I think we may safely agree that the notion of democracy has two components, both indispensable: 1) the securing of the freedom of the individual so … - Kenneth Arrow

In this case of unrestricted income distribution, the dimensionality of the issue space is the same as the number of individuals. Thus, as Tullock argues, political resolution of distributional issues is apt to be possible only if only a few parameters of the income distribution are under consideration, not the whole distribution. Why this restriction of the scope of choice should occur is not easy to explain on simple economic grounds. On the other hand, the restriction does conform to the long-standing view of writers on ethics, of whom Kant is perhaps most conspicuous, that decisions on distribution ought to be made as if by an impartial observer, who considers then only the mean, a measure of inequality, and perhaps one or two further parameters characterizing the income distribution, but not specifically who gets what. If voters acted like Kantian judges, they might still differ, but the chances of coming to an agreement by majority decision would be much greater than if voters consulted egoistic values only. Does this suggest that ethics may have survival value for political systems and therefore descriptive as well as prescriptive significance?

Learning, as studied by psychologists, closely resembles sequential analysis in some aspects. Learning experiments usually consist of a series of trials in which the subject’s choices are sometimes rewarded and sometimes not. The individual, after making many choices, eventually begins to discriminate between the proper response and the improper one. At some point, presumably, he could terminate the experiment, at least in the sense of disregarding the further observations and making the same choice each time.

The comparative economic efficiency of capitalism and socialism remains one of the most controversial areas. The classical socialist argument is that the anarchy of production under capitalism leads to great wastage. An appeal to the virtues of the price system is, in fact, only a partial answer to this critique. The central argument, which implies the efficiency of a competitive economic system, presupposes that all relevant goods are available at prices that are the same for all participants and that supplies and demands of all goods balance. Now virtually all economic decisions have implications for supplies and demands on future markets. The concept of capital, the very root of the term “capitalism,” refers to the setting-aside of resources for use in future production and sale. Hence, goods to be produced in the future are effectively economic commodities today. For efficient resource allocation, the prices of future goods should be known today. But they are not. Markets for current goods exist and enable a certain coherence between supply and demand there. But very few such markets exist for delivery of goods in the future. Hence, plans made by different agents may be based on inconsistent assumptions about the future. Investment plans may be excessive or inadequate to meet future demands or to employ the future labor force.