Wolfram Elsner - Social Costs Today: Institutional Analyses of the Present Crises

This book deals with the causes of the present crises, but it claims that causes and policy implications cannot be properly assessed by focusing on allocative efficiency or income growth alone; it contends that a more general approach is called for, based on social costs. It does not deal with social costs according to the Pigouvian or the Coasian traditions. It draws on the work of Original Institutional Economics (OIE) such as Thorstein Veblen, Karl William Kapp and Karl Polanyi, on post-Keynesians such as Hyman Minsky and, in general, on authors who have provided insights beyond the conventional wisdom of economic thought.

The assumption underlying the books social cost perspective is that social costs arise because the money-centered accounting of capitalist market economies is biased relative to social requirements and needs. Although social costs may sometimes have a monetary dimension, they cannot be dealt with in money terms alone. What is at issue at a more fundamental level is that (1) labor and knowledge, nature, money and finance, and problem-solving social institutions are treated as commodities, (2) our common knowledge is often distorted in order to favor vested interests, (3) whatever competition one might achieve, it cannot deal with the social dilemma between individualist profitability and societal serviceability and, finally, (4) when social costs rise and the quality of life declines, so does the ability of democratic collective action.

Social costs, in this perspective, identify the issues that need to be addressed if public policy would wish to prevent the economy from subsuming societal relations and freedom. Social costs, in this evolutionary-institutional perspective, particularly elaborated by Karl William Kapp, both precede and follow the crises, as causes and effects of the current financial, real economic, resources and food, energy and climate, social, political and moral crises. The sections in this book provide a framework that better allows us to situate the issues and to appreciate the crises.

Paolo Ramazzotti is Associate Professor of Public Policy at the University of Macerata, Italy.

Pietro Frigato received his PhD in Development Sociology from the University of Pisa, Italy.

Wolfram Elsner is Professor of Economics at the University of Bremen, Germany.

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