Criteria of Justice

11.5.1 OriginalPosition

In 1985, Arrow raised the question “What are the standards of justice?” (Arrow 1985, p. 136). First, according to Arrow, Rawls' theory of justice affirmed the redistribution of goods.

Arrow did not believe that freedom and equality were in conflict with each other; rather, one cannot be achieved without the presence of the other. In other words, respect for one’s freedom as justice means equal respect for everyone’s freedom. In contrast, the biggest restriction on an individual’s free choice and action in the market is the scale of his or her budget. Consequently, an individual’s income decides his or her free choice regarding consumption type and occupation. Inequality of income means that many people face restrictions in getting a job and only a few enjoy freedom; thus, the consequence of the market cannot provide a just distri­bution of income because poverty restricts freedom.^[136]

According to Arrow, “income inequality also constrains freedom in dimensions other than economics.” By this, he implies the political free­dom dimension. Some resources are necessary to exercise political free­dom, especially freedom of expression and publication. Since the rich tend to provide extra money to help public officials operate the market politic­ally and receive special political advantages in return, “an equalization of income will increase the political freedom of the lower-income groups” (Arrow 1985, p.

Along with income equalization, the equalization of power is essential to promote freedom. Power means the authority to make a collective decision. For example, China and Cuba have achieved equality of income to some extent in 1985, but they are not idealistically equal societies, because only afew people have the authority to make collective decisions inthese countries.

Next, Arrow considered that one should choose a redistributive policy to achieve such freedom and equality through the social decision process in the original position. To clarify this point, he noted the relationship between social choice and distributive justice.

Social choice theory provides a normative judgment of interpersonal relationships. In other words, it can provide the criterion of justice. For example, this theory can adopt Rawls’ theory of justice, which it can interpret as the problem of social choice and an attempt to deduce “state x is more just than state y” from “state x is better than y for individuals” (Arrow 1985, p. 142).

Social choice theorists, however, have tried to identify a social welfare function that can deduce a criterion of distributive justice from individual preferences; however, they have not succeeded. There are three primary difficulties in doing so. First, it is difficult for a theorist to truly know an individual because a theorist can only analyze individual observable ac­tions (Arrow 1974, p. 19). Second, even if such a difficulty can be overcome, a paradox emerges when one tries to aggregate individual orderings to form social ordering, as Arrow's theorem proves (Arrow 1974, p. 24). Third, as previously mentioned, even if social ordering can be obtained successfully, it is not always just.

Nevertheless, Arrow stated that justice is not independent of the problem of social choice; rather, he only questioned whether its real consequences achieve justice. Accordingly, he insisted that rational choice in Rawls' and Harsanyi's original position was a desirable procedure to deduce a justice criterion.

According to Arrow, justice is not specific to some individuals; rather, it adapts equally to any individual. It is universal and impersonal. Moreover, mutual respect is essential in society. No one can ethically defend a distributive policy unless it benefits everyone equally. Rawls' and Harsanyi's original position provided the procedure that satisfies the requirement of justice (i.e., impersonality and mutual respect).^[137]

According to this position, risk-averse rational agents prefer an equal distribution. In Arrow's words, “the original-position argument shows that the impersonality that characterizes moral judgment implies that the content of that judgement is an equalization of outcomes” (Arrow 1985, p. 145). Moreover, “[w]e may similarly presume that in the original position, where the uncertainties are the outcomes of an entire life, the individuals would find it prudent and desirable to enter into a mutual insurance agreement, to redistribute the incomes they would subsequently receive to make them more nearly equal” (Arrow 1985, p. 145).

The consequences of rational choice in the original position are correct because such judgment conforms to just judgment in reality. It achieves impersonality and mutual respect; additionally, Arrow, as an economist, could deal with the problem of justice without giving up his commitment to rationality.

As explained previously, Arrow identified Rawls' original position in A Theory of Justice with Harsanyi's and supported it as a fair procedure. According to Arrow, it is true that Rawls' original position differed in character from Harsanyi's; however, the two scholars also had something in common in that both sought fair distribution. This similarity is more noteworthy than their differences (Arrow 1985, p.

Of course, many differences exist between Arrow's position and that of Rawls. First, Arrow criticized Rawls' way of deducing the difference prin­ciple, noting that rational agency with a risk-averse tendency in the original position supports the choice of the principle of average utility (Arrow 1973a). If someone's risk-averse tendency reaches a limiting value, how­ever, he or she will choose the difference principle. Therefore, the two principles are not qualitatively different from each other, as Rawls argued (Arrow 1983, pp. 107-108).

Second, Rawls considered that individuals or parties in their original position choose a principle of justice. By contrast, Arrow considered that an object that an individual or parties choose is a social preference, in that it satisfies mutual respect and impersonality. It can be assumed that such a social preference is a criterion of justice because it leads to a just social condition. As mentioned earlier in this subsection, Arrow considered that “justice values both liberty and equality”; thus, this condition is considered to include non-welfaristic aspects (i.e., freedom of choice and equality of power).

Third, Arrow did not clearly answer the question, “Equality of what?” He agrees with the equalization of income and power, but Rawls con­sidered that these are just elements related to social primary goods and fundamental freedoms (Rawls 1971, sec. 11).

Fourth, Arrow's view of one's talents differs from that of Rawls, for whom it is a common asset of society. For Arrow, it is unequal and belongs to the individual (Arrow 1985, p. 146), in compliance with libertarianism: a person with great talent should use it to contribute to society.

Fifth, Arrow attached importance to the problem of incentive. According to him, maintaining one's incentive can be in conflict with the promotion of equality. It is clear that some inequality is necessary to incentivize workers; one need not, however, acquire all rewards in accord­ance with the productivity principle (Arrow 1985, p.

Many differences exist between Arrow and Rawls, but it is clear that Arrow considered that rational choice in the original position deduces a criterion of justice because of its impersonal character. He believed that the consequences of actual social decisions are not always just, but that the problems of justice and social choice are related.

We can characterize Arrow's idea as proceduralism because he regards social states as just, not because they consequently optimize social welfare, but because they are deduced by the choice in the original position. It means that he considers fairness in decision-making as important, which is a non-welfaristic aspect. Conversely, we can also say that Arrow maintains his consequentialist aspect because he mentions that the consequences of such fair process are standards of true social goods. In short, Arrow wanted proceduralism to be consistent with consequentialism.¹6

11.5.2 Criticism of Sen's Approach

In the previous section, Arrow admitted the importance of one's freedom, though he did express his doubts about the intrinsic value of freedom in his criticism against Amartya Sen.

While admitting Sen's contribution, Arrow criticized Sen's study of the ranking of opportunity sets and of “the pairs (x, A), where A is the set from which the choice is to be made (‘menu' in Sen's terminology) and x belongs to A” (Arrow 2006, p. 54) as follows. On one hand, Sen considered that opportunity sets can be ranked by the number of elements they contain, but on the other, some of Sen's criteria to evaluate opportunity sets constitute consequentialism. Arrow takes up “one criterion, called Elementary Option Superiority” as an example. When one wants to com­pare two opportunity sets, S and T, this criterion “simply says that S is at least as good as T if there exists an element x in S, such that x is at least as good as y for every element y in T” (Arrow 2006, p. 55). However, S may have fewer elements than T, which is inconsistent with the previous criterion.

that the former has more relevance than the latter. However, Arrow does not note this difference, and he considers that the former can deal with the latter.

¹⁶ See Bossert and Fleurbaey (2014).

Arrow also had doubts about the intrinsic value of freedom by saying that people sometimes want to escape from freedom because freedom implies responsibility and they consider it a burden (Arrow 2006, pp. 58-60). This means that he considers not only freedom but also the majority will as important. This idea is inconsistent with his previous idea of respect of freedom and equality. We can, however, infer the following point from this criticism. Arrow merely criticized the idea that only freedom is important, and that we do not have to consider other things (e.g., social good or the majority will). Instead, he considered how freedom and equality are compatible with welfaristic values, such as social welfare or social good, or the appropriate balance of such values. In short, Arrow advocates moral pluralism.

11.6