Twitching veil of ignorance

Howard Davies picks his way through a field that is full of conflict

John Rawls' death in November prompted a remarkable outpouring of tributes from an astonishingly wide range of commentators, both academic and lay.

Rarely has the demise of a philosopher been treated as a matter of such international and national significance. His obituaries in the British broadsheets were almost prime ministerial in length, and many columnists and commentators devoted their weekly square inches to reflections on his seminal work, A Theory of Justice .

This extensive coverage showed that Rawls filled a gap with his elegant defence of egalitarianism. His analytical device - the "veil of ignorance" - behind which we should reflect on the type of society we would wish to live in, and especially on its income distribution, has been a highly influential construct for many political thinkers, and for many practising politicians. Rawls may, indeed, lay claim to being one of the patron saints of the new Labour leadership.

Ian Little does not share their enthusiasm. While he acknowledges that A Theory of Justice was "an extraordinary phenomenon", he begins by noting acidly that "it received great acclaim in non-academic periodicals" - no lower forms of printed life can be imagined, clearly. He notes that the veil of ignorance itself was not an original construct, but had been introduced into the philosophical lexicon by John Harsanyi 18 years earlier, in 1953, and that Harsanyi's conclusions were "more original". (He offers no amplification of that last point.) But Little's main quarrel with Rawls is more fundamental. He argues that Rawls has not succeeded in showing that the principles of social organisation that would be chosen from behind the veil of ignorance are principles of justice. He finds Rawls' focus on the distribution of primary goods, rather than on a broader assessment of human wants and needs, to be unreasonably limiting. And he argues that the constraints imposed on the decision-makers behind our veil are absurd, in that those decision-makers are supposed to be ignorant even of their own attitudes to risk, and to have no understanding of the possibility that they might turn out to be a member of a disadvantaged group of uncertain size.

This, in his view, invalidates the difference principle, according to which Rawls assumes that those behind the veil would rationally choose that society in which the most disadvantaged group fared best, regardless of the situation of the rest, because of the fear that they might be a member of that group. If this group were very small, individuals might reasonably assume that their chances of belonging to it would be remote. Little concludes that these criticisms, among others, have left Rawls' theory "in ruins". There is no reason to suppose that real people would approve of a state founded on his principles. So his theory is of little value.

Rawls is not the only philosopher to come in for such rough treatment. The utilitarians are given very short shrift. Kant's categorical imperative - that persons must never be treated purely as instruments - is summarily dismissed, on the grounds that no moral injunction can be shown to follow from pure reason. Ronald Dworkin, we learn, "does not provide a satisfactory solution of the problems he explores". Robert Nozick's entitlement theory of justice is, we discover, "highly dubious". But he fares better than the communitarians such as Alasdair McIntyre. "It seems to us" - Little often employs the royal we - "that a shared understanding of the good of the community has often been a shared understanding of evil.

Surely Hitler was an arch communitarian? Every dictator, every founder of a sect, appeals to communitarian values."

There is more. At times, Little seems to be compiling a sourcebook of academic put-downs. He must have enjoyed the exercise and there is a tone of relish in his critique. But it is fair to say that this is not his prime intention. His aim, rather, is synthetic. He tells us that he wishes to operate at the interfaces between ethics, economics and politics. He believes it is possible to say useful things about these interfaces without academic training in any of the three disciplines. (Little himself is primarily a development economist, so he is being a tad too modest.) While the publishers describe the book as "the nucleus of a joint university course", his target audience is not limited to students, or political students, of those disciplines - he aims to inform and provoke "any person with an interest in public affairs".

The meat of this commendably short book is, therefore, three dissertations on the relationship between the three disciplines. The first, on economics and philosophy, focuses primarily on welfare economics and on the definitions of personal and collective utility that lie at the heart of it.

The second, a review of the interactions between politics and philosophy, looks at the role of the state and the appropriate objectives for states.

Much of that discussion amounts to an anatomy of utilitarianism, though he also touches on different concepts of justice, and on the measurement of equality and inequality. The third essay, on economics and politics, discusses game theory and the distinction between what Little characterises as positive and normative political economies. In the process, he takes the reader on a short conducted tour of the role of voting in collective choices, and the growth of government in developing countries.

Unfortunately, in these intermittently helpful discussions, Little contrives to be both pedestrian and dense at the same time. His prose is larded with tiresome academic conceits. Contentious and unsubstantiated assertions are followed, a few pages later, by a summary noting that "we have shown how Bloggins' theory cannot be accepted", when all "we" have been shown is that Little disagrees with it. We are dimly aware that old scores are being settled along the route, but the treatment is so abbreviated that the source of the dispute is often obscure.

The density is perhaps more forgivable. Little attempts heroically to summarise complex theories in very few words. At times, particularly where he tries to encapsulate the principles of game theory in a page or two, I suspect he may lose the general reader, although the politics, philosophy and economics undergraduate may get value for money from what at times reads like an upmarket bluffers' guide to the syllabus.

Little's own ambition, however, is set somewhat higher. He does not wish to be merely a retailer of others' views. So in his final chapter he presents an outline of the principles he thinks should guide those involved in constructing public policy.

He begins from what he characterises as an anti-metaphysical position and argues that all moral rules spring from custom and convention. Furthermore, he maintains that a state acquires and creates duties and rights in the same way, in other words conventionally. So, for example, by demonstrating that redistributive taxation can provide citizens with public goods they value, many states have acquired the right to enact redistributive tax laws on a considerable scale. In most European countries, the state raises and spends something approaching half its total gross domestic product. The governments of other countries, notably in the developing world, may not yet have demonstrated that they can manage such transfers efficiently and with honesty. Thus, their legitimacy as social engineers remains in question.

Little goes on from there to suggest that while utilitarianism has severe limitations as a guide for individual action, it can still be a very useful precept for states or governments. If the state is to intervene to correct an apparent market failure, it has to do so by appealing to some form of utilitarianism, backed by cost-benefit analysis. Little is honest enough to recognise the limitations of this approach. In practice, in a democracy, decibel planning (he who shouts loudest gets most) is a more powerful influence on public spending than cost-benefit analysis. He vividly notes that "utilitarianism itself is a feeble flickering light in some cases, especially perhaps when it comes to intervention in social or cultural matters". But he believes it is significantly better than any of the available alternatives and is especially dismissive of the role of direct popular votes in determining public expenditure priorities. So much for the Swiss and their referenda.

If one accepts Little's view of the role of government, what might the practical consequences be? In a very abbreviated concluding section, he attempts to offer some guidance for our political masters. He believes his approach amounts to a prima facie case for private rather than public production, even of welfare services, largely on the grounds that the less government is responsible for relative earnings in different occupations or sectors, the better. Governments are not competent to make those decisions without creating serious market distortions.

But he does not think this adds up to an argument for a minimalist state.

While pre-tax income should be settled by the market, the government may nonetheless act forcefully to redistribute post-tax incomes and to promote competition. So, in the UK at least, Little's prescription would not result in any significant reduction in public expenditure. (In India, by contrast, it would, although largely because the Indian government has not demonstrated competence in managing redistributive policies, or at least not to Little's satisfaction.) He appears, in the end, to be slightly surprised, and even disappointed by this conclusion - his political slip shows from time to time - but he does not shy away from it.

How then, should one assess this canter across the academic interfaces of politics, philosophy and economics? At the end of the course, do we conclude that the journey was worthwhile? As I have tried to explain, Little's prose, and his whole approach, can be tiresome, but my answer is ultimately "yes". This is, perhaps, partly because I find his conclusions both humane and practical. But I am also temperamentally attracted by the modesty of the language with which his eventual synthesis is proposed. He argues that "some sort of reconciliation (between the dictates of PPE) can perhaps be produced, provided that too much is not claimed". Little's attempt at that reconciliation can therefore be recommended to both the student and the general reader, provided their expectations are not too high.

Sir Howard Davies is chairman, Financial Services Authority.