. History of the concept of economic efficiency . INTRODUCTION James Buchanan won the Nobel Prize by proving that the process by which elected officials ...

A classical moral defense of profit seeking as the social responsibility of business in a competitive market is examined. That defense rests on claims about the directness of relationships between (a) profit seeking activity and standards of living and (b) standards of living and the quality of life. Responses to the classical argument tend to raise doubts about the directness of the first relationship. This essay challenges the directness of the second relationship, argues that the classical argument is invalid, and (...) claims that an alternative description of the social responsibility of business is entailed by the classical premisses. (shrink)

On the face of it, the protracted public controversy over abortion in the United States and elsewhere might seem to rest on intractable normative questions inaccessible to economic analysis. But an influential early essay in the now sizable philosophical literature on the subject suggests otherwise. Judith Jarvis Thomson disarmingly inclined toward the view that “the fetus has already become a human person well before birth”,. presumably with all the rights pertaining thereto. She denied, however, that such rights necessarily include (...) use of the mother's womb until birth. To illustrate her point, she compared the mother's situation to that, for example, of an unwilling Good Samaritan with a uniquely suited blood type, who is forced to share a kidney for 9 months with a famous, ailing violinist who needed its use for that duration to recover. Even if the life of a human being was at stake, the assertion of rights for the violinist or the fetus, she argued, would be too degrading for either the Good Samaritan's or the mother's status as a person, where large unwanted sacrifices would be required. Reduced to its economic essentials, the argument is that the mother has property rights to her own body, including the right to expel a “trespasser”. who would die as a consequence. Thus, the antiabortion position is neatly undercut by granting its major premise while denying its conclusion. (shrink)

In the late eighteenth century, Adam Smith significantly shaped the modern world by claiming that when people individually pursue their own interests, they are together led towards achieving the common good. But can a population of selfish people achieve the economic common good in the absence of moral constraints on their behavior? If not, then what are the moral conditions of market interaction which lead to economically efficient outcomes of trade? Answers to these questions profoundly affect basic concepts and (...) principles of economic theory, legal theory, moral philosophy, political theory, and even judicial decisions at the appellate level. Walter Schultz illustrates the deficiencies of theories which purport to show that markets alone can provide the basis for efficiency. He demonstrates that efficient outcomes of market interaction cannot be achieved without moral normative constraints and then goes on to specify a set of normative conditions which make these positive outcomes possible. (shrink)

Current teaching, writing and thinking in business ethics reflects (more than) a tendency to subsume business into the theoretical, idealistic and impractical objectives of philosophical ethics. Professors Primeaux and Stieber argue against this tendency. They propose the basic business model of economic efficiency as a practical and appropriate paradigm for business ethics. Understood from a behavioral perspective, economic efficiency reflects all of the ethical considerations of the academic study of philosophical ethics, but in a much more (...) concrete and applicable manner. In effect, they are proposing that any study of business ethics defines its starting point and focus of reference in terms of economic efficiency. qu]Is there a need for business ethics? Yes, of course! Can business ethics be taught? Well, yes. But ... But, what? But, how? (shrink)

In a market economy, each industrial enterprise aims to increase the economic efficiency of its activities. The aim of the study is to systematize the factors of increasing the economic efficiency of industrial enterprises. There are many classifications of factors that affect the efficiency of the enterprise. On the example of enterprises of the chemical industry of the Smolensk region, factors were considered and a model was proposed to increase the economic efficiency of (...) their activities. (shrink)

Increasing returns to scale is an area in economics that has recently become the focus of much attention. While most firms operate under constant or decreasing return to scale on their relevant range of production, some firms produce goods or services with a technology which exhibits increasing returns to scale at levels of production which are large relative to the market. These goods are an important component of economic activity in a modern economy and are typically commodities produced either (...) by a public sector or, as in the U.S., by regulated utilities. In this study, the author analyzes increasing returns using general equilibrium theory to take into account the interactions between production in the public and the private sector, and the effects of financing the public sector on the redistribution of income. (shrink)

The paper by Earp, Lewis, and Hart offers a strong criticism of the so-called “war on drugs.” The authors very convincingly argue that the war “has worsened many aspects of public health whi...

Does the level of marketing activity in a country contribute to societal well-being or quality of life? Does economic efficiency also play a positive role in societal well-being? Does economic efficiency also moderate or mediate the marketing activity effect on societal well-being? Marketing activity refers to the pervasiveness of promotion expenditures and number of retail outlets per capita in a country. Economic efficiency refers to the extent to which the economy is unhampered by corruption, (...) burdensome government regulation, and a large informal economy. We used secondary data from the World Bank and other statistical sources to answer these questions. Our study findings suggest that both marketing activity and economic efficiency contribute positively to societal well-being, and that economic efficiency plays more of a mediator than moderator role between marketing activity and societal well-being. The public policy implication of this study is that increases in marketing activity and economic efficiency in countries characterized as low on both dimensions should significantly increase the quality of life in those countries. (shrink)

How do economists persuade their readers that one policy is superior to another? A glance at the literature on welfare economics quickly provides the answer to this question: Economists enter policy debates armed with mathematical models, evaluating options on the basis of their consequences. Economists typically classify a policy change as a welfare improvement with respect to the status quo if the gain realized by the winners exceeds the harm sustained by the losers. The best policy becomes the one that (...) generates the highest net benefit. (shrink)

On Thursday, August 26, 1982 the Manville Corporation and its principle American and Canadian affiliates filed for reorganization under Chapter 11 in the United States District Court for the Southern District of New York. Manville's unexpected bankruptcy petition stunned the financial community, surprised Congress, shocked their creditors, suppliers and customers, totally outraged those who have filled damage suits against them and raised a complex tangle of legal, political and ethical issues that will have far reaching implications for millions of Americans. (...) The drama of the Manville announcement stems from the fact that this is the same Manville Corporation which last year earned $60.3 million on sales exceeding $2 billion with an uncumbered net worth of $1.1 billion. This is the same Manville which ranks 181st on the Fortune 500 list of American corporations. And this is the same Manville which has been traditionally included in the 30 companies used to calculate the prestigious Dow Jones industrial average, the most watched indicator of prices on the New York Stock Exchange. While there are many factors in the equation that resulted in Manville's final decision, Manville Chairman John A. McKinney angerly announced that his company could no longer sustain or survive the blitz of toxic torts that it was now facing.Many of Manville critics have claimed that Manville is acting in an immoral and illegal manner. They are held to be immoral insofar as their critics feel that they are using the bankruptcy boom as a means of avoiding just compensation for those who have truly been injured or killed due to excessive or abusive exposure to asbestos. Manville is accused of acting illegally in that the spirit and purpose of the 1978 Bankruptcy Act is being violated because no company has ever filed for Chapter 11 given the size of their assets, their net worth and their yearly sales figures. Other observers suggest that this is much too simplistic a response to the situation and that whatever the final merits of Manville's petition the factors involved in their decision warrant a careful and detailed analysis. (shrink)

Much philosophical attention has been devoted to whether economic models explain, and more generally to how scientific models represent. Yet there is an issue more practically important to economics than either of these, which I label the efficiency question: regardless of how exactly models represent, or of whether their role is explanatory or something else, is current modeling practice an efficient way to achieve these goals – or should research efforts be redirected? In addition to showing how the (...) efficiency question has been relatively neglected, I give two examples of the kind of analysis it requires. (shrink)

This paper points to some limitations of law and economics as both an explanative and a normative theory. In explaining law as the result of efficiency promoting decisions, law and economics theorists often dismiss the reasons actors in the legal system give for their behavior. Recognizing that sometimes actors may be unaware of why institutions evolve as they do, I argue that the case for dismissing reasons for action is weaker when those reasons make reference to rules of practices (...) that constitute the meaning of actions within those practices, or when they have otherwise been given well-considered defenses. In criticizing law and economics as a normative theory, I acknowledge that economic considerations are often important in deciding how to act in the personal sphere and how government should allocate its scarce resources. I argue that while the use of institutions to promote our ideals forces us to take their costs into account, it is a mistake to infer from this that the question of determining social policy is a purely economic problem, and that we should acknowledge the non-utilitarian moral ideals our law and practices promote. This is the basis of both an internal criticism--law and economics theorists have not sufficiently evaluated and weighed the value of fairness and other ideals in their utility calculations--and an external criticism-- these ideals are important in ways that can not be measured in utiles. (shrink)

The standard allocative efficiency criteria used by economists (Pareto efficiency and Kaldor-Hicks efficiency) are fundamentally unable to rank a slave-labor system against a free-labor system. Given either set of initial property rights assignments the market can reach (or fail to reach) allocative efficiency (that is, allocate resources to their highest-valued uses), but welfare economics provides no meta-framework for ranking initial assignments. This finding underscores the limits to the usefulness of efficiency criteria: they cannot settle all (...) questions, and unfortunately are least decisive just where the stakes are greatest (namely, where wealth effects of alternative assignments are greatest). Explicitly ethical criteria are needed to make the ranking. Key Words: Pareto efficiency • Kaldor-Hicks efficiency • property rights • welfare economics. (shrink)

Consider a firm as an organization that needs to efficiently coordinate several specialized departments in an uncertain environment. Decision making involves collective planning sessions and decentralized operational processes. In this setting this paper explores the role of economic modeling through an experimental game. Results support the idea that economic modeling favors higher performance. Economic modeling facilitates the emergence of common knowledge and the decomposition of a group decision problem into individual decision problems that are meaningfully interrelated.

In this article, we discuss recent evidence from experimental economics on the impact of social preferences on workplace behavior. We focus on situations in which a single employer interacts with multiple employees. Traditionally, equity and efficiency have been seen as opposing aims in such work environments: individual pay-for-performance wage schemes maximize of efficiency but might lead to inequitable outcomes. We present findings from laboratory experiments that show under which circumstances partially incomplete contracts can create equitable work environments while (...) at the same time reaching surprisingly efficient outcomes. (shrink)

The literature of comparative economics as well as economic history is replete with references to productivity differences as reflecting relative efficiency in production. In socialist economics, for example, the longevity of the relative-productivity/relative-efficiency theme is apparent from Abram Bergson's early survey where, commenting on a productivity debate that had already been going on for over twenty years, he identified “the only issue outstanding” as the question “which is more efficient, socialism or capitalism?” The issue has continued to (...) be addressed vigorously since then, and it is still outstanding. Again, in European economic history, John Nye recently pointed out that relative efficiency as reflected in relative productivity has been part and parcel of the postwar debate on French industrialization: the view that less productive and, therefore, “inefficient” family firms led to French “backwardness” in production. (shrink)

This is a systematic evaluation of the main arguments for and against the market as an instrument of social organization, balancing efficiency and justice. It links the distinctive approaches of philosophy and economics to this evaluation.

This volume contains Kalecki's writings on the theory of growth of a socialist economy and the theory of economic efficiency of investment. These are supplemented by essays on some economic and social problems of People's Poland. Though quite theoretical in nature, both the Introduction to the Theory of Growth in a Socialist Economy and Kalecki's many studies in the theory of economic efficiency of investment projects are deeply rooted in his practical experience as an (...) class='Hi'>economic planner. It is only in this light that the significance of his contributions to the theory of economic efficiency of investments can be assessed, and his ideas on socialist reproduction can be seen as a whole. Its central point is economic planning, which for Kalecki was the fundamental feature of a socialist economy. (shrink)

In this paper, we criticize the current focus of the bio-based economy (BBE) on efficiency and control and demonstrate the contradictions that this causes. We elucidate these tensions by comparing the BBE to alternative conceptions of economy that emphasise the relevance of both the human condition and unfathomable nature in the macro ecological transition project. From Emmanuel Levinas’s philosophy, we take and extrapolate two major concepts—il y a and enjoyment—that help to re-evaluate the status of both nature and the (...) human subject involved in environmental instability. From this analysis, we evaluate current economic practice in close relation to the deteriorating environment to contribute to a conception of an economy that is truly based on principles of the biosphere. We conclude that humankind and nature are notions that must be always considered in this encompassing and topical effort and explain how they have been fundamentally overlooked in current thought on the bio-based and circular economy. (shrink)

Efficient markets are alienating if they inhibit us from recognizably caring about one another in our productive activities. I argue that efficient market behaviour is both exclusionary and fetishistic. As exclusionary, the efficient marketeer cannot manifest care alongside their market behaviour. As fetishistic, the efficient marketeer cannot manifest care in their market behaviour. The conjunction entails that efficient market behavior inhibits care. It doesn’t follow that efficient market behavior is vicious: individuals might justifiably commit to efficiency because doing so (...) serves the common good. But efficient market systems nevertheless have significant opportunity costs. The discussion yields a range of desiderata for non-alienated economic organization. (shrink)

Hayek and the Efficient Market Hypothesis are often seen as proposing a similar theory of prices. Hayek is seen as proposing to understand prices as information conveyer, incorporating inform...

In this work the authors present a general theory of bureaucracy and use it to explain behaviour in large organizations and to explain what determines efficiency in both governments and business corporations. The theory uses the methods of standard neoclassical economic theory. It relies on two central principles: that members of an organization trade with one another and that they compete with one another. Authority, which is the basis for conventional theories of bureaucracy, is given a role, despite (...) reliance on the idea of trade between bureaucracies. It is argued, however, that bureaucracies cannot operate efficiently on the basis of authority alone. Exchange between bureaucrats is hampered because promises are not enforceable. So trust and loyalty between members of bureaucratic networks play an important part. The authors find that vertical networks promote efficiency while horizontal ones impede it. (shrink)

Abstract:Standard lessons from economics tell us that an externality creates inefficiency, and that this inefficiency can be removed by internalizing the externality. This papers considers how successfully these lessons can be extended to intergenerational externalities such as emissions of greenhouse gas. For intergenerational externalities, the standard lessons involve comparisons between states whose populations of people differ, either in their identities or their numbers. Common notions of efficiency break down in these comparisons. This paper supplies a new notion of (...) class='Hi'>efficiency that allows the lessons to survive, but at the cost of reducing their practical significance. (shrink)

In a recent essay in this journal, Tom O’Shea defends socialist republicanism, marrying the value of freedom as nondomination to public ownership of the means of production. In this reply, I argue that the efficiency costs that often attach to public ownership may undercut the ability of the socialist republic to combat domination by public agents. I provide two reasons in support of this claim. First, the economic gains provided by efficiency can insulate individuals from the discretionary (...) power of other agents. Put briefly, the more wealth you have, the less the discretionary power threatens your basic interests. Second, the efficiency costs of public ownership also make it more difficult to hold accountable the managers of economic organizations. This shortcoming of O’Shea’s argument reveals a point hitherto neglected in the republican literature—caring about nondomination implies caring about efficiency. (shrink)

To oppose capitalism often means to oppose the economic principles that it promotes, nominally at least. Radical environmentalists and a number of Marxists share a special disdain for one of those key principles: economic efficiency. A closer examination of their misgivings, however, suggests that their estimation of the concept is constrained by the role they believe it plays in capitalist production — a nexus between efficiency's descriptive understanding and its prescriptive value that needs to be severed (...) if the latter is to be fairly appraised. Once we jettison the notion that efficiency is a universal imperative of production that capitalism perfects, as well as the notion that it is part and parcel of capitalism's drive toward crisis and self-destruction, we are left with a disarmingly mundane proposition: post-capitalist economies ought to produce efficiently, other normative considerations permitting. (shrink)

Since sending explicit messages can be costly, people often utilize “what is not said,” i.e., informative silence, to economize communication. This paper studies the efficient communication rule, which is fully informative while minimizing the use of explicit messages, in cooperative environments. It is shown that when the notion of context is defined as the finest mutually self-evident event that contains the current state, the efficient use of informative silence exhibits the defining property of indexicals in natural languages. While the efficient (...) use of silence could be complex, it is also found that the efficient use of silence can be as “simple” as the use of indexicals in natural languages if and only if the information structure satisfies some centrality and dominance properties. (shrink)

An extended analysis compared to observations shows that modern “globalised” world civilisation has passed through the invisible “complexity threshold”, after which usual “spontaneous”, empirically driven kind of development (“invisible hand” etc.) cannot continue any more without major destructive tendencies. A much deeper, non-simplified understanding of real interaction complexity is necessary in order to cope with such globalised world development problems. Here we introduce the universal definition, fundamental origin, and dynamic equations for a major related quantity of (systemic) risk characterising real (...) complex system development tendencies at any level of dynamics. Practically important conclusions are derived, opening further detailed applications in economy, finance and development practice. (shrink)

Fifty years after the famous essay “The Problem of Social Cost” (1960) by the Nobel laureate Ronald Coase, Law and Economics seems to have become the lingua franca of American jurisprudence, and although its influence on European jurisprudence is only moderate by comparison, it has also gained popularity in Europe. A highly influential publication of a different nature was the Brundtland Report (1987), which extended the concept of sustainability from forestry to the whole of the economy and society. According to (...) this report, development is sustainable when it “meets the needs of the present without compromising the ability of future generations to meet their own needs”. A key requirement of sustainable development is justice to future generations. It is still a matter of fact that the law as well as the theories of justice are generally restricted to the resolution of conflicts between contemporaries and between people living in the same country. This in turn raises a number of questions: what is the philosophical justification for intergenerational justice? What bearing does sustainability have on the efficiency principle? How do we put a policy of sustainability into practice, and what is the role of the law in doing so? The present volume is devoted to these questions. In Part One, “Law and Economics”, the role of economic analysis and efficiency in law is examined more closely. Part Two, “Law and Sustainability”, engages with the themes of sustainable development and justice to future generations. Finally, Part Three, “Law, Economics and Sustainability”, addresses the interrelationships between the different aspects. (shrink)

Efficiency requires legislative political institutions. There are many ways efficiency can be promoted, and so an ongoing legislative institution is necessary to resolve this choice in a politically sustainable and economically flexible way. This poses serious problems for classical liberal proposals to constitutionally protect markets from government intervention, as seen in the work of Ilya Somin, Guido Pincione & Fernando Tesón and others. The argument for the political nature of efficiency is set out in terms of both (...) Pareto optimality and aggregate welfare maximisation, and similar arguments can be generalised to other social values. (shrink)

In this paper, we explore how the application of technological tools has reshaped food production systems in ways that foster large-scale outbreaks of foodborne illness. Outbreaks of foodborne illness have received increasing attention in recent years, resulting in a growing awareness of the negative impacts associated with industrial food production. These trends indicate a need to examine systemic causes of outbreaks and how they are being addressed. In this paper, we analyze outbreaks linked to ground beef and salad greens. These (...) case studies are informed by personal interviews, site visits, and an extensive review of government documents and peer-reviewed literature. To explore these cases, we draw from actor-network theory and political economy to analyze the relationships between technological tools, the design of industrial production systems, and the emergence and spread of pathogenic bacteria. We also examine if current responses to outbreaks represent reflexive change. Lastly, we use the myth of Prometheus to discuss ethical issues regarding the use of technology in food production. Our findings indicate that current tools and systems were designed with a narrow focus on economic efficiency, while overlooking relationships with pathogenic bacteria and negative social impacts. In addition, we find that current responses to outbreaks do not represent reflexive change and a continued reliance on technological fixes to systemic problems may result in greater problems in the future. We argue that much can be learned from the myth of Prometheus. In particular, justice and reverence need to play a more significant role in guiding production decisions. (shrink)

This article intends to analyze the performance and the efficiency of companies and to identify the key factors that may explain it. It was selected a sample with 15 enterprises: 7 Portuguese and 8 Ukrainian ones, belonging to several industries. Financial and non-financial data was collected for 6 years, during the period of 2009 to 2014. Research questions that guided this work were: Are the enterprises efficient/profitable? What factors influence enterprises’ efficiency/performance? Is there any difference between Ukrainian and (...) Portuguese enterprises’ efficiency/performance, which factors have more influence? Which industrial sector is represented by more efficient/profitable enterprises? The main results showed that in average enterprises were efficient with low level of profitability. According to gained results several indicators were highlighted so that companies would pay more attention to them. (shrink)

Practical and conceptual, the Responsible Research and Innovation set of books contributes to the clarification of this new requirement for all sciences and technological innovation. It covers the multiple and international responsibilities, by using various philosophical resources, mostly discussing the following topics: ethics, contingency, normative economy, freedom, corporate social responsibility (CSR), participative technological evaluation, sustainable development, geoengineering, the precautionary principle, standards, interdisciplinarity, and climate management. The ethics of efficiency must be considered with regard to the logic of action or (...) to economic, political, legal or scientific systems. This book presents a question on the central theme of responsible research and innovation (RRI), which has an ethical influence on effective logics. The issue is to question the opportunity and modularities of an ethical effective influence on the logics of efficiency of research and innovation. From the distinction of efficiency and effectiveness, lies the problem of efficacy, the ethical accord between the two. Thus appears the possibility of taking effective responsibility with respect to systematic injustices potentially linked to this efficiency. This book proposes categories to understand the ethical implications of research and innovation processes, under the aspect of their efficacy. (shrink)

Efficiency and equity are central concepts for the normative assessment of health policy. Drawing on the work of academic philosophers and philosophically sophisticated economists, this article identifies important philosophical questions implicated by the notions of efficiency and equity and then summarizes influential answers to them. Promising avenues for further philosophical research are also highlighted, especially in the context of health equity and its elusive ethical foundations.

Most social institutions are supposed to be relatively benign, so that if they did not exist, rational human beings would find it worthwhile to create them. It is comforting to believe that we have the social institutions we wish to have, and we wish to have them because they enhance the common good. The article claims that this belief is in some important cases either a self-delusion or a pious lie. The classic example is the state. We are taught that (...) since it is necessary for efficient social coexistence, it should be regarded as if it were the result of a social contract we have voluntarily entered into. The law-and-economics school generalizes this type of approach in explaining customs and law. Customs and laws evolve in response to needs. They are what they are because they efficiently serve some purpose. Certain primitive customs are rationalized in this way. The article claims that some of these rationalizations are grossly implausible. One primitive custom, reciprocal gift-giving and hospitality, is alleged to be a mutual insurance scheme, an allegation there are strong reasons to doubt. This custom, then, is said to be the ancestor of the modern welfare state. Both the ancient custom and its modern equivalent are efficient because mutual insurance that redistributes risk is itself efficient. The article demonstrates that mutual insurance and the welfare state are different in essential respects, and the legitimising analogy is false. (shrink)

The paper deals with the mutual interest of both economic and social theory in exploring a broader concept of the rational and in finding validity claims for rational discourse. Efficiency and effectiveness are discussed as possible validity criteria in evaluating norms in practical discussion. In addition to the problem of defining validity criteria for argumentation on norms and social choices, a major difficulty arises from the lack of a legitimate reflective centre in society which could integrate behaviour with (...) norms and metapreferences. As ways of motivating cooperative, collective action, both norm commitment and self‐interest should be appealed to. (shrink)

The sudden outbreak of coronavirus disease 2019 has caused a huge impact on the Chinese residents' health and economic level. In the pandemic background, the country and its institutions have introduced pandemic-related insurance to stabilize the national situation. At this stage, insurance has played an increasingly important role in social life. With the popularization of insurance, the idea of buying insurance to avoid risk has gradually become popular among people. Among them, the New Rural Cooperative Medical System has been (...) farmers' common choice. The NRCMS, a mutual aid system created by farmers spontaneously in the country, plays a great role in guaranteeing farmers access to basic health services, alleviating poverty caused by disease and returning to poverty due to disease, and promoting poverty alleviation and rural revitalization. Given this backdrop, we study the efficiency of the NRCMS that can effectively promote poverty alleviation and rural revitalization and ensure the people's happy life. Implementing the Data Envelopment Analysis, we find that technological progress is one of the main factors influencing the efficiency of the NRCMS. Therefore, it is important to improve the technology for providing the efficiency of the NRCMS and promoting the happiness of the society. (shrink)