What is the Difference Principle?

The Difference Principle holds that a society should allow inequality in wealth if and only if that inequality works to the advantage of the worst off class. The idea is that people will produce more only if they are allowed to keep at least part of what they produce. The poorest people, in turn, are better off living in a more productive society that is unequal than they would be in one that was strictly equal. They benefit from the greater production that follows from inequality. So the Difference Principle allows inequality because it makes everyone better off. But it only allows inequality so long as the worst off benefit. Once greater inequality ceases to benefit the worst off class, it is no longer allowed; it would be confiscated by taxes or discouraged by regulations.

This figure illustrates how the Difference Principle works.

The two axes represent wealth that goes to representative members of different classes: X₁ and X₂.

The origin represents what society would produce if wealth were distributed equally between those classes. It is not nothing; it’s just where the graph starts.

The curved line (OP) represents what society could produce if it allowed inequality. In this case, the X₁ class gets more wealth than the X₂ class. That is why the curved line is below the 45 degree line: it moves more to the right than it moves up.

X₁ gets wealthier as the line goes to the right and X₂ gets wealthier as the line goes up. When the curved line is moving up and to the right, both X₁ and X₂ benefit. A society following the Difference Principle would seek to hit point a. That is where the line reaches its highest point on the Y axis, meaning that is the point at which inequality benefits the members of the worst off class the most. Anything to the left or right of a would leave people like X₂ worse off than they would be at point a.

Do People Keep What They Make?

Kenny had said that he thought people who work harder (or more productively) should get more. That is something that most of us believe. Rawls agrees, in a way. People like X₁ have more because they produce more for society while people like X₂ have less because they produce less. In that respect, Rawls and Kenny agree.

But Rawls is unlike Locke. He does not think that there is a natural relationship between working and having rights to keep what you produce. People like X₁ get to have more because giving them more works to the advantage of the worst off class. When letting them keep what they produce no longer benefits the worst off class, they no longer get to do so. In that way, Rawls’s views are a bit like utilitarianism. Your economic rights are derived from considerations of the social good; they are not natural rights. I’m not sure if Kenny agrees with Rawls here.

What Would a Libertarian Say in Response?

Rawls’s only significant discussion of libertarianism comes in the informal part of the book. By “informal”, I mean the part where he took himself to be explaining his ideas rather than arguing for them. The official arguments come later. They depend on what the parties in the original position would choose.

But the parties in the original position aren’t asked to consider libertarianism. The part that we talked about today gives Rawls’s reasons for not asking them to consider libertarianism.

If Nozick had an opportunity to fire back I am pretty sure that he would say that Rawls’s assumption is wrong and the “unfairness of life” is only a metaphorical expression. As Nozick sees it, only people can be unfair. No one treats you unfairly if you do not succeed because you lack talent and it is not unfair for parents to favor their children. So, in Nozick’s opinion, neither the natural nor the social sources of inequality are necessarily unfair or morally arbitrary.

That, in my opinion, is the argument that Rawls has to beat.

What Would a Radical Critic Say?

If I were a radical critic of capitalist society, one thing I might do is challenge Rawls’s assumption that inequality is necessary for a productive society.

In Figure 6, the line OP represents what a society could produce. The origin represents the goods available in a perfectly equal society. (It is at coordinate 0,0 on the graph, but that does not mean it is nothing; it’s just where the graph starts.) The amount of goods rises (it moves up and to the right) as more inequality is allowed (the OP line moves away from the 45 degree line).

The assumption is that people will produce more if and only if they are allowed to keep at least a part of what they make. That is why you get inequality: the more productive wind up with more than the less productive do.

But a radical critic might question whether this is really so. Could people be motivated to produce for reasons other than gain? Could they be motivated by artistic reasons, social solidarity, or something else? It may be true that incentives are needed to motivate people to work in our society. But, a radical critic may say, that does not mean that all societies must work this way. In a different social order, people would have different motivations.

Speaking for myself, I think Rawls is probably right. But it would be rash to rule out alternatives that I have not seen. If the radical critic can describe a plausible social world in which financial incentives would not be needed to encourage production, then that would pose an interesting challenge to Rawls.

Facts!

I mentioned the study of social mobility that involves searching the enrollment lists at elite English universities for unusual surnames. That gives us a picture of social mobility over a very long time because those universities are quite old. Here’s a summary of what the researchers found.

“The more important gauge of a meritocracy, however, is relative mobility, particularly between generations. In a society with broad equality of opportunity, the parents’ position on the income ladder should have little impact on that of their children. Economic historians use clever techniques to measure this. Gregory Clark at the University of California, Davis, and Neil Cummins of City University of New York, for instance, have tracked families with rare surnames. Looking at English census records since 1800, they picked out names such as Bazalgette and Leschallas and compared them with records of students at elite institutions such as Oxford and Cambridge universities. Their results show that even over 200 years social mobility has been rather limited. The wealth and social status of people with rare surnames in 1800 is strongly correlated with that of their descendants today.” (The Economist Oct. 13, 2012.)

And here’s an interview one of the authors did with NPR.

“If I just know that you share a rare surname with someone who was wealthy in 1800, I can predict now that you’re nine times more likely to attend Oxford or Cambridge. You’re going to live two years longer than an average person in England. You’re going to have more wealth. You’re more likely to be a doctor. You’re more likely to be an attorney,” Clark says.

This finding was a big surprise.

So Clark and some fellow researchers checked results in other countries. They looked at records of elite status — top colleges, listings of doctors and lawyers. They checked how often certain names showed up in these places compared with how common they were in the general population. Then they checked how that comparison changed over time to see how names were moving in and out of elite positions.

They checked in England, Sweden, the United States, India, China, Japan and Chile.

“And astonishingly, there’s no more mobility in Sweden on these measures than there is in South America,” says Clark. “And that America looks just like England, looks just like Sweden.”

And, even more astonishingly, the numbers were the same in the Middle Ages as they are today.

Clark has published his research in a book called The Son Also Rises. It sounds interesting!

Key concepts

1. The four systems: Natural Liberty, Liberal Equality, Natural Aristocracy, Democratic Equality.
2. What Rawls means by “factors so arbitrary from a moral point of view” (Rawls 1999, 63).
3. Figure 6 and the Difference Principle.