Fundamental Values

Universally, Shared, Underlying Values

When individuals pursue their own specific purposes, which will of course differ from those of others and will vary over time, their actions tend nevertheless to be informed and supported by largely similar underlying values.

Fundamental values, for purpose of institutional economics Opens in new window, are defined as universally held, high, abstract preferences of individuals. However, more specific aspirations tend to be subordinated to them.

Whatever their background and the civilization they hail from, most human beings, when given the choice, place a high priority on attaining a number of fairly universal, fundamental values, even at the expense of other, more specific aspirations.

The values that we discuss in this post are ultimate purposes to which most people aspire and most consider as being desirable. Fundamental values take different concrete shape in different civilizations, but are in principle universally pursued irrespective of culture.

Examples of such fundamental values are freedom, justice, peace, security and prosperity.

These fundamental values constitutes powerful motives for human action and have pervasive influence over daily activities. Visible economic phenomena are influenced by these values in ways analogous to how invisible DNA carries genetic information, which forms all visible physiological and psychological traits.

Moreover, one can observe that these values are central to what most citizens would consider the good society Opens in new window (Boulding, 1959; Hazlitt, 1988/1964; 35 – 45 and 53 – 61).

They are:


Individual freedom from fear and coercion is spelled out in specific, political and economic liberties.

Freedom means that individuals can enjoy a safe-guarded sphere of autonomy to pursue their own, self-chosen purposes, a domain where they are in control of their decisions and actions, but of course within constraints set by physical-technical and socio-economic conditions, particularly the institutions that serve to protect the freedom of others.

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Freedom without the constraint of rules would be license, and license inevitably destroys social harmony and effective cooperation.


Justice means that people in equal circumstances are treated equally and that restraints are placed on all in equal measure, irrespective of class or person (no discrimination).

In practice, this relates normally to the demand for the rule of law, rather than the (arbitrary) rule of men. This kind of procedural (or formal) justice is closely related to equity, namely that all have the opportunity to pursue their self-set goals without artificial hindrance.

Some observers stipulate different interpretations of justice and equity, implying some degree of equality of outcomes irrespective of the starting position, luck or effort (see freedom, justice and equity Opens in new window).


Security is the confidence that people will be able to enjoy their life and freedom into the future without experiencing violent and undue interference and unexpected and unmanageable changes in their circumstances.

Security is thus the inter-temporal dimension of freedom. It may refer to one’s personal appreciation of security or to someone else’s appreciation of other people’s security.

Some observers (though decidedly not the authors of this work!) give a different meaning to security, relating it to the protection of acquired socio-economic positions and of certain conditions over time irrespective of changing circumstances and new challenges.


Peace is the absence of strife, terrorism and violence inflicted by powerful agents, both within the community (internal peace) and from the outside (external peace).

Peace is closely related to security according to our preferred meaning (in the above paragraph (#3)). By contrast, security in the sense of conserving acquired socio-economic positions frequently is detrimental to peace.


Economic welfare (or prosperity) relates to material betterment and some measure of security of material achievements over time.

Prosperity defines to what extent people’s wants are satisfied by the use of scarce resources.


A livable natural and man-made environment is another fundamental value that most people aspire to. This may be thought of, to a considerable extent, as a sub-set of security (for example, avoiding future environmental catastrophes that could harm human wellbeing).

Other observers, though not the authors of this work, nowadays postulate nature preservation as an absolute objective, which should overrule all other human aspirations.

These fundamental values take varying concrete form, depending on experiences and cultural circumstances. They have universal appeal only in their general, abstract content.

As far as we know, human beings have hardly ever striven to be deprived of freedom, to forego justice, and so on, unless they saw a worthwhile trade-off with another of the afore-mentioned fundamental values.

Of course, there are, for example, individuals and groups that avoid enhancing their economic welfare, either because they hold a fatalistic worldview Opens in new window or because they seek salvation in this life by abstinence from material satisfactions.

Generally, however, these fundamental human values—these universally shared preferences of a very high order—are revealed in frequent choices.

“Where an individual sets the ‘stopping point’, what ‘ultimate’ values he adopts, is solely his responsibility, not that of society, although the values prevalent in a given society influence the individual who has grown up there or lives there” (Radnitzky, in Radnitzky and Bouillon, 1995 a,p.7).

If one studies different civilizations in history and across the world today, it also becomes obvious that not all societies and groups pursue these fundamental values with equal energy.

Earlier in history and now still in less developed countries, one can observe that many with political influence are not committed to improving the human condition by realizing the values discussed here. Indeed, it is a distinguishing feature of the European, Judeo-Christian tradition that men could and should seek salvation by advancing their material welfare, freedom, justice and so on in this life (Nemo, 2006, Kapser, 2011b).

Many in other civilizations have accepted conditions as they are and have even made a virtue of fatalistic compliance (for example in many versions of the Hindu-Buddhist and Islamic traditions and in traditional Amerindian civilizations).

It is, however, also apparent that, during the broad sweep of history, many communities have become less otherworldly, more individualistic and more eschatological (that is, aware that life on earth can and should be improved).

The spread of modernity around the world has much to do with these fundamental shifts in basic attitudes. It is also evident that powerful elites have promoted the fatalistic worldview among the ‘masses’, in order to better control them and conserve their own advantageous social position.

Many social and political conflicts in the present era have to do with the fact that important sections of the population realize that they, too, can embrace eschatological aspirations and need not tolerate passively a continuation of the poor fate of their forebears.

Better information about the wider world and the example of a growing number of success stories in economic growth is making it more likely that fatalistic acceptance wanes and that the active, resourceful pursuit of fundamental, universal values spreads.

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As most human beings pursue these values through their actions, it seems appropriate to incorporate the analysis of values—and of how these values affect action—in the discussion of institutional economics. This also extends to normative deliberations.

Confining ourselves to a value-free analysis—in the sense of the analyst not referring to his values—would deprive the theory of much relevance, as it could not properly explicate reality.