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The Guidance of an Enterprise Economy$
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Martin Shubik and Eric Smith

Print publication date: 2016

Print ISBN-13: 9780262034630

Published to MIT Press Scholarship Online: May 2017

DOI: 10.7551/mitpress/9780262034630.001.0001

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The Economy: Time, Size, and Complexity

The Economy: Time, Size, and Complexity

(p.179) 6 The Economy: Time, Size, and Complexity
The Guidance of an Enterprise Economy

Martin Shubik

Eric Smith

The MIT Press

The first five chapters have been devoted to reformulating a pre-institutional static theory of general equilibrium, into considering an economy in terms of process where markets and other institutions exist embedded within and interacting on different timescales with the polity and society. This embedding of the economy within the framework of government and society provides both a natural formal and informal control system. The government provides the formal rules with the laws and their enforcement and the society and polity on different timescales provide the pressure on the government for rule formation and the direct pressures on the economy to conform to custom as well as law. The price system where it exists provides a perception device where the pressures of disequilibrium are signalled by the shadow prices that develop both on the price of commodities and on loans and other financial instruments. We deal here with the production and exchange economy in a process setting.

Keywords:   Short term profit, overlapping generations, capital goods, gold miners, bankers, farmers

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