Historical origins of the concept of efficiency

Heh. Well we wouldn't want to stop you being efficient at work, George...

Thanks for all the input guys, been useful.

With all the usual caveats about stuff gleaned from t'interweb not being proper research, as far as I've got is this.

The word and original concept of efficiency enters from Scholasticism's re-discovery of Aristotle (courtesy of Al Andalus, Averroes, etc), having the sense of "efficient cause" - one of Aristotle's four "causes", meaning - roughly - that which actively produces something (sculptor as efficient cause of the scuplture, etc).

Wiktionary (not the most reliable of sources) has the origin of the word in this original sense, as 1398 (wish they'd give source text, like OED...) which sorta fits. Same source also has the shift to the contemporary meaning of "productive, skilled" as 1787 which would fit with Cat's indication of Bentham and utilitarianism, which seems right to me.

The question of the link to the 15-16th C (?) notion of "improvement" (as mentioned by Ellen Meiksins Woods, for e.g.) is also open.

I guess I'm interested in the relative character of the concept - that is that an efficient use of a resource is always relative to something else. So the efficient use of labour is relative to the amount of means of production processed, for e.g.

So, in response to this

I would say that's only considering the labour efficiency aspect of the technical process. Another important aspect would be the resource efficiency aspect - particularly in those resources that are, if not necessarily scarce in an absolute sense, are limited enough to make efficient use important (fresh water, fertile topsoil acreage, CO2 emissions, etc).

edit: should have added - agree with George that we need to distinguish between the technical relation and the social relation of "efficiency".

It's an interesting article alright, but is a classic case of the fundamental problem of journalistic populism - i.e. if its a choice between telling a difficult-to-understand story about the real issues, it sells more papers to tell an easier, more familiar narrative that may only touch on the matter at hand, obliquely if at all. So in the NYT version the bulk of the article is the familiar "evil speculators in conspiracy to rip off the common man and Ordinary Decent Capitalists" (and of course, Goldman is the favoured representative figure for "evil speculators"). The role of Exchange Traded Funds (ETFs) is only mentioned in the very closing paragraphs at the end, and then only cursorially. In fact, the reality is the other way around - its the ETFs that are the story here, the derivatives tail wagging the physicals dog once again (see also food). So for example, this quote from SEC passes off, almost without comment

When really the article should have been about the fact that not only is that position wrong, but pretty much everybody in the trading business accepts that generally derivative prices form spot ones, not the other way around. Of course this knowledge is "folklore", in the sense that term is used in maths - i.e. something which everybody accepts works in practice, even if there is no formal proof for it. Economic theory, oriented as it is to directing government and central bank policy, actually has little interest in theorising the knowledge of financial market practicioners - it's not in their (ideological) remit.

A more interesting, albeit still somewhat oblique, article on this story is the Reuters one from earlier in the week. Reuters: Under proposed new LME rules, long queues become short squeeze. It's more difficult to understand as its aimed at a trader audience, so employs language familiar to them ("backwardation", "borrow the spreads", etc). However it does bring out the complex and counter-intuitive effects of all that derivative leverage a bit better.

The other problem with the NYT take on the story is the (normal) US-centric focus in what is a global economic story. Trafigura, Glencore and Goldman & other banks have mostly been driven by the need to provide physical underpinnings for their ETF & other index and derivative products - themselves attempts to take positions on the flow of physical commodities into Shenzen and the Pearl River delta - the queue arbitrage game is kinda a side benefit here - and the LME has collaborated/is implicated in the game. Now the LME has been bought by "Hong Kong-based Investors" (*ahem*) to try and sort the problem out (or get a piece of the action, depending on the balance of forces) and the proposed attempts to reform the situation are producing wails of anguish and counter-regulation resistance from existing beneficients (predictable) and some whipsawing of commodity markets and spot and future prices due to unintended consequences (unpredictable - complex).

All of which is probably a diversion from the question of "efficiency" other than that only muppets believe that markets are efficient allocators of resources. In fact, I personally prefer to refer to the EMH as the Epilectic Muppets Hypothesis (with apologies to epiletics). But I think that's pretty much common amongst the anti-capitalist left of whatever stripe. What is perhaps less common is that these inefficiencies are not simple "external" conspiracies by (wicked) financial speculators to rip us all off, but are actually immanent systemic contradictions, stemming from the same operative mechanisms that make capitalism function at all.

Just on the commodities story

FT: Banks’ influence over raw materials supply chain under scrutiny

Here again the complacent (and just plain wrong) assertion that the warehousing scam is itself the source of "pricing issues" in the metals case is raised here as a reason to ignore the effects of ETFs and derivatives - on grain pricing, for e.g.