Economic theory excerpt on cash flow and generational capital

Suppose for example that cash flow rate is known to be 4%. Using (7.2), we would figure 1 100 years purchase = —_———— = yer oN 2 SO 525 years. A%/year 4% 4/100 4. That allows (7.1) to be reexpressed as capital = (cash flow) x (years purchase). (7.3) Where cash flow and cash flow rate are assumed constant over time, they become identical to profit and rate of return. Sumerians realized that return is the universal maximand, three millennia before Turgot wrote that down, and that competition tended to equalize it to a current market norm. Then it would also equal years purchase. Petty was searching for the rationale of years purchase, and found it in the generation length. Petty’s idea I think, and mine anyhow, could begin with capital = means of accomplishing goals= means of lineage survival= fitness. (7.4) Nature’s way is transmission of all fitness, meaning total capital for humans, to the next generation. Nature cares just as much for later generations, but trusts each generation of immediate descendants to know best what their own immediate descendants will need for that long-range goal. Each passes the baton and retires. We invest everything in the next generaton precisely because we care about the ones after. Hamilton’s rule reflects this reality. Grandoffspring are only % related to Chapter 7 Petty’s Idea 2/3/16 18 HOUSE_OVERSIGHT_011077