Thomas Ferretti (LSE): “Rawls’ indexing problem: Which combination of social primary goods can maximize the freedom of the least well-off?”

Abstract: Rawls proposes that public institutions should maximize the freedom of the least well-off by distributing social primary goods. But if one can easily understand how to maximize one good like income, things get more difficult when it comes to maximizing the value of a bundle of many different goods. I will argue that, within the restricted settings of Rawls’ liberal egalitarianism, an objective solution to this indexing problem is possible. Solving the indexing problem requires solving two related problems. The first problem consists in evaluating, in theory, what are the conditions under which it is acceptable to substitute social primary goods, i.e. the substitution rates of primary goods. In the case of Rawls’ social primary goods, since they have diminishing marginal returns, they also have diminishing marginal substitution rates: other things equal, the less of a good there is in the bundle, the highest its substitution rate gets. The second problem consists in evaluating which acceptable substitutions are feasible in practice. Because of scarcity constraints, some substitutions might be acceptable in theory but not feasible in practice, and the higher substitution rates get, the more difficult it becomes to afford substitution costs. I conclude that maximizing the freedom of the least well-off is more likely to require giving him access, as much as possible, to a social position combining a high amount of each social primary good. This solution is not accurate but it is sufficient to guide policy making.

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