Tool's Social Value Principle

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The Paerto efficiency concept has often been used by neoclassical economists to provide a guide to deciding between states of resource allocation and policy.  The concept simply means that no one can be made better off without making someone else worse off.  It was thought to be a value or ethical free principle for making policy decisions in which economists did not have to take sides.  It is not, but that is a longer story (See Schmid 1987).

Institutional economists have tried to fashion their own guide to how policy or resource allocation decisions can be made.  They do not base this attempt on a belief that there is a neutral or non-ethical way to do this. That said, some believe we can fashion a concept that has a broad consensus and can guide decision making. Marc Tool is the best known institutional economist for this type of attempt with his social value principle.

The social value principle:  "choose or do that which provides for the continuity of human life and the non- invidious re-creation of community through the instrumental use of knowledge. Such provision represents progressive regulatory change; its impairment or deletion represents regressive regulatory change".  Marc Tool

 Tool then talks about the process of getting to the social value principle.  "we perceive democracy to mean that those who receive the incidence of policy must have and retain ultimate discretion over that policy-that is, that restraints and constraints are, in effect, self imposed through responsive and responsible political institutions and may be revised as the evolving consensus dictates. An instrumentalist can then regard the democratic process as an efficient vehicle through which to identify and promote the adoption of regulatory changes that, through continuing and successive approximation, will tend generally to reflect an implicit use of the instrumental value principle-they will represent progressive changes". So, Tool has laid out were we are headed and how we are to get there.

Finally Toole writes, "The instrumental efficiency criterion has a constancy of meaning over time. It will apply to the whole or any part of the social and economic processes. It displays real and unimpaired continuity. It satisfies all requirements for truth."  The social value principle has been controversial and many claim it is just substituting one set of ethical principles in exchange of the Paerto efficiency principle.  Warren Samuels and Anne Mayhew made this argument.


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