Pareto Minimality

Vilfredo Federico Damaso Pareto (1848-1923), an Italian Polymath (trained in physics and mathematics) whose genius radiated into the major fields of knowledge especially, sociology, civil engineering, economics, political science and philosophy had made several contributions to economic theories.

- BY PARIMAL BRAHMA

One of his major contributions to welfare economics had been a unique theory famously known as Pareto Efficiency, Pareto Optimality or Pareto Equilibrium which signifies a stage from where no further improvement is possible without making someone worse off. Taking a cue from Pareto Optimality, Indian economist Bhabatosh Datta defined economic development in simple language as "some gain somewhere without any loss anywhere."

The question whether there can be real gain or economic development without adversely affecting humans, nature or environment. Or is there a win-win situation while undertaking development projects? Perhaps no, because there is always a tradeoff and achieving Pareto Efficiency is an impossibility. Jeremy Bentham (1748-1832), English philosopher, jurist and social reformer, propounded an ethical theory, known in economics as Utilitarianism, which enunciates a principle: "it is the greatest happiness of the greatest number that is the measure of right and wrong". Any action or policy for the improvement of the lot of humans would be ethical and desirable if it bestows maximum good for the maximum number, irrespective of questions of equity.