Chapter Three:
Justice and Economic
Distribution
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Overview
 Chapter Three examines the following topics:
(1) The concepts of justice and business decisions.
(2) Fairness, equality, rights, what people deserve,
and some rival principles of distribution.
(3) The utilitarian approach to justice in general and
economic distribution in particular.
(4) The libertarian theory with its emphasis on
liberty and free exchange.
(5) John Rawls’s contractualist and egalitarian
theory.
Moral Issues in Business
Chapter 1
Introduction
 Economic justice concerns a network of moral
issues in our society.
 These issues are raised by society’s norms about
distribution of wealth, income, status, and power.
Should CEOs give themselves enormous
salaries at the expense of stockholder profits
and employee salaries?
Should expensive medical procedures be
available only to those who can afford them?
Moral Issues in Business
Chapter 1
(1) The Nature of Justice
 Definitions of justice: Justice is related to morality
as part to a whole, and is often specified in
connection with terms such as fairness, equality,
desert or rights.
 It is one important aspect of morality.
 Talk of justice generally involves related notions
of fairness, equality, desert, and rights.
Moral Issues in Business
Chapter 1
(2) The Nature of Justice
(1) Aristotle on justice as fairness: Treat similar
cases alike except where there is some relevant
difference.
(2) Mill on justice as a moral right: Justice implies
something that is not only right to do, and wrong
not to do, but something that an individual can
claim from us as a moral right.
Moral Issues in Business
Chapter 1
(3) The Nature of Justice
 Five rival principles of distribution:
(1) Each an equal share.
(2) Each according to individual need.
(3) Each according to personal effort.
(4) Each according to social contribution.
(5) Each according to merit.
Moral Issues in Business
Chapter 1
(4) The Nature of Justice
 Reconciling rival principles of distribution: Some
philosophers argue that principles are applicable
in some circumstances and not in others – but it is
not always clear how to reconcile two or more
rival principles in the same circumstances.
 Michael Walzer’s approach: The idea that
different distribution principles depend on
implicit social norms.
Moral Issues in Business
Chapter 1
(1) The Utilitarian View
 Reconciling rival principles of justice: Mill argued
that rival principles of justice can be reconciled
only on the basis of the principle of utility, such as
through considerations of the general well-being.
 Utilitarianism does not tell us which economic
system will produce the most happiness.
Moral Issues in Business
Chapter 1
(2) The Utilitarian View
 Deciding which system will promote most
happiness depends on knowing:
(1) The type of economic ownership.
(2) The form of production and distribution.
(3) The type of authority arrangements.
(4) The range and character of material incentives.
(5) The nature and extent of social security and
welfare provisions.
Moral Issues in Business
Chapter 1
(3) The Utilitarian View
 Distinctive utilitarian ideals:
(1) Worker participation: In his Principles of
Political Economy (1848), Mill argued for the
formation of labor and capital partnerships
promoting equality between workers and
industrialists.
(2) Greater equality of income: Utilitarians are more
likely to favor equal income distribution on the
basis of the so-called declining marginal utility of
money.
Moral Issues in Business
Chapter 1
(1) The Libertarian View
 The principle of liberty: Libertarians refuse to
restrict individual liberty even if doing so would
increase overall happiness.
 Nozick’s theory of justice: Nozick developed an
influential statement of the libertarian position in
his book Anarchy, State, and Utopia, based on the
idea of negative and natural rights borrowed from
the writings of the British philosopher John Locke
(1632–1704).
Moral Issues in Business
Chapter 1
2) The Libertarian View
 The idea of Lockean negative and natural rights:
The idea amounts to (1) non-interference with the
way others choose to live or act, and (2) the
ownership of those rights prior to any social and
political institution.
 Nozick’s entitlement theory: Nozick maintains
that people are entitled to their holdings (that is,
goods, money, and property) as long as they have
acquired them fairly.
Moral Issues in Business
Chapter 1
(3) The Libertarian View
 Principles of Nozick’s entitlement theory:
(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 justice in transfer, from
someone else entitled to the holding, is entitled to
the holding.
(3) No one is entitled to a holding except by
(repeated) applications of statements 1 and 2.
Moral Issues in Business
Chapter 1
(4) The Libertarian View
 Nozick’s Wilt Chamberlain example:
The player of a team is guaranteed $5 from the
price of each ticket.
He is a favorite player and eventually ends up
with far more than the average income.
Nozick argues that Chamberlain is entitled to
his new wealth, and that any other theory of
economic justice would inevitably fail to defend
his entitlement.
Moral Issues in Business
Chapter 1
(5) The Libertarian View
 Distinctive libertarian ideals:
(1) Liberty: Libertarians support economic laissez
fire and oppose any governmental economic
activity that interferes with the marketplace,
even if the point is to enhance the performance of
the economy.
(2) Free markets: Libertarians don’t contend that
people morally deserve what they get in a free
market, but only that they are entitled to it.
Moreover, justice does not necessarily help those
in need.
Moral Issues in Business
Chapter 1
(6) The Libertarian View
 Property rights: For libertarians, property rights
exist prior to any social systems and legislative
acts, reflecting one’s initial appropriation of a
product or exchange between consenting adults.
 Criticisms of libertarian property rights:
(1) Property includes more than material objects. It
also has many abstract forms.
(2) Property ownership is not a simple right but
involves a bundle of different rights.
Moral Issues in Business
Chapter 1
(1) Rawls’s Theory of Justice
 Main features: John Rawls (1921–2002), one of
the most influential contemporary social and
political philosophers, suggests a social concept
of justice in his ground-breaking work A Theory
of Justice.
 Two important features of Rawls’s theory:
(1) The hypothetical-contract approach.
(2) The principles of justice that Rawls derives
through it.
Moral Issues in Business
Chapter 1
(2) Rawls’s Theory of Justice
 The original position: Rawls proposes a thought
experiment – individuals are allowed to choose the
principles of justice that should govern them prior
to any existing political or social arrangement.
 The nature of the choice: Each individual will
choose the set of principles that will be best for
him/herself (and loved ones).
Moral Issues in Business
Chapter 1
(3) Rawls’s Theory of Justice
 The veil of ignorance: To avoid disagreement with
others while pursuing one’s self-interest, all
circumstances and conditions that can influence
one’s choice of principles of justice (economic
background, talents, privileges, etc.) ought to be
removed.
 Once the basis for bias is eliminated, the
groundwork for a choice of fair principles of
justice is established.
Moral Issues in Business
Chapter 1
(4) Rawls’s Theory of Justice
 Choosing the principles: Regardless of their
particular interests, people in the original position
will want more, rather than less, of the so-called
primary social goods (income and wealth, rights,
liberties, opportunities, status, and self-respect).
 People in the original position will also choose
conservatively, by trying to maximize the
minimum that they will receive.
Moral Issues in Business
Chapter 1
(4) Rawls’s Theory of Justice
 The two principles:
(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.
(2) Social and economic inequalities are to satisfy
two conditions: To be attached to positions open
to all under conditions of fair equality of
opportunity, and to give the greatest expected
benefit to the least advantaged members of
society.
Moral Issues in Business
Chapter 1
(6) Rawls’s Theory of Justice
 Explanation of the principles:
(1) The first principle takes priority over the second
– it guarantees as much liberty to individuals as
possible, compatible with others having the same
amount of liberty.
(2) The first part of the second principle articulates
the familiar ideal of equality of opportunity.
(3) The second part of the principle – called the
difference principle – stipulates that inequalities
are justifiable only if they benefit the least
advantaged members of society.
Moral Issues in Business
Chapter 1
(7) Rawls’s Theory of Justice
 Fairness and the basic structure: Rawls rejects
utilitarianism because it could permit an unfair
distribution of benefits and burdens. Contrary to
Nozick, Rawls believes that social justice concerns
the basic structure of society, not transactions
between individuals.
 Benefits and burdens: According to Rawls, justice
requires that the social and economic
consequences of arbitrarily distributed assets
(natural characteristics and talents) be
minimized.
Moral Issues in Business
Chapter 1