Putting Rawls’s “Difference Principle” to Work
linking the pay of CEO’s and least-paid employees
John Rawls’s book A Theory of Justice was published in 1971. One of the central features of the approach to justice he advocated was termed by him the “difference principle.” Basically, the idea of the difference principle is that no one can become better off materially unless the material lot of the least-well off is also improved.
Rawls was an academic philosopher — Harvard University, to be specific. Not surprisingly, there are nuances and technicalities related to this part of his “theory” that we can ignore for present purposes.
Specifically, we are talking about money and other compensation, in the form of benefits. Rawls was saying that increases in the compensation of the best-off could only be justified if they were accompanied by increases in material well-being for the least well-off.
Rawls was talking about justice in the structure and sanctioned functioning of the “basic institutions of society.” Masses of academic articles and books were written about the validity of the principle itself and the viability of applying it to society.
It occurred to me that, while applying that principle to society as a whole could not avoid being a complex, problematic undertaking, applying it to individual businesses would be easy as pie. We would simply pass a law setting a maximum ratio between the total compensation (pay, benefits, and ‘bonuses’) of the highest-compensated person in any business and the lowest-compensated person in it. Personally, I would set it at twenty: the total compensation of the highest-paid employee could not be more than twenty times higher than the lowest-paid employee.