The Concept of Economic Efficiency 51 



practical consideration, the effects which this could have on 

 the constellation of prices (and imputed prices) employed for 

 evaluating comparative efficiency of alternatives can be ignored. 



Finally, even if all of the required adjustments in the competi- 

 tive model are made appropriately, there will be economic condi- 

 tions under which our balancing of costs and gains at the margin, 

 using market (or imputed) prices, will have no relevance for 

 evaluating economic efficiency. In times of economic distress, when 

 there is a substantial amount of involuntary unemployment, condi- 

 tions of general economic efficiency cannot be specified by reference 

 to market prices. However closely the marginal conditions are met 

 in all other sectors, if there is a vast body of unemployed workers 

 and idle productive capacity, it will not follow that the maximum 

 amount of the preferred composition of output is being produced, 

 given the resources available to society. Hence, we recognize that 

 the empirical data in the efficiency criteria used in this study apply 

 only to economic conditions of relatively full employment, such as 

 have characterized the years in the postwar period. They are not 

 relevant for evaluation of projects in periods of depressed economic 

 conditions — nor for projects undertaken during past periods of 

 economic depression. Furthermore, these criteria will be applicable 

 only to new undertakings, as other criteria are required to evaluate 

 the efficiency of operations for which economic resources already 

 have been irrevocably committed. 



