Philosophy, Politics and Economics (PPE)
Rawls, A Theory of Justice
Section 11: Two Principles of Justice
The two principles:
1. Each person is to have an equal right to the most extensive scheme of equal basic
liberties compatible with a similar scheme of liberties for others. §
2. Social and economic inequalities are to be arranged so that they are both (a)
reasonably expected to be to everyone’s advantage, and (b) attached to positions
and offers open to all.
These principles primarily apply to the basic structure of society and govern the assignment
of rights and duties and regulate the distribution of social and economic advantages. Their
formulation presupposes that, for the purposes of the theory of justice the social structure
may be viewed as having two more or less distinct parts, the first principle applying to the
one, the second principle to the other.
We thus distinguish between the aspects of the social system that define and secure the
equal basic liberties and the aspects that specify and establish social and economic
inequalities.
The basic liberties are given by a list of such liberties; important are political liberty (the right
to vote and to hold public office) and freedom of speech and assembly; liberty of conscience
and freedom of thought; freedom of the person, which includes freedom from psychological
oppression and physical assault and dismemberment (integrity of the person); the right to
hold personal property and freedom from arbitrary arrest and seizure as defined by the
concept of the rule of law. These liberties are to be equal by the first principle.
The second principle applies to the distribution of income and wealth and to the design of
organizations that make use of differences in authority and responsibility. While the
distribution of wealth and income need not to be equal, it must be to everyone’s advantage,
and at the same time, positions of authority and responsibility must be accessible to all. One
applies the second principle by holding positions open, and then, subject to this constraint,
arranges social and economic inequalities so that everyone benefits.
These principles are to be arranged in a serial order with the first principle prior to the
second. This ordering means that infringements of the basic equal liberties protected by the
first principle cannot be justified, or compensated for, by greater social and economic
advantages.
All social values – liberty and opportunity, income and wealth, and the social bases of selfrespect – are to be distributed equally unless an unequal distribution of any, or all, of these
values is to everyone’s advantage.
Injustice is then simply inequalities that are not to the benefit of all.
Now it is possible, at least theoretically, that by giving up some of their fundamental liberties
men are sufficiently compensated by the resulting social and economic gains. The general
conception of justice imposes no restrictions on what sort of inequalities are permissible; it
only requires that everyone’s position be improved. E.g., people seem willing to forego
certain political rights when the economic returns are significant.
The distinction between fundamental rights and liberties and economic and social benefits
marks a difference among primary social goods that suggests an important division in the
social system.
Section 12: Interpretations of the Second Principle
“Everyone’s advantage”
“Equally open”
Principle of efficiency
Difference principle
Equality as careers open to
System of Natural Liberty
Natural Aristocracy
talents
Equality as equality of fair
Liberal Equality
Democratic Equality
opportunity
The system of natural liberty asserts that a basic structure satisfying the principle of
efficiency and in which positions are open to those able and willing to strive for them will
lead to a just distribution. Assigning rights and duties in this way is thought to give a scheme
which allocates wealth and income, authority and responsibility, in a fair way whatever this
allocation turns out to be.
In the system of natural liberty, the initial distribution is regulated by the arrangements
implicit in the conception of careers open to talents. These arrangements presuppose a
background of equal liberty and a free market economy. They require a formal equality of
opportunity in that all have at least the same legal rights or access to all advantaged social
positions. But since there is no effort to preserve an equality, or similarity, of social
conditions, except insofar as this is necessary to preserve the requisite background
institutions, the initial distribution of assets for any period of time is strongly influenced by
natural and social contingencies. The existing distribution of income and wealth, say, is the
cumulative effect of prior distributions of natural assets – that is, natural talents and abilities
– as these have been developed or left unrealized, and their use favoured or disfavoured
over time by social circumstances and such chance contingencies as accident and good
fortune.
The liberal interpretation tries to correct for this by adding to the requirement of careers
open to the further condition of the principle of fair equality of opportunity. Positions are to
be not only open in a formal sense, but all should have a fair chance to attain them. Those
with similar abilities and skills should have similar life chances. The outcome is determined
by the natural lottery in this case.
On the view of natural aristocracy no attempt is made to regulate social contingencies
beyond what is required by formal equality of opportunity, but the advantages of persons
with greater natural endowments are to be limited to those that further the good of the
poorer sectors of society.
Section 13: Democratic Equality and The Difference Principle
The democratic interpretation is arrived at by combining the principle of fair equality of
opportunity with the difference principle. This principle removes the indeterminateness of
the principle of efficiency by singling out a particular position from which the social and
economic inequalities of the basic structure are to be judged. Assuming the framework of
institutions required by equal liberty and fair equality of opportunity, the higher
expectations of those better situated are just if and only if they work as part of a scheme
which improves the expectations of the least advantaged members of society. The intuitive
idea is that the social order is not to establish and secure the more attractive prospects of
those better off unless doing so is to the advantage of those less fortunate.
The difference principle is a strongly egalitarian conception in the sense that unless there is a
distribution that makes both persons better off, an equal distribution is to be preferred.
What can justify the initial inequality in life prospects? According to the difference principle,
it is justifiable only if the difference in expectation is to the advantage of the representative
man who is worse off. The inequality in expectation is permissible only if lowering it would
make the working class even more worse off.
Chain connection means that at any point where the expectations of the least favoured are
rising, the expectations of the middle favoured are rising as well.
Difference principle: Social and economic are to be arranged so that they are both (a) to the
greatest benefit of the least advantaged and (b) attached to offices and positions open to all
under conditions of fair equality of opportunity.
Section 14: Fair Equality of Opportunity and Pure Procedural Justice
In justice as fairness society is interpreted as a cooperative venture for mutual advantage.
The basic structure is a public system of rules defining a scheme of activities that leads men
to act together so as to produce a greater sum of benefits and assigns to each certain
recognized claims to a share in the proceeds. What a person does depends upon what the
public rules say he will be entitled to, and what a person is entitled to depends on what he
does. The distribution which results is arrived at by honouring the claims determined by
what persons undertake to do in the light of these legitimate expectations.
In pure procedural justice, the correctness of the distribution is founded on the justice of the
scheme of cooperation from which it arises and on answering the claims of individuals
engaged in it. A distribution cannot be judged in isolation from the system of which it is the
outcome or from what individuals have done in good faith in the light of established
expectations.
Allocative justice applies when a given collection of goods is to be divided among definite
individuals with known desires and needs. Justice becomes a kind of efficiency, unless
equality is preferred. Suitably generalized, the allocative conception leads to the classical
utilitarian view.
Section 15: Primary Social Goods as The Basic of Expectations
Utilitarianism: this view requires us to maximize the algebraic sum of expected utilities taken
over all relevant positions.
The difference principle is different in how it tries to establish objective grounds for
interpersonal comparisons in two ways;
1. As long as we can identify the least advantaged representative man, only ordinal
judgments of wellbeing are required from then on. It asks less of our judgments of
welfare.
2. The difference principle introduces a simplification for the basis of interpersonal
comparisons. These comparisons are made in terms of expectations of primary social
goods.
The good is the satisfaction of rational desire. Each individual has a rational plan of life
drawn up subject to the conditions that confront him.
Section 16: Relevant Social Positions
For the most part each person holds two relevant positions: that of equal citizenship and
that defined by his place in the distribution of income and wealth.
As far as possible, justice as fairness appraises the social system from the position of equal
citizenship and the various levels of income and wealth. Sometimes, however, other
positions may need to be taken into account. If, for example, there are unequal basic rights
founded on fixed natural characteristics, these inequalities will single out relevant positions.
Since these characteristics cannot be changed, the positions they define count as starting
places in the basic structure.
The relevant social positions specify the general point of view from which the two principles
of justice are to be applied to the basic structure. In this way everyone’s interests are taken
into account, for each person is an equal citizen and all have a place in the distribution of
income and wealth or in the range of fixed natural characteristics upon which distinctions
are based. Some selection of relevant positions is necessary for a coherent theory of social
justice and the ones chosen should accord with its first principles. By selecting the so-called
starting places one follows out the idea of mitigation the effects of natural accident and
social circumstance. No one is to benefit from these contingencies except in ways that
redound to the well-being of others.
Lecture 1
Nozick
Nozick’s entitlement theory of Justice: main conclusions about the state are that a minimal
state, limited to narrow functions of protection against force, theft, fraud, enforcements of
contracts, and so on, is justified; any more extensive state will violate person’s rights not to
be forced to do certain things, and is unjustified; and that minimal state is inspring as well as
right  nachtwakersstaat, minimal state.
Principles entitlement theory
If the world were wholly just, the following principles would exhaustively cover the subject
of justice in holdings.
1. A person who acquires a holding in accordance with the principle of justice in
acquisition is entitled to that holding.
2. A person who acquires a holding in accordance with the principle of transfer, from
someone else entitled to the holding, is entitled to that holding.
3. No one is entitled to a holding except by (repeated) applications of 1 and 2.
Example of principle one: when America was discovered, everyone could just get a piece of
land. However, at a certain point there was no more free land  everything turned into
private property. So, the later generation was not able to acquire easy private property.
However, a system of private property was created, and this later generation was
generously compensated by the wealth acquired by this system.
The third principle is a principle of rectification. Example: in USA they are now busy to
rectify the native people who lived there and owned the land previously.
Absolute property rights
The particular rights over things fill the space of rights, leaving no room for general rights 
so there is no certain thing as a fair income distribution or opportunity.
No end-state principle or distributional patterned principle of justice (such as making sure
that the Gini coefficient is not too high) can be continuously realized without continuous
inference with people’s lives.
Taxation of earnings from labour is on a par with forced labour (Frits Bolkestein opened a
bottle on the first of July, because only second half or year he works for his own, the first
half year only for tax the higher the effective tax rate, the more you have the work for
desired living  forced labour).
In the Netherlands there is no political party in favour of above.
If you move from D1 to D2, this might be very different (some people became really rich),
but there is nothing you can do, because it is according to the principles.
Liberal egalitarians: in the transition from D1 to D2 you are allowed to do all kind of things,
progressive income taxes, flat income rate, make poor people wealthier.
Liberal Equality: Rawls
You want to have a better method, scientific, to determine what is just and unjust; this
cannot be done by social circumstances, since poor benefit from high progressive taxes,
whilst rich suffer.
Justice is the first virtue of social institutions, as truth is of systems of thought. When
evaluating if a social system is good, look at justice, not social welfare etc.
Example; in the fifties, when you married, you were fired. Then you are directly able to care
for children and household. Everyone was happy and it is efficient, so why is this bad?  it is
not just. Halve of the population does not have the same rights.
Purpose of social fabric is not to maximize happiness/GDP/income  it is to build the most
just society that we can have.
Rawls
Rawls’ general conception of justice: all social primary goods – liberty and opportunity,
income and wealth, and the bases of self-respect – are to be distributed equally unless an
unequal distribution of any or all of these goods is to the advantage of the least favoured.
Rawls is, however, in favour of income inequality because otherwise there is no incentive to
work  so no communist country/everything completely equally distributed.
Up until Rawls the dominant theory was Utilitarianism: “justice” is the distribution of
benefits and burdens that maximizes social welfare.
Another stream was intuitionism: incoherent set of ideas and intuitions without method or
priority rules.
Before Rawls, also principle of equality of opportunity: reward for a job is just if it was open
to all and the best selected. However, the problem with this is equality of opportunity, which
can almost never be fair. Formal equality of opportunity is free career choices, careers open
to talent. Fair equality of opportunity is affirmative action programs, special programs for
disadvantaged groups. Even fair E.o.O. is only just if positions are determined only by
choices, not circumstances. Natural and social lottery: you cannot change your
DNA/disability.
E.o.O only tries to neutralize the social lottery, not the natural lottery. Life is not fair, but this
is not injustice. You cannot change the natural lottery.
A liberal equalitarian would organize the society in such a way that all the differences due to
the natural lottery work to the benefit of those who have the least.
The method Rawls is using is the original position and the veil of ignorance. You have to
decide a distribution without knowing the outcome of the social and natural lottery. If you
do not know what the outcome is, the most rational thing to do is to make a system in which
when you lose in the lottery, your position in society is as best as it can. The least fortunate
must end up as high as possible. Must be as if your worst enemy will decide for you a place
in society; then make sure worst position is as best as it can be. Because all information in
this decision are left out, the outcome of this decision is fair.
Principles chosen under fair conditions  justice as fairness. You do not know anything
about the outcome, the only thing that is left is rationality.
Two types of primary goods;
1. Social goods
2. Natural goods
Those are the currency of justice. Primary goods are all-purpose means, whatever one’s
conception of the good life. Social goods can often easily be redistributed, natural goods not.
Two principles of justice, the outcome of the thought experience/veil of ignorance.
1. Each person is to have an equal right to the most extensive total system of equal
basic liberties compatible with a similar system of liberty for all  is the rational
thing to do.
2. Social and economic inequalities are to be arranged so that they are both;
a. To the greatest benefit of the least advantaged, and
b. Attached to offices and positions open to all under conditions of fair equality of
opportunity
 nobody knows why Rawls put a above b, since b is more important than a.
1= liberty, 2b=equality 2a=fraternity
Fraternity: greater advantages only if it benefits the less well off.
It is legitimate in a Rawlsian society to pay very much to a CEO, because you then attract the
best talents, which have high leverage to society and benefit al, and make the poor better
off by doing their job. Therefore, an extraordinary high salary for CEO is just according to
Rawls. Inequality is necessary for the incentives. Inequality is allowed but must be justified;
inequality must make the poor better off.
Priority of justice over efficiency and welfare.
Reflective equilibrium: flow from assumptions to principles, confront with sense of justice,
see if it is acceptable, and then go back to original position and decide again.
The choice you make for the society behind the veil of ignorance reflects your risk aversion.
Problems with Rawls;
1. Definition of least advantaged is in terms of primary social goods. Rawls proposes the
unskilled worker or all with less than half of the median income and wealth. It leads
to no compensation for natural inequalities.
2. No distinction between chosen and unchosen equalities. Example: twins (crazy and
lazy), equally talented and same social background, one workaholic, one tennis
player. Different conception of the good life; under the difference principle there is
redistribution from crazy to lazy, which is not right, because crazy works hard and
lazy not. There should not be redistribution; own choices of how one wants to live his
life.
Rawls reaction: induce leisure as a primary social good.
Dworkin: Rawls not endowment-insensitive enough and not ambition-sensitive
enough.
Tutorial 1
Difference between concepts and conceptions. There are different conceptions of a certain
concept. Justice is a concept, but people have different conceptions of it.
Lecture 2
Dworkin: Equality of resources
Rawls is not endowment-insenstive enough (no full compensation for natural disadvantages)
and not ambition sensitive enough (lazy subsidized by Crazy, compare the undeserving
poor).
Just income distribution must be endowment-insensitive (circumstances do matter) …
Problem 1: endowment insensitive
With Rawls, when a handicapped person earns a decent income, there will be no
compensation for the fact that he is handicapped. This is not right according to Dworkin.
Problem 2: ambition insensitive
From Rawls, there will be redistribution from Crazy to Lazy, due to the difference principle,
which is not right according to Dworkin, because it is the own choice of Lazy to work less.
Point of departure Dworkin:
-People are not held responsible and should not be held responsible for unchosen
circumstances (handicapped)
-People are responsible, and should be held responsible, for the outcomes of their own
choices (Lazy)
-Fair framework is necessary (see slides)
Unchosen natural inequalities: make the envy test impossible. No matter how much you are
compensated for your handicap/short life expectancy, you will still prefer the life of
someone without a handicap.
Brute luck: luck that you did not choose, that you also could not foresee.
Option luck: luck that you do choose. Example, you decide to buy a lottery ticket.
Dworkin: with the island, with how much of the clamshells are you willing to buy an
insurance in case you were the person with a handicap?
Two competing requirements;
-Must be ambition sensitive.
-Must be endowment sensitive.
Slavery of the talented: because your working power is so big on the market, you must work
more to have the same standard of living as people with less talent.
In Dworkins framework, you also know your talents. Otherwise it would be impossible to bid
at the market. However, you do not know how much your talent is worth.
Problems Dworkin: there might be some really ambitious, but untalented, people who work
hard and earn therefore much money, but they are still compensated by the tax system. So
they are rich, despite their resources, but still get money.
Other way around: people who are talented, but decide not to use it, still need to transfer
money to untalented people.
Alternative: Egalitarian earning subsidy scheme (everyone gets an average hourly wage).
However, some jobs will then never be chosen.
Adam Swift – Political Philosophy
The state is the collective agent of the citizens, who decide what its laws are. So the question
of how the state should treat its citizens is that of how we, as citizens, should treat one
another.
The distinction between a concept and the various conceptions of that concept is a very
useful analytical tool. The concept is the general structure, or perhaps the grammar, of a
term like justice, or liberty, or equality. A conception is the particular specification of that
concept, obtained by filling out some of the detail. What typically happens, in political
argument, is that people agree on the general structure of the concept – the grammar, the
way to use it – while having different conceptions of how that concept should be fleshed
out.
Justice: identifying the scope and content of coercively enforceable duties by the state.
Hayek vs. social justice:
The idea that ‘society’ is something that might be just or unjust involves a misunderstanding
of the concept of justice. Justice is an attribute of action, a predicate of agents. A person acts
justly when she undertakes a just action. ‘Society’, not being an agent, is not the kind of
thing that can be just or unjust.
Rawls: justice as fairness
The ideas at the heart of Rawls’s theory of justice are the original position and the veil of
ignorance. Rawls believes that the way to find out which principles of justice are fair is to
think about what principles would be chosen by people who do not know how they are
going to be affected by them. Justice should be understood as that which would emerge as
the content of a hypothetical contract or agreement arrived at by people deprived of the
kind of knowledge that would otherwise make the agreement unfair. Depriving people of
particularizing knowledge means that they will choose fair principles rather than allowing
that knowledge to bias the choice of principles in their own interests.
There are two kinds of things that the parties to this hypothetical contract don’t know;
1. They are ignorant of their talents – their natural endowments – and their social
position.
2. They don’t know their conception of good. They don’t know what they believe about
what makes life valuable or what is worthwhile, whether they are religious or not,
and so on.
Rawls thinks people behind the veil of ignorance would choose the following principles:
1. Each person is to have an equal right to the most extensive total system of basic
liberties compatible with a similar system of liberty for all.
2. Social and economic inequalities are to be arranged so that they are both (a) to the
greatest benefit of the least advantaged, and (b) attached to offices and positions
open to all under conditions of fair equality of opportunity.
(1) Is the principle of equal basic liberties. This has priority over (2), which is concerned with
social and economic inequalities and itself has two parts: (b), the principle of fair equality of
opportunity, which has priority over (a), the difference principle.
Taken together, this means that a just society will, first and most important, give each of its
members the same set of basic liberties or rights. Then, if there are social and economic
inequalities, it will make sure that all citizens enjoy equality of opportunity in the process by
which they come to achieve (and avoid) the unequally rewarded positions. Finally, it will only
allow such inequalities at all if they tend, over time, to maximize the position of the worstoff members of society.
Nozick: justice as entitlement
For Nozick, justice is not about agreeing fair principles by imagining that we don’t know how
lucky of unlucky we have been in the natural or social lottery. It is about respecting people’s
rights to self-ownership and their right to hold property, leaving them free to decide for
themselves what they do with what is theirs. The proper role of the state, for Nozick, is not
to meddle with the distribution of resources so as to produce some ideally ‘fair’ distribution.
That would involve unjustified intrusions into people’s legitimate holdings of private
property. Its role should rather be limited to that of protecting people from such intrusions
by others. Nozick is committed to the idea of self-ownership and arguing for a laissez-faire
‘nightwatchman’ state.
In Nozick’s view, people can do what they like with what is theirs. And there are three kinds
of things that might be theirs:
1. Their selves (brains, bodies, etc.)
2. The natural world (land, minerals, etc.)
3. The things people make by applying themselves to the natural world (cars, food,
computers, etc.)
Nozick identifies three ways in which people can acquire a legitimate property holding (or
entitlement): initial acquisition, voluntary transfer and rectification. On Nozick’s view, what
matters is that people have stuff that is justly theirs, and whatever distribution results from
voluntary exchange between them is necessarily just. Whether somebody has a justice claim
to something depends solely on the chain of events that led to them having it. Inequality
could be just, equality could be just. That depends simply on what it is that people choose to
do with their property.
Three positions thinking about the justice as a desert:
1. Conventional view: holds that one person can deserve to earn less or more than
another even if this is due to factors that are beyond their control.
2. Extreme view: people do not deserve to earn less or more than one another even if
they are exerting – or have in the past exerted – different amounts of effort.
Somebody who works hard does not deserve to earn more than somebody who does
not. The justification for this is that how hard somebody works is itself something
beyond their control. People’s character and psychological makeup are a function of
their genetic constitution and their childhood socialization. Luck undermines
differential desert claims and, because the view thinks that effort is itself a function
of luck, denies even that those wo work hard deserve to earn more than those who
do not.
3. Mixed view: the halfway house position. People don’t deserve to be rewarded
differently for things (or ‘circumstances’) that are genuinely beyond their control (like
being clever or stupid). But they do deserve to be rewarded differently for things that
are genuinely a matter of choice (how hard you work, kind of job, etc.).
Dworkin: What is Equality? Part 2: Equality of Resources
An overall theory of equality must find a means of integrating private resources and political
power. An equal division of resources presupposes an economic market of some form,
mainly as an analytical device but also, to a certain extent, as an actual political institution.
The idea of an economic market, as a device for setting prices for a vast variety of goods and
services, must be at the centre of any attractive theoretical development of equality of
resources.
Envy test: no division of resources is an equal division if, once the division is complete, any
immigrant would prefer someone else’s bundle of resources to his own bundle.
We must apply the envy test diachronically: it requires that no one envy the bundle of
occupation and resources at the disposal of anyone else over time, though someone may
envy another’s bundle at any particular time. If everyone had equal talents, the initial
auction would produce continuing equality of resources even though bank-account wealth
became more and more unequal as years passed.
People can envy each other, but they must not envy each other’s bundles of resources.
Starting-gate theory of fairness: if people start in the same circumstances, and do not cheat
or steal from one another, then it is fair that people keep what they gain through their own
skill. This is very far from equality of resources and hardly a coherent political theory at all.
Difference with theory Dworkin: Dworkin does not suppose that an equal division of
resources is appropriate at one moment in someone’s life but not at any other. If people of
equal talent choose different lives it is unfair to redistribute halfway through those lives.
According to Dworkin, resources must be:
1. Ambition-sensitive. Those who work more than others, must be permitted to retain
the gains that flow from these decisions in an equal auction followed by free trade.
2. Endowment-sensitive: the distribution of resources must be allowed to be affected
by differences in ability of the sort that produce income differences in a laissez-faire
economy among people with the same ambitions.
Joseph Heath: Dworkin’s auction
Dworkin’s argument for resource egalitarianism has at its centrepiece a thought experiment
involving a group of shipwreck survivors washed ashore on an uninhabited island, who
decide to divide up all of the resources on the island using a competitive auction.
Criticism Heath: Dworkin misunderstands how the auction mechanism works, and so
misinterprets its significance for egalitarian political philosophy;
1. He makes it seem as though there is a conceptual connection between the ‘envyfreeness’ standard and the auction, when in fact there is none.
2. He fails to appreciate how idealized the conditions are that must be satisfied in order
for his results to obtain.
This leads him to draw practical conclusions from the thought experiment that do not follow,
such as his claim that the principle of equality generates a presumption in favour of the
market as a mechanism for the distribution of resources. The result is that Dworkin saddles
resource egalitarianism with a set of commitments that are, in fact, inessential to that view.
Dworkin himself misunderstands how the auction mechanism works, and misinterprets its
significance for both the practical and theoretical aspects of the theory of justice. First, there
is confusion about what the auction accomplishes in the broader resource-egalitarian
scheme. Dworkin makes it seem as though there is some conceptual connection between
the envy-freeness standard and the auction, when there is in fact none. The auction simply
takes a prior envy-free allocation and makes it Pareto efficient. Second, Dworkin fails to
appreciate how strict the conditions must be satisfied in order for the results that he derives
to obtain. Thus, he draws practical conclusions from this thought experiment that simply do
not follow. In particular, he claims that the principle of equality generates a presumption in
favour of the market as a mechanism for the distribution of resources, when in fact his
argument, correctly understood, implies no such thing.
Solution for generating an envy-free allocation for three people: making three bundles of
goods, and letting each person set their preferences on paper. If each person requests a
different bundle, then the bundles are distributed. As long as two people request the same
bundle, the bundles will be reorganised. No distribution is made until an allocation is
achieved that generates a mutually consistent set of requests.
In the economic literature, the concept of envy-freeness is often used to define the following
two distinct principles, one stronger than the other:
1. Fairness: a distribution is fair if, and only if, no individual prefers the bundle that is
received by any other individual to his or her own.
2. Superfairness: a distribution is ‘superfair’ if, and only if, each participant receives a
bundle that is strictly preferred by that individual to the bundle received by anyone
else.
Under the fairness principle, an individual could be indifferent between her share and
someone else’s, and so would still be willing to accept certain rearrangements of the
bundles. Under superfairness, each agent has a strict preference for her own bundle, and so
would reject any arrangement under which she received anyone else’s.
If two players have exactly the same preferences, then the two fairness frontiers will land on
top of one another, and there would be no super-far solutions, only fair ones.
Second Fundamental Theorem of Welfare Economics: is the converse of the First
Fundamental Theorem, which shows that the outcome of a perfectly competitive market will
be Pareto optimal. The second theorem shows that, under certain assumptions, every
Pareto optimal allocation can be the equilibrium outcome of a competitive market, given
some initial allocation of goods and resources. This shows that there is no conflict in
principle between equality and the exchange of goods.
What Dworkin is describing is simply the fact that the envy-freeness standard will lead to no
one preferring anyone else’s bundle within that allocation, but that at least one person will
prefer the bundle that he would receive under some other envy-free allocation.
The central point in this article is that Dworkin misunderstands the contribution that his
auction makes to his resource-egalitarian scheme. This leads him to make two illegitimate
inferences concerning the status of the market. First, it leads him to think that there is some
internal connection between the institution of the market and the resource-egalitarian ideal.
This is incorrect. Markets promote efficiency-they are at best neutral with respect to
equality. Second, it leads him to overlook results in economic theory which show that in
principle conclusions derived at this level of idealization have no normative implications for
real-world institutions. General equilibrium theory simply cannot be used as a platform for
the development of a theory of justice.
Parijs – International Distributive Justice
Kon ik niet vinden. Navragen bij docent.
Adam Swift – Political Philosophy: Social Justice v. Global Justice
Cosmopolitans: the idea that all human beings are fundamentally equal means that their
nationality, or which society they are a member of, should not make a difference to what
they can claim from others as a matter of justice.
The alternative view insists that social justice and global justice really are different things.
Members of a society have duties to one another that they do not have to members of other
societies. Those who share a nationality, or belong to the same state, are in a particular kind
of association – a distinctive relationship with particular others – that makes a difference as
far as justice is concerned.
Each of the conceptions of social justice that we have looked at can be thought of presenting
a different justification of inequality. Hayek thinks that the whole idea of seeking social
justice involves a philosophical mistake, so that inequality doesn’t really need justification in
the first place. Rawls hold that inequalities are justified if they conform to the principles that
would have been chosen in the original position, most controversially the difference
principle which holds that inequalities must serve, over time, maximally to promote the wellbeing of the least advantaged members of society. Nozick rejects this kind of thinking in
favor of a principle of self-ownership that leaves people free to do what they like with
property that is theirs – a principle that would justify extreme inequality. All three of these
thinkers reject the popular views that people deserve differently depending on their
productive contribution.
John E. Roemer: Responsibility in Egalitarian Theory
The original position of Rawls and the hypothetical insurance market of Dworkin both
produce results that are undesirably unequal, if they are modeled correctly.
The central premises of the two above, that individuals, or those denizens who represent
them behind the veil of ignorance, are entirely self-interested, is the assumption that must
be jettisoned, and replaced with a conception of solidarity, in order for the thought
experiments to produce an outcome that is egalitarian.
Rawls: veil of ignorance  maximin, hyper risk aversion.
Dworkin distinguishes between brute luck and option luck. Brute luck is an event affecting
the person against which he could take no precaution, against which he could not insure.
Option luck is a stochastic event a person chooses to face. Thus if my house burns down and
I chose not to buy fire insurance, that is an instance of option luck.
Dworkin argues that brute luck is unfair, while option luck is fair, precisely because a person
is responsible for his choices. Perhaps the most important instance of brute luck is the birth
lottery, which assigns circumstances – families and genetic constitutions – to persons.
If all resources were transferable, then equality of resources would simply mandate that an
equal-division of resources be mandated, and then people could trade to a competitive
equilibrium. This would produce a Pareto efficient allocation, in which no one envied any
other person, in the sense of desiring the other’s bundle. This is exactly the case of the
auction on the desert island that the shipwrecked travelers face in Dworkin’s second article.
Unfortunately, many important resources are not transferable: families into which one is
born, talents, and handicaps. Dworkin’s ingenious proposal is to transform the brute luck of
the birth lottery, which allocates those resources, into option luck, by use of a hypothetical
insurance market.
The venue for this market is an analog to Rawls’s original position. In this venue, each person
is represented by a soul. The soul knows the preferences of her person, including her
preferences over risk. She does not know the circumstances of her person, but she does
know the distribution of circumstances in the world. In Rawlsian parlance, she knows exactly
those things her person is responsible for (preferences) and facts about the world (the
distribution of circumstances). She does not know what is morally arbitrary, namely, her
own circumstances, or as Dworkin would say, resource endowment. In this situation, an
insurance market will operate, where each soul will have the same amount of fictional
money to purchase insurance – this equality is key. Insurance can be purchased to pay out
contingent upon the realization of the birth lottery. Thus, souls can insure against their
persons having bad luck in the birth lottery, and in so insuring, they use the risk preferences
of their particular persons. This seems to be a perfect model for Dworkin’s theory: for the
original position shields persons precisely of morally arbitrary facts and holds them
responsible for their choices.
Unfortunately, Dworkin’s discussion of how this insurance market would operate is clumsy
and ad hoc. When applying the standard model of insurance to Dworkin’s veil of ignorance
construction, and it leads to the following result: unless the individuals are sufficiently risk
averse then the consequence of Dworkinian insurance will be to transfer resources from the
disabled to the able.
The equality part of equal opportunity is that regardless of one’s circumstances, one will
face the same distribution of the objective – that is, one will have the same probability of
achieving given levels of acquisition of the objective, regardless of type. The opportunity
part is that we do not seek to equalize the value of the objective across al persons, but only
to equalize the distributions of the objective across types. Greater effort will bring about a
greater degree of acquisition of the objective within the type. Thus, a person is not
responsible for his circumstances, but is responsible for his choice of effort.
In conclusion, Roemer proposes that a good measure of economic development is the
degree to which earnings inequality is due to effort, not circumstances. A country would
count as developed to the extent that it had eliminated the effect of morally arbitrary
factors of earnings. In order words, economic development means approaching distributive
justice, in the sense that contemporary egalitarian theory has defined it.
John E. Roemer – Market Socialism Renewed
In the US there is little discussion of what was a central topic in earlier socialist movements:
the nature of property rights in firms. Because American socialist politicians say little or
nothing about property relations, the implicit assumption must be that their conception of
socialism is social democracy: an economic system with capitalist property relations, but
with significant taxation to finance the investments that comprise their policy proposals.
Every socioeconomic formation, Roemer proposes, has a foundation consisting of three
pillars:
1. A set of property relations and institutions that organize the allocation of resources,
a distributive ethic that specifies the allocation of resources.
2. A distributive ethic that specifies the allocation of income and resources considered
fair or just.
3. A behavioral ethos that specifies how economic actors are expected to make
decisions.
The behavioral ethos of capitalism is individualism: each actor is conceived as being in
competition with all other actors, and the actions of all are constrained by nature. The key
institutions are private property ownership, contracts, and markets. The distributive ethic is
“from each according to his endowments of talents and wealth, to each what he can get.”
Law sets the rules.
Socialism’s three pillars are the following: the behavioral ethos is cooperation – people in
solidarity are engaged in a struggle constrained by nature. The distributive ethic, classically,
was “from each according to her ability, to each according to her needs.” A variety of sets of
property relations and institutions have been proposed as socialist, from state ownership of
firms to worker-owned firms. The importance of behavioral ethos of a social formation was
emphasized by G. A. Cohen. For Cohen, the socialist ethos was “community”, an amalgam of
reciprocation and altruism.
The goal of this article is to describe an attempt to conceptualize the ethos of cooperation
and socialist property relations in a precise way, in order to provide a new set of blueprints
of what a socialist economy could look like – an economy where economic actors cooperate
in their labor supply and investment decisions, rather than going it alone, as they do under
capitalism. For this, the theory of general competitive equilibrium and game theory are
used.
First theorem of welfare economics: in a general competitive equilibrium, if there is no
taxation, no externalities, no public goods or public bads, and there is a complete set of
markets, then the equilibrium allocation is Pareto efficient.
Firms demand factors of production from households and supply produced goods to the
market, and households supply production goods to firms and demand consumption goods
through the market.
In Socialism 1, the property relations of capitalism are maintained, but there is income
taxation with a demogrant distributed to all citizens. Workers and investors, however, do
not determine their factor supplies by Nash optimization as they do under capitalism, but
rather by Kantian optimization, which is a cooperative way. When a worker decides upon
her labor supply L, she asks herself “What is the labor supply that I would like all workers to
offer?” The free-rider problem disappears, and the resulting allocation of resources is
Pareto-efficient. There will be no deadweight loos of taxation, therefore the trade-off
between equity and efficiency no longer exists.
In Socialism 2, both the behavioral ethos and property relations are different from those
institutions under capitalism. Firms are no longer owned by shareholders, as in social
democracy, but rather by those who invest in and supply labor to them. There are no
shareholders in Socialism 2.
The reliance on profit maximization by firms is essential: I do not know of any model that
gives Pareto efficiency of economic equilibrium in the absence of profit maximization.
However, in the presence of unregulated public bads, profit maximization if not Pareto
efficient.
G.A. Cohen defines three levels of equality opportunity:
1. Bourgeois equality of opportunity removes socially constructed status restrictions,
both formal and informal, on life chances.
2. Left-liberal equality of opportunity also sets itself against the constraining effect of
social circumstances (e.g. the wealth of the family into which one is born) by which
bourgeois equality of opportunity is undisturbed.
3. Socialist equality of opportunity seeks to correct for all unchosen disadvantages –
disadvantages, that is, for which the agent cannot herself be reasonably held
responsible, whether they be disadvantages that reflect social misfortune or those
that reflect natural misfortune.
Lecture 6
Post-productivist does not accept the predominance of paid work (all social benefits workrelated). A productivist policymaker would choose a paid employment rate of 80% and an
unemployment rate of 10% above a paid employment rate of 70% and an unemployment
rate of 5%. A post-productivist policymaker would choose a paid employment rate of 70%
and an unemployment rate of 5% above a paid employment rate of 80% and an
unemployment of 10%. In the 70% employment situation, more people are doing unpaid
work (watching the children etc.).
Welfare states grant social rights that to varying extent make living standards independent
of market forces (‘de-commodification’); education, health care in the Netherlands; not
depended on own or parents’ performance on labor market. In the US these goods
(education, health care) are commodified. The welfare state de-commodifies.
Post-productivism stresses the value of personal autonomy. It insists on welfare-work
unconditionality, and it regards the emphasis on fulltime and long work as a constraint on
the control over one’s time.
Productivism stresses the value of paid work both as a ‘way of life’ and means of achieving
economic self-reliance. It insists that social rights should never be used to free people from
the social obligation to work for a living.
Core value of a post-productivism as an ideal is individual autonomy.
To promote autonomy, three key conditions must be met:
1. Income adequacy, because necessity, to be money poor, is the enemy of choice.
2. Temporal adequacy, because autonomy requires sufficient discretionary time (e.g.
instead of being time poor).
3. 1 and 2 provided in a way which involves minimal conditionality.
The Netherlands scores high on post-productivism.
Adam Swift – Liberty
According to MacCallum, all claims about freedom have the following form:
x is (is not free) from y to do (not do, become, not become) z
Freedom is a triadic relation. It necessarily involves references to three things: x, the agent
or subject of freedom; y, the constraint or interference or obstacle; and z, the goal or end.
Whatever claim about freedom you have in mind, it will contain the idea of an agent being
free from something to do or become something. What people who disagree about liberty
disagree about is what counts as an x, what counts as a y and what counts as a z.
Three distinctions between conceptions of liberty:
1. Effective freedom vs. formal freedom
The difference between effective and formal freedom is the difference between
having the power or capacity to act in a certain way and the mere absence of
interference. The fact that nobody is preventing you from doing something does not
necessarily mean that you can actually do it.
This distinction can be expressed in terms of MacCallum’s triadic relation. Those
endorsing this variant of the ‘positive’ view think that poverty, or lack of resources,
counts as a constraint on freedom – as a y in his formula. Whereas those endorsing
the ’negative’ view think that only deliberate inference by others (for example, by
laws prohibiting particular actions) counts as such a constraint.
2. Freedom as autonomy vs. freedom as doing what one wants
The thought behind this distinction is that somebody could be doing what she
wanted without really ruling (or being in control of, or governing) herself. She would
then have negative freedom – nobody is interfering with her – but would she have
positive freedom? Would she have the kind of freedom that consists of being in
control of one’s life?
Acting heteronomous: acting for the lower self (emotional, irrational self) instead of
for the higher self (ideal, inner, true, rational self). E.g. smoking.
Freedom as autonomy is a notion of agency (x) which allows that there can be
internal constraints on freedom – that freedom can be limited by inner factors (such
as desires), not just the inference of external others.
3. Freedom as political participation vs. freedom beginning where politics end
This variant of ‘positive freedom’ holds that one achieves true freedom through
political participation in the state, through taking part in collective self-government,
through being involved in making the laws under which one lives. The contrast is with
the more conventional view that the laws are the rules that determine what the
individual is and is not free to do.
This kind of freedom is freedom of a citizen (x) from domination by others (y) to
make the rules she is to live under (z).
Five positions on freedom, private property, the market and redistribution:
1. Justified redistributive taxation does not infringe the freedom of those who are taxed
because their claims to the property in question cannot be established in the first
place.
This is the position argued for by Dworkin. He says that when we take property from
those whose claim to it is not justified, we shouldn’t think of ourselves as restricting
their freedom at all. This is because judgements about what counts as a restriction of
freedom depend upon judgements about what property rights are justified in the
first place.
The libertarian view is, ultimately, a view about the legitimacy of property rights.
Where they appeal to freedom, it is to a conception that makes judgments about
what does and does not count as a restriction of freedom depend on judgements
about the legitimacy of particular property rights.
2. Even if justified redistribution does restrict the freedom of those who are taxed, and
whether or not it increases the freedom of those who benefit, it makes them better
off in other ways and can be justified on these non-freedom grounds.
Even if we think that redistribution does reduce the freedom of those who are taxed,
this reduction needn’t itself be justified on freedom grounds. We shouldn’t think that
freedom can only be restricted for the sake of freedom. It might be justified because
it promotes equality, or justice, or social order, or utility, or any of a number of other
variables.
3. Redistribution reduces the effective freedom of those who are taxed, but is justified
because it makes for more effective freedom overall.
4. Private property rights and market relations encourage people to misconceive their
real interests and hence render them heteronomous and unfree.
True freedom consists in rejecting private property and markets as embodying an
alienated and distorted understanding of what it is to be human.
5. Freedom = autonomy, autonomy = rationality, rationality = morality, morality =
justice, justice = redistribution, therefore the person who recognizes her duty to
redistribute her resources is herself freer than the person who doesn’t recognize that
duty.
The truly free (autonomous) person is someone who is acting rationally, hence
morally. Suppose acting morally implies redistribution from rich to poor. This leads to
the conclusion that the rich themselves are more free in giving their money to the
poor than they would be by holding on to it for themselves. They may have less
freedom understood as ‘range of options available to one without interference’, but
they have more freedom understood as ‘action in accordance with one’s higher
(=moral) self’.
Much political debate invoking the concept of freedom has focuses on issues to do with
property and redistributions. During the 1970s and 1980s, the right appropriated the
concept of freedom for its own purposes. To believe in freedom meant to favor the free
market, and to want the state to do as little as possible, leaving individuals ‘free’ from its
interference. The left responded in two quite different ways. The mainstream or liberal left
argued that the right seemed particularly concerned with the freedom of those who had
property – their freedom to do what they liked with it – and not much interested in the
freedom of those who had little or none. The radical and Marxist left questioned the very
idea that property and freedom were connected, arguing that true freedom required the
transcendence of the capitalist framework that relied on and fostered a ‘bourgeois’
conception of freedom.
J. Heath – Three normative models of the Welfare State
The three normative purposes most commonly cited as providing a justification for the
scope of welfare state activity are equality, community, or efficiency. These give rise to a
corresponding set of models, which I refer to as the redistributive, the communitarian, and
the public-economic model of the welfare state. Heath’s objective in this papier is to show
that the public-economic model of the welfare state is the most plausible. Not only does it
provide a superior account of the existing configuration of welfare-state activities, but it
alone is able to explain why, in all Western democracies, state spending rose almost
continuously over the course of the 20th century as a fraction of GDP.
The redistributive model sees the central function of the welfare state to be the
redistribution of resources, with the goal of making the outcomes produced by the market
economy less unequal.
The communitarian model considers the central function of the welfare state to be that of
imposing limits on the scope of the market, in order to resist the commodification of certain
domains of interaction.
The public-economic model regards the welfare state as playing a role essentially
complementary to that of the market. According to this view, the welfare state corrects
market failure, either through regulation, subsidization and taxation, or the direct provision
of goods and services.
According to the redistributive model, the market economy is extremely successful at
producing wealth. The problem is that this wealth winds up being very unequally distributed
– or winds up being distributed in a way that violates widely shared intuitions about social
justice. Thus, the state intervenes, redistributing a certain amount of the wealth, in order to
make the overall results of the economy palatable to a sufficiently large number of the
people that the system remains stale. The economic role of the welfare state is organized
around a set of core tasks that are fundamentally different from those that are carried out
by the market. While the private sector produces, and is therefore concerned with
efficiency, government redistributes, and is therefore concerned with equality.
The communitarian model of the welfare state has as the central idea that certain moral and
civic goods are diminished or corrupted if bought and sold for money and should therefore
be provided by the state. In its crudest form of the communitarian model, individuals in the
private sector are regarded as acting egoistically, while those in the public sector are
thought to act altruistically. The scope of the welfare state is determined by moral
abhorrence at the thought that the provision of essential needs should be instrumentalized
and subjected to the corrupting influence of ultimately self-interested actors.
According to the public goods view of the welfare state, the basic role of the state is to
resolve collective action problems. The economic model of the welfare state should
therefore be interpreted as the view that the state should strive to resolve collective action
problems in case where it can do so more efficiently than other institutional forms.
Wagner’s law: the state taxes people in order to provide public goods. As people become
wealthier, they want to spend an increasing fraction of their income gain on public goods,
and so, to the extent that the state is responsive to public references, growth in per capita
GDP will lead to an increase in state spending as a fraction of GDP.
The public-economic model of the welfare state provides both the best theoretical
reconstruction of the existing configuration of welfare-state services, as well as the most
useful set of principles to guide any proposed expansion or modification of these services.
Adam Swift – Equality
Egalitarian plateau: nearly all agree with the principle that members of a political community
should be treated as equals, that the state should treat its citizens with equal concern and
respect. What people disagree about is what ‘treatment as an equal’ amounts to.
For libertarians such as Nozick, treating people as equals means respecting their property
rights, including their right to self-ownership, equally; not using some as means to other’s
ends.
Minimal conception of equality of opportunity: a person’s race or gender or religion should
not be allowed to affect their chances of being selected for a job, of getting a good
education, and so on.
Conventional conception of equality of opportunity: equality of opportunity requires more
than that people’s relevant competences – rather than the prejudices of others – determine
whether or not they get the jobs or education they apply for. It matters also that all have an
equal chance of acquiring those relevant competences. People’s prospects in life should
depend on their ability or effort, not on their social background.
On the radical view, correcting for social disadvantage does not really yield equality of
opportunity, because it leaves untouched natural or inborn disadvantage. People should
have equal opportunities in the sense that their prospects are influenced neither by their
social position nor by their position in the distribution of natural talents. Only in that case
will different outcomes really reflect people’s choices rather than unchosen differences in
their circumstances.
A child’s starting point (opportunity) is a parent’s outcome. If we really care about equalizing
opportunities, we need to think about equalizing outcomes also.
Philippe van Parijs – Basic income: A Simple and Powerful Idea for the Twenty-first
Century
The following three types of proposals are plausible candidates as the promising next step
for basic income:
1. Individual tax credit: e.g. student loan, child support.
2. A household-based regressive negative income tax: take as given the household
modulation of the current guaranteed minimum income and, instead of withdrawing
the benefit at a 100 percent rate as earnings increase, to withdraw them at a
somewhat lower rate (70-50%), so as to create material incentives to work for any
household, however low its earning power.
3. A modest participation income: build upon existing parental, study, or care leave
schemes and integrate them, jointly with tax credits for the employed, into a
universal basic income subjected to a very broad condition of social contribution.
Loek Groot – Compensatory Justice and Basic Income
The general assertion of this article is that the more favorable the conditions under which
people can freely choose their labor market careers, the more scope there is for
Compensatory Justice. More specifically, an economy with an unconditional basic income
(one sufficient to cover the basic needs according to the prevailing standard of living) fulfills
the conditions required from the viewpoint of Compensatory Justice and is better than a
conditional system of social security with a guaranteed social minimum at the same or even
somewhat higher level.
In the economist’s view on CJ, only the workers on the margin are exactly compensated in
welfare terms for their loss of utility compared to their next best alternative, whereas all
nonmarginal workers (perhaps liking their jobs) are being overcompensated. This outcome
is, however, more efficient than what would follow from an objective or balancing approach
to CJ. The chief criterion to be used to assess whether the conditions of CJ are met or not is
whether people have the real choice or no other choice when they take a job. Having a real
choice requires an acceptable alternative. If workers lack the real freedom of choice, the
prospect of CJ is threatened. The best guarantee for CJ is a decent fallback position readily
accessible to all. According to this view, with the emphasis on the required conditions, it is
easier to make com- parisons of CJ between different schemes of social security than to
measure the degree of CJ.
It has been argued here that although the objective and balancing approaches may have
coherent conceptions of CJ, they are infeasible and impracticable. The economist’s view on
CJ is the most practical conception of CJ: CJ is achieved when each job’s rate of pay exactly
compensates the worker on the margin for the disutility suffered compared to her next best
alterna- tive. However, this criterion is incomplete, since it leaves out what the alter- native
is and disregards the other conditions that are required to achieve CJ. There can still be a
blatant violation of CJ if the alternative or fallback posi- tion (and hence workers’ bargaining
power) is weak. It suffices to say that the alternative must be socially acceptable. Full
employment is usually a suffi- cient guarantee, and involuntary unemployment the primary
threat, to CJ. The duty to work, the need to resume work as soon as possible, the threat of a
cut in benefits, and the stigmas attached to benefits under a conditional scheme are factors
that are very likely to impair the conditions of CJ or hamper the market forces that bring
about CJ. The more the present welfare state is moving away from generous welfare
provisions towards an austere workfare scheme, the more serious this danger becomes. The
advantage of a BI scheme is that by providing unconditional access to subsistence income to
all, without means- or work-test, it precludes coercive pressure on the (un)employed to take
jobs at rates of pay below what would be required on grounds of CJ. This has far-reaching
consequences for the degree of CJ that can be attained in the end: although the positive
correlation between good jobs and pay levels is not eliminated, it will probably become
much lower.
Loek Groot – Basic Income, Unemployment, and Job Scarcity
Hamminga’s thought experiment: considers a country Eu in which there are more workers
than there are jobs available, but where everyone is given an equal and tradable entitlement
to these scarce job assets. Thus, the basic idea behind it is simply that a fair way of dealing
with a shortage of jobs is to give everyone an equal and tradable share of Labor Rights.
Doing this avoids a first-come, first-served appropriation of jobs (and assigning a social
benefit to those who lose out), as well as make redundant measures like collective working
time reduction to spread jobs over more workers. The Labor Rights scheme can thus be
considered as a mechanism to (re)distribute unemployment in an efficient and equitable
way.