ABSTRACT
In Chapter 11 we use a simple one-good, three-year model to shed light on two crucial questions regarding investment planning: (1) How can investment planning be done democratically with maximum participation by workers and consumers? (2) How can we solve the missing information and missing people problems in a way that mitigates welfare loses, since initial investment plans must be based on assumptions about future preferences, technologies, and labor supplies, which will inevitably prove to be somewhat inaccurate, and future generations cannot participate in creating investment plans that will affect them? In a simple setting we proposed first, how, with the aid of a “generational equity constraint,” aggregate investment planning can be carried out in a democratic and participatory way; and second, how participatory aggregate investment planning and participatory annual planning can be integrated so as to reveal and correct inevitable errors in initial investment plans and thereby mitigate welfare loses.
