What is the Association of Efficiency with Morality?

What is the Association of Efficiency with Morality?

The principle of efficiency is an important concept that we hear about primarily when we hear that “the market is efficient”. I think that in terms of the stock market this implies that there exists transparency and everyone has the same information. In the matter of morality it is often used to illuminate the concept of distribution as it relates to matters of justice.

The web site http://oak.cats.ohiou.edu/~piccard/entropy/rawls.html provides an outline of John Rawls book “A Theory of Justice”. In this outline the author provides this account of the meaning of “The Principle of Efficiency”:

“Rawls adopts the concept of efficiency that is associated with the name Pareto in the field of economics. It is perhaps most easily described in the negative:
No system can be called efficient if there is an alternative arrangement that improves the situation of some people with no worsening of the situation of any of the other people.
In general, there are many arrangements that are efficient in this sense. Not all of them are equally just; other principles of justice must be invoked to select the most just arrangement.”

A graph is the best way to visualize the meaning of this concept. Imagine a standard two dimensional X-Y graph with X being left to right and Y being the vertical axis. Draw a convex line connecting equal length on both axis. The line represents the distribution of commodities in an efficient market. X and Y share in the commodities as shown by this line. If X gains Y loses and vise versa.

Efficiency is considered to be an instrumental matter and is an objective determination based on reasoned consideration without subjective bias. Any point on this line is a point of maximum efficiency; it is the best that is possible based on objective parameters alone.

Human rationality is very good at developing the most efficient way to accomplish a given task. Our technology is one example of our capacity to accomplish instrumental matters, i.e. matters concerning the most efficient means for reaching a proscribed end.

On the other hand we are very weak at determining matters requiring communicative rationality. Communicative rationality is that rationality focused on subjective considerations when human values are involved rather than concrete objects. We are good at developing the best means for an end but we are not so good for determining the end to be sought. The determining of ends, i.e. values is where morality enters into the equation.

On our imagined graph anything on the efficient line is best if efficiency is the only parameter of consideration. If other parameters are important then the area onto which the point of distribution occurs is southwest of the maximum efficiency line.

A theory of justice is required for us to understand how to pick that point SW of efficiency. The SW point is dependent upon our set of values and how well we understand such matters and how much we care about such matters.

What you've described is a production possibilities curve (or 'frontier'😉 and I can't imagine how it relates to morality- free market capitalism is largely disdainful of morality. Put another way, what we should produce (at any given point on the ppc) is determined by market forces. Unless you want to label the fluctuation of prices and demand 'good' and 'evil' then I don't really know where you're going with this.

Originally posted by Red Nemesis
What you've described is a production possibilities curve (or 'frontier'😉 and I can't imagine how it relates to morality- free market capitalism is largely disdainful of morality. Put another way, what we should produce (at any given point on the ppc) is determined by market forces. Unless you want to label the fluctuation of prices and demand 'good' and 'evil' then I don't really know where you're going with this.

We can comprehend only what we are prepared to comprehend.

Communicative rationality is that rationality focused on subjective considerations when human values are involved rather than concrete objects. We are good at developing the best means for an end but we are not so good for determining the end to be sought. The determining of ends, i.e. values is where morality enters into the equation.

Originally found in [an economics textbook]
If not all available resources are being used to their fullest, the economy is operating at some point inside the ppf. This is clearly inefficient. But even if the economy is operating at some point on the frontier, who is to say that it is the point that is most desired by the citizens? If it does not happen to be the point that society most wants, we are also facing an inefficient situation.
[...]
Allocative efficiency The economy is producing the optimal mix of goods and services. By optimal, we mean that it is the combination of goods and services that provides the most net benefit to society. If society is allocatively efficient, it is operating at the 'best' point on the frontier.

How do we determine which point is the optimal point?
[Graph]
The allocatively efficient amount [of anything] is the quantity where the marginal benefit of each one is exactly equal to the marginal cost of producing it.

Unless you'd like to moralize the law of increasing costs and the tendency of marginal benefits to decrease then you're just blowing smoke.

Why don't you explain the quote that you posted in greater detail? What do you (does John Rawls) mean by 'The determining of ends'? As far as I know those ends are determined by market factors, not morals.

Originally posted by Red Nemesis
Unless you'd like to moralize the law of increasing costs and the tendency of marginal benefits to decrease then you're just blowing smoke.

Why don't you explain the quote that you posted in greater detail? What do you (does John Rawls) mean by 'The determining of ends'? As far as I know those ends are determined by market factors, not morals.

When President Bush told his military to invade Iraq they then proceded to determine what was the best means to accomplish that end. This is called instrumental reasoning. The goal, to invade Iraq, was for unknown reasons but the stated reasons were the presence of WMDs.

When I was young I decided my goal was to become an engineer. To achieve that goal my means consisted of first going into the Army to get the GI Bill and then I went to college on that GI Bill.

Morality is about relationships The goal of morality is to develop relationships that will at least not lead to war and violence. You can see that morality has often failed.

Originally posted by Red Nemesis
What you've described is a production possibilities curve (or 'frontier'😉 and I can't imagine how it relates to morality- free market capitalism is largely disdainful of morality. Put another way, what we should produce (at any given point on the ppc) is determined by market forces. Unless you want to label the fluctuation of prices and demand 'good' and 'evil' then I don't really know where you're going with this.

Well some form of morality will likely always exist. In the free market a moral person would worship at the altar of Adam Smith.

Originally posted by coberst

Morality is about relationships The goal of morality is to develop relationships that will at least not lead to war and violence. You can see that morality has often failed.

This is false. Not all moral systems are devoted to peace: many are more concerned with the 'soul' and 'purity' than with earthly affairs of any kind. This doesn't explain (at all) why or how morality is involved in economics, though.

[worship Adam Smith]

Being right about how systems function (Capitalism) doesn't mean that one is worthy of worship.

If your point is that people will always worship something then I'll have to ask if you think that the present religions will survive or if there will simply be new religions born. (It is telling of the level of cynicism I'm dealing with here. You're clearly not Christian but do you think that the status quo will be maintained?)