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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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Innovation and Evolution: Growth and Control

Innovation and Evolution: Growth and Control

(p.395) 10 Innovation and Evolution: Growth and Control
The Guidance of an Enterprise Economy

Martin Shubik

Eric Smith

The MIT Press

In connecting Walras and modern General Equilibrium theory with Keynes and Schumpeter we have confined ourselves to 1-ply games with government and a central bank and initial and terminal conditions specified. Pandora’s Box is opened at 2-ply or more. Then the whole world of learning, teaching, signalling, non-symmetric information and habit, herd and rule-of-thumb behavior open up . In this chapter previous approaches are noted, including large econometric models, simulations and possible operational games. Innovation in an asset rich economy is considered. The need for at least three levels of banking and a national debt is discussed. The institutions required are a central bank, commercial banks, and investment financiers, and a treasury or other named manager of a national debt. The chapter ends with a consideration of related complexities in biology and economic dynamics.

Keywords:   Commercial banks, national debt, fluctuation, modularity, robustness, canalization, friction

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