justify the welfare state by appeal to Rawls’s concept of social justice, we have to identify Rawls’s “society” with the nation state. The problem is that the nation state is not the kind of cooperative scheme that is modelled by Rawls’s concept of society – and is becoming less and less so as a result of international economic integration. International economic integration is not a new phenomenon, but rather a consistent long-run trend in economic affairs. We are seeing: a progressive increase in international trade as a proportion of the national income of individual countries; increasing legal and illegal cross-border migration; increasing cross-border ownership of assets; and a progressive equalisation of wages across the world for given types of work, often associated with increasing within-country inequality. The implication of all this is that the nation state is becoming less significant as a unit of economic cooperation, and its membership is becoming more fluid. To put this another way, it is becoming increasingly unrealistic to model the nation state as a union of social unions. Rather, it is one social union among others, all with entry and exit options and overlapping memberships. As a dramatisation of this, consider a fictional character in the globalised economy. Joe has a well-paid job in an engineering office in London. This is a branch of a firm based in Germany. His work is to design oil installations for construction in Azerbaijan. He sees his job in London as a step in his career, and thinks that his next job will probably be outside Britain. At home, Joe buys electronic goods manufactured in China, via an American internet platform. He communicates with his Spanish-owned bank via an Indian call centre. He spends his holidays in Thailand, where he hangs out with Australians. What can he make of Rawls’s concept of social justice? If Joe is sufficiently reflective, he will be able to see that his well-being depends on a scheme of cooperation without which no one could have a satisfactory life. But that scheme spans the globe; it has no particularly obvious association with Britain as a nation state. The British government supplies public goods from which he benefits, and for which he pays taxes. But that is just one of the many cooperative schemes in which he participates. He can see that there are other people in Britain who are less advantaged than he is – for example, Jill, who works as a waiter in a McDonald’s in Gateshead. But how does Jill have a special claim in social justice on Joe, by virtue of their both being British? Why is Jill’s claim stronger than that of the waiter in the Thai hotel (with whom Joe does cooperate)? It seems more natural to treat all cooperative associations as having the same normative status. If we took this approach, we could define justice for each association as fairness in the distribution of the surplus that it creates. But that idea would be fatal for the concept of social justice, as Kenneth Arrow explains in a discussion of Robert Nozick’s theory of (non-social) justice. Arrow considers the criterion (which he sees as in the spirit of Nozick’s theory) that “any group of individuals within the total should be allowed to keep what this group could collectively achieve”. If we think of justice as the fair distribution of surpluses attributable to cooperation, this criterion seems compelling. But it is equivalent to the concept of the core in cooperative game theory. In a large economy with constant returns to scale, there is a unique core solution – competitive equilibrium. Because of the vast number of entry and exit options in a competitive economy, each cooperative association considered separately creates negligible surplus. So there is nothing to distribute. In Arrow’s words: “There is no problem of justice left!” (Collected Papers of Kenneth J. Arrow, volume 1, Social Choice and Justice, Blackwell, 1984, p. 188). As I see it, the challenge for liberal supporters of the welfare state is to find a way of justifying welfare policies as cooperative ventures, while treating the nation state as just one voluntary cooperative association among
15