Intergenerational Equity in a Model of Endogenous Growth

The main difficulties in trying to derive and apply social welfare criteria, such as utilitarianism or maximin, to the problem of intergenerational justice come from time-irreversibility. Future generations cannot compensate for a sacrifice made by earlier ones, or ask for just sharing of past resources that were wasted. There is a possible altruistic approach to intergenerational equity. However, it requires that the altruism of future generations be secured. In any case, intergenerational equity is not only a matter of gifts from present to future generations. It is also an issue of ‘retro-gifts’ which have to be socially contracted. In economic terms, this is translated into the problem of finding a just rate of savings, taking into account both the well-being of the present generation and the productivity of capital for future generations and considering the impossibility of ex post transfers from future generations to present ones.