Social costs and normative economics
The aim of the paper is to assess the notion of social costs from an evolutionary institutionalist perspective. It argues that: social costs can be defined as the difference between the actual outcome of a historically defined capitalist market economy and the outcome desired by the members of society; markets are only one of the possible coordinating instances in such economies, albeit the prevalent one, the others including non-profit organizations, the welfare state, households, etc.; under these circumstances, the assessment and organization of economic activities requires a meta-coordinating instance; the extension of capabilities, as theorized by Amartya Sen, may provide such an instance. The paper begins with a brief discussion of the themes of, and problems related to, the conventional theory of social costs. It then specifies the context of the discussion by situating it in a historically defined economy: a capitalist market one. It contends that the rationale of such an economy involves treating labor, nature and money as "fictitious commodities", and that the existence of social costs ultimately depends on this central feature. Based on this approach, it discusses Kapp's suggestion that policy should focus on minimal social requirements. It points out, in this respect, that a broader criterion is required. Drawing on Sen, the paper stresses that choices cannot be reduced to a single dimension - such as (economic) welfare - and that the economic context may preclude the freedom to choose how to conduct one's life. The implication is a qualification of social costs: they are determined by economic activities that prevent people from achieving the capabilities they need. The public policy implications of the above approach are that many alternatives to the status quo are possible. In the light of these features, the discussion reasserts the need for a normative approach to economic inquiry.
|Date of creation:||Mar 2012|
|Date of revision:||Sep 2015|
|Contact details of provider:|| Postal: Via Crescimbeni, 20 -62100 Macerata|
Web page: http://www2.unimc.it/dief
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Warren J. Samuels & Steven G. Medema & A. A. Schmid, 1997. "The Economy as a Process of Valuation," Books, Edward Elgar Publishing, number 1088.
When requesting a correction, please mention this item's handle: RePEc:mcr:wpdief:wpaper00066. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Silvana Tartufoli)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.