A Simple Model of the Difference Principle

Abstract

In this paper, we present a socioeconomic model illustrating the difference principle first proposed by John Rawls (1971). We demonstrate that this principle can be fulfilled by incorporating reciprocity into the basic structure of society. We show its appropriate embodiment in external increasing returns in line with traditional neoclassical economic theory, which is the exact mechanism described by Rawls (1971, 2001). Our model yields an intuition and interpretation of the principle by showing its implementation in the market equilibrium. Moreover, the model will show that the utilitarian principle, i . e ., the maximization of the total (average) utility leads to advantaged people monopolizing all wealth as a just state of society. We also discuss the sociopolitical conditions necessary for the difference principle model to be stable and sustained.