First, my own solution to poverty: throw dollars at the problem. This approach is admittedly in some disfavor at the moment. But consider this: we could lift every household in the country above the poverty line for a total of $xx billion by writing them each a cheque. In fact, we spend $xx billion on various programs of social assistance today, yet more than one sixth of the nation remains in poverty. We've been throwing dollars, all right. We've just been missing the target.

At the same time, our varied attempts to ''make the market work fairly,'' as Rae puts it, in fact do the opposite. The minimum wage, which Rae would increase, locks the poor out of the labor market; rent controls have locked them out of the housing market.

Rae used to defend rent controls. He now seems to wish all but to replace the market entirely with state housing, along the lines of education, health, and (soon) child care. Thus are the poor locked into the state system, while the rich can exit to their choice of private providers. Why not provide benefits in cash, rather than kind, and give choice to the poor as well? Throw dollars, not doctors.

Redistribution

It is my contention, in other words, that a radical commitment to free markets can and should be combined with an equally radical program of redistribution of income (and wealth: see inheritance taxes). Neither free enterprise nor social assistance advocates seem to believe this: their incompatibility is the shared credo of Messrs. Black and Rae.

Indeed, they are not only compatible, but in logic cohere. The case for markets over political means of allocation is not merely or even primarily that they are more efficient, but that they are more fair: that is, that in the contest for economic power, the one chance for the weaker sorts is through the democracy of the market, rather than the jungle of politics.

The case for the welfare state, likewise, is not on grounds of ''compassion'' - charity is the province of individual will, not collective coercion. It is rather a question of quite mechanical efficiency. Distributive justice is arguably a public good: left to individuals, the temptation for each to leave the poor to the benevolence of others would be too great.

It should, then, be the task of government to extract as much revenue as it possibly can from the citizenry, and distribute as much of it as it can in the form of a guaranteed minimum income, factoring in the costs of such social rights as housing, health coverage, education, and day care. This is not synonymous with the highest tax rates: lower marginal rates may yield more revenue, because a) the income base expands with greater incentives, and b) the returns on avoidance decline. At some point, even taxation reaches the limits of coercion.

It may be that the prospect of an unconditional income guarantee would lead some to give up work entirely. I don't think the level of support even our affluent society could afford would be taken by many as the good life, and would not find it terribly troubling if they did, set beside the achievement of the end of poverty.

Effort is truly discouraged, moreover, not by giving people money when they don't work, but by taking it away from them when they do. The worst disincentives to work are in the present welfare system, which takes a dollar away for each dollar earned. This effectively puts the poorest in a 100% marginal tax bracket. A guaranteed income, taxed back gently as earned income rises, ensures that it always pays to take a job, or to move up the pay scale.

With a minimum income in place, we could at last dispense with the minimum wage, and other such price distortions. It's all a matter of division of labor. The market is an allocative device: its only purpose is to prevent shortages and surpluses. It cannot be turned to distributive ends, no matter how the rules are jimmied. Distribution is the job of the tax and transfer system. That's enough of a task without piling on allocative responsibilities as well.

The ''social market'' here advanced is not to be confused with Red Toryism. It is in fact diametrically opposed. The Red Tory sticks nervously to the middle on all courses, mixing a little redistribution with a slightly free market; the social market takes from the two extremes. It is radical, yet moderate for being doubly so: a balance, not a blend.