Summary, Policy Implications, and a Final Test
The vital components of an organism, whether biological or social, are unique in that each one lives or dies according as the organism lives or dies. Nature or design has presented them with an environment in which they have no strictly private opportunity cost. Narrowly rational, perfectly informed, behavior by each vital component, each member of the nonconflictual team, would then generate jointly efficient behavior (Appendix A.2). The decentralized interactions among the vital components of any organism therefore produce a relatively direct and inexpensive path to a joint optimum, one lacking the wasteful status-seeking involved in ordinary strategic interaction (Appendix B. 1). Moreover — regarding the institutional evolution of a method of selecting and suitably constraining a team of incompletely informed but objective, “Pascalian”, individuals who are to make decisions about their society’s vital institutions — pragmatic imitation and a necessarily harsh level of natural selection work together to produce a rapid adjustment path.
KeywordsCapital Stock Money Supply Reaction Function Capital Subsidy Investment Subsidy
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