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SUMMARYThis article places special, but not exclusive emphasis upon those obstacles to the Pareto optimality of group behavior which arise from the imperfection of man's knowledge. Bounds upon Pareto optimal behavior are first discussed for three limiting 'societies'—(i) a society in which all members are independent, (ii) one in which only one‐way dependencies can arise and (iii) one in which all members are completely interdependent. These cases give insights into non‐limiting ones. Next, account is taken of the fact that few groups exist in isolation and some formal conditions, which make it impossible for a group to ensure itself of Pareto optimality, are stated. It is speculated that these conditions often arise. Further, it is shown that Pareto optimality of group behavior is, among other things, limited by factors such as individuals' imperfect knowledge of their own preferences, barriers to discovering the preferences of others, limitations imposed by the good faith of parties to agreement, the intrusion of emotional factors, e.g., in bargaining, false notions by individuals of their own predictive powers and the willingness of others to make concessions, and by other uncertainties about possible acts and the relationship between acts and outcomes.

SUMMARYAssumptions concerning the political behaviour of voters and politicians have first been made by A. Downs. Using these assumptions and considering several structural characteristics of democracy, the author of this paper attempts to develop some tendencies of economic policy. Since these tendencies are not only subject to the political but also to the economic situation of the country in question, additional assumptions upon the structure of economy have to be made. The present paper deals with a growing economy; it is assumed to work on a high level of diversification and consumption. Some sectors expand however only slowly, others even decline. Given these assumptions, the governmental economic policy will favour I. sectors with low rates of growth, and 2. sectors with low capital/ employment ratios. There exist, however, priorities about the measures to be taken: Import restriction is preferred to export promotion, export promotion to a policy of public buying and storing; even less estimated are public subsidies (provided costs of storing can be neglected and/or elasticities of demand and supply are low). The paper finally shows, how the tendencies of economic policy vary by changing political and economic structures of democracy.

SUMMARYPrediction as a rejection test for theories is limited and unnecessarily severe. Useful knowledge frequently does not fall into this mold. Also the prediction test does not follow from the view that science provides coherent explanations of experience. The inapplicability of prediction as a sharp test is especially likely to be true for macro‐economic development theories. Thus it may not be meaningful to say that a given theory is correct or incorrect in a strict sense. Where the phe‐nomena that a theory covers is inseparable from a large system in which it is imbedded then it may be impossible in principle to discover the true relations between variables. Although no single simple test may exist for a class of theories there may be a number of considerations that help us judge the adequacy of some theories.Development theories may be looked upon as sets of partially connected sample relations that operate within a changing environment. Such relations should be credible. Sample relations based on hypotheses that constantly flout experience are likely to be poor samples. Thus the realism of assumptions matter. Theories of the type considered may be useful in that the sample relations are helpful in the discovery of specific relations in specific contexts that we hope will work frequently in a loose fitting servo‐mechanistic type of arrangement so that (1) diagnoses of existing difficulties can be made, and (2) corrective policies fashioned which, while they cannot be expected to work universally, do work sufficiently frequently in terms of directional changes to be of interest.

SUMMARYThe object of this paper is two‐fold. First, an attempt has been made to show that under certain specific circumstances a livestock production system can be raised to a higher level of output by slaughtering some of the animals. Second, it has been then shown that given a free say to exchange and clearly defined preference scales of the consuming coalitions, this policy is strongly Pareto‐wise optimal. Finally the attention is drawn to the relevance of the policy to the problem of scarcity of food in India. It is suggested that India could do well by slaughtering of its animal population.

SUMMARYA market economy makes its large allocations and reallocation of resources on the basis of a summing up of the 'votes' recorded by customers in a host of small, individual market transactions. A critical task in appraising the efficiency of such an economy, then, is to determine whether and under what conditions this adding up process produces optimal results. The 'smallness' of the decisive, individual transactions—their limited size, scope and time‐perspective—can, it is argued, be a source of misallocations, in the sense that consumers might disapprove of the larger result thereby produced, if they were ever given the opportunity explicitly to vote for or against it.In certain circumstances, the smallness of the relevant decisions may produce authentic market failure. This will be the case where they do not include an independent appraisal of customers' desire to keep available for possible future use a service that they do not actually use in sufficient amount to cover the costs of providing it. In other circumstances, the smallness of the individual transactions may encourage irrational consumer choice, because they are too small to justify the effort of securing good market information. In yet others, monopoly elements may cause the buyer to be presented with excessively narrow choices that do not correctly reflect that actual costs of the competing alternatives; and the result may be an uneconomic spiral of product quality changes over time so‐called 'product inflation'. Finally, the cumulation of individual choices may have the ultimate effect of changing consumer preference function themselves, in which event it is not possible for welfare economics to judge the optimality of market performance. These possible defects of the market may be conceived in the more familiar terms—as attributable to externalities, market imperfections or the defects of consumer sovereignty itself. Emphasis on the contribution influence of the smallness of the controlling decisions has the virtue of suggesting the possible necessity of substituting a 'large' for a piecemeal accumulation of small decisions if the results are to be intelligently appraised or improved.