group as "non-persons"), we cannot justify that act.
The second "law" of social justice is "cooperation not conflict." Socialism and capitalism both understand the common good as a collection of particular, that is, individual goods. When we confuse individual goods and the common good — or, worse, common goods and the common good — we necessarily put all individual goods and common goods in conflict with one another. Instead of trying to establish the ascendancy of our particular good or goods over those of others, or one or two common goods over the totality of goods held in trust by the State for the benefit of society, we have to realize two things. One, the common good is not a collection of individual goods, or even those common goods that, for the sake of expedience, the State "owns." Two, realization of our individual goods, and the optimal enjoyment of common goods, can only take place within a strong juridical framework in conformity with the natural law and to which all citizens have given their consent, whether explicit or tacit. This requires that people and groups cooperate within the institutional environment of the common good in order to gain the optimal benefit without harming the rights or interests of others.
The third "law" of social justice is that "one's first particular good is one's own place in the common good." This law is a logical extension of the first two laws. The first law is that we cannot hijack any part of the common good, that is, any institution (such as an individual right to choose or private property), or the common good as a whole to advance our individual interest(s). This third law is that we cannot hijack any part of the common good or the common good as a whole to advance our institutional interest(s), that is, our group or groups over other groups or the common good as a whole. Groups must cooperate, not come into conflict, within the institutional framework of the common good in the same way as individuals.
The fourth "law" of social justice is that "everyone is directly and personally responsible for the common good." This is because the common good is made up of institutions. These institutions are, in turn, made up of sub-institutions, and these sub-institutions are made up of sub-sub-institutions, and so on, ad infinitum, down (or, more accurately, up) to the individual. ("Up" is more correct because all institutions are made to serve humanity, not the other way around; the "organizational chart" for society should be an inverted pyramid.) Further, these institutions combine with other institutions at their "level" of the common good to form milieux, or the various media of life within particular contexts. As we might expect, these milieux are made up of sub-milieux, and these sub-milieux of sub-sub-milieux, and so on, "down" to the individual, on whose natural rights the whole towering and complex superstructure of the common good ultimately rests. These relationships are in a constant state of flux, to such a degree that the social order can be described as being "radically unstable," at least in the sense that changing milieux, moving between institutions, interacting with other groups and individuals, and so on, means that each person's specific social situation is never the same. Thus, because everything ultimately derives from the individual and social rights possessed absolutely by each and every human person, it necessarily follows that each and every human person has a direct and individual responsibility for the common good.
The fifth "law" of social justice is that "higher institutions must never displace lower ones." This is the principle of subsidiarity. That is, because each and every individual has a personal responsibility for the common good at his or her level, institutions at "higher" — or "lower" — levels of the common must never take over the functions of institutions at other levels. They would otherwise be usurping the responsibility and thus power of those who subsist at that level. Regardless of whatever level of the common good we're talking about, "insiders" are the ones primarily responsible for their own institutions. "Outsiders" can assist, and even in an emergency take over from the insiders temporarily, but never displace the institution itself. That would be to impose a condition of dependency on those who subsist within that institution, which is directly contrary to the demands of human dignity, and thus of social justice.
The sixth "law" of social justice is "freedom of association." This is the "liberty" of which America's Founding Fathers spoke. It does not mean license, that is, doing whatever you want, when you want. There is some of that, but only within the strong juridical framework of the common good, and only if doing what you want when you want doesn't harm anybody or anything, including yourself. The reason freedom of association is a law of social justice is that the act of social justice is necessarily social, and that means social justice is only possible if people are free to associate.
The seventh "law" of social justice is that "all vital interests should be organized." As Aristotle observed, "man is by nature a political animal" (The Politics, I.ii). That being the case, humanity acts in accordance with its own nature when it acts politically, that is, in an organized and structured manner within the polis, that is, the social unit.
In addition to the laws of social justice, we also have six essential characteristics by means of which we can make a good determination whether what we are engaged in is truly "social justice," and not just extended individualism or collectivism.
The first characteristic of social justice is that acts of social justice cannot be carried out by individuals as individuals. The act of social justice is something that can only be carried out by members of groups, that is, as a political act.
The second characteristic of social justice is that it takes time. This makes sense if we stop to think about it. "Virtue" is defined as the habit of doing good. Building good individual habits can take a lifetime. How much more time, then, can it take to overcome social inertia and build good institutional habits? Of course, this doesn't mean that it isn't possible to change institutional habits overnight, but as a general thing, don't count on it.
The third characteristic of social justice is that nothing is impossible. As we've already noted, individuals frequently feel helpless in the face of what seem to be (and frequently are) insurmountable social problems — speaking individually. The common good, however, is composed of an effectively infinite number of institutions, every single one of which was made by human beings. The necessity for these institutions is "hard wired" into our nature, but the specific form that the institutions take is due to conscious decisions made at some point by human beings. Human beings made our institutions, and human beings can therefore remake our institutions — once we approach the task with the tools that social justice gives us.
The fourth characteristic of social justice is constant vigilance. Obviously, as we can see from the structure of the common good, in which we have different levels of institutions, institutions combining and recombining to form different milieux, and the people, groups, and sub-groups within institutions and milieux constantly changing the relationships between all these elements, the social order is in a constant and bewildering state of flux. That being the case, we must keep a constant watch on our institutional environment to make certain that it continues to meet our needs and wants adequately (it will never do so perfectly) and, should our institutions stray too far from their assigned roles, organize with others to correct the situation and put things back on course.
The fifth characteristic of social justice is effectiveness. We can have all the good will in the world, but if what we propose to do in order to improve the general welfare or ameliorate the condition of the poor or anyone else won't work, we would be acting in a socially unjust manner. It's not enough to intend to do the right thing. The intended good must stand a reasonable chance of being accomplished, and without any unintended but anticipated non-objectively evil consequences. That is, we must not only be right, we must do right. A virtuous and glorious defeat just to make a point or to prove how much better we are than others is not a socially just option.
The sixth characteristic of social justice is that organizing with others to restructure our institutional environment for the better is not optional. It is, on the contrary, a rigid obligation imposed on us by our very nature. As political animals, human beings ordinarily acquire and develop virtue (pursue happiness) within a well-structured social order. That being the case, when the social order is flawed we owe it to ourselves as members of the human race to organize with others to get things back on track when necessary.
The bottom line is that the State has a definite role to play, but the State's role is not as sweeping as the socialists claim, nor as the capitalists eventually (and inevitably) demand. Instead, as should be obvious from the above discussion on the laws and characteristics of social justice, lex ratio, "rule of law" — reason — necessarily takes precedence over the capitalists' and the socialists' lex voluntas, "rule of whim" — will. The State does not determine what is right or wrong. Consequently the State cannot either impose desired results or stand aside and let people do what they will, whether or not what they will is in conformity with nature. As A. V. Dicey pointed out, the State, no less than every individual in the State, is subject to the law. Neither the State nor anyone else can " 're-edit' the dictionary."