Do unto others as you would have them do unto you.
LUKE 6:31
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have little.
FRANKLIN D. ROOSEVELT
As we saw in chapter 1, the concept of fairness is central to the income inequality debate. Indeed, it is at the very core of the stability and proper functioning of a democratic society and the free market. Therefore, before we address the more specific issue of fairness in income distribution, we need to examine it in the broader context of social justice, i.e., equality, liberty, and utility in a democratic society, exploring various leading theories of distributive justice that seek to specify what is meant by a just distribution of goods (Fleischacker 2004b; Roemer 1996).
The fairness issue is a particularly challenging one as the term fairness is often used quite broadly and can mean different notions in different contexts, as can be seen from the literature on this subject (e.g., Sen and Foster 1997; Fehr and Schmidt 1999; Bolton and Ockenfels 2000; Kaplow and Shavell 2001; Thomson 2007; Akerlof and Shiller 2009). This is one of the reasons the term is often used in quotes, as in “fair.” It is a tricky concept as what is morally fair can be different from what is fair in an economic sense. For instance, fairness based on moral principles might require us to recognize all human beings as equals, but does this imply that all employees should receive equal salaries irrespective of their contributions in an organization? Our sense of economic fairness would tend to dictate otherwise. Our intuitive sense of economic fairness suggests that one’s reward should be commensurate with the value of one’s contribution, i.e., more pay for greater contribution.
Economists have generally avoided treating the fairness issue as a mainstream topic, as reflected in the comment by Robert E. Lucas, Jr. (Lucas 2002), a Nobel Laureate in Economics: “Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution…. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.” Lucas is, of course, right about the importance of growth and efficiency, but fairness also matters a great deal to people in real life, as noted in chapter 1 (we discuss this further in sections 5.9 and 5.10). However, most standard economics textbooks sidestep the fairness issue, focusing more on productivity and efficiency. But it is important to note that there are encouraging recent trends, as reflected by the literature on the ultimatum game and related topics on fairness (Güth 1995; Fehr and Schmidt 1999; Nowak et al. 2000).
While mainstream economics has generally avoided discussing equality and fairness, political philosophers have embraced it wholeheartedly, making it the central theme in their theories of a democratic society, as we see from the work of Rawls, Nozick, Dworkin, Sen, and others in the past four decades. These scholars have shed light on the roles of the free market and the state in socioeconomic systems with respect to equality, liberty, and fairness. Following up on the groundbreaking work of Rawls (1971) and Nozick (1974), there has been extensive literature on these topics (see, e.g., Sen and Foster 1997; Dworkin 2002; Tomasi 2012; Spatscheck 2012).
Our purpose here is not to review these pioneering contributions at any length. Our aim is to only highlight the key concepts so that when we present our framework, we can better articulate the similarities and differences between our theory and theirs. In particular, we will limit ourselves to the theories by Mill, Rawls (and Dworkin, to some extent), and Nozick, who are leading proponents of utilitarian, egalitarian, and libertarian models of fairness, respectively. We do not go into the various nuances of these theories, which have been extensively analyzed and critiqued over the years. For the uninitiated, the Stanford Encyclopedia of Philosophy is an excellent place to start to delve more deeply into this area (van Eijck and Visser 2012; see also Lebacqz 1986). We will limit ourselves to the essential ideas in order to set the stage for our system-theoretic perspective.
While many great intellectuals, such as Jeremy Bentham, had advanced utilitarianism, John Stuart Mill’s exposition defined the intellectual framework for discussing theories about utility, justice, and fairness. The essential idea of utilitarianism is that the “right” thing to do is that which produces the greater good or “greater happiness” for those concerned (Mill 1957, 10). However, this view was always at odds with the traditional notions of justice at an individual level, since the strictly utilitarian principle leads to situations where individual rights may be sacrificed for the collective good of the society. But to utilitarians there can be no theory of justice that is devoid of utility. Indeed, Mill considers justice to be that which promotes our well-being, “the most vital of all interests,” and “therefore of more absolute obligation, than any other rules for the guidance of life” (Mill 1957, 67). Hence, there can be no discussion of justice without acknowledging the importance of the utility of preserving and promoting well-being. Thus, in the eternal tussle between utility and justice, Mill’s utilitarian view favors utility over justice, thereby valuing the society’s interests more than an individual’s.
Stressing the importance of individuals and their liberties, rather than society as a whole as the utilitarians prefer to, with a particular concern for the weaker ones in a society, John Rawls proposed his theory in Justice as Fairness (Rawls 1971, 2001) as a liberal egalitarian alternative, expressed in two main principles of liberty and equality. According to the first principle, every individual is to have equal basic liberties. Rawls arrives at this fundamental principle of equality among people through the application of his “veil of ignorance” concept to a group of rational agents in the “original position.”1 In conformity with the social contract tradition, Rawls assumes that the individuals in the original position are equal, free, and independent.
The second principle has two components and is stated, in its revised re-statement (Rawls 2001, 42), as follows: “Social and economic inequalities are to satisfy two conditions: first, they are to be attached to offices and positions open to all under conditions of fair equality of opportunity; and second, they are to be to the greatest benefit of the least-advantaged members of society (the difference principle).”
Rawls organizes these principles in lexical ordering, prioritizing them as the liberty principle, fair equality of opportunity, and the difference principle. This order determines the priorities of the principles should they conflict in practice.
Thus, Rawls stipulates that a just society is one wherein the social and economic inequalities are to be arranged such that they are of greatest benefit to the least-advantaged members of society. He proposes the maximin procedure for the distribution, i.e., maximizing the minimum prospects of individuals in a given society. This form of distributive justice is to be enforced by some strong central authority, such as the state. Rawls does not inform us what the resultant income distribution would be in his egalitarian society, in quantitative terms, beyond stipulating the maximin procedure for the distribution.
Disagreeing with the premise, Rawls’s Harvard colleague and libertarian, Robert Nozick (1974), rejects the role of a strong central authority, countering with a theory that argues that only a minimal state is justifiable. Like Rawls, Nozick stresses the importance of individual liberties. However, as opposed to Rawls’s strong state, he argues that a minimal state will emerge naturally, guided by an invisible hand, and will function solely to protect individuals’ basic rights. This is essentially a free-market view of a society (Friedrich von Hayek [1944] had defended a similar view, not so much from the perspective of fairness and justice, but out of concern for “the danger of tyranny that inevitably results from government control of economic decision-making through central planning.” [Eberling, 1999, 31]). Both Rawls and the utilitarians argue in support of a strong state to ensure that goods are distributed justly either to protect the least advantaged (the Rawlsian view) or to ensure the greatest overall good (the utilitarian view).
However, Nozick argues that only a minimal state is justified whose role is to protect and preserve basic rights of individuals such as life, liberty, and property, and to maintain social order. He asserts that both the Rawlsian and the utilitarian notions of justice are in fact unjust, and that only the distribution, whatever it may be, that naturally arises from the numerous individual exchanges and decisions through a free-market mechanism is justified. One of the key roles of the minimal state is to ensure the proper functioning of such a free market. Like Rawls, Nozick also does not inform us what the resultant income distribution would be in his libertarian society, in quantitative terms, beyond claiming that whatever distribution the free market delivers is fair.
Another important egalitarian theory of distributive justice comes from Ronald Dworkin, who differs from fellow egalitarian Rawls in his emphasis on equal access to resources (Dworkin 1981a, 1981b, 2002; Rogers 2000; Waldron 2001). Dworkin’s theory is often identified as one of the earliest in the luck egalitarian literature, though he himself called his theory resource egalitarianism.2 Like Rawls’s theory, Dworkin’s theory of equality has two parts: first a general theory of justice and then an account of the principles of distribution. His theory of justice values equality over liberty, arguing that it is the sovereign virtue (Dworkin 2002). According to him, the ideal of liberty already has built into it the notion of respecting the freedom of others, i.e., equal freedom for all. Thus, the notion of liberty is founded on equality. According to Dworkin, one should show equal concern for each person’s life and equal respect for the basis on which he has chosen to live it.
Regarding distributive justice, Dworkin follows Rawls to some extent but differs in important ways. Egalitarians have tended to be vague about what they consider should be distributed equally, but they generally suggest that it should be some measure of well-being, such as utility or happiness. In two powerful essays (Dworkin 1981a, 1981b), Dworkin disagrees, arguing for equality of resources over equality of welfare, with important individualistic qualifications. Differing from Rawls, he argues that distributive justice should discriminate between consequences resulting from individual choices, on one hand, and luck, on the other. Dworkin uses the term ambitions to represent the realm of our choices and what results from our choices (such as the choice to work hard or not, or to spend money on luxuries). His term endowments refers to the results of brute luck, or those things over which we have no control (such as genetic inheritance or an accident making someone disabled).
On the distribution of resources, like Rawls, Dworkin conducts a thought experiment, asking us to imagine a desert island community in which everyone, starting with the same purchasing power, is able to bid in auction for a share of the island’s resources to arrive at a fair distribution. Dworkin proposes that people begin with equal resources but be allowed to end up with unequal economic benefits as a result of their own choices. He argues that people who choose to work hard to earn greater income should not be required to subsidize those choosing greater leisure and hence less income.
More recently, John Tomasi (2012) proposed in Free Market Fairness a kind of compromise between Rawlsian egalitarianism and Nozickian libertarianism, in which he argues that capitalistic economic freedom should be treated as a basic liberty. He has tried to retain certain appealing features from both theories, but this has led to some inconsistencies, according to his critics (Koppelman 2012; O’Neill and Williamson 2012).
It is important to recognize at this juncture that while all these scholars made groundbreaking contributions in laying the philosophical foundations of a fair society, none of their frameworks could answer the four fundamental questions we raised in chapter 1. Toward this goal, we begin the formulation of our theory from the next section onward.
In essence, the theories of Mill, Rawls, Nozick, Dworkin, and others address the foundational and organizational principles that a well-ordered, well-functioning, fair democratic society must adopt to meet its societal goals. In system-theoretic parlance, these are the design and control principles of a socioeconomic system.
Since a society is a complex construct that stands for many things, it can be analyzed philosophically, sociologically, economically, and even theologically. In addition, it is a dynamical system with a very large number of citizens (often in the millions), who interact with one another as well as with the environment in myriad ways. In this regard, it also exhibits behaviors and characteristics of a statistical, dynamical system that cannot, and should not, be ignored. While a society of human beings is obviously very different from an engineering system of inanimate elements, it nevertheless shares certain common characteristics, at an appropriate level of abstraction, that may be profitably analyzed using concepts and techniques from systems engineering, game theory, statistical mechanics, and information theory. Therefore, it is reasonable to model a human society from these perspectives.
Mill, Rawls, Nozick, Dworkin, and others framed what constitutes a fair society as a philosophical or sociological problem, or one of political economy. While these philosophical and sociological approaches have made great contributions to further understanding of societal organization and functioning, not addressing this other essential nature of society, i.e., as a statistical dynamical system of interacting agents, has resulted in an incomplete understanding that has missed critical insights, as our theory demonstrates.
We address this deficiency by developing a system-theoretic framework, which we have named statistical teleodynamics, that integrates foundational concepts and techniques from game theory, statistical mechanics, information theory, and systems engineering with those in philosophy, sociology, and economics to yield a quantitative theory that reveals surprising and useful insights as well as testable predictions that can be verified with empirical data. Our theory’s name comes from the word telos, which means “goal” in Greek. Since our agents, such as employees and corporations, are driven by their goals (to maximize utility or profit) in their dynamics of switching jobs or employees, we call such goal-driven systems teleodynamical systems. Because of the stochastic or statistical nature of dynamics, it is called statistical teleodynamics. This framework may be seen as a generalization of the concepts and laws of statistical thermodynamics, developed originally for systems of inanimate entities, such as molecules, about 150 years ago, to teleological systems, such as economic and societal systems.
I have described the different elements of this theory in four earlier papers (Venkatasubramanian 2007, 2009, 2010; Venkatasubramanian et al. 2015). Here we develop this theory further to a more complete form and compare it with the theories of Mill, Rawls, Nozick, and Dworkin, pointing out the similarities and differences.
2.2.1 A New Theory of Hybrid Society
It is important to recognize that there has never been, and never will be, a purely utilitarian society (à la Mill), egalitarian society (à la Rawls or Dworkin), or libertarian society (à la Nozick) in the real world. These are, of course, idealized model societies, which we don’t expect to see in practice. We don’t see them because, in their purest form, they are impossible to implement in a democracy. Let us, for instance, consider Rawlsian egalitarianism versus Nozickian libertarianism as the path to follow. By the very nature of a democratic society, there will be a plurality of opinions about which path to follow as both have their own advantages and disadvantages. As a result, it will be difficult to implement one system or the other in its entirety without any compromise.
So it is no surprise that we end up with a hybrid society that has elements from different political philosophies. This is just a matter of survival of the fittest —the pure versions simply can’t survive in a democratic environment of empowered citizens with diverse opinions who demand their views be accommodated. As a result, a compromise solution emerges—the hybrid society—as the fittest candidate in this environment. We will have more to say about this later when we discuss our theory of teleological systems in chapters 5 and 8.
Most, if not all, modern free market–based democratic societies in real life, particularly Western democracies, are such hybrid societies. They typically incorporate Nozick-like free-market principles, suitably modified by a Rawlsian difference principle, e.g., tax and transfer policies, while making utilitarian cost-benefit trade-offs. Nevertheless, these foundational principles, in their pure form, are still very useful because they provide us, at the very least, moral guidance for the sensible choices that each society could make, offering us a menu of choices to select and combine.
It is also important to keep in mind that these formal theories of Rawls, Nozick, and others appeared only in the 1960s, 1970s, and later, but their central principles were already integral to these hybrid societies, and arguably had been so for centuries. For example, life, liberty, and the pursuit of happiness were enshrined in the U.S. Declaration of Independence in 1776 as inalienable rights. Whether formalized in a theory or not, people have generally had an intuitive understanding of, and a desire for, liberty, equality, fairness, and happiness, and they incorporated them in their practices, to varying degrees, as they formed societies. People’s initial positions were further refined, iteratively through practical experience over several decades, in response to economic booms and busts, to social unrests demanding equality on a number of issues. Consider, e.g., the different amendments made to the U.S. Constitution (e.g., the Thirteenth Amendment abolishing slavery or the Nineteenth Amendment granting women’s suffrage) as a result of such iterative improvements, or the new laws passed (e.g., Glass-Steagall) and institutions created (e.g., the Federal Reserve) to respond to economic crises.
So human societies were not waiting for the philosophers, sociologists, and economists to figure all this out formally first and then implement it in practice. The experimentation and iterative self-adjustment started from the earliest days of civilization. The intellectuals only caught up with the reality with their formal theories much later, as is often true in many scientific endeavors. Therefore, such hybrid societies have long been a reality, at least in the Western world.
Hence, there is a clear need for theories that deal with this reality. Among such theories, the works of Schmidtz (2006), Wright (2010), Gaus (2010), and Tomasi (2012) stand out. What we propose in this book is not as philosophically deep or rigorous as their theories or as those of Rawls, Nozick, Dworkin, Sen, and Nussbaum. But, as opposed to all these beautiful philosophical theories, which are qualitative in nature and hence don’t yield quantitative predictions, we take a much more pragmatic perspective and seek to develop a simple, but quantitative, framework that makes testable predictions which can be verified using empirical data. Our goal is to identify fundamental principles and develop simple models that offer an appropriate coarse-grained description of a hybrid society and make predictions not restricted by society-specific details and nuances.
Motivated by such a pragmatic outlook, one might say an engineering perspective, we consider a hybrid utopia—an ideal version of such a hybrid society—and explore its distributive justice property from an income distribution perspective, i.e., how fairly this society distributes wage income. We don’t offer any particular philosophical defense or justification for our hybrid society, along the lines of Rawls, Nozick, or Dworkin, other than to defend it as a pragmatic solution, commonly arrived at by citizens in real life, to a challenging decision-making problem. (That said, we do provide a system-theoretic justification, founded on the principle of maximum fairness, in chapter 8.) The various elements of this compromise solution (such as the equality and liberty principles) have been defended eloquently by its original proponents and require no further defense. The only aspect that requires justification is the reason for this “mixing and matching,” which we justify on a pragmatic basis. So one might call our approach pragmatic egalitarianism or pragmatic libertarianism. The typical hybrid society in real life has different elements adopted from utilitarian, egalitarian, and/or libertarian societal models, combining them to varying degrees. Some societies are more egalitarian, as in the Scandinavian countries. Others are less so, such as in the United States. Most others are typically somewhere on this spectrum. So, in practice, what really is left for us as a choice is the extent of this compromise—how to balance the needs of the society and those of the individual.
We now outline the essential features of this hybrid society, and then develop an analytical model and analyze its behavior and predictions. First, this hybrid society is a free market–based society in the Nozickian sense, with utility-maximizing agents and profit-maximizing corporations. However, we modify it by applying a Rawlsian treatment and introduce a minimum wage as a way of protecting the working poor. Such a floor is widely adopted in Western democracies, including the United States. While this may not be as generous to the weak as the maximin strategy advocated by Rawls, it’s a nod to the spirit behind the principle. Most Western democracies, however, do take a more progressive approach by implementing tax and transfer policies that benefit the less fortunate, but in our current model we do not consider the effect of taxes and transfers (this is a natural next step which we discuss in chapter 8). Then we infuse this socioeconomic system with an element from Smith’s (and Mill’s) utilitarian framework; we assume the agents—both individuals and corporations—strive to maximize their self-interests.
In the model hybrid society, we assume, as Rawls and Nozick do, that all citizens are equal, free, independent, and fully capable. They do not suffer from any disability, physical or mental. Thus, we do not address the important questions that arise in a society in which some citizens are disabled, one way or the other, requiring special treatment. These issues have been addressed by Amartya Sen, Martha Nussbaum, and others. Our theory, in its present form, is focused on able individuals who generally constitute the bulk of a population. Again, this is another natural extension discussed in chapter 8.
Let us now develop the theory of this ideal hybrid society from a systems engineering perspective. In a sense, this is perhaps the ultimate systems engineering challenge.
How do you engineer a society of humans? That is, how do you “design,” “control,” and “optimize” a human society?
At first glance, this seems preposterous—designing and controlling a society of humans as if they were mechanical or electrical parts in a machine. This also sounds downright scary, raising all kinds of dystopian alarms. But this is what the Founding Fathers were attempting to do in their American experiment, as they laid down the principles of a democratic society they wanted to live in, and leave for their descendants, in the Declaration of Independence and the Constitution. So, this is not that crazy or scary, after all!
We now approach this challenge—how to design (i.e., organize), control (i.e., govern), and optimize (i.e., maximize benefits under constraints) a society?—as if it were a proper systems engineering problem.
When engineers design a system, they start with a series of questions that address various aspects of the design and operation of the system. The first question is: What is (are) the purpose(s) of this system?
A system, which is an organized structure of entities (animate or inanimate), typically exists to accomplish some goal(s) or purpose(s). For example, a chemical plant is an organized structure of equipment with a goal to safely and efficiently manufacture some chemical needed by society. A corporation is a system of people (i.e., animate entities or agents), organized to efficiently perform their tasks and generate profit, which is its economic objective. The corporation’s main purpose is to make money for its investors and shareholders.
A simpler example of an engineering system would be a pressure vessel, which is a collection of gas molecules (i.e., inanimate entities) in a sealed container. This is a thermodynamic system, obeying the laws of thermodynamics. Thus the molecules are not organized or structured in any particular manner inside the vessel, beyond the constraint that they must be inside the vessel, which is the extent of organization needed for the purpose here. The objective of this system is to build pressure that can later be used to perform some useful task.
A more complicated example is an entire refinery (of which the pressure vessel could be one part) whose purpose is to convert crude oil into valuable products (such as gasoline) and thus generate profit for the corporation that owns the refinery. This is also a thermodynamic system, but a more complex one.
Thus, systems, whether human-engineered, such as corporations or chemical plants, or naturally evolved, such as life-forms or societies, typically exist to accomplish some objective(s).
In addition, systems engineers would subsequently ask many questions such as (not necessarily in this order): (1) What are all the inputs and outputs? (2) What are the properties of the individual agents? (3) How do the agents interact with one another? (4) How should they be structured? (5) How does one define the state of the system at any given time? (6) What are the key state variables and parameters? (7) How are they measured? (8) What are the conservation laws and constitutive relations, if any? (9) How would the state of the system evolve over time? (10) What are the variables to be controlled? (11) What is the system’s environment? (12) How does the system interact with its environment? (13) Will the system settle into an equilibrium state over time? (14) What criterion determines equilibrium? (15) Is the equilibrium stable to disturbances? (16) What are the risks to the system’s stability? (17) What are the efficiency-robustness and cost-benefit trade-offs in various design and operational choices?
While there are major differences between a society (or an economic system) and an engineering system, several of these questions are still quite relevant in the design or organization of a human society or an economic system. Hence, it is useful to explore this avenue of inquiry.
Thus, from a systems engineering perspective, the first question to answer is: Given a society of human agents, who freely and dynamically interact among themselves and with the outside environment, what is (are) the purpose(s) of a society?
While this central question has been debated for centuries by philosophers, theologians, and sociologists, neither Rawls nor Nozick explicitly answers it in his theory. It can be seen to be implied in their discussions, but it is not stated as a clear objective as are the liberty and equality principles of Rawls. One infers that the purpose is well-being or happiness, whatever that may be. Liberty and equality per se cannot be the ultimate objectives of a society, for they naturally lead to the following question: Once every agent has liberty and equality, then what? What would the agents do with their liberty and equality? Thus, these are just means to an end. But what is that end?
Utilitarians like John Stuart Mill (1957) and Jeremy Bentham (1982), as well as other philosophers, notably John Locke (1689) and Samuel Johnson (1787), had suggested that the goal of life is the pursuit of happiness. This is also, by the way, the goal in Eastern philosophies, but it can get more complicated because of the spiritual nature of the discussion (Maharshi 2000; Bodhi 2005; DeLuca and Vivekananda 2006; Adidevananda 2009). While this goal is perhaps implied in the theories of Rawls and Nozick, it is not explicitly mentioned as the stated objective of a society. However, this is generally understood to be so as C. S. Lewis (Lewis, 1996, 171) observes: “The State exists simply to promote and to protect the ordinary happiness of human beings in this life.” This objective, of course, is the foundational principle of American society—the pursuit of happiness, empowered by life and liberty, the other two key principles of the tripartite motto.
As Hamilton (2008) points out, this Jeffersonian ideal has its origins in the writings of John Locke, and its philosophical lineage can be traced from Socrates, Plato, and Aristotle through the Stoics, Skeptics, and Epicureans. To quote Hamilton: “It appears not in the Two Treatises on Government but in the 1690 essay Concerning Human Understanding. There, in a long and thorny passage, Locke wrote:
The necessity of pursuing happiness [is] the foundation of liberty. As therefore the highest perfection of intellectual nature lies in a careful and constant pursuit of true and solid happiness so the care of ourselves, that we mistake not imaginary for real happiness, is the necessary foundation of our liberty. The stronger ties we have to an unalterable pursuit of happiness in general, which is our greatest good, and which, as such, our desires always follow, the more are we free from any necessary determination of our will to any particular action, and from a necessary compliance with our desire, set upon any particular, and then appearing preferable good, till we have duly examined whether it has a tendency to, or be inconsistent with, our real happiness: and therefore, till we are as much informed upon this inquiry as the weight of the matter, and the nature of the case demands, we are, by the necessity of preferring and pursuing true happiness as our greatest good, obliged to suspend the satisfaction of our desires in particular cases.”
We won’t be addressing the voluminous literature on various interpretations and discussions of the tripartite motto here.3 For our purposes, it means that one has the right to live a life, free to decide for oneself how to achieve happiness. We will take the widely held interpretation that this means the following: Objective 1-Life: security of life and property, including certain inalienable rights. Objective 2-Liberty: the freedom to live that life the way one chooses. Objective 3-Pursuit of happiness: to freely pursue happiness for oneself.
Objective 1 guarantees certain fundamental rights for the agents for their survival and existence. Objective 2 guarantees freedom of thought, decision, and action. Objective 3, in some sense, is the main objective of the society—objectives 1 and 2 are enablers to realize objective 3. In the American model, society allows an individual to pursue happiness, but with no guarantees on the outcome. Thus, different people may end up with different levels of happiness, or with none at all, in their lives. One is only provided with an opportunity to pursue it.
From a systems engineering perspective, reflecting on the list of questions cited above, objective 1 essentially defines the static properties of the agents, while objective 2 defines the dynamic aspects such as decisions, actions, and interactions that affect the temporal evolution of the agents and the system. In some sense, objective 1 defines the present while objective 2 refers to mechanisms for the evolution of the present state to a future state, in purely qualitative terms. Objective 3 is the overall goal of the society.
Let us now consider an ideal, utopian, hybrid society, which we call BhuVai, inspired by a concept in Hindu philosophy of a paradise on Earth, called Bhuloka Vaikuntham. In this society, all are treated as equals. Everyone enjoys the same rights associated with life and liberty, similar to the individuals in Rawlsian and Nozickian societies. In addition, BhuVai strives to ensure that everyone also enjoys the same level of happiness. With this ambitious objective, BhuVai differs dramatically from the Rawlsian, Nozickian, or other societies that have been proposed before.
This objective is, of course, not achievable in real-life societies. While this may seem to be an impractical, even laughably silly, objective of little utility, it turns out to be quite useful as a reference state, as we shall demonstrate.
The logic for this objective is as follows. In our utopia, everyone is making a valuable contribution to the overall functioning of the society. The sanitation workers, teachers, accountants, farmers, doctors, chefs, bankers, lawyers, executives, police and military personnel, cobblers, poets, painters, actors, etc., are all making a valuable contribution to the successful functioning of the society. Imagine what life would be like if sanitation workers stopped clearing garbage, if farmers stopped growing food, if teachers refused to teach, and so on. Any society would come to a grinding halt. If the bottom 90% refused to cooperate, did not perform their jobs effectively, or did not perform them at all, then the top 10% would find life to be very difficult, no matter how much money they have. In this sense, everyone is making a valuable contribution to the overall functioning of a society.
Therefore, in our utopia, the goal is to make all people equally happy for performing their jobs well and making their contributions. Wouldn’t it be wonderful to have a society where all the people pursue their lives the way they wish, making a valuable contribution and enjoying the same level of happiness as everyone else in the society? This idea runs along the lines of Adam Smith’s sentiments (Smith 1976, 664): “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty, and justice.” This is an envy-free society. Dworkin discusses the envy test for his equality of resources proposal (Dworkin 1981a, b). Here we have it in the context of equality of welfare. No one in this utopia would want to trade her life for someone else’s, since she is already as happy as everyone else is, leading the life she wants to lead. What more could we ask of a society?
Past work has generally shied away from the objective of equality of welfare, well-being, or happiness for the simple reason that it is very hard to measure. Happiness is a fuzzy and elusive state of an agent, depending on a whole array of complex factors. So no one could measure it, correctly and consistently, across a population. That’s why either this objective is generally avoided, as in the theories of Rawls and Nozick, or the focus shifts to equality of resources, as Dworkin proposed. Even the aforementioned giants of philosophy and statecraft limited themselves to just the pursuit of happiness as a fundamental right. They did not consider the realization of happiness as a fundamental right, let alone everyone achieving the same amount of it! It is just plain silly, a fool’s errand, to propose this as a societal objective. Thus, one can raise a number of objections to this idea.
But even Dworkin concedes that this is a laudable objective. As he observes (Dworkin 1981a):
It does not follow, however, that the ideal of equality of welfare, on any interpretation, is either incoherent or useless. For that ideal states the political principle that, so far as is possible, no one should have less welfare than anyone else. If that principle is sound, then the ideal of equality of welfare may sensibly leave open the practical problem of how decisions should be made when the comparison of welfare makes sense but its result is unclear. It may also sensibly concede that there will be several cases in which the comparison is even theoretically pointless. Provided these cases are not too numerous, the ideal remains both practically and theoretically important.
While measuring happiness, or some such subjective well-being, has generally been considered impractical and suspect, recent advances make it indeed a reasonable exercise to perform. For instance, under the auspices of the United Nations, the first World Happiness Report was published in support of the 2012 United Nations High Level Meeting on Happiness and Well-Being. We quote from the most recent report, published in 2015: “The world has come a long way since the first World Happiness Report launched in 2012. Increasingly happiness is considered a proper measure of social progress and goal of public policy. A rapidly increasing number of national and local governments are using happiness data and research in their search for policies that could enable people to live better lives. Governments are measuring subjective well-being, and using well-being research as a guide to the design of public spaces and the delivery of public services.”
However, the objection that this objective is problematic in the real world is a valid one. That’s why it’s a utopian dream! But contrary to one’s typical gut reaction that pursuing this line of inquiry is therefore futile, this impractical target is surprisingly useful, as we demonstrate, in engineering real-world societies by serving as a useful reference state in the following sense. Most people, perhaps even all, desire happiness more than anything else in their lives. Recognizing “happiness and well-being as universal goals and aspirations in the lives of human beings around the world,” the U.N. General Assembly declared March 20 as World Happiness Day in 2012. As noted, it is even enshrined in the U.S. Declaration of Independence.
Therefore, a society where everyone is equally happy is the best a society can deliver to its citizens. It has achieved its purpose. So this is the target to shoot for. We can’t do any better than this. This is the utopia everyone would love to live in. So, if a real-world society comes close to this utopia, it is doing very well for its citizens. This is a key insight, which we shall exploit in our theory.
But how can we know whether a society has accomplished this? How do we measure how close a given society is to this ideal target? Can we even measure this?
Surprisingly, we can, in the context of distributive justice. This is what we will accomplish in the rest of the book. As noted, happiness depends on a whole array of complex factors. It clearly depends on one’s health (mental, physical, emotional, and perhaps even spiritual), income and wealth, family and friends, work environment, etc. In our theory, we limit ourselves to only the economic aspect. We are not accounting for the other factors even though they are obviously very important. Our focus is entirely on the happiness derived from work in the form of economic rewards.
The rest of the book is focused on the question of distributive economic justice in this model hybrid society, particularly how wage income would be distributed in a fair manner. Therefore, we now proceed to develop a quantitative, analytical model of our ideal hybrid society, BhuVai, and analyze its distributive justice property with respect to wage income distribution in chapter 3.
