ON THE RELEVANCE OF RAWLS,JOHN THEORY OF JUSTICE TO WELFARE ECONOMICS

Mainstream microeconomic theory makes some use of John Rawls's Theory of Justice in discussing welfare economics and social welfare functionals. While various elements of his approach are usually mentioned, his basic point is generally taken to be his difference principle (maximizing the welfare of the worst off individual) applied as a decision principle for evaluating the equity of resource allocation. To take the difference principle as the essence of Rawls's work is an error. The present paper reviews the basic argument of the Theory of Justice, compares it with the use that economists make of it, and concludes that in a number of quite specific ways Rawls's ideas are misrepresented and misused by mainstream microeconomists.