K. William Kapp's theory of social costs: A Luhmannian interpretation

In developing his famous theory of social costs, K. William Kapp claimed to draw inspiration from the theory of open systems. The present paper reconstructs the notion of social costs from the perspective of the Luhmannian theory of autopoietic social systems, an alternative systems-theoretic paradigm. According to Luhmann, these systems build up their internal complexity at the cost of lowering their sensitivity to the complexity of their environment, both societal and ecological. From the Luhmannian perspective, social costs can be understood as those segments of environmental feedback that are thus ignored by social systems. This perspective is not only consistent with Kapp's own vision of social costs as a systematic outcome of private business enterprise, but also even more radical as it traces these costs back to the regime of functional differentiation of society, and thus to human civilization generally. It follows from the Luhmannian perspective that social costs can be reduced by improving the coordination between the individual functional systems, such as economy, law, politics, and science.