Using the contrast between "formal equality" and "equity," this study employs Amartya Sen's concept of capability to illustrate the relational structure of the distributive principle behind Japan's education system and policies, as well as its problems. In addition, it presents a practical principle and measures for implementing an educational system and policies that emphasize equity. The results demonstrate that Japan's educational system and policies emphasize formal equality and distribute goods on the principle of equity only to some children with difficulties. Additionally, a growing demand for both formal equality and equity has emerged in recent years. The reality, however, is a reciprocal relationship where the majority of students are still expected to achieve a high level of functioning, while "diverse learning spaces" are expanded for those children who cannot keep up. This paper explains that to move beyond this situation and realize an educational system and policies that emphasize equity and guarantee capability will be possible by ensuring that the distribution of goods and services for children with difficulties benefits all children. This can be accomplished by adopting the philosophy of "caring educational administration."