ABSTRACT
The aim of this chapter is to assess the notion of social costs from an evolutionary institutionalist perspective. It argues that: (1) social costs can be defined as the difference between the actual outcome of a historically defined capitalist market economy and the outcome desired by the members of society; (2) markets are only one of the possible coordinating instances in such economies, albeit the prevalent one, the others including non-profit organizations, the welfare state, households, etc.; (3) under these circumstances, the assessment and organization of economic activities requires a meta-coordinating instance, and the extension of capabilities, as theorized by Amartya Sen, may provide such an instance.
