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Extending Amartya Sen’s Paretian Liberal Paradox to a Firm’s Hierarchy

In: Philosophy and Business Ethics

Author

Listed:
  • Massimiliano Vatiero

    (University of Trento
    Università Della Svizzera Italiana)

Abstract

Amartya Sen’s impossibility of a Paretian liberal underscores the trade-off between two widely applied social principles—liberalism (i.e., each individual may exercise the freedom to make certain decisions concerning his or her private domain) and Pareto principle (or economic efficiency): “If someone does have certain liberal values, then he [or she] may have to eschew his [or her] adherence to Pareto optimality” (Sen, Journal of Political Economy 78:152–157, 1970a:157). This chapter extends the Paretian liberal paradox to the firm, understood as a socio-economic institution with a hierarchical nature aimed at sparing transaction costs (Coase, Economica 4:386–405, 1937). The chapter shows that, even if the firm’s hierarchical nature may improve the efficiency, it may conflict with liberal values.

Suggested Citation

  • Massimiliano Vatiero, 2022. "Extending Amartya Sen’s Paretian Liberal Paradox to a Firm’s Hierarchy," Springer Books, in: Guglielmo Faldetta & Edoardo Mollona & Massimiliano Matteo Pellegrini (ed.), Philosophy and Business Ethics, chapter 0, pages 357-373, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-97106-9_14
    DOI: 10.1007/978-3-030-97106-9_14
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