Rivista di Politica Economica
G. Piga

The issue of equity and efficiency is once again gaining the attention of economists. There has not been such a volume of theoretical and empirical works since the 1950s,when the debate was introduced as part of the critical appraisal of the various economic doctrines by Kaldor and subsequently in an empirical context by Kutznets. This paper aims to critically re-examine these new contri- butions, indicate their lirnits and common elements and, lastly, put forward a more general theory that ailows one to precisly place the problems raised between equity and efficiency.

The relation between equity (understood as redistribution that aims to reduce inequalities of income or wealth) and efficiency (understood as the maximum production that can be obtained given the resources available), an issue of considerable importance in economic theory, is even more irnportant today. Capitalism and the market economy have perhaps won the historical challenge with the planned economy and «real»socialism, but that in no way means that the equity-efficiencyproblem no longer exists. On the contrary, it is a crucial issue in ail modern industrial societies. The question being asked by many is in fact «Whatsort of capitalism?».Leaving aside the various formulas, models, historical roots, we are once again talking about combining and synthesising the difficult equation economic efficiency/social justice…continua a leggere

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