Institutional economics and discourse theory stand unconnected next to each other, in spite of the fact that they both ask for the legitimacy of institutions (normative) and the functioning and effectiveness of institutions (positive). Both use as theoretical constructions rational individuals and the concept of consensus for legitimacy. Whereas discourse theory emphasizes the conditions of a legitimate consensus and could thus enable institutional economics to escape the infinite regress of judging a consensus legitimate, institutional economics has a tested social science (...) paradigm (rational choice) of explaining and predicting the functioning of institutions. The article outlines a theoretical synthesis of the two theories by finding points in common and possibilities of fruitful combinations concerning the problem of legitimacy, institutional design and effectiveness of legal norms. Key Words: consensus • discourse theory • effectiveness of legal rules • institutional design • legitimacy • new institutional economics. (shrink)

A claim that certain purely private matters should be beyond the reach of society's laws, moral rules, and other customs is central to the distinctive liberalism of John Stuart Mill. On Liberty, perhaps the most eloquent defense of individual liberty ever written, laments the hostility allegedly displayed in modern mass societies toward “the right of each individual to act [in private matters] as seems good to his judgement and inclinations”. In Mill's view, a free society must design its institutions with (...) due regard for what he terms “individuality.” That is, public authority, whether in the form of law, customary opinion, or economic power, must be self-limiting so that it does not interfere with the rights of individuals to choose as they like with respect to such private concerns as religious faith, reading materials, living companions, and consumption of drugs and alcohol. Individuals and voluntary groups should be permitted to do whatever they prefer within their private spheres even if everyone else in society dislikes what they do, is annoyed by them, and actually chooses not to be around them or to befriend them. (shrink)

In this article, we apply deductive content analysis to the 100 most influential publications in the field of social entrepreneurship to identify the normative assumptions in SE scholarship. Using eight contemporary schools of thought in political philosophy as a template for analysis, we identify the philosophies underlying SE literature and the important consequences of their normative stances, such as: ambiguous concepts, justifications and critiques, and normative contradictions. Our study contributes to the SE literature by proposing that political philosophy can help (...) to identify what counts as the ‘social’ in SE. We are showing some of the field’s inherent normative tensions that could dampen its impact, and propose ways in which a normative awareness would help to establish a basis upon which to evaluate and demonstrate the social, economic, and cultural impact of SE. (shrink)

This paper explores food commoning through an ethnographic case study in Catalonia as our primary site while the Norwegian case is juxtaposed as a comparison, two agriculturally and economically different European countries. The ethnography analyses cooperation networks between organic food producers’ and consumers’ involving different nodes of community gardening initiatives, self-employed growers, local farmers and all of them under a unique cooperative integrating a community economy. The result it is a myriad of exchange practices ranging from reciprocity and barter to (...) market exchange without intermediaries through on-line platforms. Along these exchanges different options of currency intervene giving rise to novel social and cooperative relations. Similar initiatives in Norway show less variation and are less experimental regarding forms of payment but share similarities in relation to material articulations, concerns and forms of alternative practice. Although these novel forms do not represent a complete break from the more standardized supply chains, and hence from the oppositions/contradictions of production and consumption, the participants see themselves as contributing to a more general process of de-commodification of food. We explore the extent to which the meaning and moral values are mutually constituted in relation to socioeconomic exchanges and environmental caring that each person experiences based on different forms of cooperation and reciprocity. Food, we suggest, is more than a commodity on the market that we may influence through our role as consumers. It is a significant focal point connecting our lives to those of others that articulates one’s relations to society in a political manner. (shrink)

This article presents a new model aimed at predicting behavior in games involving a randomized allocation procedure. It is designed to capture the relative importance and interaction between procedural justice (defined crudely in terms of the difference between one’s expected payoff and average expected payoff in the group) and distributive justice (difference between own and average actual payoffs). The model is applied to experimental games, including “randomized” variations of simple sequential bargaining games, and delivers qualitatively correct predictions. In view of (...) the model redistribution of income can be seen as a substitute for vertical social mobility. This contributes to the explanation of greater demand for redistribution in European countries vis-a-vis the United States. I conclude with suggestions for further verification of the model and possible extensions. (shrink)

The rational choice paradigm has proved to be a fruitful means of analysis and explanation in various disciplines concerned with questions of practical rationality, but in various attempts to extend its fields of application the deficiencies of the original account of rational choice have become evident. This paper tries to give a systematic overview of ways in which the rational choice paradigm can be extended and modified.

John Stuart Mill provides a classic defense of individual and group rights to liberty with respect to purely private or self-regarding matters: The only part of the conduct of any one, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself … directly, and in the first instance, … his independence is, of right, absolute.… From this liberty of each individual, follows the liberty, within the same limits, of combination among individuals; (...) freedom to unite, for any purpose not involving harm to others: the persons combining being supposed to be of full age, and not forced or deceived. (shrink)

Economic approaches to both social evaluation and decision-making are typically Paretian or utilitarian in nature and so display commitments to both welfarism and consequentialism. The contrast between the economic approach and any rights-based social philosophy has spawned a large literature that may be divided into two branches. The first is concerned with the compatibility of rights and utilitarianism seen as independent moral forces. This branch of the literature may be characterized as an example of the broader debate between the teleological (...) and deontological approaches. The second is concerned with the possibility that substantial rights may be grounded in utilitarianism with the moral force of rights being derived from more basic commitments to welfarism and consequentialism. This branch of the literature may be characterized as an exploration of the flexibility of the teleological approach, and, in particular, its ability to give rise to views more normally associated with the deontological approach. This essay is concerned with the second branch of the literature. (shrink)

It has become accepted that social choice is impossible in the absence of interpersonal comparisons of well-being. This view is challenged here. Arrow obtained an impossibility theorem only by making unreasonable demands on social choice functions. With reasonable requirements, one can get very attractive possibilities and derive social preferences on the basis of non-comparable individual preferences. This new approach makes it possible to design optimal second-best institutions inspired by principles of fairness, while traditionally the analysis of optimal second-best institutions was (...) thought to require interpersonal comparisons of well-being. In particular, this approach turns out to be especially suitable for the application of recent philosophical theories of justice formulated in terms of fairness, such as equality of resources. (shrink)

Radical and liberal theories of egalitarianism are distinguished, in large part, by the differing degrees to which they hold people responsible for their own well-being. The most liberal or individualistic theory calls for equality of opportunity. Once such “starting gate equality,” as Dworkin calls it, is guaranteed, then any final outcome is justified, provided certain rules, such as voluntary trading, are observed. At the other pole, the most radical egalitarianism calls for equality of welfare. In between these two extremes are (...) egalitarian proposals that equalize more than conventional opportunities, yet less than full welfare. Sen speaks of equality of basic capabilities as a goal; implementing that requires more than starting gate equality, because some will require more resources than others to attain the same capabilities. Meeting basic needs is another objective. Equality of needs fulfillment is perhaps less radical than equality of basic capabilities and more radical than equality of opportunity. Rawls takes equality of primary goods as a benchmark; he distinguishes primary goods from welfare, but includes among them goods that are more complicated than conventional resources and opportunities, all of which are supposed inputs into any conception of welfare. One could imagine proposing an egalitarianism that equalized some quite measurable outcome across populations, such as infant mortality. That would be an outcome-equalizing theory where the rate of infant mortality is a proxy, presumably, for some more complicated maximand, such as the degree of wellbeing of a population. (shrink)

This article provides a framework for comparing meritocratic and affirmative action admissions policies. The context of the analysis is admissions to public universities; admission rules are evaluated as part of the public investment problem faced by a state government. Meritocratic and affirmative admissions policies are compared in terms of their effects on the level and distribution of human capital. I argue that (a) meritocratic admissions are not necessarily efficient and (b) affirmative action policies may be efficiency enhancing relative to meritocratic (...) ones. Both these claims, as well as their negations, depend on features of individual behavior for which there is little empirical evidence. The implications of this absence of evidence are then explored, with a focus on policy evaluation when equality and efficiency are both desiderata. I argue that standard statistical decision theoretic approaches do not apply to the affirmative action case, even if equality and efficiency are rendered commensurable based on a scalar payoff function. In this context, I suggest that a presumption for equality-enhancing policies leads to support for affirmative action, but I emphasize the contingent nature of this conclusion. Key Words: affirmative action • meritocracy • college admissions • efficiency. (shrink)

In a recent examination of the origins of ordinal utility theory in neoclassical economics, Robert D. Cooter and Peter Rappoport argue that the ordinalist revolution of the 1930s, after which most economists abandoned interpersonal utility comparisons as normative and unscientific, constituted neither unambiguous progress in economic science nor the abandonment of normative theorizing, as many economists and historians of economic thought have generally believed. Rather, the widespread acceptance of ordinalism, with its focus on Pareto optimality, simply represented the emergence of (...) a new neoclassical research agenda that, on the one hand, defined economics differently than had the material welfare theorists of the cardinal utility school and, on the other, adopted a positivist methodology in contrast to the less restrictive empiricism of the cardinalists. (shrink)

Amartya Sen has developed the so-called capability approach to meet the criticism that income alone may be insufficient as a measure of economic inequality. This is because knowledge about people’s income does not tell us what they are able to acquire with that income. For example, people with the same income may not have the same access to health and transportation services, schools and opportunities in the labor market. Recently, there has been growing interest in empirical studies based on the (...) capability approach. Most of these, however, are only loosely related to quantitative behavioral theory, at least in a concrete and empirically operational way. The purpose of this paper is to demonstrate that the theory of random scale models offers a powerful theoretical and empirical framework for representing and accounting for key aspects of Sen’s theory. (shrink)

Economists use tastes as a source of information about personal welfare and judge the effects of policies upon preference satisfaction; neoclassical welfare economics is the analytical embodiment of this preference sovereignty norm. For an initial distribution of wealth, the welfare-maximizing outcome is the one that exhausts all possible gains from trade. Gains from trade are defined relative to fixed ordinal preferences. This analytical apparatus consists of both the Pareto principle, which implies that externality-free voluntary trades increase welfare, and applied costbenefit (...) analysis, which attempts to weight costs and benefits when evaluating policies that are not Pareto improvements. (shrink)

Since Condorcet discovered the voting paradox in the simple majority rule, many scholars have tried to investigate conditions that yield “social-preference cycles”. The paradox can be extended to two main approaches. On the one hand, Kenneth Arrow developed a general framework of social choice theory; on the other hand, direct generalizations of the paradox were offered. The motivation and surface meaning of the two approaches are different, as are the assumed background conditions. In this paper, we investigate the relationship between (...) the two approaches by taking a close look at two works, Ferejohn and Fishburn and Schwartz. (shrink)

The paper discusses some of the criticisms of contingent valuation (CV) and allied techniques for estimating the intensity of peoples' preferences for the environment. The weakness of orthodox utilitarian assumptions in economics concerning the commensurability of all items entering into peoples' choices is discussed. The concept of commensurability is explored as is the problem of rational choice between incommensurate alternatives. While the frequent claim that the environment has some unique moral intrinsic value is unsustainable, its preservation often raises ethical and (...) other motivations that are not commensurate with the values that people place on ordinary marketable goods. Nevertheless, CV is also claimed to have some advantages and it is concluded that little progress will be made in this area until both sides in the debate recognise what is valid in their opponents' arguments. (shrink)

The paper argues against the polarisation of the health economics literature into pro- and anti-QALY camps. In particular, we suggest that a crucial distinction should be made between the QALY measure as a metric of health, and QALY maximisation as an applied social choice rule. We argue against the rule but for the measure and that the appropriate conceptualisation of health-care rationing decisions should see the main task as the integration of competing and possibly incommensurable normative claim types. We identify (...) the main types as consequences, rights, social contracts, individual votes and community values and note situations in which the contribution of each claim type is limited. We go on to show that the integration of (at least some of) these claim types can be formalised within the mathematical framework provided by non-linear programming. (shrink)

Institutional economics and discourse theory stand unconnected next to each other, in spite of the fact that they both ask for the legitimacy of institutions (normative) and the functioning and effectiveness of institutions (positive). Both use as theoretical constructions rational individuals and the concept of consensus for legitimacy. Whereas discourse theory emphasizes the conditions of a legitimate consensus and could thus enable institutional economics to escape the infinite regress of judging a consensus legitimate, institutional economics has a tested social science (...) paradigm (rational choice) of explaining and predicting the functioning of institutions. The article outlines a theoretical synthesis of the two theories by finding points in common and possibilities of fruitful combinations concerning the problem of legitimacy, institutional design and effectiveness of legal norms. (shrink)