The Simple Reason Utopian Societies Always Fail


If we all want similar things, and even work towards similar goals, what explains the failure of every experiment in creating “perfect” societies?

In this series, I explore the current best hope of the ESG movement, stakeholder capitalism. Its advocates want stakeholder capitalism to replace shareholder capitalism as the driving factor behind corporate actions.

But are we pinning our hopes on a doomed strategy? Doomed why? Read on to find out. This is the first of the Stakeholder Capitalism series, Part 1.

What future do we want?

What kind of future do we want? Do we want a sustainable future, where we promote inclusion and diversity, respect individuality and privacy, and meet our energy needs from renewable sources?

Do we trust individuals to arrive at this future by themselves, or will some form of government oversight be required?

Philosophers, economists, and politicians have all been trying to figure out how to set up societies to create the greatest good for the greatest number of their people.

John Rawls made an important philosophical contribution with his 1971 book, A Theory of Justice.

His book addresses the problem of distributive justice: what is the socially just distribution of goods in society? To answer this question, John asked us to begin by going on a thought experiment.

He said that in designing an ideal society, we should start by putting ourselves behind a “veil of ignorance.”

The Veil of Ignorance means you should design your society without knowing what position you will hold in that society. In other words, you don’t know your social status, your natural abilities like strength and intelligence, or anything else.

Conditions necessary for a fair society

Because of this, the theory goes, you will try to design a society that is fair to everyone. It’s not hard to see that we might want to live in a democracy where the Rule of Law applies. For example

  • We should have the freedom to choose what to believe, what to say, and what to do.
  • We should know that our person is safe from harm and that our property rights are secure.
  • We should be confident that we can enter into contracts, and that they will be enforced as written.
  • We should trust that we and our fellow citizens will tell the truth, follow the law, and that there will be just punishment for violations of the law — in other words, that the law will be enforced.
  • And also, we should see that everyone is equal before the law — it is not just individuals, but also governments and other actors who are accountable for their actions.

If it is easy to conclude that having clear and just laws that everyone must follow is vital to any fair society, here’s a puzzle. Have you ever asked yourself why there are so many court cases? So many contract disputes, civil cases, and criminal cases?

I’ve dealt with a lot of litigation over the years. I can tell you in a large majority of these cases, if not all of them, the parties present completely opposite versions of events.

If I can put it less diplomatically, one of the parties is usually being a big, fat liar.

Ideal societies are filled with imperfect people

Here we see the first problem with trying to conceptualize John Rawls’s ideal society.

We can agree with the general principles of how society should be organized, but when it comes to our personal interests, we suddenly feel like the pig Napoleon in George Orwell’s 1945 classic Animal Farm:

All animals are equal, but some animals are more equal than others.

In other words, people are selfish, and eventually, every human experiment in designing a perfect society has bumped up against this ugly fact.

Indeed, you could argue that the main components of the Rule of Law (protection of property rights, just laws, evenly applied, etc.) are designed specifically to address the basic human nature that we are selfish.

People exaggerate, they shade the truth, and they lie. They do this whenever it is in their personal interest, which they value more highly than any general societal interest.

Until people are perfect, I don’t hold out hopes of designing a utopia.

Be well.

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