The concept of "efficiency" plays a central role in law and economics. Yet despite its centrality, some basic questions about the nature of this efficiency idea remain obscure. The argument of this article can be briefly stated. In Section I, it is argued that we need an efficiency norm to capture the fundamental idea of avoiding waste, or a sacrifice of one good thing that is not a necessary loss in the pursuit of another good thing. An anti-waste ideal is made important more by a plurality of plausible conceptions of distributive justice than by worries about the impracticability of interpersonal utility comparisons. Section II argues that efficiency can indeed be a pragmatically useful norm, if one expands the traditional Pareto criterion of efficiency not in the direction of Kaldor-Hicks efficiency but in the direction of ex ante efficiency. Adopting the rules that the parties rationally would have imposed upon themselves had transaction costs been lower is a procedure that is consonant with a broad array of reasonable views on distributive justice. Section III reconsiders the objections leveled against the idea of Kaldor-Hicks or wealth maximization, and argues that the objections are either invalid or inapplicable to the ex ante efficiency norm. Section IV argues that efficiency is a term that in itself has no particular political orientation, but that the concept nevertheless can serve as a component of a conservative political philosophy, whether one wishes to hold such a philosophy or merely understand it when held by others.
Christopher T. Wonnell,
Efficiency and Conservatism,
80 Neb. L. Rev.
Available at: http://digitalcommons.unl.edu/nlr/vol80/iss4/2