Thu Dec 28th, 2006 at 11:40:26 AM EST
In an article titled "The Evolution of Future Wealth" in the November 2006 issue of Scientific American, theoretical biologist Stuart A. Kauffman proposes that
As economics attempts to model increasingly complicated phenomena ... it would do well to shift its attention from physics to biology, because the biosphere and the living things in it represent the most complex systems known in nature. In particular, a deeper understanding of how species adapt and evolve may bring profound--even revolutionary--insights into business adaptability and the engines of economic growth.
Set aside for now the point that Kauffman seemingly implies that growth is desirable, an idea occasionally challenged on this forum (maybe "growth" here could be taken to taken to mean "complexity".)
The article is brief and summary, but I jumped on it because it suggests an apparently harmonious "middle way" between overreliance on the "State" and "Social Solidarity" on the one hand and overreliance on the "Free Market" and "Charity" on the other.
I like the idea of complexity and "value" arising spontaneously through "self-organization" among networks of interrelating, cooperating and competing entitites.
Kauffman suggests that evolution, and specifically "pre-adaptation", can be a better metaphor for how economies should develop than metaphors from physics, such as the thermodynamic equation that describes heat which the Black-Scholes model is related to.
Just as evolution does not need an Intelligent Designer to guide the formation of new species emerging and functioning interactively in a variety of ecosystems, so -- I wonder -- a country's economy may not need an Intelligent Designer, in the form of The State, to guide it, in particular, by allocating surplus, regulating consumption, and administering investment.
We do not yet know what makes some systems more adaptable than others, but research on complexity has yielded some clues. Some of my own work on physical systems called spin glasses suggests that the level of central control over subsidiary parts of a system is an important consideration. Too much control freezes the system into limited configurations; too little causes it to wander aimlessly. Only systems that hover on the border between order and chaos exhibit the needed general stability and capacity to explore the universe of possible solutions to challenges.
Some have expressed discomfort with the fact that George Soros, Warren Buffett and Bill Gates can allocate the billions of dollars they have accumulated at their whim to whatever charities and causes they consider worthwhile, just as Saudi potentates have the resources and freedom to donate vast sums to Al Qaeda. Maybe this is an example of too little "central control over subsidiary parts of a system" causing the system "to wander aimlessly", and even dangerously (or perhaps , rather, a result of a system wandering too aimlessly).
On the other hand, Communist economies have demonstrated in the extreme how "too much control freezes the system into limited configurations."
And on the positive side, Chris Cook describes preadaptation at work in the evolution of a new, and (I hope) a fitter, economic species -- the U.K. LLP -- lobbied into existence through a legislative "mutation":
In the late 1990's UK professional partnerships, faced with the prospect of individual bankruptcy as a result of litigation against the firm, successfully lobbied for protection, which arrived in the shape of the Limited Liability Partnerships Act 2000 and came into effect on 6 April 2001. Since then over 7,000 UK LLP's have been incorporated, for the most part from conversions of partnerships previously with unlimited liability.
The UK LLP demonstrates preadapation because this legal entity came about -- evolved, so to speak -- for one purpose, but according to Cook, became immediately available for a much broader and richer range of purposes:
In the December 2002 Journal Cliff Mills set out the challenge inherent in protecting public or community assets so that they are `safe and committed to a common purpose'. His article was a masterly analysis of the inadequacy of current Companies Law, and related legislation covering Industrial and Provident Societies. The author believes that the far-reaching and entirely unintended consequences of this recent innovation in UK Partnership Law not only solves the problem of which Cliff wrote but has enormous potential for the Co-operative movement in particular and Society in general.