What is the social commentary of the story "The Ones Who Walk Away from Omelas"?

In Le Guin's story "The Ones Who Walk Away from Omelas," social commentary is made as the author raises questions about the extent of the responsibility of a society to its members.

Interestingly, this story has the alternate title "Variations on a Theme by William James." In her allegorical tale, Le Guin takes aim at James's philosophy of Pragmatism, which holds that

....an ideology or proposition is true if it works satisfactorily, that the meaning ["truth"] of a proposition is to be found in the practical consequences of accepting it.[http://www.iep.utm.edu/pragmati/]

In Omelas, which appears to be an idyllic community, its happiness is formed upon what the narrator calls

...a just discrimination of what is necessary, what is neither necessary nor destructive, and what is destructive.

However, this "just discrimination" is later revealed to be composed of the confinement in a narrow subterranean cell of a young being so dehumanized and so deprived of intellectual stimulation that "it" cannot know joy: "It has been afraid too long ever to be free of fear." This scapegoat absorbs all the ills of the society, allowing everyone else an idyllic life.

When some of the inhabitants learn of this miserable creature who bears the ills of their society, they are disturbed by this knowledge. These people walk away from Omelas, while others do nothing, believing this situation is pragmatic. Further, they reason that the child's existence is necessary "for the good of others" and the contentment of all the other residents in the community.

One historical application of this concept of pragmatism and the use of the scapegoat is that used by Nazism, which held in part that many of the ills of Germany's economic depression and its society were due to the presence and social and economic influence of Jews and other "undesirable" people. Thus, in order to practically solve the country's problems, these negative influences had to be removed for the greater good of the German people.

Certainly, in her allegory of Omelas, Le Guin hints at history and raises the moral question of whether any individual, ethnic group, religious group, etc. should be sacrificed for the greater good, or whether a society should not take moral responsibility for all its people. Indeed, it is a question of lasting significance.