Dworkin's view on luck and justice is what can be called "luck-egalitarianism". Like Nagel, Dworkin thinks that justice requires society to compensate for only certain kinds of luck. Dworkin thinks that all members of a society should receive equal concern for their lives. Because we must avoid tyranny, we must have equal concern for all members of a society. Dworkin says that equal concern for all members means that everyone has the same amount of resources (money, talents, skills, goods, property, etc.). If there is inequality of resources, society unjustly discriminates between individuals. The basic distribution of resources must be equal.
While justice requires equality of resources, it does not require equality of welfare. Whether a person is happy or whether a person has their personal tastes satisfied is irrelevant to justice. What determines if a person has enough resources is how much other people value that person's resources. Imagine two people: Bill and Ted. Bill and Ted have the same amount of resources. Bill is very happy about his resources. Ted is a melancholy kind of dude and he complains all the time that he does not have enough resources. Even though Bill is better off in terms of happiness and general welfare, this inequality is not unjust. Because Bill and Ted have equal resources, their situation is just.
So long as people start off with equal resources, inequalities are just insofar as the inequalities reflect choices made. For example, Betty and Veronica start out with the same resources. Betty goes to college, buys a home and has a happy life. Veronica chose to spend all her money on blow and hookers and is now broke and a bum. Because the inequality between Betty and Veronica is the result of choices made, it is just. If the inequality were the result of natural talent or endowment or being born rich, then the inequality would be unjust. In order to be just, inequalities must reflect choices.
Contrast this with Nozick's libertarianism. Nozick's view is sensitive to both luck and choice. It is sensitive to choice because the outcomes of voluntary transactions are legitimate. Some outcomes reflect choices. Hie view is also sensitive to luck (natural endowments) because a person who is born rich or smart or beautiful can justly be better off in society. Some outcomes reflect luck. Nagel agrees with Nozick that natural talents and skills are just reasons for inequalities. Nagel disagrees with Nozick about social endowments, however. Nagel thinks that social endowments like class are not just reasons for inequalities.
So like Nagel, Dworkin thinks that only certain kinds of luck are relevant to social justice. First there is option luck, which is just luck about the consequences of a chosen risk or deliberate gamble. For example, if you choose to buy a lottery ticket, it is a matter of option luck if you win or lose. Option luck is irrelevant to justice. Brute luck is luck about consequences when there is not a chosen risk or gamble. For example, it is a matter of brute luck if you are born with a rare disease or if you are born rich or poor. Brute luck is relevant to justice.
In some cases, option luck and brute luck are connected by insurance. For example, it is a matter of brute luck whether you get severely ill. But if you could have bought insurance earlier and did not, then it is a matter of option luck that you cannot afford your medical bills. Insurance converts a situation from being merely a matter of brute luck to being a situation of option luck.
Justice requires the elimination of brute bad luck on the relative distribution of resources.
Does Dworkin's view require socialism? Must the government control the distribution of goods? Dworkin says no. He thinks that markets do not need to be controlled by the government. Dworkin says that justice is achieved in a market economy. Dworkin thinks that an economic market (a hypothetical auction) helps us to formulate the ideal of equality of resources. Economic markets help to create goods. To clarify this, Dworkin has us imagine a thought experiment.
Imagine that there has been a shipwreck. Survivors have made it to land. The question is how the survivors should justly distribute the resources. Dworkin thinks that a just distribution needs to pass an "envy test". Dworkin says that in order to avoid envy, everyone should prefer their own bundle of resources to the resources of others. A single person could not decide this because some people might end up with a bunch of resources that they hate. The solution is an auction. Everyone has the same amount of clamshells to use as currency. Bundles of resources are sold to the highest bidder, just like at an auction. This is continued until all of the "lots" or bundles of resources are sold. The auction continues until everyone is satisfied. Dworkin thinks that this method will help to reduce envy, since everyone had an opportunity to buy the same bundles of resources. This auction is an example of a market economy that is very compatible with equality of resources.
Dworkin thinks that the above thought experiment should be used as a standard that to judge actual economic markets. Actual markets should approximate the results of this hypothetical auction.
Somone might object to Dworkin by pointing out that luck still determines success. If a person takes a big risk on choosing resources and then succeeds, why is the resulting inequality fair? Dworkin would say that people who avoid risks gain something else instead: a life with enhanced security. Also, it is fair when someone takes a gamble and loses because that person still has the opportunity to gain more resources. The risk-taker may lack resources but he or she does have a life or risk-taking that allows them the possibility of future good luck. Because it is a matter of option luck (and not a matter of brute luck) that a person has failed, the unlucky consequences are just. Scanlon will respond by noting that individual responsibility does not preclude social responsibility. Just because a person chose to take a gamble does not mean that society therefore lacks all responsibility to take care of that person.
Dworkin thinks that people who have brute bad lack should be compensated. Specifically, we must compensate people born with handicaps, for example, as much as they would receive if a person with a normal chance of success would have insured themselves against that handicap. For example, if a person with average resources would insure himself against being blind for $1 million, then the blind woman should be compensated $1 million.
Objection on the grounds that the distinction between brute and option luck is indeterminate. Someone might object to Dworkin because it is too hard to tell the difference between option luck and brute luck. For example, imagine a farmer who chooses to plant a certain crop based on the weather. Imagine that the weather is different than expected and so the farmer has much less success than if the farmer had chosen a different crop. Is it just if this farmer starves? Is it fair that this person "chose his fate"? Someone might think that it is too hard to tell whether this is brute luck or option luck.
Another might object by asking when brute luck can be transformed into option luck by insurance. Under what circumstances must a person be expected to buy insurance? Must a person insure against freak accidents like being hit by a meteorite? What about insurance against a lifetime of medical illness?
Someone can also object on the grounds that some bad luck is neutral from the point of view of social justice. Ala Nagel, someone might say that there are limits to social control. For example, if a person has a radically shortened lifespan, society might not have an obligation to provide them with additional resources? Or perhaps the social costs of compensating someone will be too high. For example, it may cost a lot of money to prevent a genetic disease that shortens lifespans.