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CHAPTER16DistributionWe have emphasized that ecological economics is concerned withthree issues: the allocation of resources, their distribution, and thescale of the economy. We have seen how the ecological sustainability ofthe Earth is related to the size or scale of the macroeconomy. We have alsoexplored the economist’s meaning of efficient allocation in our discussionof microeconomics and the basic market equation. We then looked at themacroeconomic allocation problem in Chapter 14. But the second issue,distribution and the fairness thereof, has remained largely in the background.■ Pareto OptimalityIn dealing with allocation, we saw that economics defines efficiency as thePareto optimal allocation of resources by the market. This definition assumesa given distribution of wealth and income. More specifically, an efficientallocation is one that best satisfies individual wants weighted by theindividual’s ability to pay—that is, by her income and wealth. Change thedistribution of income and wealth, and we get a different set of efficientprices (since different people want different things), which define a differentPareto optimum. Because different Pareto optima are based on differentdistributions of income and wealth, economists are reluctant to comparethem; one optimum is as good as another. We saw that a major reason forscale expansion—economic growth—has been to avoid the issue of distributiveequality. As long as everyone is getting more from aggregategrowth, the distributive issue is less pressing, at least as a cure for poverty.Besides, the efficiency of the allocation of aggregate growth loses its welldefinedmeaning (Pareto optimality) once we accept the legitimacy ofchanging distribution in the interest of fairness. Consequently, economics301