There is no need to enlarge upon the importance of a realistic theory explaining how individuals choose among alternate courses of action when the co… - Kenneth Arrow

In this case of unrestricted income distribution, the dimensionality of the issue space is the same as the number of individuals. Thus, as Tullock argues, political resolution of distributional issues is apt to be possible only if only a few parameters of the income distribution are under consideration, not the whole distribution. Why this restriction of the scope of choice should occur is not easy to explain on simple economic grounds. On the other hand, the restriction does conform to the long-standing view of writers on ethics, of whom Kant is perhaps most conspicuous, that decisions on distribution ought to be made as if by an impartial observer, who considers then only the mean, a measure of inequality, and perhaps one or two further parameters characterizing the income distribution, but not specifically who gets what. If voters acted like Kantian judges, they might still differ, but the chances of coming to an agreement by majority decision would be much greater than if voters consulted egoistic values only. Does this suggest that ethics may have survival value for political systems and therefore descriptive as well as prescriptive significance?

I interpret moral obligation as the carrying out of agreements which may, however, be implicit. Thus, a society in which everyone immediately executed his aggressive impulses would be untenable. Therefore, there is an agreement that I will refrain from aggressive actions, which in themselves give me satisfaction, in return for your not taking aggressive action against me. However, conscious agreements to achieve these ends are much too costly in terms of information and bargaining. Therefore, as societies have evolved they have found it economical to make these agreements at an unconscious, implicit level. Internalized feelings of guilt and right are essentially unconscious equivalents of agreements that represent social decisions.

I expect that ethical codes and informal nonprice organizations will continue to evolve where needed, for example in the control of product quality, to permit transactions which would be impossible because of differential information in markets where all individuals behaved in a purely selfish manner. The evolution of ethical codes is facilitated by the fact that productive units are organizations, not individuals, and individuals are mobile among these organizations.