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Design for Values in Economics

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Handbook of Ethics, Values, and Technological Design

Abstract

We distinguish the subjectivist value theory, providing the basis for neoclassical economics (NCE) and new institutional economics (NIE), and the social theory of value, underscoring original institutional economics (OIE). In NCE design involves a comparison of the structural characteristics and conduct in a real world market with the theoretically ideal competitive market. If any problems are identified, corrective action should (re)establish competition. NIE would additionally examine the characteristics of the transactions and potential external effects and evaluate the adequacy of the prevailing market institutions. The focus is on designing the right institutions for markets to reveal the subjective values of actors. OIE looks at design in a dynamic, holistic, and systemic way and considers “the market” as one of the possible tools out of many to realize social (moral) values. Individual and common values emerge and are constituted in interaction, being judged and deliberated in their specific context of time and place regarding their consequences for society.

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Notes

  1. 1.

    Adam Smith and Karl Marx are known because of their labor theories of value. For the differences between them and the problems of the theory in general, see Heilbroner (1988).

  2. 2.

    The consumer continues to demand units of a good or service until all marginal utilities are equal and she is not able to improve his/her total utility anymore.

  3. 3.

    A distinction is made between the so-called Williamsonian and the Northian branch of NIE (Groenewegen 2011). In our interpretation we conclude that the former stays in the philosophical and methodological tradition of NCE, whereas the latter departs from it and adopted many characteristics of the original economic institutionalists (see below).

  4. 4.

    Williamson (1998) locates those informal institutions at level 1. He does not explicitly distinguish values. We consider values to be at level 1.

  5. 5.

    The arrows in Fig. 1 indicate a causal relationship between institutional environment and governance structure; the dotted feedback arrows indicate that “Although, in the fullness time the system is fully interconnected, for my purposes here, these feed backs are largely neglected” (Williamson 1998, p. 26).

  6. 6.

    The positioning of agency theory (AT) only at level 4 is confusing: Elsewhere (Groenewegen et al. 2010) is explained that the positive AT can be best located at level 3 and the normative one at level 4.

  7. 7.

    Original institutional economics (OIE) was after the emergence of NIE often called old institutional economics. We prefer the terminology of original. The label of neo-institutionalism is also used for the postwar institutionalists like John K. Galbraith, Gunnar Myrdal, and others that followed the approach of Veblen and Commons (see Gruchy 1972). In this contribution we call the pre- and postwar institutionalists both OIE.

  8. 8.

    Interesting is the question what room is left for volition, for rational purposeful action. In this respect the distinction between habits and routines becomes important. Dewey (1922, p. 28) explains that habits also can be inquired and tested by man, i.e., man can take distance from the specific habits that cause an action and reflect on the consequences of that action. When such reflections raise doubts about the rightfulness (is the “is” well analyzed?) or desirability of the belief (do the habits contribute to the realization of the “ought”?), then man is in the position to inquire what is wrong about the habits causing the undesirable action and to intervene by altering the institutions (the rules of the game) to change the “habit of thought.” In the case of routines, man acts mechanically, without thought about the consequences and without valuation of the consequences of the routinized actions in the light of the societal goals. The real opposition is not between reason and habits, but between reasonable habits and unintelligently routinized habit (Costa and Castro 2011).

  9. 9.

    “Structuring reality” should not be interpreted as “creating reality.”

  10. 10.

    Bush (2009) makes a distinction between values (standards of judgment), valuation (the application of those standards), and value judgment (the evaluation of values in relation to (other) intrinsic values).

  11. 11.

    This is the core of philosophical pragmatism. In the words of Nooteboom (2013, p. 2), pragmatism “(…) holds that cognition, in a wide sense that includes normative judgments and goals, occurs on the basis of mental dispositions and categories that are developed in interaction with the physical and especially the social environment.” The crux of the argument is that action, practice, constitutes the actor: “Intelligence is internalised practice.” This connects well with the framework of North (2005) about institutional change.

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Acknowledgment

This research has been financed by a grant of the Energy Delta Gas Research (EDGaR) program. EDGaR is cofinanced by the Northern Netherlands Provinces, the European Fund for Regional Development, the Ministry of Economic Affairs, and the Province of Groningen.

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  1. Delft University of Technology, Delft, The Netherlands

    Aad Correljé, John Groenewegen, Rolf Künneke & Daniel Scholten

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  1. Aad Correljé
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  2. John Groenewegen
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  3. Rolf Künneke
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  4. Daniel Scholten
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Correspondence to Aad Correljé .

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Editors and Affiliations

  1. Department of Ethics and Philosophy of Technology, Delft University of Technology, Delft, The Netherlands

    Jeroen van den Hoven

  2. Department of Ethics and Philosophy of Technology, Delft University of Technology, Delft, The Netherlands

    Pieter E. Vermaas

  3. Department of Ethics and Philosophy of Technology, Delft University of Technology, Delft, The Netherlands

    Ibo van de Poel

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Correljé, A., Groenewegen, J., Künneke, R., Scholten, D. (2015). Design for Values in Economics . In: van den Hoven, J., Vermaas, P., van de Poel, I. (eds) Handbook of Ethics, Values, and Technological Design. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-6970-0_24

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