Efficiency and Values

Efficiency is a concept that has meaning only in the context of an agreed set of objectives. Such objectives can include inter-personnel distribution, typically reflecting one or other interpretation of equity. The dominant interpretation of efficiency has typically included only the objective of measured economic production/consumption. We should at most call this interpretation economic efficiency, and not honor it with the label of efficiency in general. But the efficiency label has enormous legitimizing power and functions as a trump card in the modern vocabulary.

No one can declare themselves against it. If a policy option is deemed inefficient that usually sinks it. So contenders try to capture the label, to serve their particular set of objectives. This is what business interests and mainstream economists have successfully done for a long time. We need to ask: Efficient by which values?

Mainstream economists have focused on growth of aggregate production and national income. Business and other sectional interests may focus on sectional gains but advocate these behind the language of efficiency.

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