TITLE:
A Simple Model of the Difference Principle
AUTHORS:
Takashi Suzuki
KEYWORDS:
Justice as Fairness, Difference Principle, Reciprocity, External Increasing Returns
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.10,
June
21,
2018
ABSTRACT: In this paper, we present a socioeconomic model
illustrating the difference principle first proposed by John Rawls (1971). We
demonstrate that this principle can be fulfilled by incorporating reciprocity
into the basic structure of society. We show its appropriate embodiment in
external increasing returns in line with traditional neoclassical economic
theory, which is the exact mechanism described by Rawls (1971, 2001). Our model
yields an intuition and interpretation of the principle by showing its
implementation in the market equilibrium. Moreover, the model will show that
the utilitarian principle, i.e., the maximization of the total
(average) utility leads to advantaged people monopolizing all wealth as a just
state of society. We also discuss the sociopolitical conditions necessary for
the difference principle model to be stable and sustained.