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OLICOGNOGRAPHY on DEMOCRATIC ECONOMY

Synthesis, Value, Project

Basic Olicognograph: Reduce Complexity Criteria

Methods

Methods of synthesis for analysis, decisions or assessment for those concerning infrastructure projects have been developed 4 decades ago. Practically they represent an opportunity for an ordering of arguments, to put into perspective of projects or strategy(ies) of utility. Investment Decisions often care: 1) Ranking, 2) Limited budget, 3) Accepted / rejected, 4) Select from mutually exclusive alternatives.

Economic Investisment criteria used are often: 1) NPV - Net present value, 2) TLCC - Total life-cycle cost, 3) LCOE - Levelized cost of energy, 4) RR - Revenue requirements, 5) IRR - Internal rate of return, 6) MlRR - Modified internal rate of return, 7) SPB - Simple payback period, 8) DPB - Discounted payback period, 9) B/C - Benefit-to-cost ratio, 10) SIR - Savings-to-investment ratio".

"Unambiguous dominance of options or projects is by no means impossible, and a limited range of comparisons are more likely; still will often lack transitivity between ranked options; when more than 3 alternatives and projects are complex. Consequently, any project's evaluation based on a specific discount rate should include information on whether, and to what extent, the initial judgment is robust to changes, in the discounted rates. If unambiguous dominance holds, then for purposes of comparing projects, the discussion is ended. If there is dominance for a range of rates, then the discussion should center on whether the range includes all 'reasonable" rates.

There are psychologic difficulties with methods of synthesis. Especially when powers struggle for influence. Diverging interests may intermediate and/or when methods are not logically shared by different partners. When setting value the ambition is, as far as possible, that the synthesis be summerized as a simple and unique expression of value. This is hard if issues are risky, heterogenous, mixed and with complicated expressions of values. Of course one will think that money expression of value grounds the most universal expression of it. Commonly in international money because supposed to be free of distorsions. This misses not even the complexity of valuing processes and the variable definitions meaningful to people as well as its variable degrees of proper monetary expression. Complicated processes of imported/non imported, tradable/not tradable issues follows, but may often miss to involve participation. Goods and services in many sets composing projects are variably able to be expressed in money amount and this variability takes also economic sense.

Synthesis would be easier if expressed in the same register, simplification(s), reduction(s), and cover(s) (covering of the extent of some problem) of social and adverse effects could be understood, scaled homogeneously or at least weighted according some simple way by all relevant and consistent actors of the project. It is to focus processes on common and shared minimum understanding and clear agreement. Goals should also better be coherent with community's or society's aspirations, expectations (not always rational), good synergies between processes (not considering that all projects to be relevant) and really sustainably achieved (in the common flows of common local practices)

Valuation processes of projects can stay artificial and not necessary ones. If common use persist in conceiving the world in a "human" deterministic way. Risks taking should be assumed if uncertainties are understoodFailures of conventionalist methodology. "If we accept the Popper-Socrates view that there is no operational way of knowing when a theory or model is true (even if it is true), then it is impossible to construct the necessary ‘verisimilitude function’ which would enable us to compare two competing theories. We may accept some econometric convention (based, for example, on R s, t-tests, etc.) to assign degrees of confirmation, but there is no reason why one convention would be accepted over another (unless we are only concerned with practical problems). It has been argued that conventionalist methodology, in attempting to solve the choice problem, is pursuing an uninteresting (because unsolvable) problem. The more interesting problem might be understanding and even promoting (techniques inducing technological) revolutions in our world views. The efforts of science as a learning process are directed at learning through criticizing our world view, especially the limitations on our world view".

"The solution of the choice problems of conventionalist methodology relies on certain calculus-type situations – e.g. maximizing corroboration, maximizing expected probability, etc. To use such a method requires that the relationship between variables of a model or theory and the real world (i.e. the correspondence between theories and facts) be of a continuous, singlepeaked or monotonic nature. There is no reason to expect this to be the case. In fact, only one theory among available competitors can be true (and there is no reason why even one should be true). All others will be false. Attempts to disguise this with calculus can only increase the difficulty in criticizing our world view".

"Super Correspondence Principle: Problem of explanatoriness, problem of identification (which is usually solved by equating the number of exogenous and endogenous), and problem of stability which follows from Samuelson’s ‘correspondence principle’ (the testability of equilibrium models requires a specification of disequilibrium dynamics that would provide an explanation for why the equilibrium state was achieved) are not separate issues as most economic theorists would seem to think. Rather, these three allegedly separate problems are all variants of one methodological problem – namely, the problem of the informativeness (beyond available data) of our economic theories and models. No one of the allegedly separate problems is solved unless all of them are solved. The requirement of testability has survived because most model builders presume it to be the sole means of avoiding tautologies. Actually, to avoid tautologies, all we need do is establish that our theories are conceivably false.

Social and Economic Issues

Some schools of economics can prefer to relate economic value to some theoretical market frame of market or general equilibrium models of prices biased toward prices existing at international levels and perfectly tradable goods and services. Positioning local existing values at inferior ranks. Critical humane values are needed for honnesty, transparency to forge proper view on their system of values. That is able to guide decisions toward sustainability. Needs let unmeet nor gauged by despicable formal views on economics theories. Other methods can be biased, for good or for bad, toward the jobs and value added, of a given project to the local or regional economics. This may look like better anchored but somehow also missing the hard flexibility local people expect (mistakingly sometimes) and many biased local interests make the overview on the sustainability of the project.

Anyhow these elements of a project make the opportunity both to detail, as in our frame, what are the social interests (eventually by types of actors: firms, households, government); the sort of expertise required (health - social - ecological) for the proper identification of externalities and concerns. Also for defining the sort of status the register may have respect to the assessment. A given project may inscribe itself with a health, ecological or social as primary, be its entry or just an output of externalities or concern.

Together: Social Capital or Public Economy Concern

Anyhow one the most important of any anthropic process is learning (toward wisdom?). Many unwise theories have intented to fix a concept of human capital, but our concern is with fixed definition. If definitions are part of answers to questions as well so are flexibility of concept(s) around social capital. (Dasgupta, Bowles & Gintis) "Social capital generally refers to trust, concern for one's associates, a willingness to live by the norms of one's community and to punish those who do not. might be, but to ask instead a fundamental question facing any group of people who have agreed on a joint course of action: under what contexts can the members be sanguine that the promises they have made to one another are credible ? Dasgupta's exploration: 1) Trust and Credibility: - Mutual Affection - Pro-social Disposition - The Need for Incentives to Keep Promises - External Enforcement - Reputation as Capital Asset - Mutual Enforcement in Long-term Relationships; 2) Culture as Beliefs : - Cultural Stereotypes - Civic Virtues - Culture vs Explanatory Variables - Social Capital; 3) Creating Networks: - Network Externalities - Weak and Strong Ties - Inherited Ties - Multiple Equilibria Again - Contagion Models; 4) Networks Sustained: -Human Capital - Horizontal ve. Vertical Networks - Networks and Markets ( - Complementarities - Crowding Out); 5) Micro-Behaviour and Macro-Performance: - Scale vs. Change - Cross-Section - Network Inefficiencies - Dark Matters 6) Standard Weaknesses of Social Capital: - Exploitation within Networks". With Putman "Social capital refers to connections among individuals - social networks and the norms of reciprocity and trustworthiness that arise from them... A society of many virtuous but isolated individuals is not necessarily rich in social capital".

See also our extended concept of integral capital where: tranversally, human operator manage tools boxes (present) and technologies (now and forward, according past but not only). Making as a delocalized cloud between (and out ?) 3 factors. Also higher scaling: from individual to social, because economy is social. So a second integrative cloud of intermediate trajectories extend to working population (complexte interacting collections of humans), all actually working techniques and machines; working to reproduce society. Not just the working population; all within a system or technological civilization. Still not to speak of social classes, discontinuities and other intermediate complexities, structuring space in times of renewal and reproduction. This designs a minimum sense of integrated poles-factors-pooling perspective over capital: human and social, tools and collection of means: techniques, major machines and knowledge - logics - technologies... So that a no so complex overview; to care about capital and potentialities as a social trying to design projects of sustainability.

Too there is the concept of public insterst or related concepts applied to social projects as:" ‘Marginal cost of public funds’ (MCPF) is a problematic term in the cost–benefit literature. There are 2 different traditions: the Harberger - Pigou - Browning tradition in which the marginal cost of public funds is always larger than unity and the Dasgupta – Stiglitz – Atkinson – Stern tradition in which it may be larger or lower than one. In the first tradition the marginal project is a lump sum transfer to a representative consumer financed by a distortionary tax. A marginal cost of public funds greater than unity then occurs because the dead–weight loss of taxation. In the second the marginal project is arbitrarily defined. The size of the marginal cost of public funds then depends on factors such as, e.g., whether the tax system is optimal or if non–optimal which the marginal source of financing is".

"The marginal cost of public funds is defined as the ratio between the shadow price of tax revenues and the population average of the social marginal utility of income. Under optimal taxes a positive net social benefit is a necessary and sufficient condition for a project that passes the cost–benefit test. Under non–optimal taxes this is not the case: If taxes are too low a positive net social benefit is a necessary but not sufficient condition and if taxes are too high a sufficient but not necessary condition for an accepted project".

Questions related to institutional linkages: 1) Are there nested institutions to provide a hierarchy of governance structures?, 2) What horizontal linkages (across the same levels of organization) and vertical linkages (across levels of organization) exist in the study area? 3) Are there boundary organizations involved in the project that can play bridging roles across levels of organization?"

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