Rawls, rules and objectives: A critique of the two principles of justice

Constitutional Political Economy, 7, 103-126 (1996) © 1996 Kluwer Academic Publishers, Boston. Manufactured in The Netherlands.

Rawls, Rules and Objectives: A Critique of the Two Principles of Justice

DAN USHER Queen's University, Kingston, Canada, K7L 3N6

Abstract. John Rawls has made two large claims for "the two principles of justice": that they are what everyman would choose behind the veil of ignorance as the foundation for laws and institutions, and that they are the rock bottom requirement for the stability of political liberalism. I argue here that these claims are altogether unsubstantiated. The two principles are more like a social welfare function than like what we ordinary think of as justice. They are a false social welfare function in the sense that everyman would not choose them behind the veil of ignorance. Their connection with the stability of liberal democratic government is tenuous at best. Stability is dependent on the entire corpus of rules by which a society is guided, rules that are no more identifiable behind the veil of ignorance than when the veil is lifted. There no basis for supposing that the appropriate rules can be derived from the two principles of justice, and there is some question as to whether they can be derived from any well-specified social welfare function. What remains valid in the two principles was recognized long before the two principles were enunciated. The exaggeration of common ideas in the two principles is not enlightening.

JEL classification: A12.

1. I n t r o d u c t i o n

At col lege , I had to read John Stuart Mill . F r o m On Liberty (1859) I learned that l iberty

is essent ial for a decent and viable society. F r o m Utilitarianism (1863) I learned about

social wel fa re as the aggregate o f individual welfare, and about the impl ied weigh t ing o f

the total output of goods and the var iance o f the distribution o f i ncome among people in

the assessment o f the welfare of society as a whole. I was also taught about the difficult ies

in the inter-personal compar i son of utili ty and in judg ing the relat ive impor tance o f l iberty

and prosperity.

La ter on, I read John Rawls ' A Theory of Justice (1971) and then Political Liberalism (1993) f rom which I learned about the two fundamenta l pr inciples o f ' just ice as fairness. '

In A Theory of Justice (1971, p. 60) the principles are stated as fol lows:

First, each person is to have an equal r ight to the mos t extens ive basic l iberty

compat ib le with a s imilar l iberty for others.

Second, social and e c o n o m i c inequali t ies are to be arranged so that they are both

(a) reasonably expected to be to eve ryone ' s advantage and (b) at tached to posi t ions

and offices open to all.

In Political Liberalism (1971, pp. 5--6), the two principles are stated as fol lows:

a) Each person has an equal c la im to a fully adequate scheme of basic rights and

liberties, which scheme is compat ib le with the same scheme for all; and in this

scheme the equal poli t ical l iberties, and only those liberties, are to be guaranteed their fair value.

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b) Social and economic inequalities are to satisfy two conditions: first they are to be attached to positions and offices open to all under conditions of fair equality of opportunity; and second, they are to be the greatest benefit of the least advantaged members of society.

So stated, the principles of justice are to be understood as doubly lexigraphic, the first principle takes absolute priority over the second, and benefit to the worst-off person takes absolute priority over cost to anybody else as long as the benefit to the worst-off person is not so large that somebody else becomes worse off than he.

The books differ in how the principles are established and in the role they are called upon to play. In A Theory of Justice, (1971, pp. 136-37) their origin and the certification are virtually the same. There, 'justice as fairness' is the principle one would choose for society in the "original position" behind a "veil of ignorance:"

The aim is to use the notion of pure procedural justice as a basis of theory.. . I assume that the parties are situated behind a veil of ignorance. They do not know how the various alternatives will affect their own particular case and they are obliged to evaluate principles solely on the basis of general considerations.

It is assumed that the parties do not know certain kinds of facts . . . . no one knows his place in society, his class position or social status, his fortune in the distribution of natural abilities . . . . his conception of the good . . . . his psychology such as his aversion to risk . . . . the particular circumstances of (his) own society . . . . or the level of civilization and culture it has been able to achieve . . . . They must choose principles the consequences of which they are prepared to live with.. .

It is taken for granted, however that they know the general facts about human society. They understand political affairs and the principles of economic theory; they know the basis of social organization and the laws of human psychology. It is an important feature of a conception of justice that it should generate its own support.. . Given the principles of moral learning, men desire to act in accordance with its principles. In this case the conception of justice is stable.

'Justice as fairness' is all-encompassing. Given the resources and technology of a society, justice as fairness supplies the basis for the allocation of rights and goods among all citizens. It describes the society everyone would choose for himself if he did not know in advance who he would turn out to be and had an equal chance of occupying each and every slot. So Rawls claims in A Theory of Justice.

Though the principles of justice remain the same, the role of the two principles shifts dramatically in Political Liberalism. Now, without sloughing off the paraphrenalia of the veil of ignorance, Rawls places far greater emphasis on the stability of democratic society and looks upon the two principles as imposing obligations on government, and as providing citizens with considerable scope for believing and doing as they please.

The book is motivated by the question, "How is it possible for there to exist over time a stable society of free and equal citizens, who remain profoundly divided by religious, philosophical and moral doctrines?" (1993, xviii). The answer is that society must adhere to the two principles of justice. Not only do the two principles embody our rock bottom

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sense of justice, but they are a technical requirement for a liberal society. As Rawls claims in Political Liberalism (1993, pp. 142--43):

• .. citizens' sense of justice given their character and interests as formed by living under a just basic structure, is strong enough to resist the normal tendencies to injustice•.• The kind of stability required of 'justice as fairness' is based, then, on its being a liberal political view, one that aims at being acceptable to citizens as reasonable and rational, as well as free and equal, and so as addressed to their public reason.

With these claims as background, I want to raise four connected questions: To what extent do Rawls' two principles of justice go beyond our inheritance from John Stuart Mill that liberty is important, that prosperity is important, and that it is also important to narrow the gap between rich and poor. In so far as Rawls goes beyond Mill, is he right? Are Rawls' sweeping claims for the two principles of justice supportable? What exactly is it that Rawls calls justice as fairness? The answer to the last of these questions will provide the key to the rest. Before dealing with these questionsl I digress briefly on the distinction between rules and objectives, l

2 . R u l e s

In the beginning there was chaos and the life of man was, as we all know, solitary, nasty, poor, brutish, and short. And the Lord said to Samuel, "Harken to the voice of the people" and give them a king (1 Samuel 8,7). The establishment and legitimization of the king was, no doubt, less peaceful and less voluntary than the Bible would have us believe, but it was no less welcome on that account• The people were more than willing to exchange the "reciprocity between free and equal citizens in a well-ordered society" (Rawls 1993, p. 17) for the greater security that a monarchy was seen to provide• To be sure, the king did exactly as Samuel had predicted• He took the people's "sons and appointed them to his chariots.., and to plough his ground• .. and to make his implements of war. . , and to be his slaves" (1 Samuel 8, 11-17), but the people were content because they preferred the security of subservience to the king to the terrible insecurity they had experienced before the kingdom was established.

At first the king ruled arbitrarily. His word was law, and that was better than no law at all. But gradually the king, in his own interest, began to rely increasingly upon rules because a rule-bound society was seen to be more prosperous and easier to govern than a society at the whim of the king and his immediate servants. Penalties were established for crimes. Taxes were levied as a proportion of the harvest. People began to participate in the choice of judges and administrators who were allowed a measure of independent authority. The ruler ruled more and more by rules until eventually, after the passage of many years, the ruler became superfluous and the people guided themselves by rules alone.

With some exaggeration, one may say that a society is the sum-total of its rules. There are legal rules: rules of criminal law, specifying punishment for a long list of

crimes; rules of tort law, identifying compensatible harm and providing for redress; rules of contract, prohibiting some contracts (such as contracts to sell oneself into slavery),

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allowing others and indicating which the courts are prepared to enforce; elaborate rules of court procedure specifying who must do what to determine that a law has been violated and how punishment is meted out.

There are property rules: rules about what may or may not be owned by individuals, the administration of common property, who owns what, how title is verified, how property may be acquired, when, and under what terms, property may be taken by the state; rules governing the conduct of business specifying what goods may or may not be produced, standards of quality and the limits of permissible advertising; rules about the governance of the firm, limited liability, poison pills and take-overs.

There are political rules: electoral rules about who may run for office, what candidates may or may not do during elections and how to identify the winner in an election; procedural rules about how a bill must be presented to Parliament, quorum, the role of the Senate and when a bill can be said to have passed into law; jurisdictional rules allocating powers to tax and spend between levels of government.

There are administrative rules: rules specifying when one is liable for tax and how much tax one must pay in a wide variety of circumstances; rules of entitlement to public services and transfers; rules about the appointment of judges and other public officials.

There are constitutional rules: rules limiting the powers of elected government; rules about civil rights, freedom of speech, of association, of religion and from arbitrary arrest; rules specifying how the constitution itself may be changed.

Each of these categories contains thousands of specific rules that govern our conduct and make possible a society where people are able to look after themselves without destroying one another in the competition for political office and material advantage. Most, perhaps all, rules are two-sided. They specify what one must do, what one may do and what one may not do, as the case may be. They also impose an obligation on the rest of society to ensure that one's rights are maintained, that one does not suffer as a consequence of another's violation of the rules and that rule-breakers are adequately deterred by punishment, for a rule without sanction for disobedience is really no rule at all. "Thou shalt not steal" is addressed to the would-be thief and to society at large. It is an injunction to all of us to ensure that thieves are punished. Everybody is involved in every rule, though one's involvement is often delegated to some extent.

Rules can be divided into two classes, rules of substance, and rules for changing other rules. "Thou shall not steal," speed laws, and the obligation to pay income tax are rules of substance. Political rules in a democratic society can be looked upon, at least in part, as rules for changing other rules. Changing rules is the first business of Parliament. Even the most primitive society manages to change rules from time to time, and there must be a written or unwritten procedure for doing so.

Rules may, but need not, conform to Rawls' two principles of justice. Among the rules in many societies today is the separation of church and state, usually in conjunction with a hard line between public and private domains. One's choice of religion would be located within the private domain where individuals are free to believe and to act, on certain conditions, as they please. But such a rule is by no means universal throughout history. Recognizing that religion is often contentious, many societies have chosen to enforce conformity. It may not matter in such societies which religion is chosen as long as there is only one. People may be

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content to accept the king's choice among religions, as long as they have some religion to worship and are spared the devastation brought on by religious wars. I mention this not to advocate enforced uniformity of religion today, but to question what appears to be Rawls' view that toleration of a multiplicity of religions is self-evidently desirable regardless of the circumstances.

Behind the veil of ignorance and in certain conditions of technology and society, a person in "reflective equilibrium" might not choose the two principles of justice at all. He might opt for monarchy as did the Israelites, he might want the king to choose a religion for his people, and he might prefer that all other religions be rigidly prohibited as a source of discord in the state. The example Rawls uses over and over again to illustrate the first principle of justice may not survive the veil-of-ignorance test.

3. Objectives

In time, the rules acquired the respect that was once accorded to the king. The rules were seen as society's great bulwark against chaos and degeneration, just as the king had been. But mere rules are inadequate in two respects: 1) With changes in the conditions of society or in people's views about right and wrong, there develops pressure to change the rules, and the rules are changed from time to time. Rule-changing requires discussion among those who might be affected, and discussion can only be conducted in the language of criteria or objectives by which old rules and proposed substitutes can be evaluated. Rules can only be assessed and compared in the light of something beyond the rules themselves. 2) The implications of rules are not always self-evident or beyond dispute. Courts must sometimes take account of the purposes of rules in deciding whether or not rules have been broken. Rules and the objectives are sometimes hopelessly intertwined. A rule may be defined in terms of its objective, as when the Ministry of Transport is instructed to choose among alternative road projects in accordance with the principles of cost-benefit analysis.

A variety of objectives have been recognized in different contexts: The simplest and most straightforward of these is efficiency which, for many purposes, can be interpreted as the maximization of real national income. Cost-benefit analysis is typically the application of an efficiency standard. To undertake all projects with ratios of benefit to cost in excess of some appropriately chosen number is to maximize total benefit for any given total expenditure, and that, in turn, is to maximize total national income or to spend efficiently within some given budget constraint. An efficiency standard is commonly justified in this context by an argument with a family resemblance to the veil-of-ignorance test for the two principles of justice. The Ministry of Transport must somehow decide which roads to build. I would prefer it to concentrate on roads that I am likely to use in preference to roads that others are likely to use. But if I am not to be favored over my fellow citizens, and as the Ministry typically does know for any given road project whether the beneficiaries will be rich or poor, the next best is, in effect, to place the Ministry behind the veil where it is required to act without regard to the identity of the beneficiaries of projects.

There is also an appeal to efficiency in the economic analysis of tort law. It is claimed that accident law, for example, is designed to maximize net national income by minimizing the sum of the cost of avoiding accidents, the cost of the accidents that do occur, and the

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cost of adjudication. I would choose that criterion behind the veil of ignorance where I do not know whether I will turn out to be the perpetrator or the victim of accidents. I play the probabilities to be as well off in expectation as the technology of social interaction allows. On this interpretation, optimal tort law need take no account of the wealth of perpetrator or victim on the presumption that the cost of incorporating such information into the judgment of the court would exceed any redistributional benefit that might accrue. 2

But there are circumstances where the efficiency criterion will not do because it fails to reflect the typical citizen's sense of the common good. There are circumstances where the common good is best thought of as a balance between two criteria, efficiency and equality. This dual criterion becomes operative in the evaluation of redistributive measures, provision of welfare for the poor, public housing or the setting the progressivity of the tax structure. Redistribution is always costly in that somebody has to give up more than a dollar's worth of goods and services to provide a dollar's worth to the recipients. That is not a criticism of redistribution; it is a fact of life. The full burden upon the ultimate donors in redistributive programs always exceeds the full benefit to the recipients by the cost of administration-- wages of administrators, social workers, and tax collectors--and the loss of output from the disincentives that such programs inevitably entail.

The dual criterion can be seen as a basis for society's trade-off between cost to donors and benefit to recipients. With efficiency as the only criterion, a dollar is a dollar is a dollar to whomsoever it may accrue, and no redistribution would ever be warranted. In practice, equality is given more or less weight within the dual criterion by raising or lowering the threshold for redistributional programs. The weighting of equality is small when, for instance, society is prepared to take away up to (but not more than) $1.10 from the rich in order to provide a dollar's worth of benefit to the poor. The weighting of equality is increased when the threshold is raised to $1.50, still more when it is raised to $2.00, and so on, with an upper limit of infinity. To say that the threshold is $5.00 is to say that society is prepared to increase the income of the poor by, for example, raising stipends for welfare recipients or the progressivity of the income tax, even if the income of the rich is reduced substantially, as long as the reduction in the income of the rich does not exceed $5.00 for each additional dollar to the poor. The greater the weighting of equality in the dual criterion, the higher the threshold, and the greater the provision for the poor will be.

Of course, this description is with implicit reference to a rigid two-class society. It has to be modified to account for gradations of prosperity on a scale from the very poor to the very rich. A distinction must also be drawn, and is drawn in practice, between broad programs of redistribution affecting (almost) all poor and all rich and ad hominem taxation or expenditure in which particular individuals are rewarded or victimized.

In the context where it is normally applied, the dual objective of efficiency and equality is for all practical purposes the equivalent of utilitarianism, the doctrine that the objective of society in the establishment of its rules is to maximize the sum of the utilities of all of its members. To put the doctrine to work, it is usually supposed that each person's utility is a function of his income, that everybody's utility of income function is the same, and that the common utility function is such that each extra dollar of income provides a person with a bit less extra utility than the one before.

For our purposes, utilitarianism can be looked upon as the doctrine that the appropriate


objective of society in the determination of public policy is to maximize total welfare, W*, or, equivalently, its uniform-income representative, W, where

W* = u (y l ) -k- u(y2) + " " -k- u(yn) (1)

where Yl . . . . . Yn are the incomes of each of the n people in the economy, where u(y ) is the assumedly common utility of income function and where W (defined such that n u ( W ) = W*) is the common income with the same total welfare as the actual mix of incomes in the economy.

As explained in the appendix, the relative importance of equality and efficiency in one's sense of the common good can be reflected in the form of the postulated utility of income function. In particular, if the utility of income function is given the general form

u(y ) = y(1-,~ (2)

then the weighting of equality as compared with efficiency varies from no importance to all-importance as the parameter ot varies from zero to infinity.

At one extreme where oe = 0, total welfare is simply the sum of everybody's income (the national income) and no weight is put on the distribution of income at all. As oe increases, equality acquires more and more weight. At the other extreme where ot rises to infinity, society is prepared, if necessary, to take any amount of income, no matter how much, from the rich to supply an extra dollar of income to the poor, provided only that the poorest person does not thereby become better off than somebody else who is harmed in the process. In other words, when ot = 0, the utilitarian criterion boils down to the maximization of

W = (Yl + " " + Y n ) / n (3)

which is the national income per head, and when ot = c~, the utilitarian criterion boils down to the maximization of

W = the smallest of {Yl . . . . . Yn } (4)

which is the income of the worst-off person. Note that values of W are not comparable between equations (3) and (4). What matters is the change in W resulting from changes in peoples' incomes for any given value of or.

The dependence of the relative importance of the size and distribution of the national income upon the postulated value of oe can be illustrated in a simple example. Suppose there are only two people whose incomes are initially $9 and $16. Obviously, ift~ = 0, the social welfare is 25 and a transfer of a dollar to the poorer person, raising his income from $9 to $10, is bad for society in the sense of lowering total welfare if the cost of the transfer

i to the rich person is anything in excess of $1. That is no longer true if ot is increased to 7. In that case, the initial value of total welfare in accordance with equations (I) and (2) is 3 ½

[because 9½ -t- 16½ = 3 + 4 = 7], and an increase of $1 in the income of the poor person generates an increase in total welfare as long as the corresponding decrease in the income of the rich person is less than $1.27 [where 1.27 is the value of x satisfying the equation (9 -t- 1)½ + (16 - x)½ = 7]. The reader can easily compute that the trade-offrises to 1.42 when oe rises to 2, and to 4.88 when oe rises to 5.

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With an ~ as high as 5, society is prepared to accept a reduction of just under $5 in the income of the rich to procure an increase of $1 in the income of the poor. It is proved in the appendix that, as ~ approaches infinity, the trade-off approaches infinity as well, which can be interpreted as the proposition that society seeks to maximize the income of the worst-off person, exactly as in Rawls second principle of justice. 3

Finally, the utilitarian objective can be looked upon as a special case of a social welfare function, the general form of which is

W* = f ( u l , u2 . . . . . Un) (5)

where Ul . . . . . Un are the utilities of each of the n people in society, where each person's utility is a function of his income and, perhaps, other considerations, and where the function f is such that the social welfare, W*, is an increasing function of each person's income. When employed by economists, the social welfare function is supposed to represent the typical citizen's sense of the common good and is intended as a guide for public decision- making in the economic realm. For some purposes, a utilitarian function will do. For other purposes, such as in the analysis of altruism or envy, a broader social welfare function may be required.

On comparing the ordinary social welfare function with Rawls' two principles of justice, one might ask oneself why the social welfare function takes no account of rights, why there is no counterpart in the social welfare function of the equal-rights stipulation in the first principle of justice. Are the economists absent-minded, do they consider rights to be unimportant or is there a better reason? There would seem to be two possible answers to this question, of which the second is in my opinion by far the most important.

First, it is at least arguable that civil rights enter the social welfare function automatically because one's rights are a component of welfare or because rights are instrumental in procuring other goods, services, and conditions that people desire. If I am person i, my utility, ui, may be large when freedom of speech is maintained because I appreciate freedom of speech for its own sake, because freedom of speech is a requirement for democratic government or because freedom of speech promotes innovation which, in turn, is conducive to prosperity. On this view, I uphold freedom of speech not just in my representative capacity behind the veil of ignorance, but in my capacity as a participant in society as it is. The argument is that rights need not be explicit in the social welfare function because they are implicitly present in each person's utility function.

Second, the formal absence of rights from the social welfare function can be justified by the purpose of the function. Utility functions for the individual and for society as a whole are used by economists for the analysis of economic problems--the design of the old-age pension, welfare, tax structures and expenditure programs--where rights may be only marginally at stake or may not be at stake at all. Civil rights may have little or no bearing on whether it is preferable to build a road wide or narrow, whether pensions should be defined benefit or defined contribution or whether a school should be built here Or there.

Or, to put the argument differently (since rights may turn out to have a bearing on virtually anything), the point at issue may be whether rights should be incorporated into formal economic models or treated as part of the ceteris paribus, as one of the many aspects of life excluded from formal analysis but recognized as waiting outside to pounce upon the analysis


if it is pushed too far. Our minds are finite. Our capacity for assessing what influences what is limited. We cannot literally consider everything at once. Formal economics, like theorems in mathematics, takes you from here to there, and the leap is longer and better aimed if some of the underbrush is cut away. Nevertheless, the social scientist who takes no account of rights in his formal analysis may not ignore rights in practice an.d may well argue on occasion that such-and-such is efficient and equalizing but unfair.

The critic of this procedure must not be content to write intellectual overdrafts, or should not be taken seriously if he does. One who claims that rights should be woven into the fabric of economic analysis must not fob offthe task onto somebody else. To be taken seriously, the critic must do the job himself, so that his analysis may be compared with what it is intended to displace. He must design the rights-based public finance, for example, to compete with the allegedly defective product we have today. My assertion here is not that the task is impossible, for major theoretical innovations do occur from time to time. My assertion is that criticism becomes sterile if the critic cannot point to or design a better procedure.

Efficiency, equality and rights form a sequence from narrow to successively broader objectives designed for the assessment of rules in a sequence from narrow to successively broader domains of life. None of these objectives has divine status. None has independent authority as representation of everyman's sense of the common good or priority of respect over the rules themselves. They are objectives that one may or may not hold in any particular situation. Furthermore, such authority as these objectives may have diminishes with the scope of the domain over which they are applied. One may at the same time accept the efficiency-objective for cost-benefit analysis and the evaluation of tort law, but reject it utterly in the assessment ofredistributive policy or anti-discrimination rules. Similarly, one may be a strict utilitarian about redistributive policy but not about family law or electoral reform. The general social welfare function in equation (5) might be interpreted so broadly as to govern anything at all, but there is no guarantee that a specific representation can be found which is at once precise enough to cover all public decisions and authoritative enough to reflect everyman's sense of the common good.

It would be wonderful to have a superior welfare function, at once so general as to apply to all domains of life, so precise as to resolve all disputes and so compelling as to be recognized by everybody as reflecting his sense of the common good. With such a function, we could evaluate all rules unambiguously and could always identify the best set of rules for the technology of the day. But one cannot wish such a function into existence. Either we have it, or we do not. And, of course, we do not. In its absence, we live with the rules we have and with the vague conflicting arguments we put to one another in the process of changing rules from time to time. That democracies survive without such a superior function is proof enough that it is possible to do so.

4. Just ice vs Social Welfare

4.1. The Veil of lgnorance

In evaluating the two principles of justice as fairness, I begin with the grounds on which they may be assessed. Broadly speaking, I am inclined to accept Rawls' ultimate criterion,

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though with some reservations. Rawls' test is an appeal to everyman's judgment behind the veil of ignorance. Alternative rules, institutions or societies can be assessed as fair, right, good or desirable in accordance with what everyman would choose in circumstances where he must enter society with equal probabilities of occupying the circumstances of each and every person within it.

The test has the particular virtue that it enlists self-interest in the search for the common good. One can be assumed to understand one's own self-interest, but statements about what is right, just, proper or in the service of the common good are often suffused with disguised class interest or individual greed, and it is all too easy to persuade oneself that what is best for oneself is sanctioned by some higher criterion. The purpose of the myth - - for it is a myth - - of the original position, the veil of ignorance, and the reflective equilibrium is to reduce public interest to self-interest in a special context, to conscript the safe and truthful calculation of what is best for me as an aid in the mental process by which I identify what is best for everybody. Thus, in evaluating justice as fairness, I need only ask myself whether that is what I would choose for myself behind the veil of ignorance where I do not know my place in the society that will emerge when the veil is lifted.

In assessing this test, it should first be noted that, though Rawls seems to have invented the neat phrase "veil of ignorance", the test itself is not original to Rawls. As Rawls acknowledges in A Theory of Justice, the test had already been employed by the economist- game theorist John Harsanyi (1955). Harsanyi devised the test as a justification for ordinary utilitarianism, and he saw no difficulty in providing a place for equality in the social welfare function without recourse to anything as extreme as Rawls' second principle of justice. If Harsany! was right (and I shall argue below that he was), the veil-of-ignorance test does not automatically lead to Rawls' two principles of justice. The test may lead somewhere else altogether.

Nor is the identity between self-interest behind the veil of ignorance and the inclusion of equality in everyman's sense of the common good as strong as one might at first suppose. A degree of equality may be desired behind the veil of ignorance for either or both of two distinct reasons, namely because one is risk-averse or because one is altruistic. Knowing behind the veil that all redistribution is inevitably costly in the sense that the dollar-value of the harm to the rich exceeds the dollar-value of the benefit to the poor, I may nevertheless favor assistance to the poor because I may turn our to be poor when the veil is finally lifted or because, even if I turn out to be rich, I prefer to live in a society where the gap between rich and poor is not too wide. Only the first of these reasons is based on selfishness behind the veil of ignorance, on the willingness of a normally risk-averse person to trade off a given loss in the event that he is rich for a smaller gain in the event that he is poor. The second reason appeals to altruism or a sense of justice, considerations that would seem to apply with equal force on both sides of the veil.

4.2. What is Justice as Fairness?

A Theory of Justice is not a theory of justice at all. My dictionary defines justice as follows: "1. the quality of being righteous. 2. impartiality; fairness. 3. the quality of being right or correct. 4. sound reason; rightfulness validity. 5. reward or penalty as deserved; just


deserts. 6. the use of authority to uphold what is right, just or lawful. 7. the administration of law; procedure of law court. 8. a judge". That seems very different from Rawls' justice as fairness. One might speak, for example, of a King as being just to his subjects in circumstances where the King's rights and privileges far exceed those of any other person and where the disparity of incomes in the kingdom far exceeds that which "can reasonably be expected to be to everyone's advantage" or to provide "the greatest benefit to the least advantaged members of society". (Rawls, 1993, page 291). One might speak of a slave holder in ancient Athens as being just, or unjust as the case may be, to his slaves. One might speak of the just application of the law in a class society where the upper classes have privileges that the lower classes are denied.

Much depends on whether justice as fairness is seen as the virtue in society or as one of several virtues, whether society can trade off some degree of 'justice as fairness' against, for example, prosperity. I think it fair to say that Rawls sees justice as the virtue and is therefore prepared to countenance no trade-off whatsoever between justice and anything else. Justice for Rawls is the one great overarching virtue to which all other virtues are subordinate. This view of justice is in sharp contrast with the meaning of the term in common speech and with ordinary academic usage. Scott Gordon entitled a book Welfare, Justice and Freedom (1980), these being the more or less co-equal virtues for the design and evaluation of public policy. John Stuart Mill (1863, p. 68) spoke of a trade-off between justice and expediency:

All persons are deemed to have a right to equality of treatment, except when some recognized social expediency requires the reverse. And hence all social inequalities which have ceased to be considered expedient assume the character.., of injustice, and appear so tyrannical that people are apt to wonder how they could ever have been tolerated . . . . The entire history of social improvements has been a series of transitions by which one custom or institution after another, from being a supposed primary necessity of social existence, has passed to the rank of universally stigmatized injustice and tyranny.

In Rawls' defense, one might argue that justice as fairness is a technical term, that the term is well-described in both books and that an author has every right to define his terms a~ he pleases, as long as he tells the reader what he is doing. The practitioner of a profession that defines supply, demand and competition as economists do has no business objecting to the redefinition of words in common speech! On the other hand, one should be wary of the accordion manoeuvre, of a definition widening and narrowing at different stages of an argument, of the misuse of language when implications appropriate to one definition of a word are drawn in a context where a different definition is implied. In particular, to speak of"the greatest benefit to the least advantaged members of society" as a fundamental principle of justice, with the implication that the stability of society itself may be at stake in the slightest deviation from the rule, is a particularly crude instance of persuasive definition. One might be inclined to accept Rawls' two principles of justice if justice were seen as one among several virtues of a good society, for, in that case, the unpalatable consequences of Rawls' two principles could be avoided or circumvented in a trade-off among virtues. Rawls will have none of that. Justice is the only virtue. The claims for the two principles of justice are absolute. These claims must be accepted or rejected in total.

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In view of its intended status as the political virtue and its role in society as the final arbiter of rules, one could rightly classify what Rawls calls the two principles of justice as a social welfare function. It is a well-specified objective for the evaluation of rules and changes in rules. By itself, the second principle of justice is a particular case of a utilitarian social welfare function where t~ is set at infinity to put the largest possible weight on equality as compared with efficiency. To be sure, the first principle is not typically incorporated into social welfare functions in the circumstances where they are employed, but it is arguable that some variant of the first principle is present nevertheless as part of the ceteris paribus of the analysis. As a social welfare function, the two principles become amenable to the same kind of analysis to which any other such function might be subjected.

4.3. The Domain of the Theory of Justice

In principle, all broad social objectives---efficiency, equality, liberty, justice as the term is commonly understood, and so on--are pertinent to all public decisions, but, in practice, one objective may be of paramount importance in some particular domain of life: efficiency for the design of commercial law, equality for electoral rules, liberty for consideration of censorship, and justice for the application of laws. There is typically a connection between the range and domain. The narrower the domain of application, the narrower the range of objectives can be.

The domain of application of Rawls' social welfare function, to call it by its proper name, ~s at once quite broad and quite narrow. It is broad in the sense that it regulates the whole of society from top to bottom, specifying what governments may or may not do and how all departments of government should be conducted, for every conceivable decision of the government has some bearing on the income of the worst-off person in society. Except in so far as people differ in their predictions about the consequences of alternative laws, there is in theory no room for ordinary politics because there must be one among any set of feasible policies that is best for the worst-off person in society. I suppose the same objection can be raised against any social welfare function, but, in economics at least, the domain of application is usually implicit in the context where the function is employed. By contrast, Rawls supplies no context, gives little guidance about the sort of problem to which his social welfare function ought to be applied and specifies no boundary beyond which his principles cease to be valid. Rawls' two principles of justice are presented as a superior welfare function, a n objective for all seasons and to resolve all disputes.

On the other hand, Rawls' examples of the applications of his principles are within a fairly narrow domain, toleration in religion and electoral reform, with virtually nothing on the details of social or redistributive policy. Thus, the reader does not really know how seriously to take the second principle of justice, whether to treat it as utilitarianism exaggerated for emphasis or as an absolute mandate to be followed to the last detail. Perhaps, one interpretation is implied for the cognoscenti and another for the common man.


5. Would Everyman Choose Justice as Fairness Behind the Veil of Ignorance?

The simple fact of the matter is that, as a social welfare function, justice as fairness is an abject failure. It is a failure with reference to the very test that Rawls, correctly in my opinion, requires a social welfare function (or a theory of justice if one wants to call i t that) to pass. Justice as fairness is inaccurate as a representation of one's objective behind the veil of ignorance. It is not the criterion that everyman would apply in selecting among alternative sets of rules for a society into which he is to enter with an equal chance of occupying the circumstances of each and every person there. The fault lies with lexigraphic ordering. One would not choose among possible societies according to the circumstances of the worst-off person exclusively, and one would not trade off any amount of income, no matter how much, to procure any improvement in civil rights, no matter how small. Consider the two principles one by one.

5.1. The Greatest Benefit to the Least Advantaged

Imagine yourself behind the veil of ignorance, choosing between two societies, each with a population of one million people. The two societies are alike in that people enjoy the same basic liberties, but the societies differ in total national income and in allocation of national income among citizens. In one society, absolutely everybody has an annual income of $20,000. In the other, everybody but one person has an annual income of $50,000 and that person has an annual income of $19,500. Which of these societies would you choose? Rawls asserts that a just society is the society you would choose behind the veil of ignorance, and that you would choose the first society because it confers the greatest benefit on the least advantaged person. That is simply untrue. Nobody in this world is so risk-averse that he would give up a virtual certainty of $50,000 a year, as compared with $20,000, to avoid a one in a million chance of a loss of a mere $500. 4

Against this example, Rawls has a defense. The defense is that the second principle of justice is not to be taken literally. Obviously one would prefer the second society in this example, and the principle that one should seek "the greatest benefit for the least advantaged member of society" is to be understood to mean no more than that the government should favor the poor in public decision-making. The second principle of justice would be interpreted to mean that the government must treat one dollar's worth of benefit to the poor as the equivalent of several dollars' worth of benefit to the rich, but the principle would allow for a cut-off beyond which a large loss to the rich would be deemed too high a price to pay for a small gain to the poor.

This defense is not wrong per se, but it comes close to the abandonment of the second principle of justice. To jettison the pure and uncompromising rule that no gain, however large, in income to the rich can compensate for any loss, however small, in income from the poor, is to allow for trade-offs among incomes of different people and that, in turn, is equivalent to the maximization of an ordinary social welfare function because trading-off and maximizing are two sides of the same coin. And it is now a small and inconsequential step to suppose that the social welfare function is utilitarian--that it may for all practical purposes be expressed as the sum of the utilities of the incomes of all members of society--

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because the weighting of the poor can be incorporated in the shape of the postulated utility of income function. Thus, though Rawls takes great pains to differentiate his theory from utilitarianism, the "reasonable" interpretation of the second principle is logically equivalent to what many people who think of themselves as being utilitarians interpret utilitarianism to mean.

There is a passage in The Theory of Justice that casts an alltogether different light on the postulated rules of priority in the principles of justice (Rawls 1971, p. 152):

There is an analogy between the two principles and the maximin rule for choice under uncertainty. This is evident from the fact that the two principles are those a person would choose for the design of a society in which his enemy is to assign him his place. The maximin rule tells us to rank alternatives by their worst possible outcomes.. .

Rawls then goes on to argue that, though one's place is not to be assigned by a "malevolent opponent," it would be reasonable to act behind the veil of ignorance as though it were. I see no justification for that assertion. And if it cannot be justified, one can only conclude that what Rawls calls the second principle of justice, depending on how it is interpreted, is either worse than ordinary utilitarianism or is essentially the same.

5.2. Equal Political Liberty

The first principle of justice is open to a similar objection. Few would question the assertion that the basic liberties are a vital part of institutions of a democratic society, but Rawls puts forward the much stronger claim. He assigns the first principle absolute priority over the second. There is a lexigraphic ordering of the principles. No amount of income, however large, may be traded off against any part, however, small, of the basic liberties.

In the last chapter of Political Liberalism, Rawls applies the first principle of justice to recent decisions of the U.S. Supreme Court. He discusses a number of decisions, some assessed to be just, and others not. Among the decisions of which Rawls disapproves are Buckley vs. Valeo, and First National Bank vs. Belotti about the constitutionality of state- imposed limits on the funding of elections. Rawls argues that these decisions are contrary to the first principle ofjustice. He asserts that certain constraints on the funding of elections are not a violation of the constitution and that, on the contrary, the absence of such limits are a departure from 'justice as fairness' because "the fair value of political liberties is required for a just political procedure, and that to ensure their fair value it is necessary to prevent those with greater property and wealth.. , from controlling the electoral process to their advantage" (Rawls 1993, p. 360). I have no quarrel with Rawls about the substance of these decisions. I do not know enough about the cases to say with confidence that Rawls is right, but I would certainly not say that he is wrong.

The point at issue here is whether the lexigraphic apparatus of Rawls' particular theory of justice adds anything, or even conforms to, one's intuition about what justice requires in these cases. Assume for the sake of the argument that Rawls is fight, that these decisions diminish liberty and constitute a violation of the first principle of justice. Now suppose that there is a peculiar connection between electoral rules and the economy such that the reversal


of the Supreme Court decisions in these cases would lead to a fifty percent reduction in the national income of the United States. Would the priority of liberty take precedence over that? If these cases represent a violation of the first principle of justice as Rawls asserts, and if the first principle of justice has absolute priority over the second, then one would have to say that justice does indeed require that half the national income be sacrificed, if necessary, to ensure that liberty prevails. No sacrifice of national income would be too high a price to pay to set the matter right.

The objection to absolute priority of the income of the poor over the income of the rich within the second principle of justice applies with equal force to the absolute priority of the first principle of justice over the second. Neither represents the ordinary man's sense of justice. I doubt whether a society that tried to live by Rawls' principles of justice could even survive. But anything less than a strict priority of liberty reduces to the true but innocuous and almost undisputed statement that liberty is very important.

One might try to justify the strict priority of liberty pragmatically. To do so, one would need to suppose that something dreadful would happen if liberty were abridged or limited in any way. The consequences of the smallest departure from perfect liberty would have to be horrendous. The relevant motto would be, not "Do justice though the heavens fall," which is no more than an instructive exaggeration, but "Do justice because the heavens will fall if you do not." Yet, we know that the heavens will not fall. Admittedly there are circumstances where liberty can be defended on such grounds, but that does not seem relevant to the election funding decisions. The decision in Buckley vs. Valeo may have been mistaken, but the United States survived the mistake. Surely this is an instance where criteria of justice can be applied without supposing that justice always takes precedence over every other consideration. Indeed, Rawls' analysis of this decision draws upon and is not fundamentally different from the analysis by established legal scholars who may or may not subscribe to Rawls' design. I doubt whether Rawls himself attributes catastrophic consequences to the perceived failure of the U.S. Supreme Court to serve justice as Rawls would recommend.

There is even some question as to whether the phrase "equal liberty" is precise enough to serve as a principle of justice with absolute priority over other principles and specific rules. To speak of equal liberty is to suppose that it is always possible to rank liberty as more or less. Of two people, it can be said unambiguously that one has more income than the other, but comparable statements cannot always be made about liberty. Income is intrinsically quantitative; liberty is not. Would it be a violation of equal liberty if O.J. Simpson were denied the opportunity to hire best lawyers in the land, or is it a violation of equal liberty when others accused of similar crimes are denied an equally effective defence? Is a foetus' liberty violated by abortion, or is the mother's liberty violated when abortion is denied? Is it a violation of equal liberty when, among people with the same disease, some live and others die depending on who can afford the required medical care? It is not clear what equal liberty means unless these questions can be answered definitively one way or another. To speak of equal liberty as a principle of justice is to talk as though tricky moral questions were already resolved.

One might duck this issue by arguing that equal liberty is strictly procedural, requiring no more than that the rules, whatever they may be, are universally applied. Rawls does

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not do so, for equal liberty cannot play its role as the first principle of justice unless it is to some extent substantive. For instance, a strictly procedural interpretation would not prohibit slavery. Nor would it "prevent those with greater property and weal th . . , from controlling the electoral process to their advantage" (Rawls 1993, p. 360). "Equal liberty" is like "equal nobility" or "equal perspicacity." We know what it means in some contexts, but it tends to dissolve at critical moments. It lacks the solidity required for a principle with absolute priority over everything else.

The first principle of justice is a counsel of perfection without guidance about what to do when perfection is unattainable. One is not told how to choose among societies where people have unequal rights or how to trade off some religious freedom against an extension of the franchise. This is a serious failing in a world where no perfectly just society, in Rawls ' sense of the term, has ever been observed.

6. Can ~re Get Along Without a Superior Social Welfare Function?

We can and we do. Though one would certainly like to have an infallible principle for the choice of specific rules, no such principle is required for the maintenance of a democratic society. No such principle need be acquired behind the veil of ignorance for the citizen to make the choices that he must. The superior principle may be as elusive behind the veil of ignorance as when there is no veil at all.

Behind the veil of ignorance, one may come to appreciate the indispensability of civil rights, the superiority of one set of tax laws over another, the best rules for the conduct of the legislature and that the death penalty is, or is not as the case may be, appropriate as punishment for certain crimes, but no superior, all-encompassing principle may present itself. Or one may have a vague, ill-defined sense of the conmlon good that one cannot pin down in an exact formula. Or a superior principle may seem appropriate in a limited domain, as when an ordinary social welfare function proves useful for the choice of progressivity in taxation without at the same time governing the whole life of society. Put forward as they are with an unlimited domain of application, Rawls ' two principles are, quite simply, wrong in that they fail to capture everyman's judgment behind the veil of ignorance. We are left, to put it bluntly, with immodest claims on behalf of a clearly unacceptable candidate for a post that need not be filled at all.

Between A Theory of Justice and Political Liberalism, there is a major change of focus. Nothing, so far as I can tell, in the earlier book is actually rejected in the later one, but there appears to be a shift of emphasis from the second principle of justice toward the first and a substantial contraction of the domain of life over which the two principles of justice are alleged to rule. Rawls does not actually say that the second principle is no longer to be taken seriously in, for example, the design of tax structures. He does not retract the claim that the maximization, come what may, of the income of the worst-off person is an infallible guide to public finance. Nor does he allow that the second principle of justice and utilitarianism with a reasonable weighting of equality are, for all practical purposes, the same. Nevertheless, Rawls ' virtual silence about the application of the second principle of justice outside of narrowly-specified constitutional matters conveys the impression that the second principle is no longer very important.


In Political Liberalism, Rawls puts his principles of justice to work at one task, and one task only: to provide a basis for the stability of democratic society. The principles of justice become the content of the 'overlapping consensus" among citizens that makes democracy possible. Stability in turn

involves two questions: whether people who grow up under just institutions... acquire a normally sufficient sense of justice so that they generally comply with those institutions... (and)... whether.., the political conception can be the focus of an overlapping consensus (Rawls 1993, p. 114).

This is a more substantial shifting of the ground than one might at first suppose, for there is some question as to whether the stability of democracy can be studied from behind the veil of ignorance at all. The veil of ignorance was designed as a kind of gym for the mind where one builds up and strengthens one's moral powers so that one can hear clearly the voice of conscience and morality. The extensive discussion of the veil of ignorance in Political Liberalism implies that the very same gym is appropriate for the discovery of the ethical foundations of the stability of democratic government.

Why should that be so? What is it about political liberalism that one identifies and appreci- ates behind the veil of ignorance but could not identify or appreciate in full knowledge of the circumstances of one's life? Might not one share Rawls' ideals of political liberalism--the overlapping consensus, public reason, and so on--without reliance upon artificial ignorance in the social contract myth within which these ideals are exposited? Might not the myth interfere with the exposition? Cannot the conditions for the stability of political liberalism be described cleanly without the far-fetched counterfactual elaboration?

The myth of the veil of ignorance might be looked upon as an inducement to advocate public policy in accordance with the common good as I see it, as a device to force myself to tell the truth. I may know the importance of justice in society, but I favor my own class, religion, and race regardless. Again and again, Rawls exemplifies the first principle by tolerance in religion. If I am a Catholic, I claim that all the important posts in society should be held by Catholics. If I am a Protestant, I claim that all the important posts in society should be held by Protestants. Only behind the veil of ignorance, where I do not know whether I am Protestant or Catholic, will I finally admit that justice as fairness requires tolerance and a basic structure of society in which everybody, Catholic and Protestant alike, has an equal opportunity to become wealthy and to occupy high office. This is, in my opinion, a poor justification for the paraphernalia of the veil of ignorance, not because people always tell the truth about their views, but because there is nothing about the veil of ignorance to make them do so if they are inclined to do otherwise. If, without access to the veil of ignorance, I am prepared to lie about what I know to be in the public interest, then I am equally prepared to lie when the veil is lifted and I discover who I really am. We cannot speak behind the veil of ignorance, and there can be nothing there to make us speak truthfully afterwards.

But truth-telling is not Rawls' purpose for sending me behind the veil of ignorance. His purpose is different. It is to force me to recognize the truth about my own sense of justice in the hope that I will act upon the truth once I know it. "As a device of representation the idea of the original position serves as a means of public reflection and self-clarification. It helps us work out what we now think once we are able to take a clear and uncluttered

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view of what justice requires. . ." (Rawls 1993, p. 26). My sense of the common good, or of justice, is what I would choose in reflective equilibrium behind the veil of ignorance. I go behind the veil of ignorance to clarify my views about society, not just to communicate them truthfully. I go there because that is where I learn what I really think is best for society.

How then to draw the line between what can and cannot be learned behind the veil of ignorance, and on which side of the line does the stability of political liberalism lie? Unre- generate economist that I am, I suggest it is all a matter of demand and supply, of preferences and technology. Behind the veil of ignorance, one can learn about one's preference for society as a whole, but one can learn nothing about the technology of social interaction that cannot be learned in full knowledge of who one is now. Whether one approves of political liberalism, given the alternatives and without reference to one's own status in society, can be discovered behind the veil of ignorance. How and when political liberalism works cannot, for that is part of the information we bring with us when we step behind the veil.

Recall Rawls' original question, "How is a just and free society possible under conditions of deep doctrinal conflict with no prospect of resolution?" That is a technical question, not a moral one. It is a question about the idiosyncrasies of voting, the nature of bargaining, the innards of bureaucracy, and the relation, if any, between democracy and the organization of the economy. It is a question that can be investigated dispassionately, a question to which answers by thoughtful and honest people need not depend to any significant extent on personal characteristics that are abstracted away behind the veil of ignorance. Whether the stability of democracy rests upon the adherence to Rawls' principles of justice is in the end a matter of fact not of value, a question about how democratic societies actually work rather than about what everyman would choose behind the veil.

That strict adherence to the two principles of justice is not a necessary condition for the stability of democratic society is evident from the many instances where the two principles have not, in fact, been respected. They have never in the history of the world been embodied to the letter in the rules of any society, and it is arguable that there have been conditions where democratic society would not have been viable if they were. Some classical economists claimed that Parliamentary government could not have been maintained in early nineteenth century Britain if universal suffrage had been introduced all at once at that time (Gampp 1948). I am in no position to say whether the classical economists were right or wrong, but they could have been right, and, if they were, one would be compelled either to reinterpret the two principles of justice drastically or to recognize that the two principles were inconsistent with the stability of the best approach to democracy at that time. Worse still, in view of Rawls' emphasis on toleration in religion, full toleration may have been literally impossible in seventeenth and eighteenth century England because of the political role of religion and because the animosity between the adherents of the different religions was still too strong. Political liberalism may have been impossible without an established church. And what are we to make of the claim by a leading classical scholar (Finley 1972) that democracy in ancient Athens would have been impossible but for the institution of slavery?

Rawls' position might, of course, be defended on the grounds that these examples are about societies which cannot reasonably be described as instances of political liberalism, but that line of argument comes perilously close to tautology. Political liberalism could be defined as strict adherence to the two principles of justice, but that manoeuvre would


imply that no instance of political liberalism has yet been observed and would divorce theory from content, so that little or no light would be cast upon the requirements for the stability of existing democratic governments. To be useful in this context, the theory must allow that political liberalism is one thing and the two principles of justice are another. Political liberalism without adherence to the two principles of justice must at least be imaginable.

Nowhere does Rawls specify exactly what he means by democracy or by political liberalism. Nowhere does he explain what political liberalism without adherence to the two principles of justice would be like, and, until one knows that, one is in no position to say with assurance whether political liberalism without the two principles would be stable or not. Nor is there any real assurance that adherence to the two principles of justice is more conducive to a stable society than adherence to any other principle of organization or to no higher principle at all. Speculation about what one would choose behind the veil is no substitute for social science.

Granting for the sake of the argument that democracy, however defined, requires an overlapping consensus among citizens about something, it remains to be determined what that something might be. The search for a rock-bottom minimal content to the consensus that makes democracy possible is a worthy enterprise, but we have no basis for supposing that the enterprise has been successful or even that the search has been in the right place. There is in the end no basis for supposing that the overlapping consensus would be about the two principles of justice.

Consensus, if there is one, is almost certainly about rules rather than objectives. To say, as virtually every theorist of democracy has said, that democracy requires consensus is not to say that citizens have some common objective which guides their every move. It is to say that citizens are loyal to certain institutions and are prepared to respect certain rules, including, of course, rules for changing other rules, even where adherence to the established rules may not serve one's immediate self-interest. The rules are respected because they have proven to be effective or because violation of the rules would be a threat to democracy. We are loyal to our rules about property, voting, torts, crimes, religious toleration, freedom of speech, freedom of association, and so on. We are loyal to the great traditions of our society as they have evolved over thousands of years. To say that our consensus is about the two principles of justice is to claim for those principles the entire heritage of Western civilization.

Desirable as it would be to encapsulate the great tradition into a simple, universally- correct and universally-respected formula, we cannot procure such a formula by fiat. The two principles of justice simply will not do. With their doubly lexigraphic ordering, they fail to reflect everyman's choice of rules or institutions behind the veil of ignorance. A democratic society can manage without a single, well-specified, over-arching objective to resolve all disputes. The stability of democratic society is a technical not a moral question. In so far as stability requires an overlapping consensus, that consensus may be about rules rather than objectives, and, therefore, cannot be about the two principles of justice at all.

In the end, the complex paraphernalia of the two strictly ordered principles of justice contributes virtually nothing to our understanding of democratic society, and we are left with the bare propositions that rights are important, that efficiency is important and that

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equality is important. But we knew that already. We learned that as undergraduates from the writings of John Stuart Mill.

Appendix: Utilitarianism and the Second Principle of Justice

Social welfare is a utility of utilities, an assessment of the common good that takes account of the conditions of each and every person in society. Social welfare may be looked upon as objective or subjective, as a fact about society or as the embodiment and precise specification of somebody's sense of the common good. If you and I are in agreement about the effects of some public policy on the incomes of every person in society, if we disagree nonetheless about whether the policy serves the common good and if social welfare is objective, then at least one of us has to be wrong. But if social welfare is subjective, there is no higher principle to which we can appeal and we must simply learn to live with our disagreement. For some purposes, it may be appropriate to depict each person's utility as dependent on the entire bundle of goods consumed and on all of the social and political conditions of his life. For our purposes here, it is sufficient to suppose that a person's utility is dependent on his income alone. On that supposition, the general form of a social welfare function becomes

W* = W(R1, u2 . . . . . Un) (A1)

where each person's utility is a uniform function of his income

Ui = u(yi) (A2)

and where W* is social welfare, n is the population, ui is the utility of the ith person in the economy and Yi is his income.

This function is still too general to be of much use in its job as the representation of the common good in the evaluation of public policy and, in particular, as an exact indicator in that evaluation of one's trade-off between the size of the national income and the variance of the distribution of income among people. A social welfare function must provide a measure of the loss of income to the rich that is equivalent in one's assessment of the common good to the gain of a dollar to the poor. To be useful, a social welfare function must contain a parameter to represent that trade-off. Nothing is lost in the exposition of the social welfare function if it is assumed that society consists of two people, person 1 whose income is Yl, and person 2 whose income is y2.

Most of the job can be done by a simple utilitarian social welfare function

W * ~-- u 1 + u 2 = ( y l ) ( l - c 0 q- ( y 2 ) (1-~) (A3)

where ot is constrained to lie between 0 and 1, and where each person's utility is dependent on his income in accordance with the specific individual utility function, u = yO-yo. It is immediately evident that social welfare increases when any person's income increases and that the marginal increase in welfare associated with a given increase in a person's income is a decreasing function of his income, i.e. that is, ~ W * / ~ y i > 0 and ~(SW*/~y i ) /~y i < O.

The parameter t~ in this utilitarian social welfare function (A3) is an indicator of one's trade-off in social welfare between the income of the rich and the income of the poor, as


is evident when the trade-off is derived explicitly by totally differentiating equation (A3) with W* held invariant.

- (dy ~/dy2) = (Yl/Yz) c`. (A4)

By construction, the derivative - ( d y 1/dy2) is the decrease in the income of person 1 that just compensates for the increase of $1 in the income of person 2. One can see at once from equation (A4) that the trade-off is progressively more favorable to the poor the larger ot becomes. Suppose person 1 is rich and person 2 is poor, specifically that yl = 100 and y2 = 50. If ot = 0, the value of (y l /y2) '~ is just equal to 1, signifying that social welfare is enhanced equally by an extra dollar to any person, rich or poor. If oe = 0.5, the value of (Ya/Y2) °~ becomes 1.414, signifying that social welfare is enhanced by an increase in $1 to the poor as long as the corresponding loss to the rich does not exceed $1.414. If or = 1, the value of (y l /y2) °t rises to 2, signifying that social welfare is enhanced by an increase of $1 to the poor as long as the corresponding loss to the rich does not exceed $2.

But, there is in the utilitarian social welfare function (A3) an upper limit to ot which, in turn, places an unreasonable upper limit on one's possible trade-off between gain to the poor and loss to the rich. Though nothing in equation (A4) would seem to be restricting the value of ~, that value is nonetheless restricted in equation (A3). There is an upper limit of 1 because, were ot to exceed 1, the marginal utility of income would turn negative. The simple utilitarian function must be generalized to allow for any positive value of ~e. A suitable candidate for a generalized utilitarian social welfare function is

2W (1-'~) = ul + u2 = (yl) (l-a) + (y2) (l-a) (A5)

where W is the uniform-income representative of social welfare, the common income that is equivalent in social welfare to the actual mix on incomes in the economy. So defined, W is an increasing function of any person's income even though (yl) '~ can no longer be interpreted as an individual's utility function over the entire range from 0 to :x~.

Among the properties of this function are:

a) Social welfare is equal to income per head whenever both person's incomes are the same. For any value of oe, W = y whenever Yx = Y2 =-- Y. That is obvious from inspection of equation (A5).

b) For any value o f~ that is strictly greater than 0 and for any given average income, y, per head, social welfare is a decreasing function of the variance in the income distribution. With two people, 1 and 2, if Yl = Y + A and Y2 = Y - A, then W is a decreasing function of A.

c) For any positive oe, social welfare is an increasing function of any person's income but at a decreasing rate, i,e., for any ~ > 0, 8W/~yi > 0 and ~(~W/~yi ) /~(y i ) < 0 for any person i.

d) The parameter o~ is an indicator of the relative importance of variance of income as compared with average income. Variance is of no importance when ot = 0, and it is of increasing importance as a increases all the way up to infinity.

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The generalized utilitarian social welfare function in equation (A5) can be simplified enormously for three critical values of or. At ot = 0 which is the lowest possible value of or, the social welfare function becomes

W = (y~ + y2)/2 (A6)

regardless of the distribution of income. Social welfare and income per head become one and the same and the distribution of income becomes irrelevant. At c~ = 1, the social welfare function reduces to the simple Cobb-Douglas form

i 1

W = (Yl) ~ (Y2) ~ (A7)

At oe = oo which is the highest possible value of or, the social welfare function becomes

W = the smaller of Yl and Y2 (A8)

signifying that welfare depends on the income of the poorer person exclusively and that an increase in the income of the richer person contributes nothing to the common good unless the income of the poor is increased as well, precisely Rawls' second principle of justice. 5

Thus it turns out that Rawls is a utilitarian after all, in that the second principle of justice is a restriction--and a most unreasonable restriction at that--upon the generalized utilitarian social welfare function. Nothing that happens to Scrooge, no increase or decrease in his income, has any bearing on social welfare as long as Cratchit remains the less prosperous of the two. [If that is not your understanding of the common good, then you do not accept Rawls' second principle of justice.]

It is instructive to bracket John Rawls with Richard Posner. Posner is especially concerned with the development of a criterion by which one can say that one law is better than another. He wants to ground the rules of ordinary law, especially tort law, in the public interest, where public interest can be represented as an entity that can be maximized. Better law supplies more of that entity; worse law less. The entity, according to Posner, is weal th . 6 Among alternative laws, the best is that which maximizes the wealth of the entire community. Or, equivalently, Posner's criterion for the choice among laws is efficiency, regardless of the distribution of income.

Posner and Rawls are alike in several respects, but different in one important respect. They are alike in that both require a criterion for the liberal society, Posner for laws, Rawls for virtually everything. They are alike in that both deny vehemently that their chosen criteria are utilitarian. Their denials are valid in that they both slough off a good deal of intellectual baggage which is often associated with utilitarianism. They are both unwilling to credit monstrous preferences, such as preferences for cruelty. They are utilitarian nonetheless in that what they do maximize can be looked upon as special cases of a more general utilitarian social welfare function. Posner and Rawls are alike in that their criteria can be interpreted as extreme utilitarian. They differ in the extremes they choose. Deny it as he may, Rawls' second principle of justice is utilitarian with a value of ~ of infinity, signifying that equality is all-important and efficiency is hardly important at all. Deny it as he may, Posner's choice of wealth as a criterion is utilitarian with a value of ot of 0, at which utilitarianism boils down to the maximization of wealth.


As a universal pr inciple , there is, in my op in ion no suppor t to be had f rom the vei l -of-

i gnorance test for e i ther ext reme. It is open to Posne r to argue that there is a d o m a i n o f

l i f e - - w h i c h m a y inc lude m u c h o f tort l a w - - w h e r e equal i ty ought to be ignored because an

ef f ic iency cr i ter ion gives c lean prescr ip t ions whi le a m i x e d cr i ter ion canno t be e m p l o y e d

cons i s ten t ly or fairly in pract ice. Rawls , as I see it, has no comparab le just i f icat ion.

Acknowledgments

With thanks for he lpful c o m m e n t s by my col leagues Scot t Gordon and Steve Kaliski .

Notes

1. Among the many critical writings on Rawls are the collections of articles in Daniels (1978) and the in the June 1975 issue of the American Political Science Review, the latter including papers by Allan Bloom who sees Rawls as rejecting most of the political tradition of the West, and by John Harsanyi who, as might be expected, is unconvinced that the veil-of-ignorance test leads anywhere but to utilitarianism.

2. "The common law is best understood as a system for promoting economic efficiency" (Posner 1968, p. 238).

3. On the interpretation of utilitarianism in the practice of economics, see Chapter 9, 0f Boadway (1979), entitled "The Principles of Taxation." Social welfare is defined in the first instance as the weighted sum of the utilities of each and every person in society. Then, to draw inferences about the social welfare of alternative systems of taxation, it is necessary to impose simplifying assumptions about the utility of the individual. With the appropriate choice of simplifying assumptions, social welfare acquires two, and only two, attributes. Following unfortunate terminological conventions in the field of public finance, Boadway calls these attributes efficiency and equity, but, subject to qualifications that are not relevant here, the word "equity" is a synonym for equality.

4. Taking the second principle of justice seriously, it becomes uncertain what to do when people in different places are confronted with different prices. Which of A and B is worse off when their money incomes are the same, when A has to pay $1 for an orange and $2 for an apple, when B has to pay $2 for an orange and $1 for an apple, when their tastes for apples and oranges are somewhat different, and when neither would willingly change places with the other. Ordinarily, this sort of situation can be handled satisfactorily by some rough-and-ready index number formula. The problem becomes vexing when the identification of the worst-off person is invested with high philosophical significance.

5. The derivations of equations (A6), (A7) and (AS) from equation (A5) are all reasonably straightforward. Equation (At) is immediately evident once cz is set at 0. Equation (A7) follows from property (a) above and from the fact that the differentiation of equation (A7) leads immediately to equation (A4) when u = 1. Equation (A8) follows at once from the transformation of equation (A5) into

W = y 2 { 1 '1 a' }(l/(1-ct)) ~[(Yl /Y2) ' - ' + 1] (A9)

where the expression in curly brackets approaches to 1 as ~ approaches oo. Equation (5A) is analogous in the theory of social welfare to the "constant elasticity of substitution" production function. A text in mathematical economics would normally provide proof in the context of the theory of production that equations (6A), (7A) and (8A) are special cases of equation (5A). See, for example, (Chiang 1984, pp. 426-28).

6. See Posner (1979) and the symposium in the Spring 1980 issue of the Hofstra Law Review containing articles by Posner, Dworkin, and others.

References

Bloom, A. (1975) "Justice: John Rawls vs. the Tradition of Political Philosophy." American Political Science Review 69: 648-62.

126 USHER

Chiang, A. C. (1984) Fundamental Methods of Mathematical Economics. Third edition. New York: McGraw-Hill Book Co.

Daniels, N. (1978) (ed.) Reading Rawls, Critical Studies of 'A Theory of Justice'. Oxford: Basil Blackwell. Dworkin, R. (1980) "Why Efficiency." Hofstra Law Review 8: 563-90. Finley, M. I. (1972) Democracy Ancient and Modem. New Brunswick, N.J.: Rutgers University Press. Gampp, W. D. (1948) "The Politics of the Classical Economists." Quarterly Journal of Economics 62: 714-47. Gordon, H. S. (1980) Welfare, Justice, and Freedom. New York: Columbia University Press. Harsanyi, J. (1955) "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility?' Journal

of Political Economy 63: 309-21. Harsanyi, J. (1975) Can the Maximin Principle Serve as a Basis for Morality?" American Political Science Review

69: 648-62. Mill, J. S. (1982) On Liberty. Originally published in 1859. Harmondsworth: Penguin. Mill, J. S. (1953) Utilitarianism. Originally published in 1863. New York: Liberal Arts Press. Posner, R. A. (1968) Economic Analysis of the Law. Third edition. Boston and Toronto: Little Brown and

Company. Posner, R. A. (1979) "Utilitarianism, Economics and Legal Theory?' Journal of Legal Studies 8: 103-40. Posner, R. A. (1980) "The Ethical and Political Basis of the Efficiency Norm in Common Law Adjudication?'

Hofstra Law Review 8: 478-507. Rawls, J. (1971) A Theory of Justice. Cambridge, Mass.: Harvard University Press. Rawls, J. (1993) Political Liberalism. New York: Columbia University Press. Symposium (1975) "Justice: A Spectrum of Responses to John Rawls's Theory?' American Political Science

Review 69: 588-674.

Rawls, rules and objectives: A critique of the two principles of justice

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