The Normative Matrix of Social Costs: Linking Hayden’s Social Fabric Matrix and Kapp’s Theory of Social Costs

  • Sebastian Berger


One of the most promising applications of Gregory F. Hayden’s Social Fabric Matrix is within the context of policymaking to counter environmental degradation and social costs. Developing his institutional theory of social costs since the 1930s, K. William Kapp proposed policymaking that is very similar to Hayden’s approach. Both aim at minimizing social costs by working with primary and secondary criteria based on systems principles, such as openness, negative and positive feedbacks. By presenting Kapp’s “normative economics” this paper shows how primary and secondary criteria serve policymaking as a basis to evaluate social costs in a nonutilitarian way and to avoid the theoretical and practical limitations of the purely formal Coasian and Pigouvian frameworks. The paper concludes that Hayden’s SFM provides the tool box for putting Kapp’s normative economics to work in policymaking.


Social Cost Primary Criterion Neoclassical Economist Rational Humanism Substantive Rationality 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Berger S (2008) Circular cumulative causation (CCC) à la Myrdal and Kapp – political institutionalism for minimizing social costs. J Econ Issues 42:357–365Google Scholar
  2. Berger S, Elsner W (2007) European contributions to evolutionary institutional economics: the cases of cumulative circular causation (CCC) and open system approach (OSA) – some methodological and policy implications. J Econ Issues 41:529–537Google Scholar
  3. Blum FJ (1977) Professor Kapp’s approach to a science of man in society in the light of the emerging new consciousness and social order. In: Rolf S et al (eds) Economics in institutional perspective – memorial essays in honor of K. William Kapp. Lexington Books, Lexington, pp 47–60Google Scholar
  4. Blum FJ (1982) Die Bedeutung des Universalen für alternative Theorien der Gesellschaft: Max Weber und William Kapp. In: Leipert C (ed) Konzepte einer humanen Wirtschaftslehre. Offene Welt, Frankfurt am Main, pp 41–72Google Scholar
  5. Bush PD, Tool MR (2001) The evolutionary principles of American neoinstitutional economics. In: Dopfer K (ed) Evolutionary economics: program and scope. Elsevier, Boston, pp 195–230CrossRefGoogle Scholar
  6. Coase RH (1960) The problem of social costs. Law Econ 3:1–44CrossRefGoogle Scholar
  7. Dewey J (1922) Human nature and conduct – an introduction to social psychology. The Modern Library, New YorkGoogle Scholar
  8. Hayden GF (2006) Policymaking for a good society: the social fabric matrix approach to policy analysis and program evaluation. Springer, BerlinGoogle Scholar
  9. Kapp KW (1950) The social costs of private enterprise. Harvard University Press, Cambridge, MAGoogle Scholar
  10. Kapp KW (1961) Toward a science of man in society – a positive approach to the integration of social knowledge. Martinus Nijhoff, The HagueGoogle Scholar
  11. Kapp KW [1963] 1977 The social costs of business enterprise (second enlarged edition of The social costs of private enterprise (1950)). Spokesman, NottinghamGoogle Scholar
  12. Kapp KW (1963) Social costs and social benefits – a contribution to normative economics. In: Beckerath EV, Giersch H (eds) Probleme der normativen Ökonomik und der wirtschaftspolitischen Beratung, Verein für Sozialpolitik. Duncker & Humblot, Berlin, pp 183–210Google Scholar
  13. Kapp KW (1965a) Social costs in economic development. In: Ullmann JE (ed) Social costs, economic development and environmental disruption. University Press of America, Lanham/London, pp 1–38Google Scholar
  14. Kapp KW (1965b) Economic development in a new perspective: existential minima and substantive rationality. Kyklos 18:49–79CrossRefGoogle Scholar
  15. Kapp KW [1967] 1985 Economics and rational humanism. In: Ullmann JE, Preiswerk R (eds) The humanization of the social sciences. University Press of America, Lanham/London, pp 99–120Google Scholar
  16. Kapp KW (1968) In defence of institutional economics. Swed J Econ 70:1–18CrossRefGoogle Scholar
  17. Kapp KW [1971a] 1983 Implementation of environmental policies. In: Ullmann JE (ed) Social costs, economic development and environmental disruption. University Press of America, Lanham/London, pp 111–142Google Scholar
  18. Kapp KW [1971b] 1977 Social costs, neo-classical economics, and environmental planning. In: Kapp, K. William [1963a] 1977. The social costs of business enterprise, Appendix. Spokesman, NottinghamGoogle Scholar
  19. Kapp KW (1972) Umweltgefährdung als ökonomisches und wirtschaftspolitisches Problem. Schweizerische Zeitschrift für Forstwesen 123:211–222Google Scholar
  20. Kapp KW [1973] 1974 Environmental indicators as indicators of social use value. In: Kapp KW (ed) Environmental policies and development planning in Contemporary China and other essays. Mouton, Paris/The HagueGoogle Scholar
  21. Kapp KW (1974) Environmental policies and development planning in contemporary china and other essays. Mouton, Paris/The HagueGoogle Scholar
  22. Kapp KW [1974] 1983 Governmental furtherance of environmentally sound technology. In: Ullmann JE (ed) Social costs, economic development and environmental disruption. University Press of America, Lanham/London, pp 143–207Google Scholar
  23. Kapp KW (1976) The open-system character of the economy and its implications. In: Kurt D (ed) Economics in the future. The Macmillan Press, London, pp 90–105Google Scholar
  24. Kapp KW (undated) The foundations of institutional economics (unpublished manuscript). Kapp Archive, BaselGoogle Scholar
  25. Menger C (1923) Grundsätze der Volkswirtschaftslehre, 2nd, revised edn. Hölder-Pichler-Tempsky A.G./G. Freytag G.m.b.H, Wien and LeipzigGoogle Scholar
  26. Myrdal G [1929] 1954 The political element in the development of economic theory. Harvard University Press, Cambridge, MAGoogle Scholar
  27. O’Hara PA (2000) Marx, Veblen, and contemporary institutional political economy. Edward Elgar, Cheltenham/NorthamptonGoogle Scholar
  28. Pigou AC (1924) The economics of welfare, 2nd edn. MacMillan & Co., LondonGoogle Scholar
  29. Polanyi K [1947] 1968 Obsolete market mentality. In: Dalton G (ed) Primitive, archaic, and modern economies – essays by Karl Polanyi. Beacon Press, BostonGoogle Scholar
  30. Steppacher R (1994) Kapp, K. William. In: Hodgson GM, Samuels WJ, Tool MR (eds) The Elgar companion to institutional and evolutionary economics, vol 2. Edward Elgar, Aldershot, Hants and Brookfield, pp 435–441Google Scholar
  31. Veblen TB (1904) The theory of business enterprise. Charles Scribner’s Sons, New YorkGoogle Scholar
  32. Weber M [1925] 2005 Wirtschaft und Gesellschaft. Zweitausendeinsverlag, Frankfurt am MainGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Roanoke CollegeSalemUSA

Personalised recommendations