J. D. Nyhart and Edmond F. Janssens, A Gobal DirectorZ of Development
Finance Institutions in Developing Countries, Paris; Development Centre of
the Organization for Economic Cooperation and Development, 1967.
2. V. V. Bhatt, Aspects of Functions and Working of Some Development Finance
Companies, Economic Development Institute, World Bank, Washington, 1974
(Mimeo). See also, V. V. Bhatt, On Technology Policy and Its Institutional
Frame, World Development, Vol. 3-, No. 9, September 1975.
3. William Diamond and Ravi Gulhati, Some Reflections on the World Bank's
Experience With Development Finance Companies, Paper presented at an
international seminar on Development Banks under the joint auspices of
the Bankers' Training College of the Reserve Bank of India and the
Economic Development Institute of the World Bank, Bombay, 1973 (Mimeo).
4. Ibid.
5. Peter F. Drucker, Management: Tasks, Responsibilities,_Practices, Harper
and Row Publishers, New York, 1973. Chapter 4, and pages 508-510.
6. Joseph A. Schumpeter, Business Cycles; Volume I, Mcgraw-Hill Company, Inc.,
New Yor 1939.
Schumpeter writes: 11... The assumption that business
behavior is ideally rational and prampt, and also that in principle it is
the same with all firms, works tolerably well only within the precincts
of tried experience and familiar motive. It breaks down as soon as we
leave those precincts and allow the business community under study to be
faced by -- not simply new situations, which also occur as soon as external
factors unexpectedly intrude but by -- new possibilities of business action
which are as yet untried and about which the most complex command of
- 19
routine teaches nothing. Those differences in the behavior of different
people,which within those precincts account for secondary phenomena only,
become essential in the sense that they now account for the outstanding
features of reality and that a picture drawn on the Walras-Marshallian
lines ceases to be true -- even in the qualified sense in which it is
true of stationary and growing processes: It misses those features, and
becomes wrong in the endeavor to account by means of its own analysis for
phenomena which the assumptions of that analysis exclude". "Those differences
belong, as a special case, to the class of facts usually dealt with under
the heading of Leadership." pp. 98-99.
7. Kenneth J. Arrow, "Limited Knowledge and Economics Analysis," The American
Economic Review, Volume 64, Number 1, March 1974. Arrow writes, "The
uncertainties about economics are rooted in our need for a better understanding of the economics of uncertainty -
- Even as a graduate student,
I was somewhat surprised at the emphasis on static allocative efficiency
by market socialists, when the non-existence of markets for future goods
under capatalism seemed to me a much more obvious target... But he cannot
know the future. Hence, unless he deludes himself, he must know that both
sects of expectations may be wrong. In short, the absence of the market
implies that the optimiser faces a world of uncertainty... In fact, of
course, the basic economic factors are changing, partly endogenously
because of capital accumulation in its most general sense, partly exogeneously with predictable aind unpredictable changes in technology and
tastes; equally if not more important, though, is the fact that the
dispersion of information which is so economical implies that different
economic agents do not have access to the same observations. Hence, it
- 20
is reasonable to infer that they will never come into agreement as to
probabilities of future prices... A further implication is that the
past influences the future... The past is relevant because it contains
information which changes the image of the future; the probabilities
which govern future actions are modified by observations on the past.
It follows that present decisions with implications for the future are
functions of the past values of variables as well as present values...
What still.needs to be exploited more, however, is that the inference
to the future is necessarily uncertain... A truncated theory of temporary
equilibrium in which markets for future goods are replaced by some form
of expectations, themselves functions of current prices and quantities,
has indeed, been developed, though its empirical content is necessarily
meagre if the formation of expectation is left unanalyzed."
See also, "Kenneth Arrow on Capitalism and Society," Business and Society
Review, Number 10, Summer 1974. Arrow writes: "I've stressed earlier
the information element -- that links in the chain of communication are
in part human. They have to be human because human transducers are
incredibly efficient in certain ways, though very inefficient in others.
They are relatively poor in arithmetic, but they are very good at integrating disparate pieces of information. There is no likelihood that they
will be replaced. So long as they exist, the qualities that make human
beings differ from each other and that impede or enhance communication
among them will be important... It's also true that when there's flexibility in decision making, there's power, as well as information transfer.
The ability to weild power and the efficiency with which it's harnessed
for profitable aims make the difference between successful and unsuccessful
firms. They may also determine whether the economy as a whole is more or
less efficient."
- 21
8. Joseph A. Schumpeter, History of Economic Analysis, Oxford University
Press, London, 1954. Schumpeter writes: "Theorists -- especially of
the planning type --
often indulge in the deplorable practice of deriving
'practical' results from a few functional relations between a few economic
aggragates in utter disregard of the fact that such analytic set-ups are
congenitally incapable of taking account of deeper things, the more subtle
relations that cannot be weighed and measured but may be more important to
a nation's cultural life than things than can." pp. 788-789.
9. On the distinction between thought (which is inevitably based on the past
-- knowledge, skills, techniques, tools) and intelligence (or perception
or insight) See J. Krishnamurti, The Awakening of Intelligence, Harper
Row Publishers, New York, 1973. pp. 509-538. See also Arthur Koestler,
The Act of Creation, A Laurel Edition, New York, 1967. Chapter VII.
Koestler writes: "Language can become a screen which stands between the
thinkers and reality. This is the reason why true creativity often starts
when language ends." p. 177.
On decision making see also, John Maynard Keynes, The Ceneral Theory of
Employment, Interest, and Money, A Harbinger Book, Harcourt, Brace and
World Inc., New York, 1965. Keynes writes: "The characteristic of human
nature that a large proportion of our positive activities depend on
spontaneous optimism rather than on a mathematical expectation, whether
moral or hedonistic or economic. Most, probably, of our decisions to do
something positive, the full consequences of which will be driven out
over many days to come, can only be taken as a result of animal spirits
-- of a spontaneous urge to action rather than inaction, and not as the
outcome of a weighted average of quantitative benefits multiplied by
quantitative probabilities... Thus if the animal spirits are dimmed
- 22
and the spontaneous optimism falters, leaving us to depend on nothing
but a mathematical expectation, enterprise will fade and die; -- though
fears of loss may have a basis no more reasonable than hopes of profit
had before... We are merely reminding ourselves that human decisions
affecting the future, whether personal or political or economic, cannot
depend on strict mathematical expectation, since the basis for making
such calculations does not exist; and that it is our innate urge to
activity which make the wheels go round, our rational selves choosing
between the alternatives as best we are able, calculating where we can,
but often falling back for our motive on whim or sentiment or chance".
pp. 161-163.
10. See Peter F. Drucker, op.cit. Chapter 52.
11. Ibid, Chapter 49.
