Economic justice

Last updated

Economic justice is a component of social justice and welfare economics. It is a set of moral and ethical principles for building economic institutions, where the ultimate goal is to create an opportunity for each person to establish a sufficient material foundation upon which to have a dignified, productive, and creative life. [1] ."

Justice in economics is a subcategory of social justice and welfare economics. It is a "set of moral and ethical principles for building economic institutions". [2] Economic justice aims to create opportunities for every person to have a dignified, productive and creative life that extends beyond simple economics. [3]

Models of economic justice frequently represent the ethical-social requirements of a given theory, [4] whether "in the large", as of a just social order, [5] or "in the small", as in the equity of "how institutions distribute specific benefits and burdens". [6] That theory may or may not elicit acceptance. In the Journal of Economic Literature classification codes 'justice' is scrolled to at JEL: D63, wedged on the same line between 'Equity' and 'Inequality' along with 'Other Normative Criteria and Measurement'. Categories above and below the line are Externalities and Altruism. [7]

Some ideas about justice and ethics overlap with the origins of economic thought, [8] often as to distributive justice [9] and sometimes as to Marxian analysis. [10] The subject is a topic of normative economics and philosophy and economics. [11] In early welfare economics, where mentioned, 'justice' was little distinguished from maximization of all individual utility functions or a social welfare function. As to the latter, Paul Samuelson (1947), [12] expanding on work of Abram Bergson, represents a social welfare function in general terms as any ethical belief system required to order any (hypothetically feasible) social states for the entire society as "better than", "worse than", or "indifferent to" each other. Kenneth Arrow (1963) showed a difficulty of trying to extend a social welfare function consistently across different hypothetical ordinal utility functions even apart from justice. [13] Utility maximization survives, even with the rise of ordinal-utility/Pareto theory, as an ethical basis for economic-policy judgments [14] in the wealth-maximization criterion invoked in law and economics. [15]

Amartya Sen (1970), [16] Kenneth Arrow (1983), [17] Serge-Christophe Kolm (1969, 1996, 2000), [18] and others have considered ways in which utilitarianism as an approach to justice is constrained or challenged by independent claims of equality in the distribution of primary goods, liberty, entitlements, [19] opportunity, [20] exclusion of antisocial preferences, possible capabilities, [21] and fairness as non-envy plus Pareto efficiency. [22] Alternate approaches have treated combining concern for the worst off with economic efficiency, the notion of personal responsibility and (de)merits of leveling individual benefits downward, claims of intergenerational justice, [23] and other non-welfarist/Pareto approaches. [24] Justice is a subarea of social choice theory, for example as to extended sympathy, [25] and more generally in the work of Arrow, [26] Sen, [27] and others. [28]

A broad reinterpretation of justice from the perspective of game theory, social contract theory, and evolutionary naturalism is found in the works of Ken Binmore (1994, 1998, 2004) and others. Arguments on fairness as an aspect of justice have been invoked to explain a wide range of behavioral and theoretical applications, supplementing earlier emphasis on economic efficiency (Konow, 2003).

See also

Related Research Articles

<span class="mw-page-title-main">Political economy</span> Study of the development of social production

Political economy is a branch of political science and economics studying economic systems and their governance by political systems. Widely studied phenomena within the discipline are systems such as labour markets and financial markets, as well as phenomena such as growth, distribution, inequality, and trade, and how these are shaped by institutions, laws, and government policy. Originating in the 16th century, it is the precursor to the modern discipline of economics. Political economy in its modern form is considered an interdisciplinary field, drawing on theory from both political science and modern economics.

Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science." Its content includes the study of political behavior. In political science, it is the subset of positive political theory that studies self-interested agents and their interactions, which can be represented in a number of ways—using standard constrained utility maximization, game theory, or decision theory. It is the origin and intellectual foundation of contemporary work in political economy.

<span class="mw-page-title-main">Amartya Sen</span> Indian economist and philosopher

Amartya Kumar Sen is an Indian economist and philosopher. Sen has taught and worked in the United Kingdom and the United States since 1972. In 1998, Sen received the Nobel Memorial Prize in Economic Sciences for his contributions to welfare economics. He has also made major scholarly contributions to social choice theory, economic and social justice, economic theories of famines, decision theory, development economics, public health, and the measures of well-being of countries.

In welfare economics and social choice theory, a social welfare function—also called a socialordering, ranking, utility, or choicefunction—is a function that ranks a set of social states by their desirability. A social welfare function takes two possible outcomes, then combines every person's preferences to determine which outcome is considered better by society as a whole. Inputs to the function can include any variables that affect the well-being of a society.

Monetary economics is the branch of economics that studies the different theories of money: it provides a framework for analyzing money and considers its functions, and it considers how money can gain acceptance purely because of its convenience as a public good. The discipline has historically prefigured, and remains integrally linked to, macroeconomics. This branch also examines the effects of monetary systems, including regulation of money and associated financial institutions and international aspects.

Welfare economics is a field of economics that applies microeconomic techniques to evaluate the overall well-being (welfare) of a society. This evaluation is typically done at the economy-wide level, and attempts to assess the distribution of resources and opportunities among members of society.

Normative economics is the part of economics that deals with normative statements. It focuses on the idea of fairness and what the outcome of the economy or goals of public policy ought to be.

Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law.

Equity, or economic equality, is the construct, concept or idea of fairness in economics and justice in the distribution of wealth, resources, and taxation within a society. Equity is closely tied to taxation policies, welfare economics, and the discussions of public finance, influencing how resources are allocated among different segments of the population.

Philosophy and economics studies topics such as public economics, behavioural economics, rationality, justice, history of economic thought, rational choice, the appraisal of economic outcomes, institutions and processes, the status of highly idealized economic models, the ontology of economic phenomena and the possibilities of acquiring knowledge of them.

Social choice theory or social choice is a branch of welfare economics that studies the processes of collective decision-making. Social choice incorporates insights from economics, mathematics, and game theory to find the best ways to combine individual opinions, preferences, or beliefs into a single coherent measure of the quality of different outcomes, called a social welfare function. Social choice theory includes the closely-related field of voting theory, and is strongly tied to the field of mechanism design, which can be thought of as the combination of social choice with game theory.

<span class="mw-page-title-main">Abba P. Lerner</span> Russian-British economist (1903–1982)

Abraham "Abba" Ptachya Lerner was a Russian-born American-British economist.

Economic methodology is the study of methods, especially the scientific method, in relation to economics, including principles underlying economic reasoning. In contemporary English, 'methodology' may reference theoretical or systematic aspects of a method. Philosophy and economics also takes up methodology at the intersection of the two subjects.

<span class="mw-page-title-main">Social Choice and Individual Values</span>

Kenneth Arrow's monograph Social Choice and Individual Values and a theorem within it created modern social choice theory, a rigorous melding of social ethics and voting theory with an economic flavor. Somewhat formally, the "social choice" in the title refers to Arrow's representation of how social values from the set of individual orderings would be implemented under the constitution. Less formally, each social choice corresponds to the feasible set of laws passed by a "vote" under the constitution even if not every individual voted in favor of all the laws.

Economics imperialism is the economic analysis of non-economic aspects of life, such as crime, law, the family, prejudice, tastes, irrational behavior, politics, sociology, culture, religion, war, science, and research. Related usage of the term goes back as far as the 1930s.

In economics, distribution is the way total output, income, or wealth is distributed among individuals or among the factors of production. In general theory and in for example the U.S. National Income and Product Accounts, each unit of output corresponds to a unit of income. One use of national accounts is for classifying factor incomes and measuring their respective shares, as in national Income. But, where focus is on income of persons or households, adjustments to the national accounts or other data sources are frequently used. Here, interest is often on the fraction of income going to the top x percent of households, the next x percent, and so forth, and on the factors that might affect them.

Agent-based computational economics (ACE) is the area of computational economics that studies economic processes, including whole economies, as dynamic systems of interacting agents. As such, it falls in the paradigm of complex adaptive systems. In corresponding agent-based models, the "agents" are "computational objects modeled as interacting according to rules" over space and time, not real people. The rules are formulated to model behavior and social interactions based on incentives and information. Such rules could also be the result of optimization, realized through use of AI methods.

Public economics(or economics of the public sector) is the study of government policy through the lens of economic efficiency and equity. Public economics builds on the theory of welfare economics and is ultimately used as a tool to improve social welfare. Welfare can be defined in terms of well-being, prosperity, and overall state of being.

Economics handbooks are handbooks on subjects of economics. Such handbooks range in audience from the general reader to the advanced student and professional economist.

Prasanta Kumar Pattanaik, is an Indian-American emeritus professor at the Department of Economics at the University of California. He is a Fellow of the Econometric Society.

References

  1. ↑ "Economic Justice". Investopedia. Retrieved 2023-02-27.
  2. ↑ Hayes, Adam. "Economic Justice". Investopedia. Retrieved 2021-02-03.
  3. ↑ "On Economic Justice | SPH". www.bu.edu. Retrieved 2021-02-03.
  4. ↑ • Developed along more general lines in Allan Gibbard, 1990, Wise Choices, Apt Feelings. Description and chapter-preview links.
       • Marc Fleurbaey, 2008. "ethics and economics," The New Palgrave Dictionary of Economics , 2nd Edition. Abstract.
  5. ↑ For example, in Barry Clark and Herbert Gintis, 1978, "Rawlsian Justice and Economic Systems," Philosophy & Public Affairs, 7(4), pp. 302-325.
  6. ↑ The latter is the subject of H. Peyton Young, 1994, Equity: In Theory and Practice, Princeton University Press, discussed in general terms and as quoted, pp. 6-7; description, preview, and chapter 1 [ permanent dead link ] (via scrolling).
  7. ↑ • Peter J. Hammond, 1987. "altruism," The New Palgrave: A Dictionary of Economics , v. 1, pp. 85-87.
       • James Andreoni, William T. Harbaugh, and Lise Vesterlund, 2008. "altruism in experiments," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  8. ↑ Joseph J. Spengler, 1980. Origins of Economic Thought and Justice. Link to 1-page chapter-content previews.
  9. ↑ • Edmund S. Phelps, ed., 1973. Economic Justice: Selected Readings. Penguin.
       • _____, ed., 1987. "distributive justice," The New Palgrave: A Dictionary of Economics, v. 1, pp. 886-88.
  10. ↑ • Norman Geras, 1985. "The Controversy about Marx and Justice," New Left Review, 150, pp. 47-85.
       • J.E.Roemer, 1987. "Marxian value analysis". The New Palgrave: A Dictionary of Economics, v. 3, pp. 383-87.
  11. ↑ • Marc Fleurbaey, 2008. "Economics and Economic Justice", Stanford Encyclopedia of Philosophy .
       • Daniel M. Hausman and Michael S. McPherson, 2005, 2nd Ed. Economic Analysis and Moral Philosophy, Part III: Liberty, rights, equality, and justice. pp. 157-214. Drill to preview extracts. Archived 2016-05-27 at the Wayback Machine
       • Julian Lamont, 2007. "Distributive Justice", Stanford Encyclopedia of Philosophy .
       • Julian Le Grand, 1991. Equity and Choice: An Essay in Economics and Applied Philosophy. Chapter preview links.
       • Phillipe Mongin, 2000. "Is There Progress in Normative Economics?", same title in Stephan Boehm, et al., eds., 2002, Is There Progress in Economics?.
  12. ↑ Paul A. Samuelson, 1947. Foundations of Economic Analysis , ch. VIII ("Welfare Economics"), p. 221.
  13. ↑ Kenneth J. Arrow, 1963. Social Choice and Individual Values , 2nd ed.
  14. ↑ • Jonathan Riley, 2008. "utilitarianism and economic theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Charles Blackorby, Walter Bossert, and David Donaldson, 2002. "Utilitarianism and the Theory of Justice," Handbook of Social Choice and Welfare, v. 1, ch. 11, pp. 543-596. Abstract.
       • A.B. Atkinson, 1982. Social Justice and Public Policy. Description and scroll to chapter-preview links.
  15. ↑ • Richard A. Posner, 1981. The Economics of Justice. Description Archived 2009-12-27 at the Wayback Machine and chapter links, pp. xi-xiii.
       • Peter J. Hammond, 1982. "The Economics of Justice and the Criterion of Wealth Maximization," Yale Law Journal, 91(7), pp. 1493-1507.
       • Richard Schmalbeck, 1983. "The Justice of Economics: An Analysis of Wealth Maximization as a Normative Goal," Columbia Law Review, 83(2), pp. 488-525.
       • Denis J. Brion, 2000. "Norms & Values in Law & Economics," in Encyclopedia of Law & Economics, v. 1, pp. 1041-1071.
       • Louis Kaplow and Steven Shavell, 2003. Fairness versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice," Journal of Legal Studies, 32(1), pp. 331-362.
       • A. Mitchell Polinsky and Steven Shavell, 2008. "law, economic analysis of," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  16. ↑ Amartya K. Sen, 1970 [1984]. Collective Choice and Social Welfare (description) Archived 2011-05-01 at the Wayback Machine :
    ch. 9, "Equity and Justice," pp. 131-51.
    ch. 9*, "Impersonality and Collective Quasi-Orderings," pp. 152-160.
  17. ↑ • Kenneth J. Arrow, 1983. Collected Papers, v. 1, Social Choice and Justice. Description Archived 2009-04-16 at the Wayback Machine , contents Archived 2008-04-17 at the Wayback Machine , and chapter-preview links.
       • Amartya Sen, 1985. "Social Choice and Justice: A Review Article," Journal of Economic Literature, 23(4), pp. 1764-76. Review of Arrow, 1983. Reprinted in Sen, 2003, Rationality and Freedom, pp. 325-348.
  18. ↑ • Serge-Christophe Kolm, 1969. "The Optimal Production of Social Justice," in J. Margolis and H. Guitton (eds.), Public Economics, Macmillan.
       • _____, 1996. Modern Theories of Justice. Description and scroll to chapter-preview links. MIT Press.
       • _____, [1972] 2000. Justice and Equity. Description Archived 2012-10-10 at the Wayback Machine & scroll to chapter-preview links. MIT Press.
  19. ↑ • Robert Nozick, 1974. Anarchy, State, and Utopia .
       • John Rawls, 1971, A Theory of Justice .
  20. ↑ • John E. Roemer, 2008 "equality of opportunity," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • _____, 1998. Equality of Opportunity, Harvard University Press. Description and scrollable preview.
  21. ↑ Amartya K. Sen, 1985. Commodities and Capabilities. Description.
  22. ↑ Amartya Sen, [1987] 2008. "justice," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • _____, 2000. "Social Justice and the Distribution of Income," in Handbook of Income Distribution, v. 1, Ch. 1, pp. 59-85.
       • _____, 2009. The Idea of Justice, Harvard University Press. Description and preview link.
  23. ↑ Bertil Tungodden, 2008. "justice (new perspectives)," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  24. ↑ Louis Kaplow, 2008. "Pareto principle and competing principles," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  25. ↑ Kenneth J. Arrow, 1977. "Extended Sympathy and the Possibility of Social Choice," American Economic Review, 67(1), pp. 219-225.
  26. ↑ Kenneth J. Arrow, 1983. Collected Papers of Kenneth J. Arrow, v. 1, Social Choice and Justice, preview.
  27. ↑ • Amartya K. Sen, 1970 [1984]. Collective Choice and Social Welfare (description) Archived 2011-05-01 at the Wayback Machine :
    ch. 9, "Equity and Justice," pp. 131-51.
    ch. 9*, "Impersonality and Collective Quasi-Orderings," pp. 152-160.
    • _____, 1977. "Social Choice Theory: A Re-Examination," Econometrica, 45(1), pp. 53-88.
    • _____, [1987] 2008. "justice," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
    • _____, 2009. The Idea of Justice, Harvard University Press. Description and scroll to Table of Contents, preview, back-cover comments of Hilary Putnam, Kenneth Arrow, Philippe Van Parijs, and G. A. Cohen, and a guide to reviews.
  28. ↑ • Walter Bossert and John A. Weymark, 2008. "social choice (new developments)," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Charles Blackorby, Walter Bossert, and David Donaldson, 2002. "Utilitarianism and the Theory of Justice," Handbook of Social Choice and Welfare, v. 1, ch. 11, pp. 543–596. Abstract.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.