Further Remarks on the Rawlsian Principle of Just Saving

Abstract

The implications of Rawls' 'maxi-min' welfare criterion for intergenerational justice are explored for a simple model in which each generation cares about its own and the next generation's level of consumption. In contrast with the conclusion drawn by Arrow from his narrower formulation of the problem, it is shown that the Rawlsian criterion need not preclude long run capital accumulation. The general forms of the optimal consumption, capital and utility streams are also derived undcr alternative assumptions about the psychic trade-off between own consumption and consumption of one's immediate descendents.