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The issue of the fairness of many current affirmative action policies stands in a necessary juxtaposition with the relationship citizens have with each other in the U.S. free enterprise system. Although it is the case that many of today's affirmative action programs that involve preferential treatment are flawed and morally unjustified as they stand, it is not the case that no strong affirmative action policy is morally justified. By appealing to historical facts and basic intuitions about fair competition, I present a cogent counterfactual argument that suggests that, due to the competitive nature of our present society, some forms of affirmative action are necessary to make the assumed background institutions of our society fair. Specifically, affirmative action policies that involve preferential treatment should be managed on a case-by-case basis by considering the life and family history of each candidate. Although cumbersome, this approach would be one of the fairest ways to comply with the reasonable demands of compensatory justice.