The Traditional Pareto Criteria of Allocative Efficiency Are Tainted with a Definite Static Character and Should Be Replaced with the Alternative Standard of Dynamic Efficiency

The traditional Pareto criteria of allocative efficiency, which have predominated in economics up to this point, are tainted with a definite static character and therefore are inadequate to be applied as normative guidelines to the rich dynamics of real-life social institutions. Consequently, it is necessary to replace the traditional standards of efficiency with an alternative criterion, one which will fill the serious gaps in the traditional Pareto approach and be easily applicable to the realm of social institutions. We will call this alternative standard the ‘criterion of dynamic efficiency’.

--Jesús Huerta de Soto, The Theory of Dynamic Efficiency, Routledge Foundations of the Market Economy 28 (London: Routledge, 2009), 1.