The Social Cost Concepts of K. William Kapp and Karl Polanyi

Both Karl Polanyi and K. William Kapp were concerned with social costs. Although Polanyi did not use the term extensively, his concept fiction communicates many of Kapp's concerns. This article explores the social cost concept with three objectives: to draw attention to Kapp's institutionalism, particularly his cost-shifting concept; to promote Polanyi's fundamental contribution to the analysis of social costs; and to recast the social cost concept itself in the context of the pervasive consequences of economic activities on individuals, sociosystems, and ecosystems. The first section examines Kapp's definition of social cost and his related concept of cost-shifting. The second section explores Kapp's evolution into institutionalism from the 1 940s to his last works in the mid-i 970s. The third section reviews the concepts of Karl Polanyi as they relate to social cost, focusing on the commodity fictions, the disembedded economy, the double movement, the obsolete market mentality, and the economistic prejudice. We show