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Metaphor or Unifying Paradigm?
Review Essay for the JOURNAL OF SOCIAL AND EVOLUTIONARY SYSTEMS, 18(4): 421-435
© 1996, JAI Press
Economics and Evolution: Bringing Life Back into Economics, Geoffrey M. Hodgson. Cambridge: Polity Press (Blackwell Publishers), 1993.
Bionomics: Economy as Ecosystem, Michael Rothschild. New York: Henry Holt, 1990.
To our preliterate ancestors, untutored in academic economics but well-attuned to the vicissitudes
of living in the late Pleistocene, the basic problem that they confronted -- along with all other
living things -- was survival and reproduction. Earning a living in the "economy of nature" was a
relentless, inescapable and somewhat unpredictable imperative.
The dirt-under-the-fingernails weltanschauung of these long-gone hominids included certain
universal "bioeconomic" principles (which could have been documented for posterity had there
been a perspicacious, time-warped economist available to take notes). These bioeconomic principles
included the following, among others:
- The survival problem is always context-specific. The "parameters" of the problem for each
organism differ, depending on its particular characteristics, the nature of its environment
and, most important, the precise organism-environment relationship.
- Energy, and access to relevant information about how to capture and utilize it, are two
universal requisites for survival and reproduction, along with an array of other, more
variable survival needs.
- The time and energy that any organism has available to meet its needs is always limited
and must be utilized relatively efficiently -- or else.
- All species deploy specific strategies and tactics for earning their livings. Some work
alone while others form symbiotic partnerships (mutualistic or parasitic). Some survive
by capturing sunlight and a few other basic nutrients while others survive by preying on the
photosynthesizers; some reproduce asexually while others form sexually-reproducing partnerships
in close-knit social communities; some use various body parts as tools while others fabricate
tools as needed from various raw materials; some hoard their information while others are inveterate
gossips; and so it goes.
- Ecological competition is a common feature of the bioeconomic realm, but so also is interdependency,
co-operation, symbiosis, and the division of labor. Moreover, competition is not the fundamental
"organizing principle" in the economy of nature, as many theorists have asserted. The touchstone
is the problem of earning a living and reproducing -- "adaptation" -- and both competition and
co-operation are subsidiary phenomena. They are contingent "survival strategies." In fact, many
species are practiced in the art of avoiding direct competition.
- Finally, all species exploit the synergy principle in one way or another. Synergy is "nature's magic,"
a way of conjuring economic leverage from an almost endless variety of non-linear co-operative
If none of these principles sound like conventional economics, it is because our economists have erected a science that does not bear much relationship to the biological fundamentals. Thanks to the diligent efforts of two centuries of "academic scribblers" (to borrow economist John Maynard Keynes's self-deprecating caricature), including the scribblings of a passel of Nobel Prize winners, we have come to view economies, by and large, the way professional economists tell us to.
An economy, so they say, is about competition, markets, prices, preference functions, marginal utilities, rational choices, demand and supply relationships, equilibrium conditions, etc. Moreover, we are specifically admonished not to utilize any a priori concept of biological "needs," either as bedrock measuring-rods or to make predictions about economic behaviors. We can only deal (scientifically) with the infinitely variable "tastes" and "revealed preferences" of Economic Man (and Woman). In other words, economic behavior depends on the things economists study. And the obvious shortcomings of economics as a predictive science, we are told, can be attributed to the discipline's growing-pains. In time, better analytical tools, better models and better sources of data will lead inexorably to greater predictive power. Or, alternatively, various "imperfections" in the real world, if corrected, will make it conform more closely to the economists' models.
In the halcyon days of the social sciences, after World War Two, such a conceit seemed plausible, at least in technologically advanced industrial societies. An ever-smaller proportion of the population was required for food production while a growing number of "consumers" enjoyed a high standard of living and a generous supply of "discretionary income." Keynesian economics held out the hope that major economic depressions were a thing of the past. Like the rest of us in those days, economists were prone to echo Plato's observation in The Republic that, if the original purpose of human societies was to provide for "mere life," we had progressed to the point where it was now possible to focus on "the good life." Indeed, it was an article of faith in western societies, socialist and capitalist alike, that (as a 1950s G.E. commercial had it) "progress is our most important product." Not only could progress be taken for granted, it didn't really need to be explained; it was self-evident. And the residual problems of advanced economies required only some "fine-tuning." Accordingly, Darwinism and the biological paradigm were widely viewed as being "irrelevant" because, it was said, survival was no longer a problem; economic societies had transcended "nature, red in tooth and claw."
If the world view of the post-war era was a part of the problem, the metatheoretical framework of economics and the other social sciences -- their model of how to do science -- was equally at fault. As both Geoffrey Hodgson and Michael Rothschild document persuasively in their two very different volumes, neo-classical economics, whose roots can be traced back to Adam Smith and the Scottish School, was based on a deeply flawed methodology -- in fact, a metaphor borrowed from Newtonian physics. The metaphor was that of a self-equilibrating mechanism which operates according to discoverable economic "laws." Moreover, most economists of the day favored (and probably still do) what the legendary economic theorist Joseph Schumpeter characterized as "methodological individualism," the assumption that the workings of an economy as a whole can be "reduced" to a simple sum of the actions of each individual participant. Adam Smith's immortal metaphor said it all and, in the bargain, provided subsequent generations of economic "realists" with a justification for personal greed: "In spite of their natural selfishness and rapacity," Smith wrote in The Theory of Moral Sentiments, "[men] are led by an invisible hand...to advance the interest of society."
But perhaps the most perverse aspect of neo-classical economics, not to mention the other social sciences, was the methodological premises associated with cultural determinism and value relativism. It was widely held that, in searching for the relevant causal forces in human societies, the social sciences did not need to look beyond the realm of social phenomena, or perhaps the "laws" of Skinnerian behaviorist psychology. Indeed, the very notion of autonomous human purposes, goals, or creativity as causal factors in economic life was all but banished as unscientific. Frequently quoted was the dogma of the French sociologist Emile Durkheim in The Rules of Sociological Method (1938 :104, 110), a bible for several generations of social scientists: "Every time that a social phenomenon is directly explained by a psychological phenomenon, we may be sure that the explanation is false.... The determining cause of a social fact should be sought among the social facts preceding it and not among the states of individual consciousness [his italics]."
This comfortable world view began to crumble in the 1970s and 1980s. First, there was the intrusion of some uncomfortable biological facts: the "population bomb," in Paul Ehrlich's explosive metaphor, the oil shocks and increasing concern about resource depletion, the growing menace of environmental pollution and, more recently, the ominous threat of global warming. It has become abundantly evident -- as a matter of survival if not social justice -- that economies are not after all self-equilibrating, although the die-hard advocates of Laissez-faire doubtless remain unpersuaded.
Then there was the challenge of the biological sciences, especially sociobiology, which asserted that biological (and biopsychological) facts also play a role in human behavior (how much has been the subject of rancorous debate). But the most important development by far has been ontological. There has been a growing recognition that a scientific paradigm based on Newtonian physics is not even applicable to modern physics, much less the social sciences. In its place, as Hodgson argues compellingly in Economics and Evolution, the appropriate metaphor for economics, if one is necessary, should be biological. His thesis is not original, of course, but it may well be the very best treatment of the subject to date. Let us briefly consider Hodgson's contribution.
First, it should be noted that Hodgson's volume is a work of deep and meticulous scholarship (including 35 pages of end notes and 60 pages of a wide-ranging bibliography) that, among other things, methodically reconstructs the history of evolutionary thinking in economics, from Malthus to Marx/Engels, Spencer, Marshall, Menger, Veblen, Schumpeter and Hayek. Many of these theorists are cast in a new light. However, Hodgson's purpose is not merely to summarize their work but to critique their ideas in light of our modern understanding of biological evolution, which he has taken the trouble to master, and in this respect alone he has made an enduring contribution to economic theory.
To mention a few highlights: He makes a strong case against treating Marx and Engels as evolutionary theorists. Marx and Engels had a wholly inadequate understanding of Darwin's theory and, worse yet, used highly questionable sources to rebut Darwinism. Their core conception of a dialectical clash between economic classes that are being swept along in a deterministic trajectory was in actuality a theory constructed within the mechanistic (law-driven) tradition, even though it purported to explain a historical process. The causal dynamics were thus deeply antithetical to Darwin's theory of evolution as a cumulative process of contingent, incremental change via selection for functional, adaptive properties.
Hodgson argues that the Reverend Thomas Malthus, in addition to playing an inspirational role in Darwin's own evolutionary thinking, should properly be considered a founding father of evolutionary economics. In various writings, including a major textbook on the Principles of Political Economy (1820), Malthus portrayed economic life as a dynamic process which is driven by the biological fundamentals -- particularly population growth and the "means of subsistence." In contrast with the many economic theorists who have envisioned an equilibrium condition as the natural or ultimate state of humankind, Malthus's "dismal science" was based on the premise of unending conflict, struggle and change.
Herbert Spencer, at once one of the towering figures of 19th century social science and a virtual nonentity for most of the 20th century (even though his ideas have been freely expropriated by others), is given due credit and fair criticism, for the most part. Hodgson rightly finds fault with Spencer's orthogenetic view of evolution as a law-like, progressive developmental process leading to greater complexity, harmony and the withering away of the state -- a vision Spencer shared, ironically, with Marx (albeit with some important differences). On the other hand, Hodgson perpetuates some negative judgments about Spencer's work that are not entirely even-handed.
For instance, he holds Spencer to account for not appreciating the "entropy law" (the Second Law of Thermodynamics), which, he claims, contradicts Spencer's views about the functional advantages of structural heterogeneity. Hodgson should know that the implications of the Second Law in relation to the evolutionary process remain in dispute. The work of physicist Ilya Prigogine and his co-workers on non-equilibrium thermodynamics suggests that there may be circumstances in which increased heterogeneity is in fact more stable, though perhaps not with the certainty of a universal law. Chaos theory, likewise, has illuminated the role of "dynamical attractors," or stable states, in self-organizing processes. There is also the empirical evidence of "progressive" complexification in biological evolution. And anthropologist Robert Carneiro (1987), in an elegant analysis, added credibility specifically to Spencer's views on cultural complexity by demonstrating that there is a mathematical relationship (approximately 2/3 power) between village size and village structural complexity for an ethnographic sample of 46 societies.
Of equal concern is Hodgson's caricature of Spencer's views on cultural evolution. He attributes to Spencer the crude notion that culture can only evolve insofar as humans are changed biologically, an idea so patently absurd that it demeans a theorist with Spencer's analytical power and encyclopedic breadth. To the contrary, Spencer should be given credit, along with Darwin, for appreciating the subtly interactional, coevolutionary nature of human biological and cultural evolution.
Hodgson's analysis of Alfred Marshall, one of the giants of the discipline, is particularly incisive. While much has been made of Marshall's statement in his classic text, The Principles of Economics (1890), that economics is "a branch of biology broadly interpreted," in fact Marshall never moved beyond a static, mechanistic paradigm; the core of his work was equilibrium-oriented and a promised companion volume on the dynamics of economic change never materialized. There are some suggestive ideas and intriguing leads in The Principles -- allusions to variation and selection processes, the use of an organismic analogy to characterize economic development, an appreciation of the role of organism-environment interactions. Nevertheless, as Hodgson shows, Marshall's biology was Spencerian, not Darwinian, and it remained, as Hodgson puts it, "a promise unfulfilled." Marshall's insights were later ignored, and his example was not pursued. Subsequent generations of economists (for instance, Marshall's influential follower Pigou) turned instead for their inspiration to the "hard-science" of Sir Isaac Newton.
Joseph Schumpeter and Friedrich Hayek, two of this century's leading economic theorists, are also found wanting in Hodgson's painstaking analyses. In Hodgson's view, Schumpeter is unjustly given credit nowadays as a progenitor of evolutionary economics. Schumpeter's evolutionism was in reality built on Léon Walras's dualistic vision of a general equilibrium punctuated by "revolutionary" creativity -- a vision that was somewhat reminiscent of Marxism (and of "punctuated equilibrium" theory in evolutionary biology). While Schumpeter did use the term "evolution," he did not use it in connection with the Walrasian dynamic. A close reading of his works suggests that he meant it to be nothing more than a synonym for general "change." Indeed, Schumpeter even objected to the drawing of any specific analogies between biological and economic evolution.
In contrast, as Friedrich Hayek's theoretical views evolved over the years, he became increasingly enamored of the evolutionary paradigm. Early on, his work was a throwback to the neo-classical free-market tenets of Adam Smith and the Scottish School. The problem, as Hodgson observes, is that the Newtonian model of economic life relies on "methodological individualism." In an insightful critique, Hodgson shows that there is no justification for treating the individual actor as a "black box" which responds mechanistically to whatever values, tastes, or preferences are poured into it. Such insularity about the causal dynamics of human behavior managed to preserve the autonomy of the discipline at the cost of disconnecting homo oeconomicus from the real world.
In this respect, Hayek was no more at fault than a host of other economic theorists, but his problems were compounded by an ill-conceived attempt to preserve an individualistic, self-equilibrating free market model while, at the same time, grafting onto it a vaguely selectionist superstructure that is focussed on the evolution of "rules," institutions, and even whole societies. In this paradigm, individual actions are viewed as having functional significance for more inclusive wholes, which Hayek asserted are not, after all, reducible to their parts. Hayek never seemed to appreciate, much less did he take the trouble to reconcile, the profound theoretical contradiction that his evolving theory produced. Worse yet, Hayek's loose-jointed evolutionism was not at all Darwinian (his cavalier treatment of Darwin was a travesty), nor was it in touch with the voluminous (and growing) scholarly literature on the dynamics of cultural evolution. Finally, Hayek's psychology seemed to be gratuitous, as if plucked from thin air to support an a priori ideological position. Hodgson minces no words: "Unfortunately, these are not unique cases of a casual attitude to sources and scholarship in Hayek's work."
If many of the pioneer economists fare badly under Hodgson's close scrutiny, Thorstein Veblen, an early 20th century American theorist, provides an example of a pleasant surprise -- indeed, a revelation. Though Veblen's evolutionism was little appreciated or emulated, either then or now, in point of fact he got it right, even though his theoretical framework was never fully fleshed out (nor could it be, given the relatively primitive biology, psychology and economic science of his day).
"Why is economics not an evolutionary science?" Veblen asked in a famous article published in 1898. Economics, he argued, should be focussed on explaining evolution and change, rather than fixing its gaze on the illusion of a static equilibrium. Veblen was also unique in fully grasping and utilizing the fundamental elements of Darwin's theory (variation, heredity/reproduction and natural selection), and he diligently sought to develop analogous principles for socioeconomic evolution, with an emphasis on institutions as key units of selection along with individual "habits of thought." In his classic work on The Theory of the Leisure Class (1899), Veblen penned a summary of his vision that sounds very Darwinian: "The life of man in society, just as the life of other species, is a struggle for existence, and therefore it is a process of selective adaptation. The evolution of social structure has been a process of natural selection of institutions."
Hodgson also points out that Veblen, unlike many other economic theorists, before or since, featured the distinctively purposeful (teleonomic) aspect of socioeconomic evolution, particularly the role of innovation and technological development. (Although Hodgson claims that in this respect Veblen departs from a strictly Darwinian model and adopts a Lamarckian position, in fact Hodgson has a misunderstanding of this aspect of evolutionary theory, an important point to which we will return below.) Noting that many of Veblen's insights are now in the process of being rediscovered, often without an appreciation for their heritage (e.g., Michael Rothschild in Bionomics), Hodgson concludes: "Veblen should thus be placed among the founding figures of modern evolutionary economics."
The reward for taking Hodgson's guided tour through the Pantheon of economic theory is that it provides a firm foundation for his ultimate objective -- to clarify the implications of an evolutionary paradigm and to lay out some guiding principles. Though there is a great deal of merit in what he has to offer, I will argue that it is ultimately too timid and, in my view, fatally constrained by the mind-set of his discipline; he breaks no new ground, and he poses no threat to the autonomy of economic science. Indeed, he shies away from some of the implications of his own statements.
Hodgson sets the stage with a frontal attack on the foundations of neo-classical theory. "Crisis," he observes, is an over-used word. Nevertheless, the problems at the very core of the discipline are so serious that the entire edifice needs to be rebuilt. The neo-classical paradigm is totally at odds with the underlying reality of a contingent, irreversible historical process. Neither the mechanistic assumptions of equilibrium theory nor those of classical rationality are sustainable. Furthermore, the reductionist assumption that self-seeking actors, if left unfettered, will produce social order, much less optimal economic results, is obviously untenable. Chaos theory and a variety of other non-linear approaches to modelling dynamic processes lend support to the contention that economic life displays historicity -- a sensitivity to initial conditions, path dependency, directional trends that are associated with positive feedback loops and, not least, an enormous accumulation of baggage from past cultural and economic development. The reality of human purposes and human choices also contradicts the orthodox model; the black box turns out to be a Pandora's box. "Real world economic phenomena have much more in common with biological organisms and processes than with the mechanistic world of billiard balls and planets," Hodgson notes.
Hodgson makes short work of the accusation that an evolutionary paradigm implies Social Darwinism, or an endorsement of dog-eat-dog competition. Nor does it imply biological determinism, what some critics have called "vulgar sociobiology." In a brilliantly argued section on "Problems for Dr. Pangloss," Hodgson also rebuts the charge that an adaptationist/selectionist paradigm implies a process that inevitably leads to improvement, not to mention some form of optimization or perfection. In short, Hodgson's rendering of the evolutionary/biological paradigm is exemplary; he has done his homework.
The problem, in a nutshell, lies in the follow-through. The conceptual stumbling block is his insistence on the "autonomy" of culture and economic life. Hodgson adopts and vigorously defends the so-called "dual-inheritance" model of cultural evolution -- the predominant view among biologically-oriented social scientists that biological and cultural evolution are separate processes which must be understood and explained in their own terms. There may be interactions between the two processes; anthropologist William Durham's "coevolution" model stresses this aspect. But the idea that culture and economic life are somehow an expression of (or are shaped by) our biologically-based needs, drives, and capacities is anathema to Hodgson, and to many others who have felt compelled to defend the social sciences against the imperialism of sociobiology.
Accordingly, the logical, even necessary implication is that the framework of biological evolution should be treated only as a "metaphor." There may be loosely analogous processes of variation, inheritance/reproduction and selection, but these should be viewed merely as heuristic tools. Indeed, Hodgson assigns an entire chapter to the task of trying to show how metaphors have a perfectly respectable scientific pedigree (take natural selection, for instance) and how, in effect, the adoption of an evolutionary approach in economics would simply replace one metaphor with another that is more appropriate to the subject matter. The challenge, then, is to identify the relevant analogues. Hodgson's preference, following Veblen, is to treat "habits" and "institutions" (whatever those things are -- only economists seem to know for sure) as the units of selection.
While this approach is politically safe, in my view it is wholly inadequate. It amounts to little more than a repackaging of institutional economics. While this may provide a patina of scientific respectability for a beleaguered scholarly tradition, Hodgson does not move the argument much beyond where Richard Nelson and Sidney Winter were a dozen years ago with their path-breaking book, An Evolutionary Theory of Economic Change. If the ultimate objective is to get us closer to an understanding of the underlying causal dynamics of economic processes and economic change, it does not help to maintain the pretense that what is in fact a sieve is really a wall. (For the historically-minded, the metaphor that comes to mind is the infamous Maginot Line of World War Two.) Despite Hodgson's commendable plea for reestablishing the role of human purposes and goals in economic science, in the end he opts to keep the lid on the black box for fear that it might threaten the autonomy of economics.
Michael Rothschild does no better in this regard in his popular best-seller, Bionomics. (His title is a clumsy neologism that overlooks the established term "bioeconomics" while inappropriately excising the oikos, or household, part of the original Greek term; we are left with something that means, roughly, "life-management.") The vivid illustrations that are a distinctive feature of Rothschild's volume are meant only to draw out the analogies between the economy of nature and human economies, but in so doing he unwittingly helps to make the case for the more radical thesis that human economies are not simply metaphorical ecosystems -- with capitalism as the engine of economic evolution. (The hard-cover edition of his book had the unfortunate subtitle "The Inevitability of Capitalism.") At the risk of being politically incorrect, I contend that it will ultimately prove more fruitful to view human economies as variations and elaborations on a common theme that is rooted in the process of biological evolution itself. (I will expand on this point below.)
Rothschild takes pains -- rather too vehemently -- to denounce Social Darwinists and sociobiologists, whom he lumps together in his eagerness to distance himself from the taint of biological determinism. "In their view," Rothschild asserts, "human culture is not parallel to, but an extension of, human genetic information. For them, the tree of cultural evolution grows from genetic roots. In bionomics, genes and knowledge are not connected...Our genes do not program us to become capitalists. Capitalism is simply the process by which technology evolves. By way of analogy, bionomics argues that, on a day in-day out basis, biologic and economic life are organized and operate in much the same way....Though the analogy between genetic and technologic evolution is powerful, it is not perfect."
To my knowledge, nobody has claimed otherwise. And has anyone, in this century, seriously asserted that capitalism is programmed in our genes? That hypothesis would make an easy target. However, there is also a bit of ideological sleight of hand at work here. On the one hand, Rothschild asserts that an economy as a whole bears only an analogous relationship to the biological realm. On the other hand, capitalism is justified as "a natural phenomenon."
Rothschild then proceeds to illustrate his thesis -- an unabashed paean for the free market system -- with a wonderful selection of parallel examples, for this is a very well-researched and superbly written volume. (There are 57 small-print pages of endnotes and references, with only a handful of serious errors to my knowledge, mainly regarding economic history.) As he shifts focus repeatedly from human economies to the economy of nature, Rothschild compares human and other species in a variety of ways. For instance, he shows how comparable are the uses of information in biological and economic evolution. Yet he conspicuously passes over the closer analogies and even homologies between humans and other species in terms of how they are able to acquire and utilize information through learning and in social interactions.
Likewise, he discusses the dynamics of biological evolution as it has been reconstructed for trilobites and juxtaposes it with the latest thinking about the evolution of Homo sapiens, which he describes without embarrassment as an interactive process in which behavioral/cultural/ technological developments went hand-in-hand with anatomical changes over time. He also details the many parallels between the division of labor in eukaryotic cells and in human factories, yet he avoids mention of the even closer parallel between the division of labor in human societies and, say, army ant colonies or naked mole rat societies with regard to such group-level functions as defense, food procurement and reproduction. (Perhaps because it does not suit his thesis, Rothschild illustrates but does not specifically point to the fact that complex human societies resemble both ecosystems and organisms to varying degrees.)
Rothschild's treatment of the cost-benefit calculus embedded in economic processes, particularly in relation to energetics, is especially noteworthy. His illustrations range from hydrothermal vent species to Bernd Heinrich's landmark studies of bumblebee economics to the fascinating corporate history of Cub Foods. He also highlights the vital role of real cost reductions in economic evolution. For instance, he estimates with carefully-documented calculations from historical data that, over three centuries of machine power evolution, real costs (in constant dollars) have declined from about $6,000 per horsepower for the original Newcomen engine to $3 per horsepower for a modern automobile engine. Similarly, data for the American economy between 1910 and 1986 reveal that retail egg prices (in constant dollars) declined an astounding 80 percent. And yet, Rothschild glosses over the fundamental commonalities in animal and human energetics, as stressed by the pioneering economist Nicholas Georgescu-Roegen in his thermodynamically-oriented work. (Georgescu-Roegen is not even referenced in Rothschild's volume.)
Finally, Rothschild is well enough schooled in the literature of evolutionary theory, ethology and behavioral ecology to recognize the importance of mutualism, symbiosis and social organization in the natural world, and to identify analogues in human societies. He writes: "Avoiding head-on competition -- in the wild and in the marketplace -- leads to diversity, which, in turn, promotes interdependence. Mutually beneficial relationships, common among species in nature, are echoed in business, where the vast majority of affiliations are based on mutual profitability." And yet, later on he insists on our uniqueness: "Human beings are different from all other creatures. We are conscious beings. As social animals we are socially conscious...We choose to form communities for mutual aid, support, and sharing. As a species we have always done so. Indeed, our capacity to cooperate may well be our most powerful adaptive trait." In sum, Rothschild makes the case, compellingly, for a biological paradigm in economics. He fails, conspicuously, to show that the analogy is only skin deep.
The fundamental question for an evolutionary economics is this: What are the causes of both the continuities and the changes that we can observe in economic life? (Darwin termed it "descent with modification.") Whereas Hodgson is more concerned with the sources of continuity ("heredity") and with identifying economic analogues of genes, Rothschild addresses the dynamics of change; his focus is the accumulation and modification of economic processes, especially technology and its handmaiden, information. Economic evolution is portrayed by Rothschild as being, fundamentally, a process of cumulative learning, which can be captured quantitatively in the so-called "learning curve" -- or "experience curve" in the argot of contemporary business consultants. Economic enterprises are characterized by Rothschild as "organized intelligence," and organizational learning over the course of time (a process that is often accelerated by the synergies that collective problem-solving can produce) is identified as the primary cause of economic evolution. (Well, it is certainly important, but the causal dynamics associated with historical processes are always configural and synergistic.)
In other words, what Hodgson points to as a black hole in economic theory Rothschild proceeds to fill, at least in part. And yet, once again Rothschild contaminates his argument by insisting on the uniqueness of humans. In what amounts to a non sequitur, he observes that the learning curve and our accumulation of organizational knowledge is what sets us apart from Edward Tolman's maze-learning laboratory rats. Other species can only improve their economic performance by changing their genes while humans alone can change their technologies, Rothschild claims. (Rothschild cites several key references pertaining to the evolution of behavior and culture in other species, but evidently he didn't read them carefully enough to discover the broad consensus view among the students of animal behavior that an organism's "phenotype" is generally the product of an interaction between its "genotype" and its specific environment, and that many adaptive behaviors arise through learning.)
Despite his insights about the workings of a complex economy (the fruit of several years of battlefield experience as a successful lawyer and business consultant), Rothschild's Panglossian "bottom-line" constitutes, in my opinion, a serious flaw. His conclusion that the experience curve of technology and economic organization, when given its head in a free market environment, will ultimately negate the Malthusian dynamic and "obliterate" the "central myth" of the dismal science (not to mention John Stuart Mill's law of diminishing returns) is, to put it bluntly, a Pollyanna look-alike. This giddily optimistic projection entails a gamble that we would be foolhardy to take; we won't have to wait until the next ice age to see Rothschild's thesis disproved.
Thus, in effect, each of these metaphorical evolutionists puts the human species into its own theoretical Disney World. In Rothschild's case, the claim that "humans alone" can invent new adaptive strategies is totally at odds with the extensive evidence that other organisms are able do so as well, although humans obviously excel in this respect. In Hodgson's case, his insistence on the "autonomy" of the economic realm as opposed to the more qualified -- and theoretically challenging -- concept of "partial independence" amounts to the same thing. (Hodgson did use the phrase "partial autonomy" at least once that I could find, but he obviously did not stress it or pursue its theoretical implications.) In rejecting the fundamental homology between nature's economy and that of humans (I'm not denying the obvious differences), these biologically-oriented economic theorists perpetuate the conceit that has for so long obfuscated the common "paradigm" shared by all living species -- namely, the basic problem of survival and reproduction in an uncertain world.
What is the alternative to these metaphorical visions of economic life? To quote Hodgson's own "loose" definition of economics: "Economics should be the study of the social relations and processes governing the production, distribution and exchange of the requisites of life [my italics]." I could not have said it better. Economics is concerned, first and foremost, with meeting the ongoing biological "needs" of human societies and their members. A human society is, at bottom, a collective survival enterprise; we are deeply dependent upon one another, as Adam Smith himself stressed. Furthermore, the survival problem remains pressing. Despite our propensity for self-denial, survival is directly or indirectly associated with most economic activity world-wide. (Consider, for instance, the fact that humans spend about one-third of their lives sleeping, and that a substantial share of our economic activity is devoted to providing for this basic biological need in various ways, from hovels to hotel rooms to sleeping bags to sleeping pills. Or, consider how much economic activity is devoted to keeping the human body warm, or cool.)
As suggested earlier, in an effort to distinguish this radically different economic vision from more conventional approaches, I prefer to call it "bioeconomics." The term was actually coined by an obscure turn-of-the-century theorist, Hermann Reinheimer, one of whose provocatively titled books was Evolution by Co-Operation: A Study in Bioeconomics (1913). More recently, the term has been associated most closely with the thermodynamics approach of Georgescu-Roegen (e.g., 1971, 1976). It has also been employed by the subset of professional economists who are working on various problems at the interface between the environment and human economic activity, such as fisheries management (e.g., Clark 1990).
My own version of bioeconomics was originally detailed in a chapter of my book, The Synergism Hypothesis: A Theory of Progressive Evolution (1983). It formed part of a broader analytical framework that I characterized as an "Interactional Paradigm." Among other things, this framework featured an attempt to develop explicit measures of basic needs satisfaction in 13 different "primary needs" domains, along with a preliminary discussion of a number of so-called "instrumental needs." These measures were grounded in the then-current state-of-the-art in public health research and in the work on "social indicators." (Consider, for example, the vast body of research on human nutritional requirements.) Needless to say, there was plenty of room for improvement in this framework, but at least it was a beginning toward measuring human adaptation in a concrete way.
In addition, I explored in a tentative way the possibility of developing a summary "master indicator" of personal health and a global "Population Health Indicator" as analytical tools that could be used to evaluate the outcomes of economic activity from a bioeconomic perspective, at both the personal and societal levels. Finally, my chapter on the Interactional Paradigm summarized various efforts to understand better the relationship between our biologically-based motivational substrate and the vast range of learned and culturally-molded behaviors through which these motivations are expressed. This area was hardly terra incognita in 1983, and there has been much additional progress since then. (A recent computer search for the period from 1985-1995 identified over 200 book-length studies, many of which were syntheses of the research literature.) In other words, we already know quite a bit about what goes on inside the black box; there is no scientific justification for keeping the lid on it.
A few additional points about the implications of a bioeconomics paradigm:
- First, this approach is focussed on the causes and biological consequences of behavior
-- economic and otherwise -- including the ways in which biopsychological factors
influence the ongoing cultural and economic evolution of human societies. This contrasts
with the "dual inheritance" model, which is focussed on the "replicators" -- the mechanisms
of information storage, transmission and change over time. The objectives of these two
approaches are not contradictory but complementary. (Needless to say, this approach also
contrasts with the simplistic determinism of vulgar sociobiology.)
- A key aspect of this paradigm is the concept of a multi-leveled hierarchy of causation
(some prefer Arthur Koestler's less authoritarian-sounding term "holarchy") -- from the
physical environment to the most inclusive political entities, including several levels of
emergent biological and social "wholes" which are at once partially-independent and
interdependent; complex processes of both "upward" and "downward" causation are continuously
at work. Indeed, the causal dynamics are usually configural and interactional in nature; they
have synergistic properties. Accordingly, in addition to the creative activities singled out
by Rothschild, the process of evolutionary change also includes such important "variables" as
population growth, environmental challenges and opportunities and, not least, resource
availabilities. (To cite one example, England's adoption of coal as an energy source at the dawn
of the Industrial Revolution was hastened by a drastic depletion of its supply of firewood.)
- In this framework, a distinction is made between various "units of selection" as passive repositories of
information storage and replication and the units of selection in causal/functional terms. In the latter
case, "selection" is an active process that goes on at multiple levels -- among goods and services,
tools and technologies, resources and raw materials, physical locations and ecosystems, individuals
and households, volunteer organizations and business firms, markets and economic sectors, governmental
entities and even whole societies. Futhermore, the precise relationships and interactions among these
kinds and levels of selection are immensely complex.
- This framework also comfortably accommodates purposiveness in general and human inventiveness in particular.
In fact, the one lapse in Hodgson's otherwise flawless scholarship was his apparent unawareness that many
biologists have long since accepted the concept of purposiveness in evolutionary biology (biologists seem to
prefer Colin Pittendrigh's term "teleonomy," or evolved internal teleology, as distinct from an externally-imposed
"teleology"). Since the late 1950s, leading evolutionists have also appreciated the fact that purposive behavior plays
an important causal role in initiating evolutionary changes. I have frequently quoted Ernst Mayr, who characterizes
behavioral change as an evolutionary "pacemaker," but similar statements can be found in the writings of Waddington,
Dobzhansky, Simpson, Ayala and Thorpe, among others. There is also a detailed review in my 1983 book. Since then, at
least two full-length edited volumes on the subject have also been published. Finally, biologist Lynn Margulis has
weighed in with an update of an older thesis, dating back to a turn-of-the-century Russian school of naturalists,
regarding the role of "Symbiogenesis" (symbiotic partnerships that are by definition behaviorally-based) as a source
of evolutionary change. In sum, this aspect of Lamarckian theory has long since been Darwinized and does not need to
be "imported" to supplement an evolutionary paradigm. (I prefer to call this mechanism "teleonomic selection," although
there are a variety of synonyms in the literature.)
So, how might one define economic evolution from a bioeconomic
perspective? Economic evolution can be characterized as a consequential change in a society's (or a species') mode of
adaptation -- ie., in the means of production of the requisites for biological survival and reproduction. It entails the
differential selection of alternative adaptive modalities (instrumentalities of needs satisfaction). It is a multi-leveled
process, and it is predominantly, though not exclusively, a teleonomic process. While creativity and cumulative learning
play an obviously important role, the process is also affected by entrenched cultural values, routines, customs, traditions,
rituals (ok, "habits"), and many other factors; the dynamics are synergistic.
Is bioeconomics "an impossible dream," as the old Broadway song had it? In actuality, its essential elements are already well-established in such disciplines as ethology, sociobiology and, especially, behavioral ecology. (There is also relevant work in physical, ecological, and economic anthropology and even in human ecology.) Researchers in these fields routinely study animal (and human) behavior and social organization in terms of its adaptive consequences. The focal questions are: How does each species organize its survival enterprise? How does it allocate resources to meet its needs? How does it make choices among alternative strategies? And with what biological/adaptive consequences?
Since we are not exempted from the survival problem, there is no reason in theory why the same paradigm could not be applied more broadly to the human species. If economists can successfully penetrate the complexities and ambiguities of market prices to get to the bedrock of "real costs," it should also be possible to get to the bedrock of "real benefits." The problem, of course, is the leaden weight of vested interests -- intellectual, academic, ideological, economic, even political. These saddle-weights may, in fact, constitute an insurmountable handicap. But perhaps economists will respond to Hodgson's plea for greater theoretical "diversity." One hopeful sign is a brand new journal called Evolutionary Economics, which is providing a much-needed forum for various iconoclasts. Another is the nascent new, environmentally-oriented sub-discipline called "ecological economics" (see Costanza 1991).
However, experience suggests that bioeconomics will not easily win converts. It is a discipline that will most likely have to be created at the interstices between economics, anthropology and the life sciences. Nevertheless, I will hazard the prediction that, in the long run, the efforts of Hodgson, Rothschild and others who have been chipping away at the reigning dogma (and the priesthood) of the economics establishment will come to be viewed as transitional figures -- as major contributors to a more fundamental paradigm shift than even these pioneering thinkers had in mind.
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