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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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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 02 July 2022

Innovation And Breaking The Circular Flow

Innovation And Breaking The Circular Flow

Chapter:
(p.345) 9 Innovation And Breaking The Circular Flow
Source:
The Guidance of an Enterprise Economy
Author(s):

Martin Shubik

Eric Smith

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262034630.003.0009

Chapter 9 has a basic theme that even the simplest venture into innovation takes us into the realms of disequilibrium where the study of behaviour in transient states of any length is unavoidable, even if one sticks to the mantra of the rational economic agent. The very nature of the complexity involved in the study of innovation provides the curse of high dimensions. It is our belief that the utilization of low dimensional models in order to be able to obtain some analytical results, while of great value for exploration of basic problems, must be viewed in application as dealing with parable and metaphor intermixed with applied macroeconomics. Even with the gross behavioral simplifications of rational expectations these models can provide answers or at least raise precise questions in economic theory that remove the mystery from items such as “Bills only” by requiring specification of details such as grid size.

Keywords:   Innovation, Disequilibrium, fiduciary behaviour, grid size, circular flow

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