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Spontaneous Economic Order

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  • Yong Tao

Abstract

This paper provides an attempt to formalize Hayek's notion of spontaneous order within the framework of the Arrow-Debreu economy. Our study shows that if a competitive economy is enough fair and free, then a spontaneous economic order shall emerge in long-run competitive equilibria so that social members together occupy an optimal distribution of income. Despite this, the spontaneous order might degenerate in the form of economic crises whenever an equilibrium economy approaches the extreme competition. Remarkably, such a theoretical framework of spontaneous order provides a bridge linking Austrian economics and Neoclassical economics, where we shall comprehend a truth: "Freedom promotes technological progress".

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  • Yong Tao, 2012. "Spontaneous Economic Order," Papers 1210.0898, arXiv.org, revised Sep 2013.
  • Handle: RePEc:arx:papers:1210.0898
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    File URL: http://arxiv.org/pdf/1210.0898
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    References listed on IDEAS

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    1. Schroder, Mark Douglas, 1989. " Computing the Constant Elasticity of Variance Option Pricing Formula," Journal of Finance, American Finance Association, vol. 44(1), pages 211-219, March.
    2. Rainer Avikainen, 2009. "On irregular functionals of SDEs and the Euler scheme," Finance and Stochastics, Springer, vol. 13(3), pages 381-401, September.
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    Cited by:

    1. Yong Tao, 2015. "Universal Laws of Human Society's Income Distribution," Papers 1506.05418, arXiv.org.
    2. Yong Tao & Xiangjun Wu & Changshuai Li, 2014. "Rawls' Fairness, Income Distribution and Alarming Level of Gini Coefficient," Papers 1409.3979, arXiv.org.
    3. Tao, Yong, 2015. "Universal laws of human society’s income distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 435(C), pages 89-94.

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