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Chapter1.Teconstitutionalstateasafunctionaltechnology
ofporkleadstoadecreaseinprices,which,inturn,createsanincentive
toreducethenumberofpigs.Asmallerlivestockpopulationleadstolow-
ersupplyandhigherprices,whichagaininducesfarmerstoexpandtheir
livestock,etc.Whilstthephenomenoniscolloquiallydubbeduthepork
cycle”
,itreferstoanyfieldofagriculturewhereproducerscanmoreor
lessflexiblyadaptthevolumeofproductiontochangingprices.Wehave
hereacomplexcycleofsocialchangesinthefarmingbusinessrevolving
aroundthenaturalcycleofgrowthinanimalsorplants.Interestingly,
theshorterthatnaturalcycle(i.e.theshorterthetimerequiredtoef-
cientlyadapttothechangingprices),themorelikelytheeconomiccycle
istooccur.Insomefieldsofagriculture,though,wherethenaturalcycle
ofgrowthissomehowtoolong,theuporkcycle”isnotreallyobservable.
Productionofwineandthecultivationofvineyardsisagoodexample.
Grapesgrownforwineneedmanyyearsbeforetheyreachsufcientma-
turity,andalotofcostlyexperimentationisrequiredbeforethevineyard
startstoyieldapredictabletaste.Evenifpricesfall,producerswould
ratherstockpiletheirwinethanreducetheacreageofvineyards.Abio-
logicalcyclethatistoolongmakestheuporkcycle”adaptationtoocostly
andtoorisky.
Tus,whenthecycleofadaptationisrelativelyshortandpredictable,
manysocialchangesgooninaloop,withoutanyclearultimatepur-
pose.Politicsworksverymuchlikeporkfarming.Whencapitalischeap
andaccessible,i.e.wheninterestratesarelow,governmentsborrowea-
gerlyandaccumulatesignificantgrossdebtevenwithoutclearnecessi-
ty.Wheninterestratesgoupandindebtednessstartstoweighheavily
onthepublicpocket,budgetarydeficitsarecutanddebtaccumulatesat
aslowerrate,orevendecreases.Tatleadstotheparadoxofcounter-ef-
cientfiscalpolicies,overlylaxinthetimesofplentyandunnecessarilyre-
strictiveinthetimesofscarcity.Althoughtheloopofadaptationisclear,
noultimatepurposecanbeascribedtoit.Itisprobablyoneofthegreat-
estmeritsofeconomicsciencestohaveshownthat,mostofthetime,
economicsystemsoscillateinasetofproximateincentivesratherthan
evolvetowardsomeultimatepurpose.
Terearetwotheoreticalreasonsfortheauthortoavoid,inthisbook,
theevolutionistdistinctionbetweenproximateandultimatecauses.First-
ly,weneveractuallyknowwhetherthecurrentlydiscoveredlinkbetween
phenomenaistheultimateone.Somethingthatwemaycurrentlyper-
ceiveastheultimatepurposeofsomebehaviourmightbesubordinateto
anevenmoreoverarchingonethatwehavenotgraspedyet.Tatleadsto
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