The Meaning of Efficiency

Abstract

Policy implementation within a democratic society calls for efficiency. But because policy concerns range over broad social and political-economic areas, it must be recognized that the efficient pursuit of one particular goal may conflict with the realization of some other, equally important social interest. Hence, efficiency for its own sake cannot be a policy goal. This paper discusses the problems and complexities that arise in the pursuit of equity, stabilization, markets and trade, as well as the issues of social and environmental sustainability. Starting with the limitations of market efficiency when conventional requirements of social welfare are taken into account, it is argued that a more meaningful concept of social efficiency can be obtained with the help of the social development indicators elaborated by the UNDP, augmented by the sustainability indicators developed by the European Union during the last decade.