Maximin, viability and sustainability

Abstract

The maximin criterion defines the highest utility level that can be sustained in an intergenerational equity perspective. The viability approach makes it possible to characterize all the economic trajectories sustaining a given, not necessarily maximal, utility level. In this paper, we exhibit the strong links between maximin and viability: we show that the value function of the maximin problem can be obtained in the viability framework, and that the maximin path is a particular viable path. This result allows us to extend the recommendations of the maximin approach beyond optimality, to characterize the sustainability of economic trajectories which differ from the maximin path. Attention is especially paid to non-negative net investment at maximin accounting prices, which is shown to be necessary to maintain the productive capacity of the economy, whether the development path is optimal or not. Our results provide a new theoretical ground to account for sustainability in imperfect economies, based on maximin prices.