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So I've noticed the reliance on the term "efficiency" on some cases of economic practice. But I've also recognized problems, e.g. problems of abstraction or problems of pseudo-objectivity, related to making claims about "economic efficiency".

I wonder whether "efficiency" can ever be an objective quality? Or whether it's in practice a very complicated concept.

E.g. while slaves could be efficient in terms of output, using slaves would negate many other aspects of humans and thus is not necessarily a "complete" view on "efficiency". Also, while "exploiting" laborers for gains might offer efficiency, it again might neglect that laborers have more aspects than "mere cold production". And that those other aspects (e.g. life quality) might have correlation between how they perform in work.

Also, since communities or societies cannot necessarily be shown to have "objective goals", then concepts such as "economic growth" may seem absurd. Because objectively, there's nothing to fundamentally motivate it.

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Efficiency can be a very "objective" concept because it is conditional on whatever "non-economic" environment production will take place. Consider the "production possibilities frontier" of a society, that says "given the resources we have, we can produce $100$ of X only, or $70$ of Y only, or some combination of the two, in a year". As long as we are on the production possibility frontier, we are efficient. Right. How do we measure how much we can produce? It looks like a totally objective "engineering" exercise (however complicated). "We have available $1000$ labor hours and with them we can produce $100$ units of $X$, it is simple as that".

Hmmm... and why do we have $1000$ labor hours available, and not, say, $2000$? How did we determine that? We determined it by considering perhaps some "average" number of hours worked per person times the working population of the society. Ok, and how did this "average" number of labor hours per working person cοme about? In practice it is strongly affected by the institutional environment in the specific economy. But his institutional environment is taken as given in determining whether we are efficient or not.

So this concept of efficiency is conditional on technology and socio-economic institutions (market structure is included here).

But can the socio-economic institutions be assessed as to whether they cause inefficiency themselves? They certainly can, but we just moved one step higher than the previous concept of efficiency. And here things get cloudy, because the socio-economic institutions are never free of ideology, values and the like.

So to say "the structure causes inefficiency" has the possible rebound "given your values which is not my values". In theory we could even quantitatively assess that -but we would have to perform real-world experiments, something like "let's introduce slavery, and see whether in a long term perspective we produce more or not". Ok. Are you willing to play slave in this scenario (that will last many-many years), so that the world will benefit from the objective knowledge we will gain?

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  • $\begingroup$ Good, but are you neglecting that people can voluntary choose to disobey measures of efficiency? $\endgroup$ – mavavilj Oct 29 '18 at 18:16
  • $\begingroup$ @mavavilj I am not sure I understand what you mean by "disobeying measures of efficiency". $\endgroup$ – Alecos Papadopoulos Oct 29 '18 at 18:17
  • $\begingroup$ Behave inefficiently, even if someone presented a model of efficiency. That is, disobey the principles of efficiency. $\endgroup$ – mavavilj Oct 29 '18 at 18:41
  • $\begingroup$ @mavavilj ...in which case we have inefficiency as measured by a specific criterion. So? $\endgroup$ – Alecos Papadopoulos Oct 29 '18 at 18:42
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    $\begingroup$ @mavavilj Your post and questions were about the measure of efficiency. You suddenly introduce the "goal" of efficiency, which is an altogether different matter. $\endgroup$ – Alecos Papadopoulos Oct 29 '18 at 19:08
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Efficiency is mostly a very objective measure. That is why it is preferred by economists, who like to avoid using value laden concepts in order to be as objective as possible. This affinity for objective measures was strongly put forward by Max Weber.

The concept of efficiency that economists use is most often Pareto Efficiency. If a proposal is more efficient it means that it is possible to make someone better off without making anyone else worse off. While this also imposes a (light) value system, economists argue that it is a concept most people would agree with regardless of values.

Your question seems to confuse efficiency with desirability. Just because something is efficient does not necessarily mean it is the best policy, because "best" is evaluated along many dimensions. In that sense, you are right that "best" is not always objective. Nevertheless, efficiency itself is objective.

The example of imposing slavery you give would violate the concept of pareto efficiency, because it makes the slaves worse off. Of course, many issues (such as slavery or human rights) should not be evaluated on the basis of efficiency alone. That does not mean, however, that the concept of efficiency cannot be objective.

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  • $\begingroup$ "The example of imposing slavery you give would violate the concept of pareto efficiency, because it makes the slaves worse off. " This just means slavery is not a Pareto improvement, it does not mean it isn't Pareto efficient. Please do not think I am advocating any form of slavery, I am not. I am just stickler. $\endgroup$ – Giskard Oct 29 '18 at 14:26
  • $\begingroup$ Yes, that is why I emphasized 'imposing' slavery and the fact that such decisions cannot be made on the basis of efficiency alone. $\endgroup$ – BB King Oct 29 '18 at 16:41
  • $\begingroup$ Forgive me, but I don't get it. How does imposing slavery violate Pareto efficiency? $\endgroup$ – Giskard Oct 29 '18 at 17:04
  • $\begingroup$ Having slavery can be pareto efficient. Being in a situation where slavery does not exist can also be pareto efficient. Putting people into slavery (imposing slavery) is not a pareto improvement and cannot be justified on efficiency grounds. OP seems to suggest that having slaves is (more) efficient that no slavery according to economics. That is simply not true, which is what I am trying to point out. $\endgroup$ – BB King Oct 29 '18 at 18:32
  • $\begingroup$ Hmm, I see. To me, the word "imposing" sort of implied that slavery would be a change from some status quo therefore I thought in Pareto improvent, not efficiency. $\endgroup$ – Giskard Oct 29 '18 at 22:08
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This question is asking if economic and/or political economic categories are value laden, or used in value laden ways.

The social uses of economics and political economy are always value laden. Practitioners have latent or blatant values which they inject unknowingly or knowingly into their work. Institutions and clients demand outcomes or specify problems with only one answer. That’s people in society. We are moral and political.

Like most social disciplines the disciplines of economics and political economics prefer less value judgement.

Economics deals with this problem by putting a lot of weight on their field specifying assumption of ranked order type effective preferences (I don’t have enough money to prefer diamonds, I prefer stackexchange). This assumption is value laden of course, but it reduces the question of “worth what for who’s use” to “what is the price of how many dead babies?”

Political economics specifying question is “what is value?” Multiple theories of value are available. They are evaluated against each other by consistency, completeness and explanatory worth. For example, utilitarianism is out of fashion because scholars realised that we can never equate my enjoyment and your enjoyment, “use” is an interior experience. Marxism claims a strong explanatory worth in terms of predicting future behaviour and for the liberation of the majority of the population from compulsion. It has known completeness problems (full communism hasn’t happened, yet) and with consistency (declining rate of profit debate.)

  • Economics and political economy are value laden
  • Each uses techniques to minimise that
  • some economic calculations are largely value free within their framework, this leads to a conflict between for example potential economic efficiency and social or cultural preferences that are not expressed economically. Such a tension is not resolvable within Economics. Such tensions may be resolveable within political economy, but debates about values worth uses and power ensue.
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