Dworkin’s auction

Politics, Philosophy & Economics

Volumn 3, Issue 3, 2004, Pages 313-335

  Heath, Joseph ^a  

^a UNIVERSITY OF TORONTO   (Canada)

Author keywords

efficiency; envy freeness; resource egalitarianism; Ronald Dworkin; superfairness

Indexed keywords

EID: 33748918471     PISSN: 1470594X     EISSN: None     Source Type: Journal    
DOI: 10.1177/1470594X04046244     Document Type: Article

References (25)

1. See Ronald Dworkin, ‘Equality of Welfare’ and ‘Equality of Resources’, in Sovereign Virtue (Cambridge, MA: Harvard University Press, 2001).
2. For example, Will Kymlicka's use of Dworkin's auction thought experiment to justify minority rights is based on a flawed interpretation, as it assumes the presence of uninternalized ‘network externalities’ associated with language and cultural practices. See Will Kymlicka, Liberalism, Community and Culture (Oxford: Clarendon, 1989). Similarly, Elizabeth Anderson's recent reappraisal of the ‘point’ of egalitarianism takes Dworkin's interpretation of the auction at face value, which allows her then to accuse resource egalitarianism of harboring a ‘Poor Law’ mentality. See Elizabeth Anderson, ‘What is the Point of Equality?’ Ethics 109 (1999): 287-337.
3. Economists will often describe Dworkin's egalitarian solution in a way that renders this explicit (for example, as ‘the Walrasian equilibrium associated with an equal division endowment’). This sort of language is, unfortunately, opaque to the majority of political philosophers.
4. The following is an incomplete list: Duncan Foley, ‘Resource Allocation in the Public Sector’, Yale Economic Essays 7 (1967): 45-98; Hal Varian, ‘Equity, Envy and Efficiency’, Journal of Economic Theory 9 (1974): 63-91; William J. Baumol, Superfairness (Cambridge, MA: MIT Press, 1986); Serge-Christophe Kolm, Justice and Equity, trans. Harold F. See (Cambridge, MA: MIT Press, 1997).
5. Thomas Hobbes, Leviathan, edited by Richard Tuck (Cambridge: Cambridge University Press, 1991), p. 87.
6. Baumol, Superfairness, p. 19. The two concepts are comparable to weak Pareto superiority (which permits indifference among some) and strong Pareto superiority (which does not).
7. See Mark Blaug, Economic Theory in Retrospect, 4th edn. (Cambridge: Cambridge University Press, 1985), Ch. 13.
8. There is one noteworthy restriction to this claim. The example above is of a pure exchange economy, without production. Adding production into the mix complicates things, because it introduces a variety of problems pertaining to the distribution of leisure. See Elisha A. Pazner and David Schmeidler, ‘A Difficulty in the Concept of Fairness’, Review of Economic Studies 41 (1974): 441-3.
9. Note that Dworkin (SV: 72) claims, erroneously, that the envy-freeness standard alone can be used to rank distributions as more or less equal.
10. See Marc Fleurbaey and François Maniquet, ‘Fair Social Orderings’ (forthcoming).
11. See Baumol, Superfairness, pp. 64–70.
12. This has been noted elsewhere. See, for example, John G. Bennett, ‘Ethics and Markets’, Philosophy and Public Affairs 14 (1985): 197.
13. Elsewhere, Dworkin describes the function of the auction as equalizing aggregate opportunity costs. See Ronald Dworkin, ‘The Place of Liberty’, in Sovereign Virtue (Cambridge, MA: Harvard University Press, 2001), p. 149. Again, he fails to notice that the auction does no such thing. Aggregate opportunity costs are already equalized by the initial allocation (since the bundles are identical, aggregate opportunity costs must be the same). The auction simply preserves the equality of these aggregate opportunity costs, while selecting a more efficient allocation.
14. Dworkin says: ‘I mean to describe a Walrasian auction in which all productive resources are sold’. Walras famously demonstrated that under certain conditions an auction could achieve the same outcome as a perfectly competitive market. For a helpful non-technical overview, see Blaug, Economic Theory in Retrospect, Ch. 13.
15. See Dworkin, ‘The Place of Liberty’, Sovereign Virtue, pp. 150–1.
16. Anderson suggests that the market offers ‘no aid to those it labels irresponsible, and humiliating aid to those it labels innately inferior. It gives us the cramped vision of the Poor Laws, where unfortunates breathe words of supplication and submit to the humiliating moral judgments of the state’. See Anderson, ‘What is the Point of Equality?’, p. 308.
17. Ronald Dworkin, ‘Why Efficiency?’ in A Matter of Principle (Cambridge, MA: Harvard University Press, 1985), p. 270. Elsewhere in the same volume, he says that the price system is needed to achieve equality because ‘it fixes the true cost to the community of meeting [each individual's] own preferences for goods and activities’. See Ronald Dworkin, ‘Liberalism’, in A Matter of Principle (Cambridge, MA: Harvard University Press, 1985), p. 194.
18. I am using the term ‘externality’ in the very broad sense pioneered by David Gauthier, Morals by Agreement (Oxford: Clarendon, 1986).
19. This is sometimes overlooked. The difference principle favors perfect equality (according to some index of primary goods), unless it is possible to make Paretoefficiency gains that increase inequality. When that occurs, it recommends choosing the Pareto improvement that maximizes the allocation of the worst-off. See John Rawls, A Theory of Justice (Belknap: Harvard University Press, 1971), p. 76. Rawls must assume that the question of trade-offs between the two principles will arise in the normative component of his theory in part because he does not adopt the idealizing framework of welfare economics that structures Dworkin's discussion.
20. Again, one can see the very unhelpful confusion between efficiency and averageutility maximization. Note also the contrast to Rawls, who treats efficiency as a normative principle, not something that simply intervenes at the implementation stage.
21. Oskar Lange, Essays on Economic Planning, 2nd edn. (Bombay: Asian Publishing House, 1967); Oskar Lange and Fred M. Taylor, On the Economic Theory of Socialism (New York: McGraw Hill, 1964); Abba P. Lerner, The Economics of Control (New York: Macmillan, 1944).
22. Joseph Stiglitz, Whither Socialism? (Cambridge, MA: MIT Press, 1994).
23. Richard Lipsey and Kelvin Lancaster, ‘The General Theory of the Second Best’, Review of Economic Studies 24 (1956): 11-32.
24. See, for example, Dworkin's remarks at the top of p. 70, Sovereign Virtue.
25. See John Roemer, Theories of Distributive Justice (Cambridge, MA: Harvard University Press, 1996), p. 256.