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We're All Rawlsians Now!

Robert A. Lawson

In the 1970s Richard Nixon famously remarked, “We’re all Keynesians now.” Fortunately, the president overestimated the long-run influence of John Maynard Keynes’s ideas among economists. For modern philosophers, it might be appropriate to rephrase Nixon’s line and say, “We’re all Rawlsians now.”

John Rawls, the Harvard University philosophy professor, truly has had as much influence in philosophy as Keynes did in economics. As with Keynes, it remains to be seen if Rawls’s ideas will remain in vogue in the generations to come or if he is destined to a marginal role in the history of philosophy.

John Rawls asked a simple question, “What makes for a just society?” The problem in figuring out if society is just or not is that we all already live in society, and we know, roughly, how we are going to fare in it. Rich people, pretty people, and smart people are naturally going to be inclined to say that their society is just, while poor, ugly, and dimwitted people are more likely to think society is unjust. So simply asking people what makes a society just won’t work.

This is where the creative mind of Rawls comes in. He asks us to engage in a thought experiment. Let us imagine that we could wear a “veil of ignorance” that would block out all knowledge of our future condition in society. That is, imagine that we could not know whether we would be rich or poor, pretty or ugly, smart or dimwitted, white or black, or whatever. Then and only then, Rawls concluded, could we get people to decide in an unbiased way what a just society should look like.

To carry things along a bit more, Rawls even speculates on how people, all of whom are behind this veil of ignorance, would conceive of a just society. His speculation, which has inspired thousands of disciples in philosophy and elsewhere, is that rational people would consider a society just if it maximized the standing of the least well-off. This has become known as the maxi-min hypothesis: a just society maximizes the minimum person’s welfare. Let us leave aside the question of whether the maxi-min hypothesis is what we would all agree to behind the veil of ignorance. Instead we will consider the implications of the maxi-min hypothesis, assuming it is correct.

Simple followers of Rawls have argued that the maxi-min hypothesis calls for income equality, but such is not the case. Rawls himself acknowledges that income inequality is allowable if it is a means for improving the status of the lowest rungs of society.

As an example, consider two societies. Society A has three people with $1,000 each—perfect income equality. Society B has 3 people also, but one person has $10,000, another has $5,000, and the third has $2,000. In a Rawlsian sense, Society B is more just than Society A because it does a better job of maximizing the well-being of the least well-off in society.

Nevertheless, Rawlsian devotees often oppose markets and support radical income redistribution to help the least well-off. Redistribution can indeed improve the financial well-being of the least well-off, but if reduced reliance on markets diminishes the productivity of the economy as a whole, as economists warn, then redistribution can hurt the least well-off and everyone else too for that matter.

Who Does Better?

Ultimately it is an empirical question. Do poor people do better in societies that pursue free markets or in societies that restrict economic freedom? The accompanying chart shows the average income levels of the poorest one-tenth in 87 nations around the world in relation to the economic freedom index produced for the Fraser Institute.* It is clear that the relationship is positive. Poor people in societies with economic freedom do better than poor people in societies without economic freedom.

To convince yourself, take a case study. Which society is more just in a Rawlsian sense, the United States or India? The distribution of income is in fact less equal in the United States than in India. If you believe the just society is one in which income is more equally distributed, then you would have to prefer India over the United States. But the average person in the bottom tenth of the U.S. income distribution has nearly $6,200 compared with India’s bottom tenth with only $837. Indeed the typical person in the bottom tenth of the United States is almost as well off as the typical person in the top tenth of the Indian income distribution. If you really believe a just society is one where the bottom rungs of the economic ladder are treated the best, then you have to conclude that the (comparatively) free-market United States is more just than the (comparatively) socialist India. Rawls would think so anyway.

Robert Lawson is the George H. Moor Chair and Professor of Economics at Capital University in Columbus, Ohio.

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