Equity, social justice and the ‘efficient economy’

Abstract

Economists often like to say that there is a trade-off between caring for social equity and maintaining an efficient economy. Economic theory, however, tells us otherwise. This chapter debunks the enduring myth of this trade-off by exploring the true implications of economic theory. Central to this rethinking is the work of Tony Atkinson, the notable Oxford University economist. Whether talking about an individual, a household or a nation, Atkinson argues that we can’t define efficient use of economic resources without first identifying the ultimate goals behind the use of those resources. The opposite is also true: if a society that upholds values of equity and social justice does not employ some of its economic resources to those ends, it fails to be a truly efficient user of its resources.