A couple of weeks ago I flagged the Journal of Economic Behavior and Organization’s (JEBO) special issue Evolution as a General Theoretical Framework for Economics and Public Policy. I plan to post on some of the papers in that issue over coming weeks and months, but I thought I would open my commentary on the special issue by examining one of the popular press articles that accompanied its launch, a piece by David Sloan Wilson called A good social Darwinism.
A couple of years ago Wilson wrote a series of posts at his blog Evolution for Everyone called Economics and Evolution as Different Paradigms (maybe the blog is still alive, but there hasn’t been a new post for over a year). I wrote a series of posts in response to Wilson (here, here, here and here) setting out my issues with Wilson’s approach, particularly the caricatured version of economics. I also considered that Wilson sold the potential for evolutionary biology in economics a bit short, and was somewhat pessimistic about what might come out of the Evolution Institute (I should say that this JEBO special issue has seen the Evolution Institute exceed my expectations.)
Wilson’s latest article continues in a similar vein, with a marginally more subtle perspective on economics, although still missing some of the richness. He starts by painting economics as torn between two ideas: Adam Smith’s “invisible hand” that could lead to benevolent outcomes despite no-one intending them; and Smith’s fear of naked self interest. By going too far in either direction, there can be significant costs, which Wilson suggests includes the Industrial Revolution (surely not) and the Great Depression on the one hand, and Communism on the other.
What Wilson sees as lacking is the ability of economics to navigate between these two extremes. He points to some of the attempts of economics to traverse this middle course, in which he includes Walrasian general equilibrium and the development of homo economicus. These concepts survived critiques by the likes of Thorstein Veblen to be adopted by, among others, Milton Friedman (I addressed Wilson’s views on Friedman’s The Methodology of Positive Economics in an earlier post).
Wilson then suggests that evolutionary theory can offer something here (concur), including a less Newtonian view of the world. The most interesting part of the article, however, is Wilson’s desire to rehabilitate the idea of the invisible hand through multi-level selection – that is, selection occurring at levels higher than the individual. While lower level units of selection (say, the gene) do not have the higher level units in mind, selection of higher level units shapes the traits of the lower level units such that they contribute to the good of the group. Wilson suggests that the invisible hand can operate in human groups as selection at the level of groups has shaped us that way.
As an example of this, Wilson points to the work of Elinor Ostrom, sadly unknown among most of the economics profession until her Nobel Memorial Prize in Economic Sciences in 2009. Ostrom did fantastic work on common-pool resources (such as fisheries, farm land or water) and showed that, under certain conditions, institutional arrangements could emerge without either private ownership (a typical policy recommendation by libertarians) or government intervention. Wilson then notes work (the subject of one of the JEBO papers) which suggests that these design principles can be expanded to a broader range of groups than just those managing common-pool resources. As a result, Wilson suggests that an evolutionary approach can offer a basis for “steering an intelligent middle course between extreme laissez-faire and ham-fisted regulation that have proven so disastrous in the past.”
But this is where Wilson misses one important interpretation of Ostrom’s work. Ostrom’s work was well-known and highly regarded before her 2009 prize by some economists who researched public choice and institutional development, many of whom were libertarians (and from the Austrian school of economics in particular). The reason they cherished Ostrom’s work was that it showed that the tragedy of the commons does not always require a solution to be imposed from above. Decentralised groups develop the rules that allow a solution to the commons problem to emerge cooperatively through voluntary association. As such, Ostrom’s work could be argued to support the laissez-faire end of the spectrum (although Ostrom was not a libertarian).
While it is possible to argue that it is the group that is autonomous, not the individual, another problem arises where the specific conditions that Ostrom identified are not met, such as clear group boundaries. For many economic questions, those group boundaries simply do not exist, leaving us back where we started in trying to steer the middle ground.
It is also not clear that evolutionary theory takes us to the middle. An evolutionary view of the humans in government and bureaucracies may lead to a rather pessimistic view of the ability (or motivation) of government to address “market failures”. The recent meeting of the Mont Pelerin Society (of which none other than Milton Friedman was a founder and past president) on Evolution, the Human Sciences and Liberty saw many make the argument that human nature points to a free society as the optimal state. Paul Rubin wrote the excellent Darwinian Politics: The Evolutionary Origins of Freedom as an argument that liberal society is the best fit for our evolved human natures. It is fair to say evolutionary arguments can and have been used to support all points on the political spectrum.
But let me close with some praise for Wilson. Although I find many specific points to disagree with him, from his interpretation of the invisible hand to his use of multi-level selection arguments, I am somewhat in awe of his productivity and energy. My initial pessimism about the Evolution Institute is turning into optimism. Even though Wilson has his perspectives, he seems to have a drive to bring interesting people and ideas together to address some economic questions that could truly benefit from an evolutionary approach. I hope I can be a part of it.
My series of posts on the Journal of Economic Behavior & Organization special issue, Evolution as a General Theoretical Framework for Economics and Public Policy, are as follows:
- Social Darwinism is back (this post) – a post on one of the popular press articles that accompanied the special issue, a piece by David Sloan Wilson called A good social Darwinism.
- Four reasons why evolutionary theory might not add value to economics - a post on David Sloan Wilson and John Gowdy’s article Evolution as a general theoretical framework for economics and public policy
- Economic cosmology – The rational egotistical individual - a post on John Gowdy and colleagues’ article Economic cosmology and the evolutionary challenge
- Economic cosmology – The invisible hand - a second post on Economic cosmology and the evolutionary challenge
- Economic cosmology – Equilibrium – a third post on Economic cosmology and the evolutionary challenge
I will extend the list and put up links to the other posts as I develop them.