Irreversible Creative Capital and Endogenous Rational Non-intervention (ICC / ERNI)

Irreversible Creative Capital and Endogenous Rational Non-intervention

When Economic Rationality Requires Non-intervention

Naoki Kitamura
Independent Researcher

• Publication date: January 2026
• Format: Working Paper / Preprint
• Availability: SSRN

Abstract

This paper develops a theoretical analysis of conditions under which evaluative, directive, and steering forms of intervention may fail to operate rationally when value creation depends on creative activity involving irreversible commitments of finite human lifetime.

In contemporary economic environments where creativity and knowledge production play a central role and uncertainty is high, this problem constitutes an important boundary condition for institutional design and governance.

The paper first introduces Irreversible Creative Capital (ICC), defined as a form of capital consisting of irreversible investments of human lifetime and creative capacity. Such investments are ex ante non-contractible, subject to uncertainty, and inherently non-recoverable once undertaken.

The analysis then shows that, in environments where this type of capital is central to value creation, short-term evaluation and directive intervention can irreversibly contract the space of exploration and reduce future value-creation potential. As a result, restraint from intervention may be required not as a normative or ethical choice, but as an endogenous implication of economic rationality.

This outcome is formalized as Endogenous Rational Non-Intervention (ERNI) and presented as a testable theoretical hypothesis.

Paper Link

SSRN:
Irreversible_Creative_Capital_ERNI_Working_Paper_v1.0

Scope and Limitations

This paper is intended to present a theoretical framework.
Empirical analysis and case studies are explicitly left for future research.