Now more than ever, the watchword in economics is “policy.” “Decision-makers” demand – and sometimes pay well for – “the appropriate policy” to solve those economic problems that strike them as important. Economists interested in “practical relevance” respond by “applying” their theories to supply such a policy. What goes unquestioned is the plausibility of “policy” itself. Yet, the very notion of policy is questionable.

I.  The concept of “efficiency” common to most contemporary economic theories holds that analysis can and should determine the net balance between positive and negative effects of any economic act, event, or institution. Sometimes, in practical economic applications, this same notion of efficiency refers to “cost-benefit” analysis. A quantitative measure of all the positive and negative effects of an economic act, event, or institution is undertaken to determine whether, on balance, the positives (benefits added up) outweigh the negatives (costs added up).