Abstract
Economic development involves increased production efficiency and rising consumption standards. This requires capital accumulation, which allows for a better division of labor; that is, a process of ever deepening differentiation of knowledge and know-how on both the scientific/technological and user levels. Since the industrial revolution, efficiency has entailed standardization and scale economies have only been available for highly standardized goods around the production of which it was possible to conceive and develop efficient apparatus. This meant huge plants to produce physical commodities. However, even then the financial capital that was and still is a precondition for production (the physiocrats called it “advances”) could only be raised through the design of a share-holding mechanism (to assure financial divisibility). The resulting mechanism was limited liability, which is also a risk-sharing device to stimulate entrepreneurship.
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Teubal, M., Zuscovitch, E. (1994). Demand Revealing and Knowledge Differentiation Through Network Evolution. In: Johansson, B., Karlsson, C., Westin, L. (eds) Patterns of a Network Economy. Advances in Spatial and Network Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78898-7_2
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DOI: https://doi.org/10.1007/978-3-642-78898-7_2
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