For many legal and political thinkers, the distinction between commutative justice and distributive justice is a very fundamental one. Those who give a central place to commutative justice tend to regard justice as primarily a matter of property rights, and perceive the role of law as policing such rights and correcting trespasses (or injuries) by mechanisms of punishment or compensation. The sanctity of private property is the highest principle; distributive questions hence only arise insofar as owners of property may want to distribute it. On the other hand, some thinkers have given the central place to distributive justice, and regard legal and political theory as attempting to determine the correct form of the just society. Having established a just distribution of property, opportunities, offices, responsibilities, risks and so forth, issues of commutative justice might arise where the extant distribution has been disturbed by injury, theft etc. Hence commutative justice is aimed at the restoration of the distributively just scheme.
The classical conception of justice (in the works of Aristotle, Aquinas and their followers), denied overall priority to either of these conceptions. Justice remains a matter of what is ‘due’ or ‘owed’ to each person. The breadth of that inquiry takes in both commutative and distributive questions, but these terms remain matters of intellectual convenience: not distinct kinds of justice, but mere dimensions of a single inquiry. This can be seen in contract itself. A contractual instrument is in one sense a voluntarily assumed series of obligations that directly relate to the contracting parties, defining what is due (commutatively) in justice between them. But it is also a mechanism for distributing rights, risks and responsibilities between the parties in relation to some limited joint endeavour, and to that extent invokes distributive justice. Any interpretation of the contract must pay attention to both dimensions of the situation, at least if the situation is to be fully reasoned out in justice.
How should one respond to this situation? The OFT itself places responsibility in the hands of the state: ‘more radical approaches would be required if the Government or others wanted to tackle the wider social, economic and financial context in which high-cost credit markets exist.’ OFT1232 Review of High Cost Credit, Final Report June 2010. But the state’s ability to regulate the market is limited. It is widely understood that the introduction of caps to interest would result in one of two things: either loan companies hiding the costs of borrowing in arrangement fees and other administrative ‘expenses’ (themselves difficult to regulate effectively), or loan companies withdrawing from the market, forcing the poor into the hands of illegal lenders. Thus certain payday loan companies have targeted the UK after facing expensive litigation in the US and Canada where usury legislation limits profitability for firms that adhere to the rules. Nor is it clear that a global effort to eradicate high-cost loans would result in cheaper, more regulated credit for the vulnerable. Payday companies may then withdraw from the market altogether, and put their energies into other ventures.
At the same time, a systematic state response to structured privilege seems unlikely to produce significant fruit. The OFT’s contextualization of the problem is a reference toward a distributional question about which disagreement attaches not only to the question of its resolution, but extends to the very terms in which the question should be posed and understood. It is a context that is understood and represented differently by conservatives and socialists, democrats and republicans. Of course responses cannot await the settlement of every question that lies between conservatives and socialists. In the broadest practical terms, it will involve the redistribution of monetary wealth into the hands of the worse-off in one of two ways: directly, through state benefits, or indirectly through the redistribution of paid offices of employment, the control of labour relations, regulation of the banking sector, etc. But it is necessary to cast the net as widely as possible, investigating the ‘indirect’ or structural factors that lead to or reinforce poverty.
Further useful links: