(other than Bioethics)
ABSTRACT: This article aims to give an analysis of the concept of efficiency. The importance of such an analysis lies in the fact that the role which efficiency plays in different sectors of our society leads to opposite evaluations resulting in a clash of opinions concerning this role. In order to clarify this situation, I first trace the historical roots of the concept. This brief historical reconnaissance shows that efficiency is not a unitary concept. Moreover, I also argue that our use of the concept of efficiency presupposes the decisions which we make with regard to the kinds of costs we recognize. Such decisions do not come out of the blue; they relate to the opposite evaluations of efficiency mentioned above. The decisions concerning what we consider to be costly determine in part the actual content of the concept of efficiency. I argue that this content must be in harmony with the meaning of the different practices in which we are engaged, otherwise this concept can easily lead us astray. Therefore, a proper use of the concept of efficiency demands a clear and reliable view of these meanings.
Efficiency is a concept widely used by economists, engineers, organization theorists, consultants, politicians, managers and others. It figures large in the many vocabularies that abound in the world today and it seems that 'efficiency' is one of the focuses of Western culture.
Efficiency has met with enthousiasm as well as critique. An early advocate of efficiency is Frederick Taylor (1911). (1) Shortly after, John Dewey made critical remarks on scientific management but considered efficiency to be a "servant of freedom" (Middle Works, Vol. 10, p. 119). Kotarbinsky (1968) defended efficiency from a praxiological point of view. Organization theorist Mintzberg (1990, p. 330-332), for whom efficiency is a "dirty word", and economist Heilbroner (1977, p. 92), who calls the "worship of efficiency" one of our faults, (2) are very critical. (3) Other people say that efficient designs can lead to greater human freedom, with the implication, I think, that such designs can also become prisons. Cameron (1986) is also critical. But in spite of these criticisms, many people still sing the praises of efficiency. An example is Flint (1991) who, writing on the philosophy and practice of auditing, suggests that we have an obligation to be efficient.
The opposite reactions which efficiency elicits confront us with an unhappy situation, which needs to be clarified. This can be done only when we have more insight in efficiency: "What kind of concept is it?"; "What does it mean?"; What are the presuppositions of its use?". Because knowledge of historical roots increases our understanding, I will, after some preliminary remarks about its meaning, first look briefly at efficiency from the perspective of the history of ideas (see section 2). After that, an important presupposition of efficiency will be analysed (see section 3). Finally, I will discuss the wretched situation of praise and disapproval (section 4).
2. Historical roots
Efficiency (or inefficiency) is used nowadays in two ways. First of all, it functions as a seemingly value-neutral qualitative (by description) (4) or quantitative (by measurement) characterisation of processes, machines or practices. If used quantitatively the measurements are often based on 'mathematical' definitions of efficiency which are assumed to be widely applicable (Charnes 1978, 1981). Secondly, efficiency is also used in a normative sense to evaluate situations, processes, etc. Herbert Simon gives the following, well known, definition which stresses the second use:
However, from a historical perspective this meaning is rather recent, because the term was not used in this way until the 19th century. (6) Looking for the roots of efficiency makes it necessary to attend to causality, economics and the field of technology. (7) In what comes next I will shortly attend to these subjects.
Causality and economy
Philosophers like Bacon (1561-1626) and Hobbes (1588-1679) used 'efficient' to denote any cause that produces an effect. This dates back to medieval thought and Aristotle's theory of causation, with its four causes: the formal cause, the material cause, the moving or efficient cause, and the final cause. Not only in nature were efficient causes to be present, and every antecedent cause which produces some effect is said to be an efficient one.
A new meaning of efficiency can be found in the works of the British philosopher Jeremy Bentham (1748-1832). New is that 'efficient' functions as a predicate for causes that produce, or produce to a certain degree, a desired effect. (8) Something similar is shown by Charles Babbage (1792-1871), well known for his design of a mechanical computer. In his study on the economy of machinery and manufactures, which appeared in 1832, a machine is considered to be 'efficient' when it produces the desired effect (1832, p. 264). This machine efficiency should be distinguished from its economy, i.e. the economy of human time it implies and the economy of raw materials needed. The relation of efficiency to a desired effect is also present in John Stuart Mill's (1806-1873) work. Compared to Bentham and Babagge, however, he introduced another new element: the costs. In his writings on political economy (1842), Mill speaks of the efficiency of labour and of power, such as steam or water, in the context of the costs of production. One can find expressions like the "general efficiency of all labour", meaning the production of the same quantity as before with less labour (Mill Vol. III, p.481), and the "greatest efficiency of labour" (Mill Vol. II, p. 141) to be attained by the devision of labour, by the sofisticated use of machines, and of skilled people (who cost more) only when necessary. Therefore, in Mill's thought the concept of 'efficiency', besides the production of the desired effect, also refers to the costs involved. By saying this, I am not suggesting that previously costs were not considered. What is new is the connection between costs and the concept of efficiency.
The ideas of Mill and Babbage are narrowly tied up with developments known as The Industrial Revolution. Important fields of activity were the textile industry and mining. Ideas about machines during that time developed in this context. Of course, there was reflection on the nature and possibilities of machinery before. An example is Leibniz' (1646-1716) involvement with a mining project in the Harz region of Germany (Leibniz 1950). But it took approximately another century for a really systematic experimentation and theoretical reflection on machines to develop (Klemm 1959). However, the question why this was the case is far beyond the scope of this article.
The systematic experimentation and reflection just mentioned did not use standard terminology. For example, Davies Gilbert (1767-1839), who at the end of 1820's was president of the Royal Society of London, called the work done by a steam engine its efficiency. But there was also the older practical engineering calculation of the duty of such engines as the weight of water that could be raised one foot by the consumption of one bushel of coal. An analogous calculation was used for water wheels. In this case the duty was expressed as a fraction indicating the capacity of the engine to restore the moving water to the source. Practical experience had already made clear that, for example, overshot wheels did a better job than undershot wheels and the same applies to high pressure steam engines compared to low pressure ones. Theoretical understanding was lacking however. Instances of a more theoretical approach which contributed to the explanation of such practical insights are Lazare Carnot's Mémoire (1791), Hachette's Traité des machines (18111, 18284) and Sadi Carnot's Réflections (1824). Sadi Carnot is especially important because of his general theory of heat machines dealing with "the most effective employment of heat" (Carnot 1960, p.47). Such a theory was needed in order to make a systematic improvement of machines possible. It was this theory and the relatively low performance of actual machinery which made Diesel, at the end of the 19th century, look for a process with the "highest heat efficiency" (quoted in Klemm 1959, pp. 342-345). (9)
Gradually the concept of machine efficiency as some kind of fraction, analogous to the notion of duty mentioned above, developed. In the case of heat machines, it was the fraction of the work done by the machine/the heat absorbed by the machine. Another illustration is combustion efficiency as the ratio of the actual amount of heat released and the maximum amount which theoretically could be released by the complete combustion of the fuel. The mathematical definitions given in Charnes (1978, 1981) all take the idea of a ratio for a starting point.
It is not necessary to trace the historical roots of efficiency any further here. The picture given is clear enough in order to procede with my argument. I will conclude this section with some general remarks. Machine efficiency (Etp) is a technical-physical concept related to energy transformation. One can measure or calculate it using laws of nature and it has an ideal limit as well. Millian efficiency (Ee) is narrowly related to the costs, for example, of wages or labour. It is an economic concept. One cannot simply calculate it from laws and there is no ideal situation which can function as a standard. Therefore, Etp is not identical to Ee and it is even possible that a system has a high Etp and a low Ee or vice versa. They are connected when the costs of physical resources, such as energy, are taken into consideration.
3. A central presupposition of efficiency
The historical analysis of the meaning of efficiency reveals two imporant features: a) efficiency is defined rather formally; b) it is not a unitary concept. The formal character supports the mathematical approaches (related to input/output ratios; Charnes 1978, 1981). That it is not unitary is already shown by the differences between Etp en Ee. Simon's definition, which is wide enough to cover both Etp and Ee suggests that efficiency is a simple, unitary notion, but it is not. This will become clearer when we look at the use of efficiency in concrete situations.
Take Etp in the case of steam engines. We can look at the essential mechanics/thermodynamics of the machine and focus on the heat needed for doing a certain amount of work. But we can also widen our scope, and consider the efficiency of producing the heat itself or even introduce aspects of safety and environmental issues. Of course, this complicates the end the machine is designed for. At the same time, it broadens the range of factors (costs) that are important in relation to efficiency. In such a situation we are thinking of various 'efficiencies' at the same time, which can seldom be analysed by applying a common standard.
Apart from the difficulties of weighing the input and output when both are multiple, my argument illustrates that every application of efficiency involves decisions about what we think that is important. When efficiency is defined in terms of a production function (Charnes 1981) such decision making seems to be absent. However, this view is a too simple. Even if it were possible to determine empirically what in fact produces the effect, it would still make a non-empirical decision if we choose to confine efficiency to those factors.
It is clear that the use of the concept of efficiency presupposes a decision about the kinds of costs we are willing to recognize. Such decisions regarding costs are unavoidable and to recognize them is of paramount importance. The notion of costs should be taken in a broad sense: the sacrifices made (e.g. energy, time, money, safety, clean air, etc.) in order to obtain the results, the ends pursued. Often, the costs are obvious. We take them for granted, not seldom because of cultural influences, oblivious of the fact that use of the concept of efficiency involves decisions about them. In our society, for example, 'environmental costs' were out of sight for a long time. Cost decisions are related to what we value, explicitly or implicitly. Therefore, every application of efficiency is itself value laden, based on values that are part of our world view. (10)
4. Praise and Disapproval
As such, efficiency functions as a normative criterion for means in relation to ends, that is for instrumental rationality. (11) In the 20th century, instrumental reason is praised as well as disapproved. It is critized by Horkheimer and Adorno. Habermas considers it to be a limited mode of rationality that, if isolated from communicative rationality, has unhappy consequences. In line with this, we may impute the problems we have with efficiency to a misunderstanding and misuse of instrumental reason. (12) This is not an indefensible line of thought, but more needs be said. The problems arise mainly because the concept of efficiency itself remains unreflected. When people disagree we should ask what notions of efficiency are being used, what kinds of costs are considered, what background values they start from, etc. Their positions probably depend on differences on this level. The same holds in the case of internal inconsistenies. Heilbroner, for example, critizes efficiency, but is at the same time anxious because "efficient fission reactors" may not come on time (Heilbroner 1974, p. 54). If the character of efficiency is not sufficiently understood, unfruitful clashes of opinion (e.g. "efficiency is a dirty word" <-> "it is a servant of freedom") or internal inconsistencies will remain.
I feel supported in my view by the works of the American philosopher John Dewey. He connected efficiency with different adjectives, such as "technical" and "social". Technical efficiency is linked to issues such as the division of labour and social efficiency to making our experiences more valuable to each other (Middle Works, Vol 9, p. 127). Besides this, he viewed efficiency as a practical skill, as doing things without waste and confusion (see also Kotarbinsky 1968). Practices are of many kinds (the artist, the lawyer, the physician, the mathematican, the chemist, the businessman, the teacher etc.). They all involve efficiencies, which (and that is crucial) are closely connected with the meaning, the purpose, of those practices (Later Works, Vol. 17, p. 77-820). Therefore, efficiency can only be a servant of freedom when we balance the different efficiencies with each other. Gains in technical efficiency, for example, should evaluated in terms of the effects on social efficiency and on the skills needed for a meaningful practice.
I think that it is important to be aware of the differentiated contexts (technical, social, medical care, business, etc.) involved and we must always ask the question "what is the meaning of the practice we are engaged in?".
For example, if we are judging a school in terms of its efficiency, then we should always keep the meaning of teaching in mind. Exclusive attention to technical efficiency in education and administration, using methods of measurement and standardization, can only lead to an improvement of existing methods, as already Dewey told us (Middle Works, Vol. 10, p. 118-121). In the case of business, we could start from the general view that its meaning/purpose is to add value to life by offering goods to the market. Generally speaking this implies that business should also try to avoid a decrease of value as far as possible, which brings in environmental issues. Of course, in concrete situations this must be worked out in more detail, in collaboration with individual organizations and the people involved. When we are working in a medical practice one also needs a clear view of its poper meaning. When we want to create an efficient organization of medical practice this meaning will help us to discern and weigh different kinds of costs, those for medication, time (of physicians, nurses, the use of a laboratory), and equipment, but, for example, also patients' time and the burden put on them need to come in focus.
In the introduction I refered to Flint's view that we have an obligation to be efficient. I think that my argument has made clear that we can conclude in favour of such an obligation only when we duly consider the contexts/meanings of our activities. Only then can we overcome the clash of praise or disapproval, of onesided worship or rejection of efficiency. However, it is not easy to overcome this clash. It presupposes that we are able to rise beyond the level of personal tastes and favourite pursuits. In order to realize this we are in need of a worked out philosophy of the different practices our culture knows of, be it eduation, business or medicine, to name a few.
Notes(1) Taylor remarks also that we must put an end to the unnecessary waste of forests, water power, coal, soil and human effort (Taylor 1911, p. 5). Although this seems relevant in relation to contemporary discussions on environmental problems, Taylor had his sights only on prosperity.
(2) Heilbroner argues that our "worship" of efficiency, shared by both capitalist and socialist industrial civilization (Heilbroner 1974, p.77), is a major fault threatening ourselves and the world we live in.
(3) Cameron (1986, p. 108) talks about education administrators who become "conservative, efficiency oriented, and reactive".
(4) For example, Foucault (1980, p.177, 181) about the "inefficient medical surveillance" of 18th century hospitals.
(5) Of course, other definitions can be found in the literature, for example in Flint (1991, p. 175) and Charnes (1981,p. 669).
(6) If the term is use is translations of older texts, we must be on the alert. The English edition of Xenophon's remarkable Oeconomicus, for example, uses the word several times (Oeconomicus, V 4-11, VI 9-13, XII 20-XIII 5). However, reading it with Simon's definition in mind is not correct. The same applies to Aristotle when he, in the English translation, writes about the efficiency of slaves (Oeconomica 1344b), which is actually nothing but their ability to work.
(7) Solomon (1993, p. 29) sees efficiency as a notion "borrowed for business directly from Newtonian physics" and Clegg (1991) considers it as derived from older accounting conventions (Clegg 1991, p. 162). Both do not argue in favour of their respective claims and I will not discuss these views now.
(8) What I have in mind are his references to "efficient" and "inefficient" ministers in his Official Aptitude Maximized Expense Minimized (1830). An efficient minister is successful in what he wants to achieve and an inefficient one is not. There are also phrases like "the most efficient [..]"( Bentham, 1993, p. 73-77, 187). Bentham knew also a more traditional use of 'efficient' in his famous book on the principles of morals and legislation (1789).
(9) The German title of R. Diesel's famous text: Theorie und Konstruktion eines rationellen Warmemotors zum Erstaz der Dampfmachinen und der heute bekannten Verbrennungsmotoren. Springel, Berlin 1893, shows an identification of efficiency with rationality.
(10) Kotarbinsky (1968, p. 80-113) recognizes different costs, "decrements". However, he does not discuss them in connection to cost decisions.
(11) Today, many, e.g. H.A.Simon, know only of instrumental rationality. This is different from classical thought. Aristotle, for example, knew about means to achieve something, and that when different means are available, one must consider by which it is "most easily and best produced" (Ethica Nicomachea 1112b). But in his view, there is wisdom essential for man as animal rationale only when the end is something good. To look merely at the means isolated from the good is mere cleverness and a bad man can also be clever (Magna Moralia 1197b). In such a context, efficiency can never be an independent criterion of rationality as it for many people seems to be today. Simon argues that rationality (or reason) "is a gun for hire that can be employed in the service of whatever goals we have, good or bad" (Simon 1983, p. 8). Ends are thought to be selected by mechanisms (such as emotions).
(12) This would be, I think, Habermas' line of thought, when confronted by the question about the dilemma. However, he does, as far as I know, not analyse the concept of efficiency itself (Habermas 1970, p. 123; 1978, p. 322; 1981, p. 27, 34).
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