Social Welfare, Markets and Efficiency

The concept of Pareto Optimality provides Neoclassical economist with both a definition of efficiency and a narrowly defined concept of justice. By implicitly assuming Pareto Optimality to be the market norm, they effectively limit their ability to confront fundamental social issues involving need-based behaviors and their relationship to distributional issues. Health care and public safety are two basic social concerns that create particular problems for simple market-oriented solutions. A narrow focus on efficiency can also lead to policies which help to distort human relationships and diminish social welfare.