Economic PerspectiveMethodological IndividualismCounterpointPrivate PropertyDistributive Justice John RawlsDistributive Justice John Rawls (Continued)Slide 7Slide 8Distributive Justice Robert NozickDistributive Justice Robert Nozick (Continued)Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Defining QuestionsPowerPoint PresentationIdeologySchools of Economic ThoughtEconomic PerspectiveEconomic PerspectiveMacroeconomics IECON 309S. Cunningham2Methodological IndividualismMethodological Individualism•Classical liberalism, classical economics and neoclassical economics are based on the conception that society is the sum of the individuals. People are whatever they are and their individual preferences, feelings, moral outlooks, etc. All aggregate to the perceived identity of the collective. •“Society” is a fiction; Society does not shape individuals, individuals are shaped independently of the social structure. •When adopted as a methodology in analysis, this is referred to as methodological individualism. Every analysis must begin with the individual, deal with individual choices and experiences, with collectives formed as aggregates.3CounterpointCounterpointMarx argues that society shapes the individual, and that individuals have great difficulty in separating themselves from the influence of those around themselves to make independent decisions. In fact, society is the principle factor shaping individuals. To change the world toward a better one, one cannot rely on individual actions since individuals are perverted by the corrupt (capitalist) society in which they live and cannot be expected to see clearly enough to make personal choices. Therefore, the state (the collective) must make decisions for the common good. The collective is more important than the individual.4Private PropertyPrivate PropertyRousseau sees all things as belonging collectively to society, whereas Locke sees things, not previously claimed, belonging to those incorporate their labor to do something with it. Locke defends property rights and process justice.To Locke private property is a “good.”Marx, following Rousseau and Plato, sees private property as the root of much evil in the world.Adam Smith accepts Locke’s vision of a free society based on individual choice, property rights, and process justice, and attempts to show that this yields “just” and optimal outcomes.5Distributive JusticeDistributive JusticeJohn RawlsJohn RawlsA Theory of Justice (1971). Called the most important work on ethics in over 100 years.Tries to find a middle ground between the “fully” end-state approach of the utilitarians and the process approach of the property rights advocates. Compromise between process and consequences as the focus of justice. Cannot consider what is “good”, but rather what is “fair”. Hence, this is referred to as Justice as Fairness (JAF).6Distributive JusticeDistributive Justice John Rawls (Continued) John Rawls (Continued)Approach:Original position: Imagine a group of people setting up a government and economic system. They must choose–principle of justice–principle of difference–rules about the priority of ranking of these principles“Original Position” approach is meant to embody “contractarianism,” a theory that has its roots in the social contract of Rousseau, Locke, and Kant. Leads to a result that some think is “Communitarian.”–People in the original position choose the principles–The choice reflects a contract–The way of constructing the contract is “just”7Distributive JusticeDistributive Justice John Rawls (Continued) John Rawls (Continued)Assumes:These people are self-interestedEqual to each other in their freedom to advance principles and bases for the construction of their societyThey are rational. That is:–They choose effective means to ends–They don’t make choices that are self-defeatingThey know many things about people, society, politics and economicsThey are absolutely ignorant of their own individual futures in the society that they are forming.–No one knows if he/she will be intelligent or stupid, rich or poor, what race or sex, healthy or sick, or even their moral outlook.  Argues that this would be a fair circumstance for agreeing on the principles of a society.8Distributive JusticeDistributive Justice John Rawls (Continued) John Rawls (Continued)Rawls believes that under these circumstances, people would choose two principles—a principle of liberty, and a principle of difference:•Principle of Liberty:Maximize the amount of individual liberties consistent with everyone having them.•Principle of Difference (when inequalities justified?):It is acceptable and also obligatory to have only and all those inequalities in a society which make the worst off people better off than they would be without the inequalities. There must be equal opportunity for anyone to get into any of the positions of favorable inequality.9Distributive JusticeDistributive Justice Robert Nozick Robert NozickRobert Nozick: Anarchy, State, and Utopia (1974).Begins by challenging the very notion of distribution:–It is an open question.–“There is no central distribution, no person or group entitled to control all the resources...”–“In a free society, diverse persons control different resources, and new holdings arise out of voluntary exchanges and actions of persons.”10Distributive JusticeDistributive Justice Robert Nozick (Continued) Robert Nozick (Continued)In the Entitlement theory, the subject of justice in holdings involves three major topics:–Principle of justice in acquisition–Principle of justice in transfer•A person who acquires a holding in accordance with the principle of acquisition is entitled to that holding•A person who acquires a holding in accordance with the principle of justice in transfer, from someone who entitled to the holding, is entitled to that holding.•No one is entitled to a holding under any other circumstances.–Principle of rectification of injustice in holdings11Distributive JusticeDistributive Justice Robert Nozick (Continued) Robert Nozick (Continued)Ownership must be honored if it was justly acquired, traced back until it was possessed by no one, and carried forward to the present when it was acquired by just transfer.Just transfers are those that are uncoerced and voluntary trades.Nozick does not see any place for