Academic journal article Erasmus Journal for Philosophy and Economics

Equality of Resources, Risk, and the Ideal Market

Academic journal article Erasmus Journal for Philosophy and Economics

Equality of Resources, Risk, and the Ideal Market

Article excerpt

When Ronald Dworkin introduced his theory of equality of resources back in 1981, his first claim was that "an equal division of resources presupposes an economic market of some form, mainly as an analytical device but also, to a certain extent, as an actual political institution" (Dworkin 2000, 66, my emphasis).1 He then went on to distinguish his use of the market from the two standard ways in which the market has been justified in the debate on economic justice: as an engine of efficiency or as a guarantor of liberty. Dworkin took a different approach: "[T]he idea of an economic market, as a device for setting prices for a vast variety of goods and services, must be at the center of any attractive theoretical development of equality of resources" (Dworkin 2000, 66). Over the following thirty years Dworkin continued to refine his theory, but the market remained a fundamental aspect of his thought on equality. In Justice for hedgehogs, published in 2011, he stated that "[a] free market is not equality's enemy, as is often supposed, but indispensable to genuine equality" (Dworkin 2011, 357). For Dworkin, then, it is necessary to make use of the notion of the market in order to explicate the ideal of equality. The subject of this paper is Dworkin's idea that the market is essential to the normative ideal of equality.

What I shall do is to investigate what the assumptions that Dworkin makes about the market imply for other parts of his theory of equality. I will argue, in section 2, that the market at the core of equality of resources is a neo-classical market in full equilibrium, as analysed by Gérard Debreu. Moreover, I will show that this market must be understood as operating under circumstances of certainty. In section 3, I will begin to spell out the implications of this interpretation of the market for Dworkin's theory of equality. Starting from Dworkin's notion that a just distribution of resources mimics the distribution produced by an ideal market, I will show that the idea of option luck, the normative axiom of individual responsibility for choices under risk usually considered a corner stone of Dworkin's theory, is incompatible with the goal of mimicking such a market. There are no choices under risk when there is complete certainty. The last sections of this article develop the implications of the argument that the goal of justice should be to mimic an ideal market under certainty. In section 4, I argue that this implies a rather high social safety net. Section 5 discusses Dworkin's theoretical solution to the question of how much to redistribute to persons who have been unlucky in the natural lottery. I argue that the thought experiment of insurance purchases behind the veil of ignorance becomes problematic, since there can be no insurance in a market under certainty.

What emerges from this analysis of Dworkin's theory is a new reading of the idea of equality of resources. This interpretation, which may be called the certainty interpretation of equality of resources, is more faithful to the basic motivations of the theory than Dworkin's own version, and retains its most attractive features while alleviating the arguably callous aspects that have been criticized by, for instance, Elizabeth Anderson (1999).

The aim of this paper is constructive rather than critical. I accept the assumptions that Dworkin makes and do not present any changes to his idea of equality of resources other than those that follow from taking the ideal market seriously. In order to show that these implications follow, I will have to engage in some exegetical work. This paper, then, follows a different strategy from well-known critical contributions by Joseph Heath (2004), John Bennett (1985), and Colin McLeod (1998), which all try to poke holes in Dworkin's ideal market foundations. I do not dispute that there may be problems that have yet to be solved within ideal market accounts. Moreover, I do not in any way dispute that there has been tremendous progress made in economics since Debreu wrote in the late fifties (see Camerer 2003; Bowles 2004). …

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