1. Ethics Theory and Business Practice
4.3 Social Contract Theory – Part Three
John Rawls’ Theory of Justice

2. aims to introduce John Rawls’ theory of justice
to explain how Rawls’ ideas can be applied to ethical evaluation of the distribution of benefits and burdens associated with business activity

3. justice
for Rawls social justice is about fair distribution for the benefits and burdens associated with society
so justice in relation to business is about fair distribution of the benefits and burdens associated with business activity …

4. consider some benefits of business activity:
e.g. prosperity, goods, services, health, security, self esteem …
some burdens of business activity:
e.g. various forms of pollution, loss of valued resources, social decay, erosion of traditional lifestyles, hard work, illness, stress …
justice is about how such things are distributed
ask class to identify these benefits and burdens

5. Rawls’ recipe for working out just distribution
1. take three fundamental human ideals:
freedom
rationality
equality
2. work out two hypothetical constructions:
the original position
the veil of ignorance
overview
3. work out two principles of justice:
the principle of equal liberty
the difference principle

6. first two fundamental human ideals:
freedom: people should be free to choose the principles of justice to which they are subjected
rationality: rational decision makers, if given the opportunity to choose, will select those principles of justice which promote their own interests
first hypothetical construction:
imagine yourself in an original position, in which you are choosing principles of justice that would be in your own interests

7. third fundamental human ideal:
equality: just principles are those that would be chosen by people from a position of equality, where variations of status, capability, and aspiration did not exist
second hypothetical construction
imagine that you are choosing principles of justice from behind veil of ignorance, which shields you from any knowledge about your actual status, capability, and aspirations

8. what principles of justice would we choose if:
placed in an original position and
wearing a veil of ignorance?
the principle of equal liberty
the difference principle

9. first principle of justice
the principle of equal liberty people should be at liberty to pursue their own agendas as long as this does not interfere with other people’s liberty to do likewise

10. second principle of justice
the difference principle
inequalities are justified only insofar as they meet two conditions:
first condition: they are attached to offices and positions open to all under conditions of fair equality of opportunity
second condition: they work to the benefit of the least advantaged

11. the difference principle and business
applying the first condition concerning fair equality of opportunity
applying the second condition concerning benefitting least-advantaged groups
at a macro level
at a micro level
see Video Activity 4.5

12. the contentious matter of senior-executive pay
theory in practice
the contentious matter of senior-executive pay
see Theory in Practice: The Contentious Matter of Senior-Executive Pay

13. key points
Rawls proposes that defining just distribution of the benefits and burdens of business activity involves applying principles that would be chosen by people who occupied an imaginary original position …
and who pretended to wear a veil of ignorance about their actual circumstances
Rawls suggests that people in this position would only permit differences in status that resulted from fair equality of opportunity …
and that worked to the benefit of the least advantaged