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What is efficiency?

In: Morality and Power

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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.

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  • ., 2017. "What is efficiency?," Chapters, in: Morality and Power, chapter 8, pages 92-125, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:17573_8
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    Cited by:

    1. Firth, Anton & Zhang, Bo & Yang, Aidong, 2019. "Quantification of global waste heat and its environmental effects," Applied Energy, Elsevier, vol. 235(C), pages 1314-1334.
    2. Löschel, Andreas & Lutz, Benjamin Johannes & Massier, Philipp, 2017. "Credit constraints, energy management practices, and investments in energy saving technologies: German manufacturing in close-up," CAWM Discussion Papers 98, University of Münster, Münster Center for Economic Policy (MEP).

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    Keywords

    Politics and Public Policy;

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