Tuesday, January 17, 2006

Economics, Evolution and Mutual Aid

Two interesting articles appeared over the Christmas holidays, how deliciously ironic, about Darwinianism and Evolution.

One from the right and one from the left. Both though concluded that Darwinianism applied as much to society as to evolution, as an ideology of society, albeit a materialist one.

The Economist had an interesting editorial and a special supplement on evolution in their Christmas New Years edition. I will expand on the Economist article below.

And Mother Jones had this article by Canadian born Keynesian economist John Kenneth Galbraith. The old codger is still at it, bashing the supply side privateers on the right. The whole issue was dedicated to the debate on Intelligent Design.

Smith vs. Darwin

Commentary: Like Intelligent Design, the idea of the Invisible Hand stubbornly persists in the face of overwhelming evidence

December/January 2006 Issue

Before Darwin, when scientists gazed on the natural world, they imposed categories on it: order, families, genera, species, with Homo sapiens sapiens coming out on top. Evolution meant progress; order and progress were signs of God's plan. Darwin shifted the focus to individuals, to mutation, and to the processes of natural, sexual, and social selection. Order now recedes. Variations are key, and they occur entirely by chance. God is left out. "What was radical about On the Origin of Species," Menand writes, "was not its evolutionism, but its materialism."

Economists, on the other hand, have been Intelligent Designers since the beginning. Adam Smith was a deist; he believed in a world governed by a benevolent system of natural law. Consider this familiar passage from Wealth of Nations, published in 1776, with its now mostly forgotten anti-globalization flavor:

"By preferring the support of domestic to that of foreign industry [every individual] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intentionÂ…. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it."

Smith's Creator did not interfere. He simply wrote the laws and left them for events to demonstrate and man to discover. The greatest American economist, Thorstein Veblen, observed that "the guidance ofÂ…the invisible hand takes placeÂ…through a comprehensive scheme of contrivances established from the beginning." What is this if not Intelligent Design?

But to Veblen this was, precisely, unscientific. And so he made a mighty effort back in 1898 to move economics into the Darwinian age. In a magnificent essay entitled "Why Is Economics Not an Evolutionary Science?" Veblen pointed out the problems of classical economics: too much preoccupied with classification schemes and higher purposes, too little with material process and "cumulative or unfolding sequence." Economics could become a science, but only if it detached itself from the idea that change intrinsically led to improvement.

More than a century later, economics has not escaped its pre-Darwinian rut. Economists still don't understand variation; instead they write maddeningly about "representative agents" and "rational economic man." They still teach the "marginal product theory of wages," which excuses every gross inequality faced by the laboring poor. Alan Greenspan even recently resurrected the idea of a "natural rate of interest" to justify raising rates, though that doctrine had been extinct for 70 years. Economists still ignore the diversity of actual economic and social life. They say little about forms of ownership and the distribution of power, and almost nothing about how pointless product differentiation and technical change now shape and drive the struggle for survival among firms.

Metaphysics still persists in economics. It takes the form of "competitive equilibrium"—the conditions under which selfish individuals and tiny small businesses in free competitive markets interact to produce the best results for social welfare. Competitive equilibrium is a state of perpetual economic stagnation, its study an exercise in mental stasis. This is because there is nothing to study: The idea dominates textbooks and journals but has never existed in real life.

And it just gets better after that. Well worth the read.

Veblens essay refered to by Galbraith is here;
"Why is Economics Not an Evolutionary Science?", QJE, Vol. 12, No. 4. (Jul., 1898), pp. 373-397. For more on Veblen see:Veblen and Darwinism

Now for the Economist. Bet you didn't know that Herbert Spencer was a regular contributor to the Economist back in the 19th Century. Neither had I.

The story of man

Dec 20th 2005
From The Economist print edition

Modern Darwinism paints a more flattering portrait of humanity than traditionalists might suppose

IN THOSE parts of the planet that might once have been described as “Christendom”, this week marks the season of peace on Earth and goodwill towards men. A nice idea in a world more usually thought of as seasoned by the survival of the fittest. But goodwill and collaboration are as much part of the human condition as ill-will and competition. And that was a puzzle to 19th-century disciples of Charles Darwin, such as Herbert Spencer.

It was Spencer, an early contributor to The Economist, who invented that poisoned phrase, “survival of the fittest”. He originally applied it to the winnowing of firms in the harsh winds of high-Victorian capitalism, but when Darwin's masterwork, “On the Origin of Species”, was published, he quickly saw the parallel with natural selection and transferred his bon mot to the process of evolution. As a result, he became one of the band of philosophers known as social Darwinists. Capitalists all, they took what they thought were the lessons of Darwin's book and applied them to human society. Their hard-hearted conclusion, of which a 17th-century religious puritan might have been proud, was that people got what they deserved—albeit that the criterion of desert was genetic, rather than moral. The fittest not only survived, but prospered. Moreover, the social Darwinists thought that measures to help the poor were wasted, since such people were obviously unfit and thus doomed to sink.

Sadly, the slur stuck. For 100 years Darwinism was associated with a particularly harsh and unpleasant view of the world and, worse, one that was clearly not true—at least, not the whole truth. People certainly compete, but they collaborate, too. They also have compassion for the fallen and frequently try to help them, rather than treading on them. For this sort of behaviour, “On the Origin of Species” had no explanation. As a result, Darwinism had to tiptoe round the issue of how human society and behaviour evolved. Instead, the disciples of a second 19th-century creed, Marxism, dominated academic sociology departments with their cuddly collectivist ideas—even if the practical application of those ideas has been even more catastrophic than social Darwinism was.

Trust me, I'm a Darwinist

But the real world eventually penetrates even the ivory tower. The failure of Marxism has prompted an opening of minds, and Darwinism is back with a vengeance—and a twist. Exactly how humanity became human is still a matter of debate. But there are, at least, some well-formed hypotheses (see article). What these hypotheses have in common is that they rely not on Spencer's idea of individual competition, but on social interaction. That interaction is, indeed, sometimes confrontational and occasionally bloody. But it is frequently collaborative, and even when it is not, it is more often manipulative than violent.

Modern Darwinism's big breakthrough was the identification of the central role of trust in human evolution. People who are related collaborate on the basis of nepotism. It takes outrageous profit or provocation for someone to do down a relative with whom they share a lot of genes. Trust, though, allows the unrelated to collaborate, by keeping score of who does what when, and punishing cheats.

Thus both of the things needed to make an economy work, collaboration and competition, seem to have evolved under Charles Darwin's penetrating gaze.

Dystopia and Utopia

This is a view full of ironies, of course. One is that its reconciliation of competition and collaboration bears a remarkable similarity to the sort of Hegelian synthesis beloved of Marxists. Perhaps a bigger one, though, is that the Earth's most capitalist country, America, is the only place in the rich world that contains a significant group of dissenters from any sort of evolutionary explanation of human behaviour at all.

Such a stunning conclusion that the real nature of Darwinian society is trust, collaboration and altruism; Mutual Aid. In the editorial pages of the Economist yet, well I had to write a letter to the Editor.

Dear Editor;

Your December 20th editorial on Darwin and Evolution was rich in irony. Intentional or not. Your conclusion that the real basis of a Darwinian society was collaboration, trust and altruism of course was shocking. Especially for the pages of such a staunch capitalist publication as yours. One that embraces competition as the highest good. But you at least were honest enough to say it.

The fact is that this very important element of evolutionary theory, that we advance more by collaboration, trust and altruism then competition was raised over 100 years ago by Peter Kropotkin in his work Mutual Aid. He called this collaboration, trust and altruism; solidarity the very basis of a voluntary society.

Kropotkin the Russian anarchist lived in exile in England and published the Anarchist fortnightly Freedom, which still publishes to this day. You overlooked his work that proves your editorial correct. It is perhaps that he had not had a column in the Economist like Herbert Spencer, whose anarchism he opposed with his ideal of mutual aid and communism. More and more society, nature and Darwinism and now your editorial is proving Kropotkin, not Spencer, right.

Eugene Plawiuk
Edmonton, Alberta, Canada



James Galbraith said...

Thanks for the comment, but do please note that I'm not the Canadian-born old codger John Kenneth, but only his Texas-living son, James K. Regards.

James Galbraith said...

Thanks for the comment. But do please note that I'm not the Canadian-born old codger John Kenneth but only his Texas-living son, James K. Not all of evolution is necessarily progress, alas.


Mea Culpa but your still a damn fine economist.