The normative matrix of social costs: Linking Hayden's social fabric matrix and Kapp's theory of social costs

Abstract

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. © 2009 Springer-Verlag New York.