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C00002 00002	TWO MODELS OF POLITICAL ECONOMY
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TWO MODELS OF POLITICAL ECONOMY


	A person's attitude to economic and political policy is often
determined   by  his  implicit  acceptance  of  one  of  two  extreme
conceptual models of how economic rewards are obtained:

	1.  It is possible to regard the world as  resource  limited.
In  this  case  what a person gets is determined by what share of the
resources he is  allocated,  and  the  main  problem  of  society  is
political - how to carry out this allocation fairly.

	2.  The  alternative  is to regard the world as work limited.
What is produced is determined by how much and how well people  work,
and  the main problem of society is economic - how to motivate people
to work well and to provide proper conditions  for  the  exchange  of
what they produce.

	When  the  issue is put this precisely, I suppose most people
will say that some rewards are resource limited  and  some  are  work
limited.   Moreover,  the  general  theory of economics is capable of
dealing with both extremes and with the mixed cases in between.

	However,  while  people  will   admit   resource   and   work
limitations in principle, people are limited in what they can keep in
mind at one time, and a given individual  tends  to  concentrate  his
attention  in  one direction or another.  Moreover, the extreme cases
are useful approximations to reality.

	In this essay, I am interested in two questions:

	1. In what ways is our country and our world resource or work
limited?   In this, I shall take the position that we are mainly work
limited, even  though  much  current  writing  seems  to  assume  the
reverse.

	2.  How  are  people's ideas on this matter affected by their
condition of life?   Herein,  I  have  come  to  the  almost  Marxist
position  that  people's  ideas  on %2this matter%1 are substantially
affected by their relation to the means of production as  it  affects
whether %2their own%1 rewards are perceived as allocated or earned.

	As to the facts, the matter is somewhat complicated.  Whether
a reward is resource or work limited depends on the time-scale
considered, the reward itself, and on the person.  Let us consider
a number of kinds of goods separately.

	1. %3Energy%1.  In the very short run, energy is resource limited.
There is a certain amount of gasoline in the tanks, and we have to
make do with it.  Normally there is enough so that people's use of it
is determined by their habits which in turn are determined by the
price and how it affects their allocation of their personal resources.
For most people, the price of gasoline is not the determining factor
in its use in the short run.  Whether you drive your car to a Ski Resort
is determined by other factors of convenience and cost than the
price of gasoline.

	In the slightly longer run, work limitations come in.  The 
oil well can be pumped faster, and more men can be hired to dig
coal.