The Stakeholder Society.

• Author: Lehman, Jeffrey S.
• Position: Review

THE STAKEHOLDER SOCIETY. By Bruce Ackerman and Anne Alstott. New Haven: Yale University Press. 1999. Pp. xi, 296. $26.

"What if America were to make good on its promise of equal opportunity by [XXX]? That's the bold proposal set forth by Yale law professors Bruce Ackerman and Anne Alstott...."(1)

The quotation above is from the Yale University Press announcement describing Bruce Ackerman(2) and Anne Alstott's(3) new book, with one change: we have substituted "[XXX]" for the authors' catchphrase summary of their proposal. What do you think the missing words might be? How would you enable America "to make good on its promise of equal opportunity"?

As you ponder that question, you might consider the following feature of the Ackerman/Alstott proposal. It calls for the federal government to spend an additional $255 billion per year (p. 35). Perhaps that is not surprising; perhaps you might have trouble spending much less if you wanted to make good on the promise of equal opportunity.

So what would Ackerman and Alstott do?

We believe that it is easiest to grasp the full import of their proposal by considering its impact on the lives of five hypothetical young Americans. Below is each individual's situation without the Ackerman/Alstott plan:

* Alan is born to a single mother in a desperately poor neighborhood of Chicago. His mother dropped out of high school and works odd jobs at minimum wage. They live in a housing project. Without the Ackerman and Alstott plan, he receives inadequate health care and a very poor education in the public schools. He drops out of school in the tenth grade and lives his adult life on the fringe of the formal economy.

* Bonita is born overseas in a poor developing country. Her family emigrates to the United States when she is twelve, settling in Arlington, Virginia. Without the Ackerman and Alstott plan, Bonita receives adequate health care and a decent public school education. She learns English quickly and is an excellent student in high school. Her parents have trouble finding jobs that pay well enough to support the family, but they manage. Upon graduation, Bonita cannot take the risk of borrowing money for college for fear that she will become dependent on her family. She decides to go right to work as a legal secretary.

* Carolyn is born to a working-class couple in Pittsburgh. Her parents rent a comfortable apartment in a safe neighborhood. They have no accumulated wealth and live frugally, but they are able to make ends meet. Without the Ackerman and Alstott plan, she receives acceptable health care through her father's company HMO and a tolerable public school education. She is not a particularly strong student, but she finishes high school. She works in retail sales for four years before going back to community college for two years, eventually becoming a medical technician.

* Dierdre is born to a middle-class academic couple in Newton, Massachusetts. Her parents make monthly mortgage payments on a comfortable house in a safe neighborhood. Without the Ackerman and Alstott plan, she receives very good health care and a fine education in an excellent suburban public school system. She is not a particularly strong student in high school, so she attends and completes her four years of college at the University of Massachusetts -- a good school, to be sure, but not as prestigious or as highly regarded as the most selective private universities her top-of-the-class high school friends attend. She does well there, majoring in economics. With help from her family, she secures a two-year entry-level job in her field, and then earns an M.B.A. from Columbia. She becomes a successful financial analyst for a large mutual fund group.

* Edward is born to a wealthy professional couple in New York City. He grows up in a Greenwich Village brownstone. Without the Ackerman and Alslott plan, he enjoys the privileges of wealth: the finest health care extant, private nannies and tutors, elite private education from kindergarten through high school, box seats at the Yankees and the Metropolitan Opera, worldwide travel in limousines and on private jets. He is a superb student, goes to Yale College and Yale Law School, joins a top-ranked law firm (one with which his family has been associated for generations), moves in-house with a major corporation, and eventually becomes its C.E.O.

These stylized hypotheticals capture a disquieting truth about American society: we do not have equal opportunity. Some Americans barely have the shadow of a chance to succeed; some must live with the consequences of their mistakes; some find their mistakes forgiven; others are insulated from ever making mistakes at all. For some Americans, the prospect of an upper-middle-class adulthood is extremely remote; for others it is virtually assured; in between, there is an enormous range.

So, here is what Ackerman and Alstott would do:

1. Each of the five children would grow up in the same circumstances that he or she would have grown up in without the plan. There would be absolutely no change in any child's circumstances until his or her eighteenth birthday, at the very earliest.

2. As soon as they reach their eighteenth birthdays, Dierdre and Edward (and any other college-bound young adult) would each receive $20,000 cash each year from the federal government, for four consecutive years, for an undiscounted total of $80,000 (this $80,000 "stake," received over four years, is the source of the book's title).

3. As soon as she reaches her twenty-first birthday, Carolyn (and any other high school graduate who does not attend college) would receive $20,000 cash each year from the federal government, for four consecutive years. She would also receive three years' worth of interest on each payment, to reflect that she had to wait longer than Dierdre and Edward to get her money.

4. As soon as he reaches his twenty-first birthday, Alan (and any other high school dropout who has not been convicted of a serious felony) would receive $4,000 cash each year from the federal government, for as long as he remains crime-free. In addition, he could have more immediate access to up to the "full" $80,000 in distributions from the federal government, but only for certain limited purposes: buying a house, going back to school, or paying extraordinary medical expenses.

5. Bonita will never be eligible to receive a stake. Only citizens are eligible for stakeholding, and even a citizen must have lived in the United States for at least eleven of her first twenty-one years to qualify. She will fall short by two years and get nothing.(4)

This program of stake distribution is the core of the Ackerman/Alstott plan, and we shall henceforth refer to it as AAP. AAP is part of a larger program that includes other elements as well -- a payback scheme (pp. 77-93), a financing scheme (pp. 94-112), and a related but severable program for retirement funding (pp. 129-54). But AAP is enough to occupy us here.

It seems self-evident to us that AAP cannot begin to "make good on America's promise of equal opportunity." In many ways it would seem to distribute opportunity even less equally than it is distributed today. Thus, in our example, Alan and Bonita would seem to be even more disadvantaged relative to Edward and Dierdre than they are without AAP. Edward and Deirdre would have started life with social and economic advantages even without their stakes; stakeholding adds to their existing resources. Alan and Bonita started out disadvantaged and are made relatively more so in relation to stakeholders in their age cohort: Bonita because she has no stake, and Alan because restrictions on his access to stake funds diminish his ability to put them to good economic use.(5)

So what exactly is going on in this book? We shall approach that question in two steps. First, we argue that AAP is best understood not as a counterproductive plan for equalizing opportunity (which, we admit, was our first reaction to it), but rather as the legitimate offspring of two normative impulses: Ackerman and Alstott's commitment to "antipaternalistic liberalism" and their desire for "fair opportunity." Second, we take a critical look at some aspects of the authors' self-presentation that, in all candor, stand in the way of efforts to give the book the generous reading any serious work of scholarship deserves.

The Stakeholder Society makes many references to the ideal of equal opportunity, but these references are not the proper point of entry into the book. To understand Ackerman and Alstott, one should begin with their statement that they stand for a "new liberalism." They want to combine "a commitment to individualism" with "an appreciation of the pervasive impact of economic inequality" (pp. 21-22).

To discern what the authors mean by "individualism," it is helpful to look outside the covers of The Stakeholder Society, and back to Ackerman's 1980 book, Social Justice in the Liberal State. In that book, he elaborated a particular brand of individualism as the central premise of liberalism, namely, "the liberal's opposition to paternalism."(6) In the course of that elaboration, he set forth a series of interrelated ideas.

First, Ackerman presented his idea of undominated conversation: "A power structure is illegitimate if it can be justified only through a conversation in which some person (or group) must assert that he is (or they are) the privileged moral authority...."(7) What kinds of conversational moves should be considered an assertion that one is "the privileged moral authority"? For Ackerman, such a move is one that violates his "Neutrality Principle":

No reason is a good reason if it requires the power holder to assert:

(a) that his conception of the good is better than that asserted by any of his fellow citizens, or

(b) that, regardless of his conception of the good, he is intrinsically superior to one or more of his fellow citizens.(8)

Under this Neutrality Principle...