Evolution and Economics

Nature is ruled by evolution.  New challenges arise, so the flora and fauna adjust or perish.  This order, spontaneous as it were, is determined by animal actions, but not animal designs.  It is the same with economics and society.  Markets and society are determined by human actions, but are not designed by humans (to paraphrase Adam Ferguson).  The result we see around us is spontaneous and evolutionary.  Yes, humans innovate.  Yes, humans act.  But we all act in regard to our own self-interest (which is not to say acting selfishly, but that is a post for another time).  We are not following some Great Plan.

Virtually all attempts to plan markets, to plan society, on a large scale have failed miserably: the USSR, Venezuela, Mao’s China, just to name a few.  The results are disgusting poverty, violence, and chronic shortages of both peace and love.  These things are necessary, mind you, to direct society in the manner of some Great Plan.  The reason why is simple: humans have this pesky thing called “free will.”  We are not robots to be programmed.  We are not unthinking drones, awaiting some master to direct us.  We are all individuals with hopes and dreams, needs and desires.  That is why violence is necessary in a planned society: some will not want to go along with the plan.  Since markets and trade abhor violence, their evolutionary process is peaceful.

Societal evolution can either take place through violence by some person hammering his/her version of perfection onto everyone, or it can come about peacefully through the individual actions of billions of people.  I contend no civilized society can be built upon violence, and therefore only the second option is available.

14 thoughts on “Evolution and Economics

  1. The question of free will vs. determinism is unlikely to be settled here. Either way that issue is settled, bottom up emergence is a fascinating fact of life.

    Free market advocates (of which I consider myself one) sometimes forget that the actions of democratic governments are also bottom up emergent. Millions of voters elect tens of thousands of representatives, who create laws enforced by countless bureaucrats. All of these people are motivated by a complex mix of personal incentives and ideological beliefs. The result is unpredictable and emergent.

    Too often “emergent” and “bottom up” are simply used by free market advocates as compliments for processes that end in results they like. And yes Jon, I know you didn’t make that mistake in this post. I just wanted to kick off the conversation with that point.

    There is pretty widespread agreement that minimizing violence and coercion and increasing people’s options are a good things. There is a lot of disagreement about the best way to do that.

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    • I have some thoughts on your comment which I think may evolve into a blog post of its own. I agree with many things you just said, but not with the political process one. While it’s true the way leaders are chosen is emergent, politics cannot be described as bottom up, as all the policies are determined and then imposed by the leaders, as opposed to the other way around. The order is determined, not spontaneous.

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    • Greg

      You may have too high an opinion of the political process and too little concern for the negative effects monopoly power has on otherwise decent human beings once they are elected to office or assigned to positions as bureaucrats. Lord Acton made some observations on this process.

      Millions of voters elect tens of thousands of representatives, who create laws enforced by countless bureaucrats.

      And why, exactly, is such an incredible tsunami of laws and regulation needed on a continuing basis?

      Part of the answer is that any elected body must justify its existence by “doing something” whether or not that something is actually useful. A regulatory body must justify its existence by regulating, whether or not those regulations are needed or effective.

      Incentives matter.

      The result is unpredictable and emergent.

      Actually a prediction of unintended and generally unpleasant consequences of most government actions is a really good bet.

      There is pretty widespread agreement that minimizing violence and coercion and increasing people’s options are a good things.

      Well that’s certainly a desirable goal, but government is force, so coercion and violence are inevitable, and government can’t possibly increase people’s options, but can only limit their choices. Do you have an example of government increasing people’s options to a greater extent than they would have without government involvement?

      I suppose you could argue that without the current political system, Donald Trump might not be a potential choice as a presidential candidate.

      There is a lot of disagreement about the best way to do that.

      I’ll say! My suggestion would be to allow everybody to decide for themselves.

      BTW I’m back home with my beloved desktop PC and no longer at the mercy of that tyrannical tablet, so any errors are now entirely my own.

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      • Ron,

        Well, everyone who isn’t an anarchist has a higher opinion of the political process than you do.

        And “a prediction of unintended and generally unpleasant consequences” is not really a prediction at all. As for an example of government increasing people’s options, you could consider the options available to people in the U.S. today as compared to the options of people living in the same territory before the Europeans arrived. At that time there was virtually no central government but violence and coercion were much more common than they are today.

        But my main point for the purpose of this discussion is that the terms “evolution,” “emergence,” and “bottom up” ought to be more than just compliments for processes whose results you like. Emergent orders are not always good or desirable. I think Jon could make the point he wants to make more clearly and effectively by talking in terms of more or less centralization or decentralization.

        Politicians in a democracy do not have anything like “monopoly power.” They are constantly frustrated by voters, other politicians and bureaucrats. Emergent orders are quite commonplace and exist on many different scales.

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        • Greg

          Well, everyone who isn’t an anarchist has a higher opinion of the political process than you do.

          Heh, good point, but maybe they shouldn’t. Politicians seem to have a lower approval rating than used car salesmen, and people of all political persuasions whine constantly about “those morons in Congress”, or “that idiot Obama”, but what they don’t realize is that it’s the process itself that’s the problem, and that people in politics are exactly like everyone else, and will almost always pursue their their own self interest above the interest of others. It’s not evil, it’s just human nature.

          And “a prediction of unintended and generally unpleasant consequences” is not really a prediction at all.

          You’re right. It’s kind of like predicting that the sun will come up in the east.

          As for an example of government increasing people’s options, you could consider the options available to people in the U.S. today as compared to the options of people living in the same territory before the Europeans arrived.

          You’re right, of course, those damn redskins should be grateful that Europeans eradicated 90% of the existing population by introducing devastating new diseases, enslaved some of them, outright murdered a whole lot of them, and finally moved the remaining few survivors from their ancestral homes to “reservations” – pieces of land that no European had any use for, whisked their children away to distant schools to “civilize” them and eliminate any connection to their own cultures, and finally, as if THAT wasn’t enough, those option enhancing Europeans effectively finished them off by introducing them to the welfare state.

          Did I miss anything?

          At that time there was virtually no central government…

          You’re forgetting that I see that as a benefit.

          … but violence and coercion were much more common than they are today.

          Depends on how you measure it, I guess, Not too many people were forced to pay taxes before the Europeans arrived. No one was put in a cage for using hallucinogenics or other mood enhancers. No one was forced to travel halfway around the world in order to kill people they didn’t previously know existed….I’m sure there’s more, but you get the idea.

          But my main point for the purpose of this discussion is that the terms “evolution,” “emergence,” and “bottom up” ought to be more than just compliments for processes whose results you like.

          I agree. My definition of emergent order is what a large flock of birds or a school of fish create when they fly or swim en masse as if there was some central control, but it’s really just many individuals responding to natural incentives – mostly involving the proper distance from others to maintain while they are all in motion. The recent “I Pencil” post at CD is an example of people working toward a common goal without even knowing one exists..

          Emergent orders are not always good or desirable.

          If you’re referring to that political carnival you admire, I’ll have to agree.

          Politicians in a democracy do not have anything like “monopoly power.” They are constantly frustrated by voters other politicians and bureaucrats.

          The state has a monopoly, therefore the agents of the state have that monopoly power also. My representative in Congress was given monopoly power for 2 years during which time I can’t fire him and hire someone else. Others are given a monopoly for 4 and 6 years, There are no alternative providers for most of the services provided by government and I am forced to pay – whether I want the service or not – whatever amount the monopolists decide I must pay. Where do you see no monopoly in that?

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          • Oh come on Ron, you want to have it both ways here. It wasn’t that long ago you were explaining to me how the wild, wild west was quite peaceful and orderly – a budding anarcho-capitalist experiment in fact – before the evil central government came and killed that beautiful dream.

            It was disease, which was very poorly understood at the time, and endless waves of settlers that doomed the native Americans. Sure government behaved badly, but no worse than the settlers that preceded government, petitioned for it and later determined its policy. Native Americans were plenty happy to kill and steal from each other before the new settlers proved better at that. I’m pretty sure there is spectacularly less violence now but there is more taxation. If you think that is a worse form of coercion we will just have to disagree about that.

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          • Ron,

            Lord Acton was no anarchist. He was, well, a Lord. That is to say he was a very successful and influential politician. He was right that power corrupts. But not just political power. All forms of power tend to corrupt including economic power.

            Constitutional democracy has worked better than any other political arrangement in human history precisely because it limits the power of individual politicians, forces them to compete with each other and provides a method for the peaceful transfer of power. For THAT reason, it tends to align the individual selfish interests of the representatives with the represented better than the alternatives. Not perfectly, just better. Which is actually not that high a bar to clear.

            When you look a the vast sweep of human history it becomes obvious that the absence of central government has never led to the flowering of anarcho-capitalism. It has always lead to rule by local warlords and kin based methods of social organization that tend to view the group as more important than the individual. Do you really think that,if government hadn’t followed the settlers west that anarcho-capitalism would have flowered and led to the protection of the rights of the native Americans? That’s a lot of pie-in-the-sky even for you.

            I am always amused when the very same people who think that constitutional democracy is horrible think that corporate democracy works just fine. Boards of Directors put up a single slate of candidates and you get a yes or no vote. That is the Soviet system of democracy. Sure you can sell your shares but if you will do you will find that other corporations are organized the same way. Whether you are choosing an investment or choosing a country your choices are limited by what the world offers. Your satisfaction is not guaranteed.

            Flocks of birds and schools of fish are examples of emergent order, not definitions of it. The term is actually surprisingly hard to define. There is a whole science of emergent order studied by people who are not pushing any particular economic theory. The thing that the definitions they use have in common is that such systems involve large numbers of individual agents making local decisions that are affected by very complex feedback loops.

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          • Greg

            Lord Acton was no anarchist. He was, well, a Lord. That is to say he was a very successful and influential politician. He was right that power corrupts. But not just political power. All forms of power tend to corrupt including economic power.

            There’s been no suggestion that Acton was an anarchist, but he made a profound and absolutely correct observation about what happens to human beings when they gain power – either through seizing it or when power is granted to them.

            Constitutional democracy has worked better than any other political arrangement in human history precisely because it limits the power of individual politicians, forces them to compete with each other and provides a method for the peaceful transfer of power.

            Sounds nice in theory, but in practice it doesn’t seem to work as well as you think. It seems impossible to limit the size and power of government. For example, Barack Obama – an individual politician – is one of the most powerful people on Earth how much is his power really limited? He has killed hundreds of thousands of people world wide, including US citizens, which he claims he has the the authority to do. Harry Reid, an individual politician, as Senate Majority Leader, ruled the US Senate as an absolute dictator, determining what questions would be addressed by the Senate and which wouldn’t. Neither the states nor the people had anything to say about the workings of the Senate. He delivered the goods for those who kept electing him, and he was rewarded with re-election over & over.

            Those we elect to congress work very hard to first, get reelected, and then to earn promotions through the ranks as members of various powerful committees that actually wield the power.

            My representative, who I didn’t choose, represents 800,000 people. Do you really believe any person can do an adequate task for that number of people?

            What we actually have these days is various organized groups working to elect their guy at every level of government in order to get their hands on some of those levers of government.

            For THAT reason, it tends to align the individual selfish interests of the representatives with the represented better than the alternatives.

            That’s certainly true for those the representatives are actually indebted to,

            Not perfectly, just better. Which is actually not that high a bar to clear.

            Far from perfect, and a VERY low bar to clear.

            Do you really think that,if government hadn’t followed the settlers west that anarcho-capitalism would have flowered and led to the protection of the rights of the native Americans?

            No, of course not. My previous comments about self rule in the West applied to white settlers and communities that did a pretty good job of organizing and governing themselves relatively peacefully before there was central government. The popular notion of constant mayhem and 24/7 gunfire is far from accurate.

            The problem for the Native Americans was that they were a pesky annoyance for white settlers, and the US Army, fresh out of reasons to exist having just finished suppressed those awful secessionists, found meaningful work in the West mopping up those other troublemakers. Then too, there was that train boondoggle to protect. It wasn’t popular with the natives.

            I am always amused when the very same people who think that constitutional democracy is horrible think that corporate democracy works just fine. Boards of Directors put up a single slate of candidates and you get a yes or no vote. That is the Soviet system of democracy. Sure you can sell your shares but if you will do you will find that other corporations are organized the same way.

            We’ve been over this before, and your comparison is no more valid than it was the last time. The entire reason a private company exists is to maximize return on the owners investments. Period. I am under no obligation to become one of those owners, if I choose not to for any reason, including not liking the company’s governance. I don’t have that choice with monopoly political government. I don’t need one company’s permission to sell or another company’s permission to buy. It is incredibly easy and cheap to sell one company’s stock and buy another one I prefer. People do it all the time. I don’t much care whether a private firm is governed as a pure democracy, a dictatorship, or if the directors just examine goat entrails for guidance. I’m only concerned with maximizing my return.

            Flocks of birds and schools of fish are examples of emergent order, not definitions of it.

            Close enough.

            The term is actually surprisingly hard to define. There is a whole science of emergent order studied by people who are not pushing any particular economic theory. The thing that the definitions they use have in common is that such systems involve large numbers of individual agents making local decisions that are affected by very complex feedback loops

            I suspect that birds and fish follow a relatively small number of simple rules about how much space to maintain between themselves and others when they are in flight. They adjust their own motion to maintain “correct distance to my left”, for instance, and have no idea what the entire flock is doing.

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        • O yeah, I forgot. Native Americans did get horses, firearms, and whiskey out of their encounters with Europeans. You would have to ask them if they felt that was a fair exchange.

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  2. The way policies are implemented is also emergent (although often not in the good way). This is why results are unpredictable and unintended consequences abound. And by the way, “the way leaders are chosen” is politics. Once in office, leaders are constantly calibrating their actions to what they take to be the wishes of the voters.

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  3. Don’t forget John when you encounter real liberals, intelligent liberals, they have a response. Let me see if I can respond to the above…
    Evolution can only go so far. We not only intervene by breeding to get better corn but we are on the threshold of GM products that will change the world.
    Similarly the market is indeed natural, but like evolution it can only go so far. That’s where enlightened force comes in. Not only can our betters invest in bridges and damns and space programs, but like evolution they can take some of the sting out of the natural events like poverty. They can do these wonderful things by tricking productive people into paying taxes without using very much force at all. One such trick is withholding. Another is licensing where they have to come to the government for permission rather than some policeman following them around all day.
    Liberals are not afraid of government because every single left wing democratic socialist state they have ever known about is run by the kind of people they like. Soviet and Mao socialism is easy to avoid. Just put together a body politic that is diverse in gender and race and then take a vote on important stuff.

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    • Walter

      Evolution can only go so far.

      Maybe you mean that evolution may only go so far in a direction you would prefer that it go. Evolution is an ongoing process that continually creates new adaptations in existing species that favor survival.

      Producing more food for humans may not be part of the strategy of corn evolution, Therefore human intervention has been able to create mutations that benefit.humans, but not necessarily corn.

      We also know that free market capitalism has produced by far the greatest improvements in human well-being of any social, political, or economic system in all of history, and there’s no reason to believe that will ever stop being true. It seems that the less markets are interfered with, the better they perform and the more benefit they provide for everyone. Attempts to modify free markets always seem to make conditions worse, not better.

      Perhaps this is one area in which tampering with something that works so well is a bad idea.

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  4. I think we’re in 100% agreement on economic issues, though I caution you to not invoke free will in defense of free markets. You may not follow philosophy or physics, so I’ll give you a quick update: there’s no evidence we have free will in the deepest sense, and there’s not even a coherent definition of free will that makes sense of the common sense view.

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    • To further elaborate, Bob: While strictly planned societies often fail, no society can exist if it is completely free either.

      The Achilles’s heel of Jon’s argument is one of semantics. “Planned” vs. “command” Though we know what he means, the USSR etc. were “command” economies not “planned” economies. The difference being that there is no autonomy in a “command” economy where “planned” economies are economies where the government influences an economy to work in a certain direction, but there is freedom for businesses and consumers to act as they please. There are several hugely successful examples including the US during WWII, The UAE, Cancun, Japan. (Yes, I am aware that some people call this a “mixed-approach” but again, let’s not argue semantics but real economic issues.)

      The other thing to consider is that many underdeveloped nations have used a strictly planned approach (command economy, mind you) in areas to achieve a level of modernization that a free market economy cannot sustain to pull themselves out of the poverty before making a switch, with varied results, to more liberating approaches later. Some would argue that China is one of those examples, and I’d be happy to list more. Granted, it is the people who often call for a change before the government is ready, but, in many historical examples, the change was planned before the revolutions occurred.

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