1. Among those recent theorists who have defended some sort of compensatory justice in whole or in part, are the following: Feinberg, Joel, “Justice and Personal Desert,” Doing and Deserving (Princeton: Princeton University Press, 1970), pp. 55–94, especially pp. 88–94Google Scholar; Dick, James C., “How to Justify a Distribution of Earnings,” Philosophy and Public Affairs 4 (1975):248–272Google Scholar; Galston, William, pp. Justice and the Human Good (Chicago: University of Chicago Press, 1980), pp. 195–261, especially pp. 201–221Google Scholar; and DiQuattro, Arthur, “Rawls and Left Criticism,” Political Theory 11 (1983):53–78, especially 60–66CrossRefGoogle Scholar. Some of these writers (in particular, Feinberg and Galston) include other principles besides compensation in their theories of justice, but I think that the points I make in this essay are still generally relevant to the use they do make of the principle of compensation. Compensatory justice also finds advocates in the socialist tradition. See, for example, Lange, Oskar and Taylor, Fred, On the Economic Theory of Socialism (Minneapolis: University of Minnesota Press, 1938) especially pp. 101–102Google Scholar; Dickinson, H. D., Economics of Socialism (New York: Oxford University Press, 1939), especially p. 133Google Scholar; and Shaw, George Bernard, The Intelligent Woman's Guide to Socialism, Capitalism, Sovietism, and Fascism (Hammondsworth, England: Penguin, 1937) especially pp. 436–37Google Scholar. Dick and DiQuattro also identify themselves as writing in the socialist tradition. Finally, Ronald Dworkin has written two important essays on equality, one of which makes many points relevant to a critique of any concept of compensation while the other adopts an ideal — distribution should be “ambition sensitive” but not “endowment sensitive” — that captures much of the intuitive appeal of the ideal of compensatory justice. See Dworkin, Ronald, “What Is Equality? Part 1: Equality of Welfare,” Philosophy and Public Affairs 10 (1981):185–246Google Scholar and “What is Equality? Part 2: Equality of Resources” Philosophy and Public Affairs 10 (1984):283–345Google Scholar. The quoted phrase is in Dworkin, “Equality of Resources,” p. 311.

2. The phrase comes from Rawls, John, A Theory of justice (Cambridge, Mass.: Harvard University Press, 1971), p. 72Google Scholar. In the article cited above, DiQuattro argues that Rawls' difference principle is based on a principle of compensation.

3. Dworkin, “Equality of Resources,” p. 311.

4. Dick, “Distribution of Earnings,” p. 272.

5. Galston, Justice, p. 203.

6. Little, I. M. D., A Critique of Welfare Economics, 2nd ed. (Oxford: Oxford University Press, 1960), p. 55.Google Scholar

7. For a systematic defense of the use of interpersonal comparisons, see Simon, J. L., “Inter-personal Welfare Comparisons Can Be Made — and Used For Redistribution Purposes,” Kyklos 27 (1974):63–98.CrossRefGoogle Scholar

8. For valuable recent discussions of the problem of preference formation, see Sen, Amartya “Rational Fools: A Critique of the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs 6 (1977):317–44Google Scholar; Elster, John, “Sour Grapes — Utilitarianism and the Genesis of Wants,” in Sen, Amartya and Williams, Bernard, eds., Utilitarianism and Beyond (New York.: Cambridge University Press, 1982), pp. 291–238Google Scholar; and McPherson, Michael, “Want Formation, Morality, and Some Interpretive Aspects of Economic Inquiry” in Haan, Norma et al. , eds., Social Science As Moral Inquiry (New York: Columbia University Press, 1983), pp. 96–124.Google Scholar

9. Dworkin, “Equality of Welfare.”

10. For an example of this sort of approach, see Bellamy, Edward, Looking Backward (1888; New York: New American Library, 1960, reprint)Google Scholar. Some egalitarians would propose additional measures like job rotation or compulsory service for some limited period, but I leave these proposals aside here because some people might argue that such measures interfere with vital personal liberties.

11. When the costs of education and training are borne by society, neither justice nor efficiency requires that the individuals being trained receive extra income as compensation for these costs, but these expenditures do represent a form of social investment for which society must receive an adequate return if there is not to be a misallocation of social resources.

12. Dworkin's discussion in “Equality of Resources” is a good example of what I would characterize as a liberal version of compensatory justice, even though Dworkin himself does not use this term.

13. Dick, “Distribution of Earnings,” p. 266.

14. Ibid., p. 268.

15. Ibid., pp. 268–69.

16. Ibid., p. 270.

17. Ibid., pp. 271–72.

18. For discussions of the characteristic difficulties of command systems, see Lindblom, Charles E., Politics and Markets (New York: Basic Books, 1977)Google Scholar; Kornai, Janos, The Economics of Shortage (Amsterdam: Elsevier, 1982)Google Scholar; Nove, Alec, The Economics of Feasible Socialism (London: Allen and Unwin, 1982)Google Scholar. Bellamy's Looking Backward contains a variant of Dick's proposal which would be much more appealing from an egalitarian perspective. Every adult is to receive an equal income and is expected to contribute an equal amount of work. Work is measured by a “credit” system in which the base value of one labor credit is one hour's work, but some kinds of work receive more credit for an hour's work and some less, depending on how willing people are to do the job. Unpleasant jobs receive more than one credit for one hour's work and pleasant jobs receive less than one credit for an hour's work. Egalitarians would prefer this approach because compensation is to be achieved through differences in hours rather than differences in income. Bellamy's system is a centrally planned economy, but the planners do not attempt to make any independent judgment about the relative desirability of different kinds of work. Rather they adjust the labor credits offered for different kinds of work until there is sufficient labor of various kinds to meet the production requirements of the plan. Because Bellamy's system is centrally planned it is open to many of the objections that I offered against Dick's proposal regarding the difficulties of adequately determining supply and demand from a central perspective. One can imagine variants of Bellamy's proposal that would make greater use of the market (e.g., by having firms compete for labor by adjusting the hours of work required for a given job). This sort of arrangement would have some of the drawbacks of any market arrangement from the perspective of compensatory justice. For example, competitive pressures would enable workers with scarce and valued abilities to obtain reduced hours quite apart from the burdensome character of their work. (I discuss the advantages and disadvantages of the market from the perspective of compensatory justice in more detail in sections IV and V below.) But if people liked their work, the incentives to extract economic rent in the form of reduced hours would be much weaker than the incentives to extract economic rent in the form of income (as in conventional market systems). So, the distribution of hours might correspond more closely to the requirements of compensatory justice than the distribution of income in conventional markets. On the other hand, this sort of arrangement would not permit people to make work/consumption tradeoffs and so would be unsatisfactory from a liberal perspective. Moreover, it would still require a command mechanism rather than the market as the central coordinating device for the economy as a whole. So, it still seems unsatisfactory as a way of institutionalizing compensatory justice.

19. McCormick, B. J., Wages (Baltimore: Penguin, 1969), p. 22.Google Scholar

20. For a thoughtful discussion of these issues, see Dworkin, “Equality of Welfare.”

21. Dworkin, “Equality of Resources” especially pp. 283–290, 304–314. Dworkin calls his ideal egalitarian rather than compensatory, but as I have noted above, his approach has strong affinities with the compensatory ideal.

22. See Elster, “Sour Grapes” for more on the question of preference formation through adaptive reaction.

23. For this sort of argument see Lange, , Socialism, pp. 101–102Google Scholar, and DiQuattro, “Rawls,” pp. 60–66.

24. It is precisely the recognition that unskilled workers and other people in similar economic positions have so little effective choice that leads some liberals to endorse egalitarian reforms. See Gutmann, Amy, Liberal Equality (Cambridge, Eng.: Cambridge University Press, 1980)Google Scholar. Of course, other liberals (e.g., Nozick) reject the view that the situation unskilled workers face in a conventional market economy can properly be regarded as a constraint on their freedom. See Nozick, Robert, Anarchy, State and Utopia (New York: Basic Books, 1974).Google Scholar

25. Existing market socialist systems, most notably Yugoslavia, have tended to have much higher rates of unemployment than centrally planned economies, and even centrally planned economies face serious problems of disguised unemployment.

26. In theory, jobs that provide such training should pay less, other things being equal, than jobs that do not provide training because the training is a form of investment which will increase the subsequent income of the recipient. In practice, because of market imperfections, pay levels rarely reflect these differences.

27. See Carens, Joseph H., Equality, Moral Incentives and the Market (Chicago: University of Chicago Press, 1981).Google Scholar

28. This summary paragraph is adapted from my essay, “Rights and Duties in an Egalitarian Society,” Political Theory, in press.

29. Sen, Amartya K., “Isolation, Assurance, and the Social Rate of Discount,” Quarterly Journal of Economics 81 (1967).CrossRefGoogle Scholar

30. For more on this, see Carens, , Equality, pp. 156–60 and 238–39.Google Scholar

31. See Nozick, , Anarchy, State, and Utopia.Google Scholar

32. In Equality I argued that it was theoretically possible to distribute income equally without hurting efficiency, but I did not claim (and do not believe) that the system described there could be realized under existing conditions.