Incentives, Social Commitment, and the Economics of Rawls's 'Well-Ordered Society'

The concept of a ‘well-ordered-society’ is central to Rawls’s theory of justice. In such a society, the agents are assumed to ‘comply with’ the principles of justice . This essay aims to clarify the notion of ‘compliance’ by using concepts from economic theory heretofore absent from the philosophical discussion. Contrary to what is usually done by economists, we adopt a non-welfaristic approach in terms of ‘primary goods’. First, we argue that the well-ordered society needs a basis of ‘maximin institutions’. Next, we focus on the extent to which adverse selection and moral hazard are admissible. It turns out that justifications of adverse selection and moral hazard based on the priority of freedom have to be rejected, or at least qualified, because what matters in the well-ordered society is the issue which agents make of their freedom. In that context, we discuss and reject approaches to Rawls based on implementation and on lump-sum taxation. We show that the former is less acceptable than economists argued to be, whereas the latter may be more acceptable than philosophers appear to believe. The last part of the essay develops a formal model in which the determination of the agents’ degree of compliance is endogenized. It turns out that the best-known philosophical interpretation of the well-ordered society are particular cases of this model.