Ingrid Robeyns in Crooked Timber:
For a while I have been working on a paper on democracy, expert knowledge, and economics as a moral science. [The financial crisis plays a role in the motivation of the paper, but the arguments I’m advancing turn out to be only contingently related to the crisis]. One thing I argue is that, given its direct and indirect influence on policy making and for reasons of democratic accountability, economics should become much more aware of the values it (implicitly or explicitly) endorses. Those values are embedded in some of the basis concepts used but also in some of the assumptions in the theory-building.
The textbook example in the philosophy of economics literature to illustrate the insufficiently acknowledged value-ladenness of economics is the notion of Pareto efficiency, also known as ‘the Pareto criterion’. Yet time and time again (for me most recently two days ago at a seminar in Oxford) I encounter economists (scholars or students) who fail to see why endorsing Pareto efficiency is not value-neutral, or why there are good reasons why one would not endorse the Pareto-criterion. Here’s an example in print of a very influential economist: Gregory Mankiw.
In his infamous paper‘Defending the One Percent’ Mankiw writes (p. 22):
“Discussion of inequality necessarily involves our social and political values, but if inequality also entails inefficiency, those normative judgements are more easily agreed upon. The Pareto-criterion is the clearest case: if we can make some people better off without making anyone worse off, who could possibly object?”
Yet the Pareto-criterion is not as uncontroversial as Mankiw believes. The Pareto-criterion compares two social states, A and B, and makes a claim about whether the act/policy/social change that brings us from A to B is desirable or not. If in B all individuals have at least the same welfare/utility/wellbeing than in A, and at least one of them has a higher level, then moving from A to B is a Pareto-improvement, and the Pareto-criterion recommends the move from A to B on grounds of efficiency.
More here.