at the end. Risk theory reinforces that impression by adding that the contribution of

at the end. Risk theory reinforces that impression by adding that the contribution of productivity in the form of realized work/human capital actually declines. One cannot pound too many stakes through the heart of the doctrine that pay compensates realized work alone. Next Generation Theory I also treat rate of return. This combined free growth theory with insights of Petty in 1662 and William Stanley Jevons in 1871. Petty’s idea was that each generation passes the baton to the next. Our investment horizon is the generation length. Its reciprocal, or one over that period, gives our time preference rate. Jevons also saw time preference as the reciprocal of the period of production, but did not connect that to the generation length. I adjust Petty’s estimate of the length from his 21 years to 28.5 by allowing for later births as well as firstborns. The reciprocal is 3.5% per year. I add free growth as an exogenous and unspecified variable. As with Mill and free growth theory, | have to walk a fine line between crediting Petty and putting my ideas in his mouth. Petty dictated his books and pamphlets, and is not always clear. My idea, probably but not certainly the same as his, is that each generation invests everything in the next in trust that it will do the same. All our capital of both factors, although Petty spoke only of a cornfield, is exhausted in putting the next generation in place. The time horizon to get this done is the generation length. This 28.5 years, as I model it, becomes Jevons’ “period of production”. Its reciprocal, meaning one over it, gives rate of return. The idea of a period of production whose reciprocal gave rate of return had begun with Rae in 1934, if you don’t count Petty, and passed through Nassau Senior to Jevons and Boehm Bawerk. All assumed growthlessness for simplicity. Return is growth rate plus cash flow rate. It simplifies to the pure consumption rate at the collective scale. All these men, even Petty, were really modeling the pure consumption rate. 28.5 years gives the period of replication, in my view, or period of production if there were no growth. Chapter 2: Fast Forward 1/06/16 28 HOUSE_OVERSIGHT_010968