What is efficiency?

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Chapter 8 in Morality and Power, 2017, pp 92-125 from Edward Elgar Publishing

Abstract: Chapter 8 is a central critical conceptual section of the book, dealing with the major ethical weapon of mainstream economics – the politically influential concept of economic efficiency, derived from the Pareto principle. It is the distributional value judgment inherent in the notion of ‘Pareto improvement’ that enables the seemingly (misleadingly) technical meaning of ‘efficiency’ to overwhelm alternative ethical drivers of public policy. The chapter draws out the limitations of the Pareto principle in both its strong and weak forms before addressing the controversial subjects of the theory of second best and the compensation principle. The latter expresses what I have called the ‘super strong’ Pareto principle providing the normative justification for the economists’ familiar tool – cost benefit analysis. This tool when applied routinely to policy biases outcomes in favour of the well-off and effectively zero values – in both monetary and non-monetary terms – outcomes that are difficult or impossible to ascribe monetary values to.

Keywords: Politics; and; Public; Policy (search for similar items in EconPapers)
Date: 2017
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