Publications
In this introductory chapter, we give a subjective account of the content of Kolm’s book Macrojustice (2005) that gave rise to the idea of organising in 2006 a round table where this book was discussed by different authors coming from a large variety of horizons: philosophers, economists, econometricians. We leave Serge-Christophe Kolm the task of presenting his theory in the first part of this book. Macrojustice is concerned about social justice proposing a comprehensive redistributive scheme. Of course, any distributive proposal always raises questions at the ethical, theoretical and practical levels. These questions are at the core of the discussions that are presented in this book, which is designed as a forum for multidisciplinary exchange.
The normative foundations of the comparison of distributions of a single attribute between a given number of individuals are by now well-established. They originate in the equivalence between four plausible answers to the question of when a distribution x can be considered normatively better than a distribution y.
At an abstract level, one can view the various theories of justice that have been discussed in economics and philosophy in the last 50 years or so, including of course that of Serge-Christophe Kolm (2005), as attempts at providing criteria for comparing alternative societies on the basis of their “ethical goodness.” The compared societies can be truly distinct societies, such as India and China. They can also be the same society examined at two different points of time (say India today and India 20 years ago) or, more counterfactually, before and after a tax reform or demographic shock.
This paper analyses the problems linked to the implementation of the Equal Labour Income Equalisation (ELIE) scheme proposed by [Kolm, 2005]. It successively studies the influence of uncertainty in the information about individual incomes, the impact of equivalence scales and finally the consequences of capital accumulation. If uncertainty does not modify fundamentally the equity properties of ELIE, equivalence scales can have non trivial consequences depending on the relation between income and fertility. Finally, capital accumulation introduces strong inequalities in the income distribution which are not removed by taxation. The paper relies on simulations of the income distribution, calibrated on French data and on the use of taxation indices.
The paper investigates the relation between welfare among households and welfare among individuals. Following Samuelson's model of the family, it is assumed that family's members share the household income by maximizing a weighted sum of individual utility functions. While the individual population is considered as homogeneous from the point of view of social planner, individuals are treated unequally within each household. We assume a strong regularity in this unfair treatment by assigning a given weight to each type of individuals. The main result shows that the welfare ranking among households is preserved at the individual level if the utility function is increasing, concave and satisfies additional assumptions expressed in terms of the absolute inequality aversion and the absolute prudence towards inequality.
Since the work by Mirrlees (1971, 1974, 1986), the second-best approach to wel- farist optimal taxation has been widely adopted. This approach discards personalized lump-sum transfers and taxes because they are not implementable when the exogenous parameters on which they depend are private information. In contrast, in his recent book Macrojustice (Kolm 2004), Serge-Christophe Kolm proposes a tax scheme derived from fundamental principles of justice that corresponds in essence to providing everyone with a common lump-sum subsidy and then taxing productivity linearly. The lump-sum subsidy is common to everyone, and so does not depend on private information. Nevertheless, because productivity is taxed in addition to the lump-sum transfer, the tax scheme proposed by Kolm depends on knowing an individual’s productivity. Kolm claims that this schedule achieves justice without resulting in losses in efficiency. The practicality of this proposal is likely to be received with scepticism by the common public economist for whom it is like claiming to have solved the problem of squaring the circle.
[Simula and Trannoy, 2011] have shown that ELIE is confronted with implementation issues when the policymaker cannot observe the time worked by every individual. This paper tries to fix this problem. To this aim, we characterise the second-best allocations which are the closest to ELIE first in terms of welfare and then in terms of transfers. In the former perspective, we consider a welfarist setting in which the social weights are those required by ELIE to be generated as a first-best allocation. These weights are defined by the tangent hyperplane to the first-best Pareto set at the ELIE allocation. We show that, in the absence of income effect on labour supply, the closest solution to ELIE is the laissez-faire. In addition, simulations for a Cobb–Douglas economy show that the second-best transfers may then be substantially different from ELIE. This is why, in the latter perspective, we construct second-best allocations which are both incentive-compatible and generate net transfers coinciding with the first-best ELIE transfers. We show that the unique solution is Pareto-efficient in the constraint set.
The basic, core theory of overall distributive justice in macrojustice is presented in this chapter. The basic facts are the following. (1) General opinion rejects differences in tastes and hedonic capacities as relevant for macrojustice in a society in a normal situation. (2) Experience shows the possibility of transfers based on given capacities with practically no disincentive effect (exemption of overtime labour earnings from the income tax). (3) Pareto efficiency is desired and a condition of stability. (4) Social liberty from given resources is desired and necessary. (5) Equal real liberty (for different domains of choice) is a priori desired and rational. The result is a simple distributive scheme rich of some twenty meaningful equivalent properties, including free exchange and labour from a given equal-labour income equalisation; general balanced labour reciprocity; basic income financed by an equal labour of each (or according to capacity); a “concentration” of total income; etc. The issues of the determination of the degree of redistribution and equalisation, and the relations with the rest of public finance are briefly recalled.
This chapter is a general summarised presentation of the problem of defining the best possible choice of the overall income distribution in macrojustice (as opposed to microjustice and mesojustice concerned with allocations directly of specific goods or in particular instances). The three classical polar principles advocate respectively self-ownership and transfers motivated by comparisons of individuals’ incomes and welfares. They are synthesised by people’s general ethical views in the society that has to implement the policy. Actual policies show the material possibilities (for instance the exemption of overtime labour earnings from the income tax that amounts to basing transfers on capacities). The result is a simple and richly meaningful distributive structure that means, jointly, equal real liberty; adding an egalitarian and a classical liberal parts of income; reciprocity by providing each other with the product of the same labour; and an equal basic income financed by an equal partial labour of each. This core principle is then applied taking all the actual economic and social phenomena into account. The questions this may raise are analysed and answered in the various chapters of this volume.
These concluding comments and considerations briefly summarise the achievement of this volume’s set of complementary contributions, answer the main questions posed and pending, and provide the necessary basic analysis and evaluation of the other distributive principles which are alternatives or complements to the one obtained here. The basis is the synthesis between the three polar possible ethical principles for macrojustice: income justice, self-ownership and the proper welfarism. Its central piece is a distributive coefficient k which can provide solutions from the pure self-ownership of classical liberalism for k = 0 to freedom-respecting income-egalitarian ideals. This choice results from the impartial moral judgment of the distributive society in question, representable in particular by comparisons between the “pure welfare” of members and which can be revealed by a number of methods. Non-human resources can be allocated according to various principles, but their equal sharing results from various types of association with the solidaristic equal-freedom allocation of the value of the human resources, and it permits more self-ownership for the same degree of distribution. The relevant introduction of the obtained distributive policy makes everybody better-off. Distributive principles alternative to the one obtained include those based on ordinal welfarism (equity-no-envy and the equivalence principle) and reductions to mesojustice or microjustice. Finally, the moral public goods of justice or caring about others’ needs elicit various types of motives which make the nature of the corresponding transfers be quite more subtle and rich than simple coercion or voluntariness.
