The Science of Choice ...

Evolutionary economic theory originates outside the orthodox neo-classical tradition, however that tradition is enriched not contradicted. Neo-classical theory becomes a special case in a much more complex reality.

Evolutionary Economics is the science of choice, survival choice.

How do we choose between alternatives? Apples and pears? Guns or butter? Save or consume? Buy or Rent? Debt or equity? Work or play? Arts or science? Cricket or football? Cynthia or Jane? Jesus or Mohamed? Good or evil? Go left or go right at the fork in the path, what is best for you and for folk in the long term?

To buy or not to buy, that is the question … and the dilemma is compounded by blind ignorance, uncertainty and risk … can we acquire 'know how' to guide decisions? ... when Darwin suggests the future is unknowable? ...

When push comes to shove these questions are so fundamental that understanding involves all of the following disciplines, at least 9 topics with ethics, law and science thrown in ... in a vain attempt to avoid loose ends? The science of sciences?

A mighty task and my own ignorance precludes any detailed answers here ... but I do know where to find some experts! Start with 1,000 references listed in 'The Evolutionary Foundations of Economics', edited by Kurt Dopfer ...

1. Molecular Biology & the Neo-Darwinian Synthesis.

The economic process is Neo-Darwinian adaptation, the differential survival of competing alternatives. Understanding starts with biological evolution, where most work has been done and where Darwin and Mendel's theories originated. However the basic copy/vary/select process can be applied quite generally, the entity being copied, the source of variation and the laws governing selection needn't be detailed to understand the process.

The focus of economics is on the evolution of 'know how', this is not some biological analogy but the real emergent structures, real science. An evolutionary process takes place, not one that selects genes and organisms and takes millions of years, but one that occurs within each individual brain within a lifetime, replicated and mediated in social cultural environments.

'Know how' is valuable production, energy is the cost (a sort of calorie cost of producing 'know how').

The 'know how' 'trick' is survival, evolutionary tricks are random variants which prove better at surviving than their parents and the reproductive success of individual variants is seen in changing populations. Learning how to survive is relentless discovery & accumulation from trial & error experiment.

Long necked giraffes result from the death of the short necked variety ...

It's an awful stretcher but genes do cost/benefit analysis ...

NB economics is not knee jerk hysteria about predicting the future, complex design is unplanned.

(level 1 - selfish genes - a few genes survive because their physics and chemistry help survival that's why they survive!)

2. Non-linear Mathematics & computer simulation.

The science involved in economic survival tricks is based on non-linear mathematics.

The availability of cheap computing power from around the 1980s enabled the investigation of evolutionary equations which when iterated can result in unpredictable irreversible bifurcations and patterns, the emergence of counter intuitive order.

Traditional scientific reductionism inevitably excludes emergent concepts which simply vanish when you focus on the individual constituent interactions. Undoubtedly there is some complex chemical cause and effect for economic behaviour but it is meaningless. 

Interesting equations are of the type - the value of x at time 'n+1' = a function of x*(1-x) at time 'n' - 'x' is multiplied by itself involving interaction, feedback and non-linearity. A non-linear system is one whose behaviour is not simply the sum of its parts.

These equations don't have easy solutions and the emerging tricks are only possibilities, being dependent of history and supersensitive to the initial conditions which can never be pinned down, being massively diverse and recursive. 

Overwhelmingly most physical systems are inherently non-linear ...

Look at the maths, look into the telescope ...

NB Newton's maths can't describe complex, emergent, unpredictable, novel, patterns of economic activity.

3. Chaos Theory & emerging hierarchies of stable structures.

A trick is an activity achieving an unpredictable end.

On the edge of chaos energy streams can counter the corrosive effect of the 2nd Law of Thermodynamics and individual tricks can interact with others resulting in self organised patterns.

Traditional economics was unwittingly modelled closed systems and the 1st Law of Thermodynamics which resulted in stable equilibrium.

Evolutionary economics is based on open systems and the 2nd Law of Thermodynamics resulting in emergent structures, patterns and novelty associated with dissipative systems far from equilibrium.

Interactions will result in stochastic events which can push non-linear systems towards attractors - local niches which are stable, impossible to predict and difficult to change - characterised as - 

* dynamic, changing, irreversible and history dependent

* non-linear, sensitive to initial conditions and path dependent

* chaotic, deterministic but bounded and never repeating

* complex mix of stocks and flows with multiple positive and negative feedback loops with different delays and timescales

Emerging structures constantly interact and feedback and the process constructs a hierarchy with further interactions and further emergence -

* material and energy (physical tricks)

* biological molecules (chemical tricks)

* unconscious neural networks (instinctive tricks)

* conscious generate and test in the imagination (imaginative tricks)

* self conscious cultural learning from others (cultural tricks).

A multiplicity of hierarchical symbiotic loops of different origins from different times and places, which interact, overlap and repeat whenever and wherever there is energy and synergy. 

Only a very few interactions result in survival synergies, the vast majority result in useless failure, but stable structures will emerge.

No one is 'in charge' of the design, self organisation emerges ...

Energy and the 2nd Law guarantee evolution just happens ...

NB economics is real complexity science not a description of supernatural social myth and magic.

(level 2 - epigenetic evolution - genes are not alone in the universe, they interact and compete for survival in an environment of nutrients and poisons, nature and nurture are the same soup!)

4. Neuroscience & individual decision making.

Understanding the process of decision making whether unconscious or conscious, is at the heart of economics. Scientists are beginning to understand how neural networks & circuits do cost/benefit analysis which is far too complex for computers.

Darwinian processes in the brain discover & accumulate tricks when perceptions of the environment are associated with neural networks & circuits. A motor ability to 'wiggle' the environment means animals can generate and test ideas and their effects.

Layer upon layer of complexity is constructed by this trial & error feedback process of copy/vary/select and eventually, late in the evolutionary day, consciousness and self-consciousness emerge. 

We perceive a behaviour as rational purposeful and intentional when it appears 'as if' planned and is performed with skill and awareness. But it is hindsight and extrapolation that deludes us into a belief about 'good judgement' and knowledge of the future.

A conscious plan for the future is brain chemistry. For sure choices are mediated by hard wired survival instincts, but intelligent design is nothing more than a process of trial and error discovery & accumulation. Innovation involves generating & testing new loops, imitation involves remembering successful loops from the past.

Matt Ridley is good with words - it is nature via nurture, nurture turns on nature - as encoded genes are expressed and result in behaviour and such behaviour then becomes a part of a complex environment which feeds back and has an effect on how genes are expressed and the survival chances of those genes.

Individual decision making behaviour results from neural networks and circuits in the brain adapting to their environment. We generate & test and rules of thumb emerge guiding behaviour and decisions.

What will survive is unknowable until the fat lady sings ...

Tricks survive because they help survival that's why they survive ...

NB economics is wary of simplistic cause and effect models and does not involve a rational, calculating, commanding and controlling economic man.

(level 3 - instinctive behaviour - biology builds neural systems which generate & test survival behaviours, like short necked giraffes, birds which don't build nests die out!)

5. Evolutionary Psychology & survival 'know how'.

Once learning networks & circuits are in place in the brain, a hierarchy of yet more new tricks becomes possible -

* speed learning tricks - individual intentions (Maslow's hierarchy). Testing ideas in the imagination dramatically speeds up the discovery & accumulation of potential individual survival tricks. 

* interaction tricks - beliefs about someone else (Robin Dunbar's 'Sally Ann Test' and empathy). People are different and there is a social 'problem' because other folks wiggles can help and harm. Individual brains discover and accumulate specialist 'know how' but useful production results from sharing and fairness in functional groups.  

* language tricks - establishing reciprocal communication (Steven Pinker and shared attention). The penny has to drop in another brain, all you can do is sense and wiggle (generate & test) but communication involves symbolic coding and decoding. 

* synergy tricks - cooperation & trust (Robert Axelrod and establishing credentials). Persuading folk you're a cooperator and not a parasite is easier with the benefit of a shared history and experience.

* morality tricks - social instincts (John Robinson, Arthur Peacocke, Bishop Spong and emotional 'social capacities' for cooperation in groups). Altruistic behaviour will tend to grow in populations whenever long term synergies outweigh the 'sucker' costs. Eventually a hard wired propensity or belief emerges from deep down in the skull mediating decisions.

* cheat detection tricks - defensive immunities (Matt Ridley and tit for tat strategies). The propensity for cooperation in trustworthy groups and the associated benefits opens up opportunities for parasites and predators. Counter strategies must co-evolve to protect benefits. Immune systems and cognitive cues identify selfish parasites & predators and altruistic groups protect themselves by confronting violence and threats.

 All these 'tricks' - intentions, empathy, fairness, cooperation, trust and cheat detection really exist as instincts honed by aeons of evolution. As neural networks reinforced by oxytocin and dopamine which can now be investigated with the techniques of neural science.

* cultural economic tricks - group enlargement (Adam Smith and specialisation & scale). Democratic communities which tolerate different lawful ideas tend to establish trust in strangers which brings more opportunities to discover synergies. Markets and companies evolve as tricks which encourage and extend cooperative economies of scale and division of labour between more and more strangers. A local focus on discovering 'profit' results in the production of global survival value in excess of costs for all folks in the long term.

We are ignorant of whet it is we do not know even though we know more than we can ever say ...

An invisible hand promotes an end which was no part of intention ...

NB economics does not involve Freudian slips but deep down in the skull survival networks & circuits mediate decisions.

6. Anthropology & culture.

Technological and organisational 'know how' are evolutionary survival tricks, too vast for individual experience or perception. Individuals specialise and cooperate enabling 'know how' to accumulate in emergent social institutions.

Folk have a genetic propensity to 'use their imaginations' and innovate and imitate, and successful behavioural traits will emerge from several sources -

* biological history and instincts

* individual innovative experiments, real and imaginary

* peers and imitative experience

* ancestors and cultural learning

It is cultural social learning that has become the dominant process enabling the survival of human activity systems. Cultural coherence emerges from individual interactions at the lower level but, somewhat confusingly, at the same time, the emerging coherence effects the survival chances of the individual interactions.

Society not a 'thing' but an emergent property of lower level interactions ...

We are dwarfs standing on the shoulders of giants, most of them far away and long dead ...

NB economies of specialisation & scale are embodied as survival 'know how' in cultural institutions.

(level 4 - cultural 'know how' - the brain generate ideas, imaginations and memory leading to symbolic learning and communication with others, there's no discontinuity!)

7. Game Theory & cooperation.

Cooperation is a behavioural survival trick which has exploded in all evolved economic systems. Game Theory has refocused economics on Adam Smith's 'moral sentiments' and the synergies of cooperation and away from the dismal science of selfishness.

Man is a clever animal but more important man is a social animal because synergy benefits can emerge from economic interactions. Game Theory is an area of science studying economic iterations and Evolutionarily Stable Strategies through computer simulation.

Game Theory contributes to the seminal concepts of evolutionary economics satisficing and market coordination as if a control loop

It is profitable to cooperate ...

And uneconomic to beggar thy neighbour ...

NB economic output is survival 'know how' from the synergies of cooperation.

8. Socio-Biological History & evidence.

Human behavioural traits are tricks that survive to become 'rules of thumb' or 'know how'.

Historical 'success' unfolds as, at each level, behaviour that fails dies out. Statistical uniformities and a self consistent coherence emerge from a sifting process involving rewards and punishments but at the same time new experiments create new diversity.

Most experiments fail but some are fruitful, spreading patterns of behaviour whenever tests find reinforcement from the environment. Such behaviours are 'path dependent' and become 'locked into' successful history and as survivors they become part of the future environment.

Imaginations are fired to avoid becoming defunct prisoners of history ...

A man's gotta eat and not be eaten ...

NB economics explains current decision making by learning the past and imagining the future.

9. Complex Systems Theory & Universal Darwinism.

Economics cannot be separated out from the whole evolving multi level 'shebang' of Universal Darwinism. The power of explanations is revealed by understanding economics as a integral part of complex interactive interdependent human behaviour which is itself part of a complex environment. At every level stable structures emerge from interactions at a lower level creating complex dissipative open systems.

Understanding ontology comes from the whole interactive shebang - energy, matter, chemistry, biology, immune systems, neural networks & circuits, instincts, language, social behaviour and culture - choices at one level are always tested against alternatives at other levels. Self consistency is guaranteed as everything effects everything else, economics is embedded in an historical trajectory of a nested set of sets -

* Morality evolves, altruism is a trick which encourages and extends social learning and economic interactions between different individuals. 

* Law evolves, tort law is a trick which encourages and extends social learning and economic interactions between groups of different strangers. 

* Science evolves, scientific methodology is a trick which encourages and extends social learning and economic interactions between groups of different strangers where knowledge is tacit, incomplete and dispersed.

* Economics evolves, evolutionary economics is a trick which encourages and extends social learning and economic interactions between groups of different strangers where knowledge is tacit, incomplete and dispersed by a scientific explanation of behavioural choice. 

It emerges from neo-classical economics as all these disciplines lead to deeper understanding of decision making. As the copy/vary/select process continues instincts, learning and culture construct niches in the environment which feed back and influence the survival chances of future variants. The process is not random, statistical uniformities emerge and the uniformities of evolutionary economics can be investigated.

The latest work confirms these concepts as plausible ... but more to come ...

NB economics is no longer about rational 'economic man' in stable equilibrium, institutionalised technology is becoming endogenous and no longer an exogenous 'black box'.

PS Distinguish between 'know how' and 'events' which are bits of information sometimes factual, sometimes opinion, but never meaningful until placed into an historical context explained by a scientific theory. 

Everything else is myth and magic ... and the danger of a belief in myth and magic is that the learning process is slowed down ... adaptation is slowed down ...