Friday, September 6, 2013
Pareto Optimality in Political Economy
This graph is called a “production-possibility frontier” (PPF), or “production-possibility curve (or 'boundary')”, or “product transformation curve”.
It shows various combinations of amounts of two commodities that could be produced using the same fixed total amount of the factors of production.
Rather than strictly economic ones, the commodities depicted here (the two axes) are political commodities; allocation, distribution, and planning by means of corporate bureaucracy, versus allocation by means of socialist bureaucracy.
The purple dot ("Centrism") represents where we are now; at a state with imperfect liberty, imperfect equality, and a mixture of socialist and corporatist bureaucratic planning.
The goal is to find a balance between socialist and corporatist planning, without sacrificing either liberty or equality, and if possible to increase both liberty and equality.
Any action which achieves this goal is a Pareto improvement, or “an increase in Pareto efficiency” (a change to a different allocation that makes at least one individual better off without making any other individual worse off; shown in light gray), and any action which fails to achieve this goal is not a Pareto improvement (shown in darker gray).
Although a move from Centrism to Corporate Nationalism (dark blue) or Republicanism (red) would increase liberty and the organization of corporate bureaucracy, it would involve a loss of economic equality and a decrease in the organization of socialist bureaucracy; therefore such a move would not be a Pareto improvement.
Although a move from Centrism to Oligarchical Socialism (pink) or Democracy (light blue) would increase equality and the organization of socialist bureaucracy, it would involve a loss of economic liberty and a decrease in the organization of corporate bureaucracy; therefore such a move would not be a Pareto improvement.
A move from Centrism to Libertarianism (yellow) would increase liberty and the organization of corporate bureaucracy, without affecting equality or the organization of socialist bureaucracy. Because this would make “at least one individual [or the production of at least one good; namely, corporate bureaucratic planning] better off without making any other individual[s, or goods; namely, equality and socialist bureaucratic planning] worse off”, it counts as a Pareto improvement.
A move from Centrism to Green-partisanship (green) would increase equality and the organization of socialist bureaucracy, without affecting liberty or the organization of corporate bureaucracy. Because this would make “at least one individual [or the production of a good; namely, socialist bureaucratic planning] better off without making any other individual[s, or goods; namely, liberty and corporate bureaucratic planning] worse off”, it counts as a Pareto improvement.
A move from Centrism to Voluntaryism / Panarchism / Mutualism (orange) would increase the organization of both corporate and socialist bureaucracy simultaneously and equally, while simultaneously and equally increasing both liberty and equality.
Once any of the dots on the curved line has been reached, a move toward any other location on the curved line would satisfy Pareto optimality. It is important to remember that just because an arrangement is optimal, it does not mean that it is necessarily the best, or that it can be objectively described as the best, or as better than others.
This is because it is impossible to maximize for two variables at once. Optimality is simply the selection of a best element, with regard to some criteria, from some set of available alternatives. Anyone promoting a set of criteria would choose a “best” based on his own values and politicoeconomic goals.
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