Scholars often talk about how important it is that law feel legitimate to the people. If the divide between justice, fairness, and law becomes too great, then the law becomes something the people will feel should be ignored if not revolted against. Furthermore, if the process by which law is written, passed, and established strikes people as full of corruption, ignorance, carelessness, and so on, then law will be seen as a force of oppression versus stability. If law changes, it must be changed through a process that the people believe expresses the law “realizing what it was always meant to be” (just) versus “changing arbitrarily.” If law changes in a way that makes it seem as if past law was unjust, it will draw into question all law of all ages.
Government and democracy also need to maintain legitimacy, as Jürgen Habermas discusses in his important Legitimization Crisis. If people don’t believe in “the system,” they will likely feel existentially anxious and oppose it. If people believe the process by which elected officials take office is corrupt or that the government doesn’t reflect the will of the people, the people will not believe it is right to follow the government. In fact, in their minds, a conflict between righteousness and the State can arise, moralizing civil disobedience.
I believe there is another kind of legitimization that is not discussed, and that is between “the real economy” and the stock market. Obviously, like law and justice, sovereignty and the government, these two markets blur and are nearly indistinguishable, but they are not identical. I believe if “the real economy” suffers tremendously but the stock market does well, the citizenship will question if the market serves the broader public instead of an elite minority. The stock market will cease to feel like a reflection of real value and instead come to be seen as a digital game played by hedge-funds so that they can get rich without hard work. Similarly, social justice activities often argue that the law serves the privileged and perpetuates injustice against the most vulnerable; it is not hard to imagine arguments being made that the stock market tricks the public into strengthening stocks with their retirement savings so that the wealthy can get rich and then be bailed out when the market turns south on them. It’s also psychologically taxing to watch Wall Street booming when you feel both like your missing out and like the real world around you is falling apart. Might make you go crazy.
When the market collapsed under the coronavirus, did the Federal Reserve buy up your stock portfolio and write you a check for even a quarter of what you lost? And yet the Federal Reserve certainly saved countless banks that owned toxic and risky assets, almost as if billionaires and corporations play a different game in the same stock market where average citizens play with a handicap. In “the real economy,” when you make a bad investment, you lose money, and in the stock market, the same logic applies — for average citizens. Increasingly, it feels like “the big boys” can’t lose but only win. This draws the legitimacy of the entire market into question.
What will happen when the stock market loses legitimacy? Obviously, there will be a turn against it, but what does that mean? Perhaps that looks like voting against Capitalism and Globalization, and perhaps that would be for the better. I’m not sure: what concerns me is the loss of market legitimacy when Main Street suffers yet Wall Street recovers. We’ll enter a whole new world, one I can only hope is for the better.