This article deals with the theory of social costs by K. William Kapp, as outlined in his book The Social Costs of Private Enterprise (1950). This work is a continuation of the socialist calculation debate, in which Kapp defended the possibility of rational planning, that is, the need to prevent social costs ex ante. This defense of planning to prevent social costs was developed into a foundation for social economics, consisting of a framework for social and democratic controls of the economy. The framework effectively ties market, state, and civil society actors to a substantive rationality, that is, social minima. Hence, Kapp developed a genuinely social theory of social costs because it originated as an explicit defense of the substantive rationality of planning to prevent social costs and guarantee social minima, and became the foundation of a comprehensive theoretical framework of social economics.

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