The problem of efficiency is related and has given rise to a series of debates of greater importance in the development of both economic and political sciences.
Central to this debate is the conception of efficiency and its causes. For example, and at first glance, it seems obvious that modern societies "produce more"—they satisfy more and better needs—than previous societies. But what is the objective measure of such intuitive perception? On what basis can we base such an observation? What and how do we measure to determine that "progress"? Depending on previous conceptions the answer will differ.
From this general point of view, efficiency is one of the competitive goals that characterize general proposals about economic systems.[8].
Different notions or criteria for evaluating efficiency can be complementary or contradictory.[9] Consequently, there is a debate both about the effects of specific policies and about which objectives should be pursued, the relative weights that should be assigned to these different objectives, sacrifices to be accepted, how to measure them, etc.:
Thus, for example, in welfare economics, efficiency is often conceived as the distribution of the economic product - or distribution of the benefits of economic activities - among the members of society.[10][11] On the other hand, Frederick Winslow Taylor conceives efficiency simply as the minimization (minimization) of the labor time necessary to produce a given product.[12].
Another great debate occurs in relation to the contrast or complementation of efficiency with criteria, seen as essential for the more general existence of social well-being, such as freedom and justice. Some economic policies can be seen as increasing efficiency, but at the cost of freedom or justice, while others argue that they increase both efficiency and freedom and justice.[13].
From this point of view, the debate occurs mainly between those who perceive the system's failures as due to a lack of coordination, both in the use and the objective of that use of the factors of production, and those who perceive the government as primarily responsible for these failures, to be corrected if the government limits its action.
Proponents of the notion of limited government derive primarily from the philosophical tradition of John Locke. They propose, starting in the 19th century, that this economic model protects the right to private or "individual" property (considered in this perspective as fundamental[14]); so it is inherently not only more efficient but fair.[15] However for some - for example Friedrich August von Hayek - the free market is the only one that can be efficient, whether or not it is “fair”.[16] For others, such a system is simply more ethical, regardless of whether or not it is more efficient.[17].
In this perspective, efficiency derives from the individual effort to maximize benefits and reduce costs. As a consequence, certain types of behaviors will become generalized in society (for example, people will choose those goods or behaviors that provide the maximum benefit with the minimum effort). For some subjectivist currents within this general approach, these benefits and costs are not comparable across a society: the benefit or cost for each individual is a personal matter - for example, in each market exchange each participant offers something that he values less than what he is trying to obtain - which means that the only possible comparison is of prices, but that comparison is neither absolute nor generalizable in order to obtain "social results" that are not arbitrary or contradictory.[18] It follows that there can be no solutions. “more efficient” "in general" to economic problems, valid for everyone and at all times.[19].
The above leads to a conception of social efficiency increasing if and only if the freedom of individuals to act economically increases:[20][21] if each individual makes only voluntary changes in the market, everyone will feel better. This gives rise to a variety of "subjectivist" efficiency positions, generally expressed in traditional conceptions of public choice theory;[22][23][24] according to which, the concept of utility, as used in economics “has nothing to do with individual, social, or group well-being, whatever that last term is supposed to mean”[25].
Consequently and at a practical economic level, the only interesting measure of efficiency is the cost-benefit analysis at a given moment and for a given situation.[26][27].
Current proponents of this version of economic liberalism are particularly associated with economic schools such as the Austrian school; monetarism, and, more generally, some versions of rational choice theory and social choice theory.[28].
Advocates of a government role follow a variety of approaches ranging from socialist proposals to those generally described as mixed economy.
Among the socialist schools, the best known are those derived from Marxism. Simplifying as much as possible - and using language that is not always found in texts - this school can be described as suggesting that capitalism is efficient to the extent that it increases production extraordinarily. But it is not to the extent that the distribution of the benefits or product of these activities is based on possession of money. This situation leads to cyclical crises that constitute waste"), a situation that worsens to the extent that, in Marx's opinion, that wealth accumulates. Thus, from this point of view, although capitalism is more efficient (it increases production and general wealth) in relation to previous modes of production, it is not so in absolute or, especially, incremental terms. Capitalism will be, due to its own dynamics of accumulation, surpassed by a new form or mode of production that, since it will produce on the basis of satisfying needs, will increase production and reduce waste.[29] This new mode of production will be based on the social control (ownership) of the factors of production that will allow the product of economic activity to be distributed to everyone, which will increase production in an even more extraordinary way (see Socialization of the means of production).
It has been argued that although this perception is interesting and provides general perceptions (such as those mentioned) indispensable for approaching and analyzing economic phenomena in general, it can easily lead to errors and/or misinterpretations, given that it is based on concepts that are currently considered not properly defined, based on unproven generalizations.[30] Consequently at present this school is generally expressed - in strictly economic terms - as a "sensitivity" to certain problems and points of issue. view[31]
.
A current political version of this sensitivity is found in the proposals derived from the suggestion of Eduard Bernstein (see social democracy): socialism will be the product not so much of the inevitable development of economic processes but of a political decision, derived or based on the demonstration by (socialist) governments that policies that increase social control of the factors of production induce more efficient results in terms of increasing social well-being (see Welfare State).
The other major current within the interventionist proposals is influenced by the economic liberalism of Bentham and Stuart Mill,[32] specifically, by the “principle of utility” proposed by Bentham: “the greatest utility to the greatest number of people”[33] (utility being “The property of an object by which it tends to produce benefit, advantage, pleasure, good or happiness”[34] (see utilitarianism). From this point of view, it can be argued that An economy is efficient to the extent that it produces the greatest possible “satisfaction” or “utility” for the participants in its activities.
Examples of this perception are, particularly in the United States and Canada, the so-called (North) American Institutionalist School. In the United Kingdom, Australia and New Zealand, currents associated, at a macroeconomic level, with Keynesianism. In France, dirigisme. In countries such as Japan, South Korea, Taiwan, etc., a version of dirigisme called Indicative Planning (which differs from dirigisme itself in that it allows the state a more active or interventionist role), etc.
A central problem for these schools is how we can measure this usefulness or satisfaction. This gave rise to a complex series of debates and attempts[35] that culminated in the neoclassical school's conceptions of an individualistic but comparable ordinal utility at a social level.[36] based on the idea that a rational individual must act “as if” he were making interpersonal comparisons of utility in his decisions, even if the information available to him is not sufficient to do such a task on an objective basis (that is, a rational individual must assume that, like him, others also seek to increase their own well-being. as general), which makes it possible to maintain the Benthamian criterion to conceive efficiency: that which increases the well-being of all. This gave rise to alternative versions to those mentioned of the theory of rational choice and the theory of social choice[37].
An important moment in this debate was the introduction of the concept of Pareto Efficiency,[38] widely used today and according to which a given situation is efficient if it cannot be modified without making the situation of at least one of the members worse. This approach is generally accepted in current economic practice, but it has been argued that it is both imprecise and that it demands or imposes a criterion of unanimity such that it makes it unviable: no modification could be implemented unless absolutely everyone agrees. (see "Usage and technical considerations" in Pareto efficiency). This has led to several other attempts to conceptualize efficiency.
In current economic practice, such an attempt is made concrete in Abba Lerner's marginalist proposal: we do not know and cannot measure absolutely what is the well-being or pleasure that any individual derives from a given good. But we can know the “marginal well-being” that is derived from that good by observing which other goods he is willing to exchange it for. If an individual exchanges good A for another's good B, we know that both the one and the other consider the exchange advantageous.
From the above, Lerner introduces three different concepts:[39] Allocative efficiency (the measure of the general utility or benefit derived from the distribution of resources. It is achieved by allocating resources in a way that increases general well-being). This allocative efficiency can be conceived as combining two elements: Technical or production efficiency: the measure of effectiveness in the use of resources or with which those resources are used to obtain results. This is achieved by moving any resource from any point at which the value of its marginal product is less to one at which it is greater). Distributive efficiency (the effectiveness with which goods and services are distributed to those who need them or obtain the greatest utility from them).
Lerner's position can be considered an example of the sensitivity derived from socialist positions, a sensitivity by which Lerner was influenced, as his participation in the debate on economic calculation in socialism demonstrates, but his criticism of Marx was strong and, consequently, Lerner adopted more Keynesian positions.[40]
Larner, Keynes, Samuelson and others all argue that government intervention is necessary to increase efficiency. From this point of view, efficiency is conceived as referring to the optimal allocation of both resources and results, in order to avoid waste. To paraphrase, an economic system cannot be argued to be efficient unless it both uses resources to produce the maximum output and distributes that output to those who derive the best benefit or make the best use of it.
Between "intermediate" positions we find, on the one hand, and since the 1930s, the supporters of ordoliberalism, who argue that the free market is the most economically efficient system, but that in itself it is not one that has ethical qualities. From this point of view, the economic system is a technical instrument that can be used by society to produce wealth, but it is an instrument that needs to be “made ethical” through supplementary social policies.[41].
The example that one of the founders of the school - the professor Vanberg - offers serves to clarify: consider a race. We all accept in principle, to develop the argument, competencies that are based on and/or reflect personal effort and sacrifice. One can even argue that such competitions lead to overall improvement. But a competition that allows cheating, etc., would not only be unfair but could hardly be argued to lead to results that improve society. In other words, competitions need an institutional framework to produce truly beneficial (i.e. both better and fair) results. From this point of view, state intervention is not only an acceptable cost for increasing freedom and justice, but also an indispensable condition for increasing economic efficiency, to the extent that the elimination of cheating and other injustices promotes efficiency as the main route to success.
Currently, a new conception is influencing these approaches: the maximin")[42] by John Rawls, which seeks to increase both equity and freedom as well as economic production: justice as fairness (justice as fairness or impartiality).[43] Within this general vision Rawls introduces two principles, that of freedom and that of difference.[44] “In Rawls, this principle of difference expresses a sense of civic friendship and moral solidarity that includes equality in social esteem and excludes all types of habits of privilege or servility. The difference principle corresponds to the idea of fraternity because it includes the need not to want greater advantages unless they benefit the worst off.”[45] This introduces a kind of modified Pareto criterion or Rawls Criterion: “The difference principle would prevent these deep inequalities by making all inequality work in favor of the least advantaged, opting for an effective distribution, namely, one that cannot be reformed without worsening the expectations of at least one; the worst situated. Equal opportunities, for its part, would guarantee the justice of this distribution.”[46] (“It is worth noting that although this criterion is not generally accepted by economists, it has been widely used in numerous investigations”[47]).