An Evolutionary Efficiency Alternative to the Notion of Pareto Efficiency

Economic Thought 1 (1) (2012)
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Abstract

The paper argues that the notion of Pareto efficiency builds on two normative assumptions: the more general consequentialist norm of any efficiency criterion, and the strong no-harm principle of the prohibition of any redistribution during the economic process that hurts at least one person. These normative concerns lead to a constrained and static notion of efficiency in mainstream economics, ignoring dynamic efficiency gains from more equal allocations of resources. The paper argues that a weak no-harm principle instead provides an endogenous efficiency criterion, which shifts attention away from equilibrium analysis in hypothetically perfect markets towards an evolutionary analysis of efficiency in real-world, non-equilibrium markets. Moreover, such an evolutionary notion of efficiency would be less normative than the Paretian concept.

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Four essays on liberty.Isaiah Berlin - 1969 - Oxford University Press.
Rationality and Freedom.Amartya Sen - 2005 - Tijdschrift Voor Filosofie 67 (1):182-183.
On Ethics and Economics.Amartya Sen - 1989 - Tijdschrift Voor Filosofie 51 (4):722-723.

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