Knowledge that Transforms

The process of interrelating disciplines takes many forms. In some cases there is simply an analogizing or a borrowing of jargon-perhaps a mere transfer of metaphor, as when we speak of body politic. In other instances one discipline provides useful tools for the study of others; for example, physics has given economics and biology units of measurement for the study of energy. Sometimes there is an area of overlap between two fields and a hybrid discipline arises: biochemistry and biophysics are good examples. Finally we have cases in which two disciplines are really branches of a more general one. The obvious example is zoology and botany forming subdivisions of biology. In the present work I shall take the position that economics and biology do not merely share common interests; they have more than just a few lessons to learn from one another, or an interdisciplinary boundary at which common problems are dealt with. Rather, they constitute a single branch of knowledge. Just as biology deals with both plant and animal life, there should be recognized a branch of knowledge that deals with economic processes irrespective of whether they are man-made or not, concerning itself with such phenomena as competition that are common to all economies. Thus I propose that we recognize a body of knowledge called naturall economy (biology) coordinate with political economy (economics), together forming a branch of knowledge which we may call genleral

One of the great intellectual achievements of the twentieth century is the Bayesian theory of rational behavior under risk and uncertainty. Many economists, however, are still unaware of how strong the case really is for Bayesian theory, and many more fail to appreciate the far-reaching implications the Bayesian concept of rationality has for ethics and welfare economics. The purpose of this paper is to argue that the Bayesian rationality postulates are absolutely inescapable criteria of rationality for policy decisions; and to point out that these Bayesian rationality postulates, together with a hardly controversial Pareto optimality requirement, entail utilitarian ethics as a matter of mathematical necessity.

This paper develops an approach to understanding voluntary collective action. A simple model illustrating this approach predicts Pareto optimal provision of a nonexcludable public good in the case of identical actors with perfect information, regardless of the number of actors. In this approach, actors voluntarily subsidize each other's contributions to the provision of a public good. Each actor individually finds it optimal to match other actors' contributions dollar for dollar, and this matching behavior leads to a Pareto optimal outcome from the viewpoint of the group as a whole. The approach developed here differs from two other sets of proposed solutions to the free-rider problem. One set of proposed which may be called solutions, simply assert that individuals are forced to contribute toward the provision of collective goods, once desired quantities of such goods are known (for example, Mancur Olson; Gary Becker's theory of collusion; Theodore Groves and John Ledyard). These however, beg the question of how the coercion itself is financed, since the policing of collective agreements is itself a public good: noncontributors cannot be excluded from benefiting from the public good resulting from the coercion. Other proposed solutions of the problem of voluntary collective action assume some special property of the public good. Olson's by-product solution assumes that the public good can be jointly produced with a private good, and that the private good cannot be produced as cheaply without also producing the public good. George Stigler's asymmetry solution, as a second example, assumes that individuals have differing interests regarding the exact form that the public good will take, leading them to contribute so that the good that is provided is optimal from their own individual viewpoints. Both of these solutions implicitly introduce some form of private-ness into the public good whose provision they try to explain. This paper avoids limiting assumptions of special characteristics of public goods, and also does not postulate any coercion in the provision of the public good. After a description of the model, some examples of the predicted matching behavior and experimental evidence are briefly discussed.

The author determines which revenue schedule, when applied by economic regulation to production units, will result in an optimum response. He points out that regulations must be stable for a long-enough period to be taken seriously by a firm, although they should not be considered to be immutable, and that good regulatory strategy encourages cheap firms to produce more and expensive firms to produce less. A model framework is described for determining optimal revenue function and the various dependency factors are characterized. Two components, the traditional price signal and a penalty for departure from the quantity target, comprise the optimal reward function, which means that it is not redundant for economic planners to set both prices and production quotas. This analysis can be applied to environmental economics in terms of effluent standards.