PARETO OPTIMALITY: IS IT VALID AS A CRITERION FOR JUDGING SOCIAL EFFICIENCY IN AN ISLAMIC ECONOMY

Abstract

Optimization aims to reach the best, and in order for optimization to have meaning, there must be a function of goals that are maximized, and there should be more than one solution available to choose the best among them. The most efficient situation according to Pareto optimization is the situation in which we cannot make a member of society better off without making a member or other members worse off in the country under consideration. The maxima we arrive at is just one of an infinite number of Pareto optimizations from which we cannot choose without assuming a scale of values to evaluate individual utilities because there is always a system for weighing these utilities that makes any point optimal. Thus Pareto optimization is a criterion that requires the existence of a function of value goals that is different in the Islamic economy from that in the capitalist economy. Justice in the Islamic economy has a concept based on rights regulated by Islamic Sharia, and this makes difference in the content and scope of the optimization process, which makes justice an organic component of the concept of efficiency in the Islamic economy, and the criterion of Pareto optimization is a criterion that does not achieve justice by itself. Pareto optimization is a quantitative criterion that depends in its judgment on efficiency on the overall quantitative result and does not take into account qualitative aspects of great importance in relation to the concept of efficiency and its judgment in the Islamic economy. Reaching a situation in which it is not possible to improve the situation of some people without making others in a worse situation, which is what is known as Pareto optimization can serve as a criterion for judging efficiency in the Islamic economy if the rulings of the Sharia in the acquisition, use, and spending of funds are applied in the economy under consideration, taking into consideration there is a difference in the content and scope of the maximization process, which makes justice an organic component of the concept of efficiency in the Islamic economy, and the difference in the concept of justice itself, and if the concept of “improving the status of some” is determined within the framework of achieving sufficiency, and the concept of “worse situation” is determined by violating sufficiency. Based on the foregoing, we suggest that the Pareto criterion, by itself, is not sufficient to judge efficiency in the Islamic economy.