The Just Savings Principle

This chapter situates John Rawls’ just savings principle in a discussion about how much a nation-state should save. The main question addressed is whether this principle is a viable alternative to the dominant utilitarian theory of optimal growth. Rawls certainly gives savings a different aim (i.e., to create and maintain just institutions) and introduces additional permissibility conditions on reaching this goal (i.e., the necessary burdens should be fairly shared between generations). He thereby gives rise to the field of research now known as intergenerational justice. To assess the relative merits of the just savings principle, however, more details are needed; and this chapter aims to supply some of them. First, the principle of just savings is given a more determinate form whereby it is understood as a two-stage combination of a priority principle at the stage of institutional development and a difference principle at the maintenance stage. Second, some of its practical bearings are explored (i.e., its implications for real-life savings decisions). Among other things, the idea that the principle leads to a steady-state economy is problematized, and its relevance to concrete problems, such as climate change and the design of pension schemes, is assessed.