Tuesday, January 31, 2006

Capital is heterogenous.

The steps between raw resources and consumer goods are at least as diverse as those that occur in an ecological system. Think of the overwhelmingly numerous levels in the food chain, even in a simple pond ecosystem. These diverse steps transform resources into products and then products combine with resources or other products to yield the consumer good or service. Unless the raw resource is actually the consumer good, capital is needed to fulfill the production.

Capital is heterogenous with regards time and with regards structure. It is unfathomable to grasp this intricate latticework. Understanding the basic properties of this heterogenous latticework is sufficient since it is these properties and principles that clearly indicate that deliberate disturbances from outside the system are always harmful.

In the divine economy model it is the nature and role of knowledge to effectively send signals that reflect the order that is compatible with peoples' choices, and it is the alertness of entrepreneurs that leads to the discovery of how best to direct the capital structure over time.

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