The Economist has an article about an economist using evolutionary ideas. To wit:
...Eric Beinhocker, of the McKinsey Global Institute, has undertaken his own 500-page haj, entitled "The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics". In places (such as its headline call for a "paradigm shift" in economics) the book may irk Mr Krugman and other gatekeepers of the profession. But it is good enough, and scholarly enough, to warrant their attention rather than their scorn.
Indeed, Mr Beinhocker is himself critical of "loose analogising" between biology and economics. The economy, Mr Beinhocker says, is not "like" a rainforest. Rather, economies and ecosystems are both evolutionary systems in their own right. The evolutionary formula--variation, selection and replication--is a formal, "all-purpose" principle, which can perform its magic equally well in either domain.How, then, does the principle go to work on the stuff of economics? The business plan is the economic equivalent of DNA, and the enterprise its host in the world. Mr Beinhocker envisages a Borgesian library of every conceivable plan, from farming wheat in Lebanon in 8500BC to manufacturing "supernano neural-blastule tubes" that have yet to be invented. Evolution provides a remarkably effective way for the economy as a whole to scour this vast library for viable strategies, finding "needles of good design in haystacks of possibility," as Daniel Dennett, a philosopher, has put it.
Countless firms, busily tinkering with their business models, provide a source of variation. The market itself--what gets bought and what gets left on the shelf--imposes a powerful form of selection. And although business plans cannot reproduce, successful ones do command a growing share of the economy's resources, as companies expand on the back of them and rivals copy them.
Such a process succeeds at the level of the economy as a whole, while remaining coldly indifferent to the fate of individual firms within it. Indeed, Mr Beinhocker cites research showing that progress owes more to new firms replacing old than to incumbent firms renewing themselves. This is not a comfortable conclusion for businessmen who might buy this book. But as a McKinsey man, Mr Beinhocker cannot resist offering a few tips to executives who are not content to be "experimental grist for the evolutionary mill".
Such ideas are less threatening to economists: Milton Friedman evoked the notion of market selection over 50 years ago. But more unsettling than the ideas are the techniques and tools Mr Beinhocker advocates. He argues that economists should abandon blackboard deduction in favour of computer simulation. The economists he likes do not "solve" models of the economy--deducing the prices and quantities that will prevail in equilibrium--rather they grow them "in silico", as he puts it.
While we can certainly intuit a relationship between evolution and economics -- both are after all competitive systems, we should always be wary about such things.
Neuroscience is a great example of a science that has benefited from this type of exchange. Neuroscience received a great infusion of new ideas when we starting talking to computer scientists. What emerged was a theory of the brain as an information processing machine that like computer performs successive transformations on sensory data and stores them in a decipherable code. This idea has totally revolutionized how we think the brain works.
However, the analogy between brain and computer does have its limits. What we know about the brain is that it is massively parallel in its processing, often nonlinear, and stores its information in networks rather than discrete units. While some disciplines in computer sciences, network theory for example, lend themselves to understanding these traits, these traits are really not the way the modern computers generally work.
It is important when analogizing one science to another to understand the differences as well as the similarities. A business plan is not the same as DNA. It is not necessarily stable over the lifetime of the company, and it is not necessarily heritable.
That being said, I like seeing stuff like this because I think these relationships can be fruitful. They go on to discuss how this guy is using emergent models to explain economic behavior and running simulations rather than trying to construct general equilibrium models.
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There have been efforts to make an evolutinary-based economics coming from the others side, i.e., from the biologists.
Evolutionary economics is not as new as its Wikipedia entry may suggest. Having researched the field for a grad school paper on the subject, it does trace back to around the turn of the 20th century. The neoclassical perspective simply held a much higher position in the field. Others have made a run at a similar paradigm shift in economics with marginal success.
There's also the book "An Evolutionary Theory of Economic Change" from 1982 by Nelson and Winter. Beinhocker's arguments aren't that far from Nelson's and Winter's.
The question I'd like to see such a hypothesis address is the same that faced the last evolution-based economic theory of the last century, that of the Social Darwinist. The problem there being that if you are truly to compare evolution to economics (in this case a weak attempt to suggest the rich are inherently more fit than the poor) then what is the metric of fitness?
In evolution it's really just sheer numbers and the ability to reproduce, so the most fit company isn't necessarily the most profitable, or the best, or the one that interacts well with society. It is simply the business that persists and replicates itself in some way, maybe like McDonalds.
The social darwinists hit a similar problem when the very same simple point was made about their theory. There are more poor than there are rich. Always have been, probably always will be, so in evolutionary terms the rich are not the most fit. Especially if they have fewer children and tend to remain small in number or get eliminated by revolutionaries.
So what is a realistic gage of fitness that gets applied to these business plans? Are they the best business plans creating efficiency and good products? Or are they plans that are most pervasive, but possibly inefficient, wasteful, uneconomical, antisocial, antienvironmental and/or probably deserving of extinction? For instance, does McDonalds make the best Hamburger in the world? I don't believe that most businesses work on the most efficient model, and many businesses reproduce inefficient models simply because they work, not because they're best, similarly to evolution.
A neurological example of the problem, the cranial nerves of humans follow a circuitous and seemingly insane set of routes out of the brain. These routes clearly work, but could they have been designed better? The reproductive system in humans works, but is unique among animals for being so painful and dangerous. And then there's the old joke, about the wisdom of placing a playground between two sewage lines. Do we want to wait a long time for business models to undergo natural selection to develop into a efficient form when biology doesn't necessarily always accomplish this task, and takes a long time to do it? Do we really want to mimic biology in this regard? Or, is this the truest theory of all, explaining why shitty businesses persist, simply because they work, not necessarily because they are the best designed?
Hmm, too much analogy, not enough data.