A liberal theory of social welfare: Fairness, utility, and the Pareto principle

Amartya Sen shows how liberal rights can produce outcomes that everyone wou ld prefer to avoid thereby violating the Pareto principle. Similarly, Louis Kaplow and Steven Shavell identify potential conflicts between the Pareto principle and notions of "fairness, " which give weight to considerations o ther than the overall utility level of each individual. Whereas Sen claims that the conflict he identifies shows the unacceptability of the Pareto pri nciple as a universal ville, Kaplow and Shavell claim that the conflict the y identify suggests a critique of all fairness notions (including liberal r ights). I argue in this Article that both claims are based on questionable assumptions. This Article propose a middle course that I argue resolves the supposed conflicts while remaining faithful to both liberal fairness princ iples and the Pareto principle. This Article presents two examples of socia l welfare functions that can incorporate fairness principles and still comp ly with the Pareto principle.