Survivial of the fittest school of economics?

October 6, 2011 2:14 AM

Charles Darwin, Economist
posted by Gyan (121 comments total)

Ah yes, 'Darwinian Economics', nothing new here. It's an old lie put forth to try to convince the more intelligent among us that Human Marketplaces are and should be ruled by the Law of the Jungle, and to believe otherwise is to deny SCIENCE. The proponents of cutthroat competition (those with the largest knives, seldom the truly strongest) have been trying to sell that bullshit since the early days of the Chicago School. Even with the rise of Fundamentalist Religion pulling people away from Science, the conmen still want to sell their snake oil to the smart people too. If you want to be properly Darwinian, then first take away ALL Health Insurance so that only people with large fortunes can survive serious illnesses. That'll cull the herd.
posted by oneswellfoop at 2:58 AM on October 6, 2011 [5 favorites]

Bringing Darwin into an economics argument is the next best thing to Godwining the discussion.
posted by fredludd at 3:05 AM on October 6, 2011 [4 favorites]

When someone my age forecasts something that will happen fifty or a hundred years from now, he needn’t worry about being teased by friends if it doesn’t pan out. Without trepidation, then, I offer the following prediction:

In other words: I don't even care whether or not what I'm saying is even remotely true. Which is good because this:

One century hence, if a roster of professional economists is asked to identify the intellectual father of their discipline, a majority will name Charles Darwin.

Is absolutely false. I mean at the very least Freud is still the father of Psychology even though no one believes his theories anymore.

The article talked a lot about evolutionary biology, but as far as I can tell his understanding of evolutionary biology beyond having read a bunch of pop-science articles about it.

One particular problem is that he's focusing on the 'fitness of the individual' model of evolution. The problem with that is it's really more about the 'fitness of the genes' (to a certain extent). If you think about it that way it makes much more sense that individuals would evolve to help out other individuals who are likely to share genes with them.

You even have competition between genes within a lineage. The part of the human genome that's actually seen the most evolution is actually genes that control the life of sperm cells. Genes that kill mutant sperm help prevent cancer. On the other hand, genes that keep sperm cells alive make men more fertile.

The result is an evolutionary arms race going on in our balls.

The other problem is that "survival of the fittest" in evolution is only one metaphor for natural selection. There are other other competing metaphors right now for what evolution really "means"

Anyway, his argument seems kind of muddled, I think he is trying to make two points, both of which are wrong IMO. The first is that there is some kind of analogy that can be drawn competition between companies in an economy an competition between individuals in a species, and that therefore... somehow the lessons of evolution can be applied to economics some how.

Two problems with this are the "survival of the fittest" model for natural selection rather then a more nuanced model. The other problem is that corporations don't reproduce, mate, and die the way animals do. They also don't even have a 'genome'. The author wants to take some concepts and apply them to economics, but a lot of it could just be done with Game theory or something.

The hockey helmet example he gives seems more like an example of Game Theory then Evolution


Finally the other point he seems to want to make is that, well, the 'rational actor' models are pretty obviously failing. Rather then actually figuring out empirically how people think and behave he wants to create a new model based on how he thinks people will think based on evolution.

Basically he's reinventing Evolutionary Psychology in an economic framework. Basically it's another example of economists basically being totally ignorant of psychology and reinventing parts of it badly. In this case reinventing part of psychology that's actually been pretty widely discredited as having little predictive power and mostly consisting of post-hoc just-so stories.

(Another example is the 'freakonomics' guys basically recreating the entire field of social psychology and then doing it really badly)

They're like the medical researcher who re-discovered calculus. They're suffering from Dunning Kruger effect. They don't know anything and they're too stupid to realize it.
posted by delmoi at 3:15 AM on October 6, 2011 [22 favorites]

That is an excellent article. At first I was all like, tl:dr, but then I actually did read it and it was worth the time. Hidden away at the end is a note that it's adapted from this book (Robert H Frank: The Darwin Economy: Liberty, Competition, and the Common Good).

The basic point it makes is not particularly challenging (market failure can occur even in a market with perfect competition) but one of the things that studying economics at uni taught me was that the chasm between orthodox models of economic behaviour and actual human psychology is so great that no amount of mathematics can bridge it, no matter how many Greek letters you use. It didn't help that most of the economists I came across seemed to be interested less in examining or explaining real-world phenomena than in formulating superficially rigorous but essentially vacant pseudoscientific rationalisations for political positions that they had already decided to adopt. The idea that you would look at behaviour on a level deeper than simple game theory models (mostly just the Prisoner's Dilemma) was not even considered.

It's an old lie

You haven't even clicked the link, have you?
posted by A Thousand Baited Hooks at 3:16 AM on October 6, 2011 [13 favorites]

It didn't help that most of the economists I came across seemed to be interested less in examining or explaining real-world phenomena than in formulating superficially rigorous but essentially vacant pseudoscientific rationalisations for political positions that they had already decided to adopt. The idea that you would look at behaviour on a level deeper than simple game theory models (mostly just the Prisoner's Dilemma) was not even considered.

The problem is this guy just wants to come up with a new bogus model based on his (very rudimentary and probably wrong) understanding of evolution to figure out how people will behave -- and that's a charitable reading.
posted by delmoi at 3:30 AM on October 6, 2011

In other words he wants to replace "People are rational actors with perfect information and therefore will behave this way" with "If people behaved in way X then they would more evolutionarily fit, therefore they do behave in way X" The problem is that the failure of evolutionary psychology shows that doesn't work.
posted by delmoi at 3:34 AM on October 6, 2011 [1 favorite]

Darwin’s central premise was that natural selection favored variants of traits and behaviors insofar as they enhanced the reproductive fitness of the individual animals that bore them.

There seems to be a misinterpretation of 'fitness' that runs through quite a lot of this article. For Darwin, 'fit' meant something like 'fits into' or 'fits together with.' It has nothing to do with strength or power, prowess, etc.
posted by carter at 3:57 AM on October 6, 2011 [5 favorites]

Bringing Darwin into an economics argument is the next best thing to Godwining the discussion.

You know who else brought Darwin into an economics argument?

(also)

MetaFilter: an evolutionary arms race going on in our balls.
posted by eriko at 3:57 AM on October 6, 2011 [4 favorites]

formulating superficially rigorous but essentially vacant pseudoscientific rationalisations for political positions that they had already decided to adopt.

That sounds like a perfect description of Darwinist Economics.

You haven't even clicked the link, have you?

I clicked the link, I tried to give it a chance, even though it was this Bogus Darwinism that did a lot to drive me AWAY from Libertarianism in the late 1970s. I thought 30+ years was enough to give it another chance. I got about eight paragraphs in and saw the phrase "Such abuses are less frequent now" that convinced me this was not a rigorous scientific anything, but rather the sales pitch of another Economic con man.
posted by oneswellfoop at 3:59 AM on October 6, 2011 [1 favorite]

The invisible hand, now with invisible opposable thumb.
posted by pracowity at 4:11 AM on October 6, 2011 [8 favorites]

Relative position is more important than absolute position. Individuals prefer collective restraint but individually seek to push boundaries. Both are straightforward contentions, and neither deserve this kind of hissing response. As for evolutionary psychology, despite its inexplicable unfashionableness among MeFites, it is actually a real field of real scientific endeavor, for the simple reason that we have psychologies, and bodies, and these psychologies probably didn't get created ex nihilo to be shoved into our evolved bodies; they probably evolved together.
posted by aeschenkarnos at 4:19 AM on October 6, 2011 [2 favorites]

The benefit of the device is the largest dollar amount he would be willing to sacrifice to gain the blade guard’s protection, which of course depends on how dangerous it is to operate the saw without one. If he would pay up to $100 a week, say, then installing the blade guard would clearly make sense. But if it’s worth, say, only $30 a week to him, then he would choose not to install it.

Having no hand: worth, say, only $30 a week to avoid
Having an Invisible Hand: priceless
posted by Zed at 4:19 AM on October 6, 2011 [5 favorites]

Onefellswoop, you are completely wrong about the author's point and should cease to comment in the thread.

Anyway, his argument seems kind of muddled, I think he is trying to make two points, both of which are wrong IMO. The first is that there is some kind of analogy that can be drawn competition between companies in an economy an competition between individuals in a species, and that therefore... somehow the lessons of evolution can be applied to economics some how.

I don't think that's quite right. He is not analogizing companies to individual members of a species. He is saying that for the individual member of any species, including humans, relative advantages are far more important than absolute ones.

He then goes on to suggest that modelling competition with this in mind gives you a better explanation of collective action problems then those currently on offer from libertarians or leftists, accounting for how people can both truly desire X yet fail to choose X if it would imperil their relative advantages. He then suggests --- a la your point above --- that the reason government regulation has "evolved" in human society is precisely so that we can overcome this collective action problem in order to enhance the absolute survival chances of our species --- the example he uses is mandating school starting ages in order to ensure that all kids in a society begin their formal education as soon as they're able.
posted by Diablevert at 4:21 AM on October 6, 2011 [4 favorites]

So individuals who care more about relative position would be more likely to muster the behaviors necessary to acquire and defend positions of high rank. That, in turn, would make them more likely to survive famines and marry successfully, thus increasing their genotype’s frequency in the next generation.

I am pretty sure that research - for example in the behaviour of finches - has shown that males who expend energy on high-status perches, and males who expend less energy on lower-status perches, average out to about the same level of reproductive success. Basically, you can defend a high twig, which has high costs and potentially high rewards, or sit on a lower twig, which leaves you more energy for feeding. I know it would be better if I included a link to a paper, but I think the rationale behind what I am saying is clear.

And this is why you only get (say) fast Cheetahs, because speed is the one successful strategy for a Cheetah. However, you get more and less competitive finches (and people) because a range of relational strategies is successful.
posted by communicator at 4:27 AM on October 6, 2011

One century hence, if a roster of professional economists is asked to identify the intellectual father of their discipline, a majority will name Charles Darwin.

If the same question were posed today, of course, more than 99 percent of my colleagues would name Adam Smith.

Oh I get it. Just like most economists who profess an admiration of Adam Smith have never read his work, don't understand his work, and in fact promote economic policy that are utterly incompatable with his work, the author is eager to prove he can do likewise for Charles Darwin?
posted by kithrater at 4:31 AM on October 6, 2011 [6 favorites]

So wouldn't that imply that the current heads of our financial institutions should be winning Darwin Awards for their work on the economy?
posted by blue_beetle at 4:41 AM on October 6, 2011 [3 favorites]

Notes toward a Darwinian Left.
posted by ersatz at 4:41 AM on October 6, 2011 [2 favorites]

Those on the Left who offer exploitation as an explanation of market failure when competition is strong need to explain the jarring implication of their argument—namely, that entrepreneurs are consistently failing to take advantage of lucrative profit opportunities.

The sheer contempt for reality that this sentence implies is staggering.
posted by cthuljew at 4:49 AM on October 6, 2011 [2 favorites]

the invisible hand of the marketplace
keeps on slapping me, right in the face
i'm tellin' you folks, it's a big disgrace
this invisible hand of the marketplace

it pulled my hair and ripped my shirt
pushed me down, and man, that hurt
i sure wish it'd get off my case
the invisible hand of the marketplace

we need a little government regulation
to keep it from smacking the whole damn nation
an enemy of the human race
this invisible hand of the marketplace
the invisible hand of the marketplace
posted by flapjax at midnite at 4:50 AM on October 6, 2011 [7 favorites]

cthuljew, I'm particularly amused by the repeated insinuation that "the left" is being irrational in suggesting exploitation as one cause of market failure when a little known political economist some may have heard of once wrote...

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate.
posted by kithrater at 4:52 AM on October 6, 2011 [3 favorites]

I am pretty sure that research - for example in the behaviour of finches - has shown that males who expend energy on high-status perches, and males who expend less energy on lower-status perches, average out to about the same level of reproductive success. Basically, you can defend a high twig, which has high costs and potentially high rewards, or sit on a lower twig, which leaves you more energy for feeding. I know it would be better if I included a link to a paper, but I think the rationale behind what I am saying is clear.

You make a good point --- I don't know if it's something the author addresses in his book, and I'd definitely be curious to read it. (In trying to explain a complex framework in a 1500 word economist essay, he's obviously simplified things pretty severely.) I believe I've also heard of work on baboons which suggest that beta males, by being sneaky and nice to the females, can enjoy equal reproductive success as alphas despite ranking lower. So I'd agree that the world is complicated and the Aim High strategy isn't necessarily the only possible one which can succeed, evolutionarily speaking.

But I do think that what the author's saying makes a lot of intuitive sense, in terms of the value humans place on relative position. At least to me --- perhaps this is more than the author would say --- it makes a good groundwork for understanding why those right-wing op-eds you see sometimes saying "Poor people in American aren't poor, they have cable," always ring so false. Relative status is infinitely more important than absolute.
posted by Diablevert at 4:53 AM on October 6, 2011 [2 favorites]

If you're more a Left-ist (or anything else) than you are a Darwinian, you're more wrong for it. The evolutionary development of Life is just one example of what may be summed up as The Game of Same and Different - of cooperation and competition.

As Joe Quirk put it in his essay demolishing Anne Innis Dagg's unfortunate "Love of Shopping is not a Gene" (basically a summarized collection of ideologues' most common erroneous misapprehensions of ev psych), "Reality doesn’t care about our ideals. We should figure out what the evidence tells us first, then decide how to implement our politics."
posted by aeschenkarnos at 5:01 AM on October 6, 2011 [1 favorite]

I think the core of Frank's argument is this: standard economic theory assumes that individuals are rational actors who seek to maximise their absolute wealth, and tries to predict collective behaviour by feeding this assumption into models based on game theory. But you get more accurate predictions by taking a step back and using game theory to develop better models of individual preference in the first place.

This isn't exactly a new or earth-shattering observation, but it's one worth making when real-world public policy is actually influenced by facile "rational wealth-maximising actor" models of human behaviour.

I am pretty sure that research - for example in the behaviour of finches - has shown that males who expend energy on high-status perches, and males who expend less energy on lower-status perches, average out to about the same level of reproductive success. Basically, you can defend a high twig, which has high costs and potentially high rewards, or sit on a lower twig, which leaves you more energy for feeding. I know it would be better if I included a link to a paper, but I think the rationale behind what I am saying is clear.

An important difference between finch versus finch perch competition and human versus human wealth competition is that a finch can use a good perch to make himself look good but can't use it to worsen the position of other finches, except by making their perches look lame in comparison to the good perch. But for humans, access to resources translates into political and economic power which can be used to weaken the position of others - both relative and absolute. This makes the stakes much higher.
posted by A Thousand Baited Hooks at 5:04 AM on October 6, 2011 [2 favorites]

kithrater: Hah! And that's not even the part of the statement I have a problem with! While your point is just as obviously true, I was getting more at things like cost of moving to another job, lack of other jobs, lack of training for other jobs, lack of security in moving to another job, lack of similarity between firms offering jobs, &c, &c. That, and the fact that the marginal gain from moving to a safer job constitutes an actual loss, and (I suspect) the vast majority of people value $75 extra worth of food in their kids' mouths than a smaller chance of injuring themselves at an already relatively risky job.

While the fantastical nature of orthodox economics has already been mentioned, it still amazes me the extent to which economists seemingly wilfully ignore the most basic of practical considerations and somehow see the world as this ideal gas of economic opportunity where improving your station is as simple as bouncing off another economic particle in the direction of lower pressure. This all wouldn't be a problem, of course, if economics wasn't entirely in service of political policy, rather than the other way around.

Also, this is certainly not the first time evolutionary biology has been suggested as an influence on economics. Although in this case I don't think Kropotkin used the facts of nature to motivate his economic theory, but rather to simply show that competition in the naive Darwinian sense wasn't the be-all, end-all of life.
posted by cthuljew at 5:08 AM on October 6, 2011

The other problem is that corporations don't reproduce, mate, and die the way animals do. They also don't even have a 'genome'.

They do nonetheless reproduce, in a sense, and they do have something like a genome. The analogy to an individual animal might be a company or other economic entity, but the analogue to a species should be one or another system of organization, a meme complex of sorts that defines its structure and operation. The idea of labour unions for instance has evolved over time. It originated somewhere, it spread, it mutated. Something akin to natural selection must be going on, all the conditions that produce it are there. Memes can of course reproduce in very different ways than genes, suddenly appearing on the far side of the world in an organism/organization that has very little to do with the one it's notionally descended from. Despite the potential for rapid change on occasion, I suspect it probably has in common with biological evolution that the large time scale involved makes it difficult to observe.

I'm sure there must be some insight available somewhere from trying to apply natural selection to economics, but didn't find much in the linked article. Does anyone really argue that it's absolutely never "a good idea to regulate safety in the workplace"? You don't need any fancy Darwinian theory to counter that. If you were to apply the idea more fully I suppose you'd have some kind of evolution of regulatory regimes through international competition. People in nations with no workplace safety might look on the success of nations that have done it better, and one way or another decide to reproduce their approach, modified by local circumstances. But this seems to me like it would be among the economic things to which natural selection is least relevant.
posted by sfenders at 5:09 AM on October 6, 2011

Does anyone really argue that it's absolutely never "a good idea to regulate safety in the workplace"?

Yes, absolute deregulation is a standard trope of libertarianism. For example. Frank isn't building strawmen here.
posted by A Thousand Baited Hooks at 5:19 AM on October 6, 2011 [2 favorites]

One thing I've always found fascinating about discussions like this is that people seem to want to engage with Libertarians when discussing problems with capitalism, and not with, oh I don't know, say, actual capitalists? That is, people who control the capital of the world? I don't care what Rand Paul believes. Rand Paul doesn't control a major share of the capital in the world. Rupert Murdoch does. The Koch Brothers do. The executives at Goldman Sachs et. al. do. Opposition to an ideology is always fun for when you're sitting at the cafe chatting with your friends. But it's useless when you actually want to change something about the world.
posted by cthuljew at 5:20 AM on October 6, 2011 [4 favorites]

Charles Darwin, Angry God.
posted by ennui.bz at 5:22 AM on October 6, 2011 [1 favorite]

Is the Invisible Hand the Left Hand or the Right Hand?

Ideology does not have to be 'true' to be selected for.
posted by dragonsi55 at 5:23 AM on October 6, 2011

cthuljew: Even more amusing is turning the author's argument against itself:

Hockey players and helmets:
...skating without a helmet confers a small competitive edge—perhaps by enabling players to see or hear a little better, or perhaps by enabling them to intimidate their opponents. However, when they’re permitted to vote on the matter, [hockey players] support rules that require them.

Employers and workplace safety:
If an employer failed to install a safety device that met the cost-benefit test, there would be cash on the table available to any rival employer willing to install one. However, if there aren't workplace safety devices offered by any employer then by the same logic as the hockey-player-and-helmet example that must mean employers have colluded/used the power of collective action to agree that no one installs the workplace safety devices.

We don't even need to introduce entirely reasonable assumptions such as the cost of moving jobs to explain why workers might be forced to work in conditions without crucial workplace safety devices: the power of collective action by employers does it for us.

As for the fantastical nature of orthodox economics, while I certainly agree that some (if not most) schools of economic thought are the modern-day equivalent of arguing how many angels can dance on the head of a pin, I believe that the reason those arguments get favourably coverage is because of their policy suggestions: the rich deserve to be rich and so fuck you poor people. They're useful idiots, much like clergymen teaching the Great Chain of Being: the king deserves to be king and so fuck you peasants and serfs.
posted by kithrater at 5:37 AM on October 6, 2011 [3 favorites]

So the figure of 'the market' gets replaced with the figure of 'evolutionary fitness' or even 'survival of the fitness' (which I'm pretty sure wasn't even originally a concept Darwin came up with, but something suggested to him by a correspondent).

In any case it's replacing one totalising abstract mechanism with another, in effect an attempt to do an end run around the actually complexity of the system being described (human economic behaviour and relations), not to mention human agency.

Also, the (confused) focus on the notion of the 'individual' in his version of evolutionary theory is somewhat telling of unexamined neo-liberal assumptions. I am not any kind of biologist, but I'm pretty sure that evolutionary processes are more concerned with groups, such as species, rather than the particular fitness of any specific individuals except in so far as it might contribute to the overall fitness of the group of which it is a member. For instance this passage:

If a trait made the individual better able to survive and reproduce, it would proliferate. Otherwise, it would eventually vanish.

So either the 'individual' has a 'good' trait and it proliferates through reproduction (presumably through asexual reproduction) or, abracadabra, it disappears in a cloud of smoke.
posted by Hello, I'm David McGahan at 5:55 AM on October 6, 2011

Actually on closer reading I've misinterpreted the subject of that passage, he's talking about the trait rather than the individual animal that carries it. My bad - or perhaps I'll blame that last glass of wine
posted by Hello, I'm David McGahan at 5:59 AM on October 6, 2011

But in any case, I think my point concerning the focus on the individual stands, at least as it points to the limitations of applying evolutionary theory to the realm of economics without considerable caution. Similar to the caution I should have exercised before posting 3 times in a row rather than collecting my thoughts.
posted by Hello, I'm David McGahan at 6:06 AM on October 6, 2011 [1 favorite]

Does anyone really argue that it's absolutely never "a good idea to regulate safety in the workplace"?

Absolutely. I am not well versed in economics and once (in 2000) I got into a heated exchange with a recent MBA graduate about de-regulating the market. I'm guessing he bought the Adam Smith theory of market regulation, hook line and sinker. He kept telling me-- a poor, deluded English major-- that if only we allowed businesses to decide for themselves how to run their businesses without government forcing them to adhere to various safety codes, that there would pressure on the business owners not to maim too many people. In other words, if there were too many deaths and maimings then it would cost the owner too much money-- somehow each business owner would magically find that perfect amount of cost effective safety regulations. The only two examples I could think of that directly contradicted this argument were polluters (the Super Fund Tax had recently been allowed to lapse) and the Mining Industry. He kept waving away my attempts to bring up The Jungle because it was fiction.
posted by Secret Life of Gravy at 6:07 AM on October 6, 2011 [2 favorites]

There was an amusing argument put forward in [1] that corporate mergers occur because executives are emulating other successful executives, rather than the more pat theory that executives are simply robbing their shareholders.

I'd imagine that's partially true, well people copy one another. duh! We must of course change the incentive structure to stop the merger madness, but maybe this helps us realize how. Institute more progressive corporate taxes that penalize companies for being larger perhaps?

[1] Ed Vos and Ben Kelleher. Mergers and Takeovers: A Memetic Approach. Journal of Memetics, Sept 2001.
posted by jeffburdges at 6:15 AM on October 6, 2011

If you are quick with a knife, you'll find that The Invisible Hand is made of tasty invisible meat.
posted by jeffburdges at 6:18 AM on October 6, 2011 [2 favorites]

I mean at the very least Freud is still the father of Psychology even though no one believes his theories anymore.

This is an aside, but I suspect it's more that "Freud is still the father of Psychology because his ideas are so deeply and ubiquitously ingrained in the language and culture that no one remembers that they are his." cf. the concept of the unconscious.

On Darwin being the 'father of Economics' - don't be silly, everyone knows that's Marx!
posted by jet_manifesto at 6:20 AM on October 6, 2011

I'm guessing he bought the Adam Smith theory of market regulation

Adam Smith never advocated anything of the sort, and was incredibly suspicious of businesses proposing changes in government regulation over their own industry. It's not his fault he's been built into some icon of lunatic-fringe libertarianism, and the philosophy would have appalled him.

On the interests of business owners: "...in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public...The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.

On labor regulations: "Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters. "
posted by strangely stunted trees at 6:23 AM on October 6, 2011 [5 favorites]

In all honesty, when someone posts an article like this, which has the whiff of "science says free markets are the only way to go", instead of R'ing TFA, I poke around the website of the think tank that's hosting it.

It probably makes my comments rather derail-y, but with the Internet letting every dog post academically-clothed articles that are actually just calls for "let's get the cats", I figure it's more efficient to do a quick check for whether or not someone it worth engaging with.

These guys are chaired by Francis Fukuyama, which foreshadows grand, incorrect pronouncements. Clicking around more lands me on an article about the Catholic abuse scandal, which contains this gem:

In July of this year Enda Kenny, the Irish Prime Minister (whose title is commonly given in Gaelic which hardly anyone can pronounce) ....

which is enough for me. It's pronounced 'tea-shock', and you can feck off.
posted by benito.strauss at 6:34 AM on October 6, 2011 [3 favorites]

As ersatz noted upthread, there is a fairly productive formulation coming from people like Peter Singer, essentially arguing :

- We should not seek to change human nature when formatting policy. In particular, we must accept that any communism style centralization of power must inherently lead to suffering, no matter how moral those initially holding the power.

- We should instead seek to rig the non-zero sum games that inherently arise in society to (a) foster cooperation among the middle class and (b) channel competition among the upper class towards limiting their power.
posted by jeffburdges at 6:34 AM on October 6, 2011 [1 favorite]

one thing I've always found fascinating about discussions like this is that people seem to want to engage with Libertarians when discussing problems with capitalism...

It's like wanting to engage with La Rouchies on the problems with the British monarchy...
posted by ennui.bz at 6:48 AM on October 6, 2011

Jesus Christ, people. The point of this article is:

There are excellent reasons why government regulations exist, and looking at economics through a Darwinian rather than a Smithian frame would enable us to explain and understand those reasons better.


And what do we have here? A thread full of people bloviating at each other "he used darwin in the title and it's about economics, he must be a Bad Guy."

If nothing else we have provided further evidence against the proposition that humans are rational...
posted by Diablevert at 6:53 AM on October 6, 2011 [6 favorites]

the value humans place on relative position

I understand you are speaking from a compassionate place, and it is true that being at the very bottom of the pile is stressful and unpleasant for any social animal. However, I think there is a big mistake - and I can see it made by other commentators above - to assume that 'winner takes all' strategies are more effective, or more rational, than co-operative strategies. Hence the false leap from Darwinian ideas to right wing policies.

for humans, access to resources translates into political and economic power which can be used to weaken the position of others - both relative and absolute. This makes the stakes much higher

Or it could be used to seek collective power, and then to advocate co-operative strategies. I think we forget, because our current societies denigrate those approaches. But they are just as effective in reproductive terms.

(if course species vary, no space to add all the caveats, but I am pretty sure humans can succeed in reproductive terms by promoting mutual aid)
posted by communicator at 6:54 AM on October 6, 2011

jeez Metafilter while all the hate? RTFA!

upon a careful reading, Frank is actually weighing in for safety and regulation: that an enlightened regulatory policy will provide incentives away from certain undesirable outcomes of Smith's Invisible Hand, namely the ones involving relative or intra-species or Darwinian competition, or zero sum games. He motivates this with the hockey helmet example, the kindergarten starting age, mandatory vacation rules, arms treaties and auto racing engine displacement limits.

was all this too far down for anyone to read?

great article!
posted by dongolier at 7:01 AM on October 6, 2011 [1 favorite]

I was a little uneasy at the bandying about of the term "Survival of the Fittest" and I finally figured out why. I do think that some people whip out that phrase without understanding fully the word "fitness." The usual mistake is to think it is the same as the word "fit" when applied to the human body-- fastest, strongest, healthiest, etc. Actually it should be called "Survival of those individual traits which results in the greatest number of offspring reaching the age of reproduction." Not as catchy, but more descriptive.
posted by Secret Life of Gravy at 7:01 AM on October 6, 2011 [1 favorite]

/I understand you are speaking from a compassionate place, and it is true that being at the very bottom of the pile is stressful and unpleasant for any social animal. However, I think there is a big mistake - and I can see it made by other commentators above - to assume that 'winner takes all' strategies are more effective, or more rational, than co-operative strategies. Hence the false leap from Darwinian ideas to right wing policies.

Well, I think that's precisely what the article is pointing out --- that we need regulation to enable us to enforce rules that enhance species survival over individual survival, that regulation itself is a key component of a cooperative strategy. This is what the author is pointing out in his lengthy description of the darn moose antlers --- that evolution can sometimes provoke adaptations which enhance individual rather than species survival, and that co-operative strategies are a method which can overcome such drives.
posted by Diablevert at 7:07 AM on October 6, 2011

That was my reading of it as well, Diablevert.
posted by Secret Life of Gravy at 7:20 AM on October 6, 2011

You know, right-wing theoreticians usually compromise with reality, diablevert and dongolier. Ever heard about Charles Koch extolling Medicare and Social Security when hiring Friederich Hayek?

I'll support anyone abandoning their faith in the invisible hand of course, but his focus upon safety regulations belies his desire to simply make the sacrifices necessary for keeping one ideological toe on the ground.

Yes, we obviously need such perspectives moderating the insanity arising inside business schools. Yet, we've much greater need for real leftists to embrace evolutionary thinking, game theory, memetics, whatever.
posted by jeffburdges at 7:30 AM on October 6, 2011 [1 favorite]

This is absolutely correct:

Jesus Christ, people. The point of this article is: There are excellent reasons why government regulations exist, and looking at economics through a Darwinian rather than a Smithian frame would enable us to explain and understand those reasons better.

I'm appalled at the lack of reading comprehension from the commenters in this thread. I guess I am assuming the commenters read the thread instead of seeing "Darwinian economics" and busting a synapse.

/just took LSAT
posted by 3FLryan at 7:32 AM on October 6, 2011 [2 favorites]

There is a theory that the same principles underpin both economies and ecologies.

http://en.wikipedia.org/wiki/Jane_Jacobs#The_Nature_of_Economies

I mean, I call bullshit on laissez-faire capitalism passed off as science-lite via some misunderstood notions of evolutionary theory, but there is a possible nuanced reading of economy as an androgenic ecology.
posted by clvrmnky at 7:32 AM on October 6, 2011

Read the link, that is.
posted by 3FLryan at 7:32 AM on October 6, 2011

it makes a good groundwork for understanding why those right-wing op-eds you see sometimes saying "Poor people in American aren't poor, they have cable," always ring so false.

There's a much simpler and older way to understand this already: Social and political equality are not about being able to afford gadgets; the issues are personal dignity and social and political power. It's not about what you can buy, but how much you view yourself as being treated as a social and political equal, rather than as an unreliable, untrustworthy child or social/political outcast.

For example, the recent changes to the unemployment insurance system in Florida, which among other things, now allows employers to deny workers their own pre-paid unemployment insurance benefits on the basis of "misconduct" outside the workplace.

That's the kind of condescending, paternalistic and ultimately classist bullshit policy that instantly creates real social and political inequality. Economic equality is ultimately only relevant to social justice because our society and political institutions increasingly privilege economic power, and more and more, we're stripping out the systematic checks we've built into our systems to mitigate the impact of natural economic imbalances on the practical social and political power balance.

When did we become so comfortable with the idea that our employers could monitor and regulate our private behavior and penalize us for it? We're forever vigilantly on guard against government impositions on our freedoms, but we seem to have forgotten that it was generations of private sector abuses and oppressive business practices that we need a proper functioning state to protect us from in the first place.

jeez Metafilter while all the hate? RTFA!

Not to justify the knee-jerk nature of the response, but it's really a pretty understandable natural reaction to seeing Darwin and economics mentioned in the same breath again, given the appalling legacy of Social Darwinism in the US.
posted by saulgoodman at 7:36 AM on October 6, 2011 [4 favorites]

I there is some math that offers a rigorous link between studies of ecology, evolution and economics. Studies of mutual information within networks scratches the surface, but it's a fairly new branch of math. In any case, it's a pity that economists tend to ignore the importance of mutualism in evolution, since human cooperation is so integral to civilization.
posted by MisplaceDisgrace at 7:37 AM on October 6, 2011

For whatever it's worth, Marx himself^[1] noted the resonances between Darwin's thought and Adam Smith's, and argues that this is largely due to the influence of the latter on the former. I don't have time to dig up the reference, but in one of the footnotes to Capital^[2] he talks about how it's not entirely surprising that an English natural scientist would find traces of English political economy in the natural world.

[1]: I guess I am sufficiently far to the left that I reflexively think of Marx as "Marx himself." I'm not quite capitalizing the 'h' yet, but I'm thinking about it...
[2]: I believe David Harvey devotes a paragraph or two to this in his excellent A Companion to Capital...
posted by You Can't Tip a Buick at 7:37 AM on October 6, 2011 [1 favorite]

But these are all golden dreams. Oh, tell me, who was it first announced, who was it first proclaimed, that man only does nasty things because he does not know his own interests; and that if he were enlightened, if his eyes were opened to his real normal interests, man would at once cease to do nasty things, would at once become good and noble because, being enlightened and understanding his real advantage, he would see his own advantage in the good and nothing else, and we all know that not one man can, consciously, act against his own interests, consequently, so to say, through necessity, he would begin doing good? Oh, the babe! Oh, the pure, innocent child! Why, in the first place, when in all these thousands of years has there been a time when man has acted only from his own interest? What is to be done with the millions of facts that bear witness that men, consciously, that is fully understanding their real interests, have left them in the background and have rushed headlong on another path, to meet peril and danger, compelled to this course by nobody and by nothing, but, as it were, simply disliking the beaten track, and have obstinately, willfully, struck out another difficult, absurd way, seeking it almost in the darkness. So, I suppose, this obstinacy and perversity were pleasanter to them than any advantage.

Advantage! What is advantage? And will you take it upon yourself to define with perfect accuracy in what the advantage of man consists? And what if it so happens that a man’s advantage, sometimes, not only may, but even must, consist in his desiring in certain cases what is harmful to himself and not advantageous. And if so, if there can be such a case, the whole principle falls into dust.

Dostoevsky, Notes from Underground, published in 1864
posted by notion at 7:45 AM on October 6, 2011 [3 favorites]

jeez Metafilter while all the hate? RTFA!

upon a careful reading, Frank is actually weighing in for safety and regulation...

Well, kind of. He's not like the really really insanely extreme anti-government types, in that he recognizes the existence of collective action problems that need a government to solve.

However, even classical Libertarians do recognize the existence of collective action problems. They usually agree that national defence shouldn't be left to the free market, because of collective action problems: it's in the self-interest of every individual to free-ride on his neighbour's defence contribution. Even for the problem of pollution, they propose solutions to the collective action problem in the form of complex lawsuits where everybody downwind just sues the polluter instead of relying on a regulator.

Frank still presents fairly extreme anti-government ideas in paragraphs like this one:

The logic of the decision is no different when the woodworker is employed by a firm. It’s still necessary to compare the blade guard’s cost with its benefit. The fact that the employer would be writing the check for the device does nothing to change its cost. And its benefit is still the value, in the worker’s eyes, of the protection it would provide. Suppose the blade guard meets the cost-benefit test. If it’s worth $100 a week to the woodworker and costs only $50 a week to install and maintain, then the employer has every incentive to provide it. Failure to do so would be to forgo the $50 a week of economic surplus it could have created.

This is pretty simplistic argument. It ignores things like the principal-agent problem. The worker has to negotiate with a line manager who has to negotiate with his manager for a blade-guard budget, who has to consider the value to the share-holders. Each link in the chain makes it harder to get these complex issues across.

There are issues of imperfect information: the worker might take the job not knowing about the missing blade-guard. There are issues of the "race to the bottom": an employer who puts in a blade-guard might make more expensive products and be removed from the market. If the job isn't skilled, the employer might be able to rely on desperate people who can't afford not to work. There are issues of limited rationality: workers might be irrationally confident of their ability not to get injured.

So, Frank is still promoting a fairly extreme laissez-faire economics, based on a quite idealized, simplistic and ulta-efficient vision of how real markets work. He's just not a complete lunatic who thinks government is entirely parasitic.
posted by TheophileEscargot at 7:57 AM on October 6, 2011 [6 favorites]

Robert Frank is a very bright guy and totally respected economist, BUT

he is wading in water here where there are great white sharks swimming just beyond the breakers. I blame Steven Pinker myself. In particular I blame the chapter in Steven Pinker's book How the Mind Works where he explains how evolution explains how modern American females write love letters to serial killers in prison. If you read Pinker's book real close, it is impossible (for me anyhow) to find any glaring fault with the sucker as he qualifies and hedges at precisely all the right places that I would love to Gotcha his ass. Nevertheless, he has equipped a small army of Randroids to spew all over the damned internet about libertarian politics and pickup artistry and the intelligence quotient shortcomings of black people and all other manner of ugly repulsive nonsense.

Frank is probably too naive to know about the great white sharks swimming in the 5 foot water there just beyond where he is wading, but his Rhetoric Sucks. There is another gifted economist, Deidre McCloskey who has a fascinating (but marginal) theory that Economics is precisely equivalent to Rhetoric, at a fundamental level. I am not feeling motivated to read any more Frank real close right now.
posted by bukvich at 7:58 AM on October 6, 2011 [2 favorites]

Dostoevsky, Notes from Underground, published in 1864

Yeah, the Underground Man also rails on at length about how maybe he likes having toothaches, and who's to tell him he ought to get his tooth fixed when, maybe, he relishes the pain.

The Underground Man was kind of the Ur-Libertarian stock character of his day (and I think also the embodiment of a kind of radical nihilism that swept through pre-revolutionary Russian intellectual cultural). I've always heard that Dostoevsky was consciously critiquing Utilitarianism through the Underground Man, but honestly, I'm not sure where Dostoevsky's sympathies ended up, and many of the arguments in the UG man's mouth don't amount to much more than embittered, vitriolic contrarianism with no real point that I can discern. I used to really highly esteem that particular work, but these days, I think Poor Folk, The Idiot, and Demons are more illuminating. Dostoevsky was a bit of a Christian mystic, so I'm not sure he really offers a lot of especially good, cogent political ideas.
posted by saulgoodman at 7:59 AM on October 6, 2011

I will say, though, that Dostoevsky gets the analysis of human psychology as embodied in the UG man just right: we humans are motivated as much, if not more often, in our decision-making by our feelings of spite, obstinance and personal enmity than by any conscious calculation of self-interest--let alone the kind of transcendent, enlightened self-interest that some have suggested could be made to drive the markets.
posted by saulgoodman at 8:10 AM on October 6, 2011

Ahh, Marx's incorrect criticism of Darwinism is exactly the problem Singer addresses, You Can't Tip a Buick. I'll explain by lifting some quotes from ersatz's link :

In the “Theses on Feuerbach,” Marx argues that, “the human essence is no abstraction inherent in each single individual. In its reality it is the ensemble of the social relations.”

Singer comments: “It follows from this belief that if you can totally change the ‘ensemble of the social relations,’ you can totally change human nature.” This claim goes to the heart of ... marxist thinking. As a result, it affects much of the thought of the entire left. ... it leaves open the possibility of a [radically] different kind of society.

Though most scholars and teachers today are not avowed Marxists, the focus on cultural or social “constructs” is the modern descendent of Marx’s “ensemble of social relations.”

... the question is not whether such constructs exist; we know that they do. But modern evolutionists worry that an over-emphasis on cultural constructs ... implies the nearly infinite malleability of human nature—a possibility that is biologically implausible.

posted by jeffburdges at 8:15 AM on October 6, 2011

Here's what Marx had to say about Darwin:

I'm amused that Darwin, at whom I've been taking another look, should say that he also applies the ‘Malthusian’ theory to plants and animals, as though in Mr Malthus’s case the whole thing didn’t lie in its not being applied to plants and animals, but only — with its geometric progression — to humans as against plants and animals. It is remarkable how Darwin rediscovers, among the beasts and plants, the society of England with its division of labour, competition, opening up of new markets, ‘inventions’ and Malthusian ‘struggle for existence’. It is Hobbes’ bellum omnium contra omnes and is reminiscent of Hegel’s Phenomenology, in which civil society figures as an ‘intellectual animal kingdom’, whereas, in Darwin, the animal kingdom figures as civil society.--Marx To Engels, 1862.

The Left is faced with a choice: repudiate the theory of evolution, or allow itself to be absorbed by the Right.
posted by No Robots at 8:19 AM on October 6, 2011 [1 favorite]

In time, I predict the invisible hand will come to be seen as a special case of Darwin’s more general theory of competition, which was fundamentally different. Darwin trained his sights on competition not among merchants but among individual members of plant and animal species. But the two domains, he realized, share deep similarities.

This is kind of nonsense. Go back and reread how Smith actually accounted for the operation of his Invisible Hand and you'll find he basically didn't. He attributed its effect to Divine Providence, not to the rational operation of the markets.

Basically, he argued the hand of God would guide the markets to the best result over time. There's no detailed scientific rationale for the effect on offer at all.

And all that Darwinian evolutionary theory really tells us is that living things only survive to propagate their genes if they are suited to their specific environment, whatever that is.

Darwinian ideas don't lend themselves to economic arguments because the conditions markets have to adapt to are not purely driven by natural circumstances, but also the exigencies of human society and regulatory systems (the extent and effectiveness of property right enforcement, contract law enforcement, etc., are pretty crucial and fundamental to how markets adapt to our changing needs). It's actually the regulatory landscape in addition to the natural ecology that fit markets have to adapt themselves to (not the other way around).

The Left is faced with a choice: repudiate the theory of evolution, or allow itself to be absorbed by the Right.

No, because luckily, evolution is a biological theory, not a political system or economic theory, and modern evolutionary theory has developed a long way from Darwin's early theories. Modern evolutionary theory is not Darwinian natural selection alone, and in any case, it doesn't really matter. How is it even relevant?
posted by saulgoodman at 8:27 AM on October 6, 2011 [4 favorites]

And what do we have here? A thread full of people bloviating at each other "he used darwin in the title and it's about economics, he must be a Bad Guy."

His discussion of how "darwinian" selection via cost-benefit analysis nullifies the selective pressures towards greater worker safety inherent in adam smith's capitalism is one of the stupidest things I've ever read. It's really too stupid to try to unpack and the whole premise of the essay (and his book: The Darwin Economy which he is flogging) is built on not really understanding natural selection... the natural kind. It's the kind of "buzzword" intellectualism which management types love; Darwin is just window-dressing or a brand identity for some tired ideas and fatuous observation: I gather from the essay that he wants to tinker with the tax code, but people's lack of understanding of Darwinian economics is getting in the way.

In the end, even though he is a Professor and uses big words, this is deeply unserious and not really worthy of serious criticism.
posted by ennui.bz at 8:28 AM on October 6, 2011 [3 favorites]

Marx did indeed emphatically maintain the existence of an essential human nature (Gattungswesen, genus-essence):

Only when the real, individual man re-absorbs in himself the abstract citizen, and as an individual human being has become a genus-essence [Gattungswesen] in his everyday life, in his particular work, and in his particular situation, only when man has recognized and organized his “own powers” as social powers, and, consequently, no longer separates social power from himself in the shape of political power, only then will human emancipation have been accomplished.--"On The Jewish Question"

The idea of a genus-essence is specifically repudiated by the theory of evolution, and thus the incompatibility of socialism and the Theory of evolution is stark:

Without species being [Gattungswesen, genus-essence], Marx’s critique of capitalism would have no ethical basis and his politics would seem directionless and arbitrary. It is paramount, therefore, that if one is to understand Marx and Marxism, one must begin with species-being [Gattungswesen, genus-essence]--"Marx via Feuerbach: Species-Being Revisited" / Jacob Held. In Idealistic Studies (2009), pp. 137–148.

The theory of evolution provides the necessary foundation for capitalism to demolish the idea of a genus-essence, and thus make mankind thoroughly exploitable.

Note that English translators commonly mistranslate Gattungswesen as species-being rather than as genus-essence. This is the result of conceptual obfuscation that I would blame on evolutionist rhetoric.
posted by No Robots at 8:38 AM on October 6, 2011 [1 favorite]

All that really needs to happen is for people to stop misreading "survival of the fittest," as "survival of the best." As Gould pointed out, all it really means is "survival of what fits." If you're in the ocean, you might find sharks, but you won't find them in the middle of the desert. How are you supposed to build better economic theory on top of such a (now) trivially true observation? If anything, what evolutionary theory should tell us is that we will never discover any universal rules governing markets and yielding some sort of penultimate economic theory: the operations of markets are completely contingent on the cultural, political and environmental circumstances that give rise to them. When they're properly adapted to those circumstances, they succeed; when they are not, they fail.

Judged by those standards, our current approach to economics and to the markets is an utter failure.
posted by saulgoodman at 8:38 AM on October 6, 2011 [2 favorites]

evolution is a biological theory, not a political system or economic theory

Then capitalists should stop using it to justify their economic theory.
posted by No Robots at 8:39 AM on October 6, 2011

The theory of evolution provides the necessary foundation for capitalism

See, there's where we disagree. A certain very flawed and strict reading of Darwin's particular formulation of Natural Selection might well do that, but more contemporary evolutionary theory does not. Again, Stephen J. Gould wrote a lot of interesting things on that point.
posted by saulgoodman at 8:40 AM on October 6, 2011 [1 favorite]

"The Left is faced with a choice: repudiate the theory of evolution, or allow itself to be absorbed by the Right.

You are wrong, but saulgoodman is also wrong. Human culture is definitely the product of evolution, but that doesn't make gross inequality inherent.

We must however accept that changing our society cannot change human nature. And instead our improvements to society must account for changes to human nature.

There are many such examples of systems designed to accomodate human nature rather than repudiate it : The 'checks and balances' in the U.S. constitution provide one such example where the powerful are divided. France's health care system does this far better than England's. etc.
posted by jeffburdges at 8:43 AM on October 6, 2011

Gould and others foolishly believed that socialism and the theory of evolution are compatible. It is time to put an end to that conceit.
posted by No Robots at 8:43 AM on October 6, 2011

Norobots>
Competition is not the sole driving force in evolution. There are high degrees of cooperation required for multicellular life to arise, and for social creautres as well. Eukaryotes would never come about if primordial cells devoured mitochondria, rather than their waste products. There is no pure socialist or capitalist economy, each nation practices some sort of mixture. In the same way, evolution is a balancing act between the forces of cooperation and competition.
posted by MisplaceDisgrace at 8:53 AM on October 6, 2011 [5 favorites]

No Robots, do you have any actual empirical argument against evolution, or are we simply to accept that since it contradicts your interpretation of classical Marxism, it simply must not be true? Because your argument as you've been presenting it here strikes me as the exact moral and intellectual equivalent of arguing that evolution must be false because it contradicts the Bible.
posted by strangely stunted trees at 8:56 AM on October 6, 2011

TheophileEscargot: the woodcutter's blade-guard example is designed to illustrate the perfect-world scenario where management recognizes the economic benefit of safety equipment and installs it up to the point where the cost outweighs the benefit, which is (erroneously) the expected behavior within the "invisible hand narrative". Frank goes on to explain using "relative income" why the perfect-world scenario is not what we actually observe in reality, and points out that the invisible hand leads to a inefficient (layman's term: undesirable) outcome. Frank is providing a rigorous way to identify these situations: the ones where "relative incomes" are what matter (ie. an individual within a species who obtains a beneficial adaptation, or a slight edge over the others). He then states that the only thing that can fix those situations and lead to an efficient (layman's term: desirable) outcome is careful, thoughtful regulation. The perfect-world scenario is the target that government regulators should aim for.

the rest of this thread's discussion Darwinism is both unintelligible (at least to me) and unrelated to Frank's economic ideas on "competition and inefficiency" ---the point he is making is the gazelles are not in a speed competition with tapeworms, they are competing against other gazelles just as hockey players, woodcutters, pushy parents of kindergarten kids are all competing against their own---and regulation is the only thing that can save them from themselves.
posted by dongolier at 8:57 AM on October 6, 2011 [2 favorites]

Another book related to viewing economics through the lense of evolutionary theory is The Origin of Wealth, among other publications that have come out of the Sante Fe Institute. If you're pointing out differences between an ecosystem and an economy, you're missing the point- the goal is to use the same analysis tools to explain two complex systems, not to say they're perfect analogs.

I think this is much more policy-neutral than people are making it out to be. You could easily draw the conclusions that intensive government intervention in the economy is warranted due to the path-dependent nature of a complex system, which may lead to localized optimization that is terrible on a system wide scale (i.e. carbon intensive energy industry).
posted by nowoutside at 9:10 AM on October 6, 2011 [2 favorites]

The hockey helmet example he gives seems more like an example of Game Theory then Evolution

It's also wrong. I recall going to Senators games in my hometown in their opening season and we had Brad Marsh who didn't wear a helmet. He was not the only veteran player to not wear one, but he was one of the last and many others that had the option over the years chose to wear helmets. You see the same thing with visors these days.
posted by Hoopo at 9:11 AM on October 6, 2011

Gould and others foolishly believed that socialism and the theory of evolution are compatible. It is time to put an end to that conceit.

What? What does the one have to do with the other? What does natural and sexual selection have to do with how humans choose to distribute resources? How does the fact that genes succeed based on fitness effect people's ability to realize that their own interests are almost always in line with the interests of their neighbors? In what possible way is the scientific theory and the economic theory incompatible? Even if there were absolutely no cooperation in evolution, it would mean absolutely nothing as far as economic theories are concerned. I mean, this is beside the fact that the extent of cooperation in nature is absurdly obvious (wolves? deer? bison? meerkats? ants? fish? any symbiosis? &c).
posted by cthuljew at 9:12 AM on October 6, 2011 [1 favorite]

nowoutside is on point with those links. I like to think that governments role in regulation is to ensure safety and balance degree distribution in trade networks, like by limiting monopolies. The adaptability of a network is based on how well energy is distributed between nodes. Think of how snow in chicago creates airport delays across the country. This is because of the relatively high number of links to other airports, hubs have a bigger impact on the network when they go down. Similarly, in an economy where different sectors have a high dependency on fossil fuels, the trade network is more sensitive to oscillations in the price of fossil fuels.
posted by MisplaceDisgrace at 9:21 AM on October 6, 2011

Is the Invisible Hand the Left Hand or the Right Hand?

It's the Middle Finger.
posted by Mr. Bad Example at 9:26 AM on October 6, 2011 [1 favorite]

the point he is making is the gazelles are not in a speed competition with tapeworms, they are competing against other gazelles just as hockey players, woodcutters, pushy parents of kindergarten kids are all competing against their own---and regulation is the only thing that can save them from themselves.

Well, then he still doesn't understand modern evolutionary theory very well. Competition is not central to it at all. Selection is. Selection isn't about competition but about adaptive fitness. Competition within species and between species turns out to be more of a sideshow than the center stage in modern evolutionary theory. With Dawkins, it's at the level of genes that selective competition actually occurs. Genes "compete" with other genes (although I'd almost just like to see that ill-fitting metaphor replaced by a better, more uniquely biological science term--hell, why not just use "selection"?).

Animals don't necessarily compete with each other or with other species except in cases of resource scarcity (which as it turns out, are not the rule and not even necessarily as common as we used to think). The most successful species have evolved to coexist with other species and with other members of their own. That's modern evolutionary theory.
posted by saulgoodman at 9:27 AM on October 6, 2011 [2 favorites]

You are wrong, but saulgoodman is also wrong

What specific point do you think I'm wrong on?
posted by saulgoodman at 9:28 AM on October 6, 2011

This has been a terrific thread.

I would say the problem which has no easy solution is ignorance of emergence and domain crosstalk.

physics - > chemistry - > biology -> psychology -> socio & anthro -> economics

Darwinism and evolution to economics skips two domains and is very far fetched. There is no quantum mechanics of depression or thermodynamic equilibrium of clan exogamy or natural selection of market clearing prices. That one concept can inform a problem in a distant field is happenstance which cannot be reliably built upon at all.

The one thing which surprised me was following ersatz' link to Tanaka and seeing this guy David Sloan who I never heard of, who is a tenured evolutionary Biology guy who argues for Group Selection. I thought those professional Group Selection advocates were extinct. I would be curious to know if anybody has a good recommendation for an even-handed overview pro and con Group Selection. Everything I can remember seeing for years seems pretty solid anti-.
posted by bukvich at 9:34 AM on October 6, 2011 [3 favorites]

thermodynamic equilibrium of clan exogamy>
I have thought about applying chemical graph theory to the study of social networks.

Complex systems unite the hierarchy you just described, and the mathematical tools to study them can be applied across fields. ever heard of fitness models in physics?
posted by MisplaceDisgrace at 9:59 AM on October 6, 2011 [1 favorite]

Umm, I've apparently misread something into your biological theory, saulgoodman, apologies.

I'll explained on the French vs. British health care example :

- Britain has fully nationalized heatlhcare, but any care even partially outside the nationalize framework must be paid in full. In consequence, there is a "class struggle" for health care resulting in enormous difference between the care that different socio-economic classes receive.

- France has more loosely nationalized healthcare, independent providers set their own prices, but receive fixed reimbursments from the state. As a result, all socio-economic classes benefit form exactly the same basic healthcare system. Yes, the rich pay a little extra for fancier doctors, but they don't actively undermine everyone else's care.

I'd imagine the British system was set up by left-wing idealists who thought : Everyone should get equal care. If you want to be better, then you should have to pay it all yourself. In practice, that unrealistic idealism has seriously damaged their system though.
posted by jeffburdges at 10:08 AM on October 6, 2011 [3 favorites]

MisplaceDisgrace I completely agree that trying out chemical graph theory on social networks sounds like an interesting experiment. If it would work it would be by serendipity, not scientific method. All those guys with their partial differential equations models working as quants are not doing economics. Those papers on arXiv on econophysics are not economics and they are not physics.

And they are not science. The field feeding that beast is finance.
posted by bukvich at 10:10 AM on October 6, 2011

I was looking at the information content of messages as a measure of energy. When a group becomes frustrated by a lack of attention, they break the rules to get a message across. Think of the digg patriots, or the london rioter who explained ,"we staged a march, no media attention, now a little rioting and I'm being interview by bbc" The rule breaking corresponds to a phase change, and there are topological indices to predict such changes. I could apply hypothesis testing to the correlation of groups acting out, but the main issue is that I couldn't provide a repeatable experiment in closed conditions. Climate science, economics and ecology have similar limitations, but I think there is always some small lack of reproducibility or system closure in an experiment. The work being done in finance is not scientific because sharing methods and data is not to the mutual interest of quants. I bet there would be a rigorous multivariate mutual information copula if those brains were working together. Anyway, I ditched that sociochemical networks idea because I didn't want to help the DoD with astroturfing.
posted by MisplaceDisgrace at 10:24 AM on October 6, 2011

One more thing: Why can't serendipity inform the scientific method? it seems like there is an iterated process of:
1)recognize serendipitous phenomenon
2)imagine explanation
3)test explanation
if test succeeds, return to step 3
if test fails, return to step 2
posted by MisplaceDisgrace at 10:30 AM on October 6, 2011

I think the biggest problem is that Darwinism isn't prescriptive, it's descriptive. As has been noted above, "survival of the fittest" (a phrase Darwin never used; it was an invention of a social darwinist) means "survival of the ones that survived (through whatever combination of outliving or outbreeding any rivals.)" It's not a merit system, it's just what happened.

There are obvious analogies to economic survival, but the economic environment in which it's playing out isn't and never will be a necessary consequence of biology or any part of the physical universe* -- it's a human invention that touches on the physical world at several points, but is largely made up of laws, and contracts, patents, and borders, and copyrights, and money... and that's all just stuff we made up.

Hardly any social darwinist would say they approve of companies ensuring their survival by literally killing everyone at a rival company, I imagine. That would be illegal. But once you've countenanced a legal boundary on what a company can do in the name of survival, we've established what you are. Now we're just haggling over where the legal boundaries should be.

* well, y'know, unless there's no free will
posted by Zed at 10:39 AM on October 6, 2011 [3 favorites]

the legal boundaries shift in accordance with nature, though. I see culture as a set of rules by which we adapt to the environment. There is feedback between the implementations of either concept.
posted by MisplaceDisgrace at 10:47 AM on October 6, 2011

I see culture as a set of rules by which we adapt to the environment.

As formulated, this strikes me as a seriously misleading oversimplification of the actual case.
posted by saulgoodman at 10:59 AM on October 6, 2011

heuristics might be a better phrase. Meme ecosystem is how I term culture as a whole, with minds as niches. that oversimplification was meant to describe the relation between culture and environments. I'd like to hear more about where it falls short
posted by MisplaceDisgrace at 11:03 AM on October 6, 2011

Well, culture isn't purposeful, in my view. It might be an emergent result of the purposeful selective advantage seeking actions of genes, but it's not purposeful, and it often acts as a stumbling block to adaptive fitness. Culture's as much in tension with the processes by which we adapt to our environment as it is a mechanism for adaptive change. Some cultures have died out because of their inability to adapt culturally. It's just not as simple to my mind as your original formulation suggested.
posted by saulgoodman at 11:15 AM on October 6, 2011

The Left is faced with a choice: repudiate the theory of evolution, or allow itself to be absorbed by the Right.

I think for those of us that prefer reality to religious flights of fancy, facts will trump mere opinions.

And this part of the left would cheerfully ditch Marx ahead of Darwin.
posted by rodgerd at 11:17 AM on October 6, 2011 [3 favorites]

the woodcutter's blade-guard example is designed to illustrate the perfect-world scenario where management recognizes the economic benefit of safety equipment and installs it up to the point where the cost outweighs the benefit

the analysis is horseshit.

If the worker owned the business and had to decide about the safety device on his own, the cost-benefit calculation would be straightforward. The cost of the device is easy to measure, and for the sake of discussion let us assume it to be $50 a week. The benefit of the device is the largest dollar amount he would be willing to sacrifice to gain the blade guard’s protection, which of course depends on how dangerous it is to operate the saw without one. If he would pay up to $100 a week, say, then installing the blade guard would clearly make sense. But if it’s worth, say, only $30 a week to him, then he would choose not to install it.

The logic of the decision is no different when the woodworker is employed by a firm. It’s still necessary to compare the blade guard’s cost with its benefit. The fact that the employer would be writing the check for the device does nothing to change its cost. And its benefit is still the value, in the worker’s eyes, of the protection it would provide. Suppose the blade guard meets the cost-benefit test. If it’s worth $100 a week to the woodworker and costs only $50 a week to install and maintain, then the employer has every incentive to provide it. Failure to do so would be to forgo the $50 a week of economic surplus it could have created.

the benefit to the employer is exactly zero, if the injured workers are easily replaceable. his entire argument (regardless of whether it has anything to do with Darwin) is dependent upon having 'efficient' markets i.e. relatively infrequent market failure. So, he's forced to set up a straw man 'left critique' and markets in order to dismiss it out of hand in order to play with his little model. The problem of "exploitation" is externalized costs: the injured workers are forced pay the cost of production.

it's easy to have a rigorous analysis of simple-models. But if the assumptions are garbage... garbage in, garbage out.
posted by ennui.bz at 12:18 PM on October 6, 2011 [2 favorites]

No, the employer's up $50 bucks. The implication of the blade guard being worth $100 bucks to the worker is that he'd accept a salary that was $100 less at a blade guard having establishment. Since the guard only costs $50, the employer could save $50 in salary by providing it and offering less take home pay. Therefore it is in the employer's entirely selfish interest to do it, according to normal economic theory.
posted by Diablevert at 1:20 PM on October 6, 2011

the benefit to the employer is exactly zero, if the injured workers are easily replaceable.

in Frank's example the employer is easily replaceable, the not-yet-injured worker leaves and finds a safer firm. This is the economically efficient outcome, the desired one where there is an incentive to invest in safety equipment. Why does this not happen in real life?

the "invisible hand narrative" suggests that there is too much competition between woodcutters, ie. the jobs are too rare or difficult to get.

in Frank's view the woodcutter will work for the highest wage regardless of the higher risk of injury; he will go for the highest wage relative to other woodcutters, rather than discount the high wage by the very real cost of injury and conclude that he is better off with a lower wage with a safer employer. All woodcutters reasoning in this way effectively collectively bargain away any investment in safety and woodcutting is seen as risky though steps to minimize the risk aren't expensive. its market failure but not due to Smith's competitive equilibrium, rather its Franks "relative income" that entices them to make inefficient (sub-optimal) employment decisions.
posted by dongolier at 1:33 PM on October 6, 2011 [1 favorite]

The Left is faced with a choice: repudiate the theory of evolution, or allow itself to be absorbed by the Right.

What. The. Fuck.

This thread illustrates exactly why people should leave evolution out of any kind of moral philosophy. Because it yeilds complete idiocy. People have no ability to distinguish between evolution itself and "stuff they think evolved" for whatever convoluted reason they think it evolved. They want to make "evolution" or "Darwinism" some key for understanding and modeling human society and it just doesn't work that way.

The commentary by this guy and a lot of people in this thread is the equivalent of random idiots talking about "quantum physics" affects their everyday lives, like talking about parallel universes where you make different chocies and crap like that.

Also apparently a lot of people like to use the term "Darwinian" to mean "bullshit bong-hit evolutionary psychology theory thought up by non-scientists"


The central problem is the idea that "Human nature is the product of evolution". Now, that's superficially true, humans evolved and thus our "nature" evolved with us.

But the problem is that people interperte that to mean "you can use evolutionary theory to figure out who human nature is" But evolution doesn't work that way. At least not in the way that evolutionary psychologists want. What you can't do is "Given some initial conditions, I imagine that some attribute would give people an advantage, therefore people have this attribute"

Often times there is this sort of imagined state of nature where there are, like, mondern humans who have no nature at all but slowly evolve some set of behaviors. But the reality is a lot of behaviors and 'nature' are probably carried over from our ancestors, from small monkeys and even earlier animals. And evolution does not at all work in a simple way where you can figure out complex behavior with just a few thought excersizes.

You can do computer modeling to determine what kind of behavior best 'fits' a certain environment, but if you actually do that what you find is that you don't always end up with the same thing. Starting conditions and random varation ends up you can end up with lots of different 'final' forms.

So there are, probably an infinite number of different 'human natures' that could have evolved given the differnet environments that our ancestors found themselves in and the random chance variation. Look at the differences in social order between Chimps, Bonobos and Baboons and other monkies. There are a lot of similarities, but also major differences that don't have any obvious environmental causes.


TL;DR: Leave science to scientists.
posted by delmoi at 1:34 PM on October 6, 2011 [4 favorites]

There is no such thing as philosophy-free science; there is only science whose philosophical baggage is taken on board without examination.--Darwin's Dangerous Idea / Daniel Dennett, p. 21.

posted by No Robots at 1:48 PM on October 6, 2011 [2 favorites]

delmoi thanks for chiming in there.

i think Frank is really pointing out the differences between "competition" as a selection pressure leading to market failure, as opposed to "competition" as a positive economic market force.

Adam Smith posited that competition gives rise to the invisible hand that sets prices and quantities sold in a market efficient, optimal way---buyers and sellers cannot be made any happier.

Robert Frank see's competition in a more negative light, its a selection pressure. Just as a highly evolved species has some individuals will have better traits and will enjoy benefits from them, humans see their benefits "relative" to others, eg. we are competing with one another in the labor market. and their are lots of other similar "competitive" economic situations where we observe market failure, non-optimal allocations of goods and services, and people making decisions at odds with their true interests.

[disclaimer: i just bought his pdf, and its chock full of examples of competition leading to market failure. Chapter 8: "a libertarian argument for a progressive income tax" sweet!]
posted by dongolier at 2:03 PM on October 6, 2011

I am honestly astonished at how many people are completely missing the point of this article. Lift your game, Metafilter.

Frank is a leftist. The "strawman" leftist position he brings up is a common small-l liberal analysis which interprets collectively undesirable market outcomes as the result of market failure (in the technical sense) due to a lack of competition; he critiques it but his critique is that it mostly comes up with the right answers for the wrong reasons. As far as I can tell he thinks libertarians are idiots.
posted by A Thousand Baited Hooks at 2:09 PM on October 6, 2011 [1 favorite]

>saulgoodman
That's a more nuanced view with which I agree. Maybe there's a nice dichotomy within culture, such that obstinate orthodoxy obstructs adaptation, but incubating a variety of traditions enhances survivability. It's kinda like the differences of monoculture crops vs genetically diverse heirlooms. One is optimized for a specific set of conditions, while the other has more options to meet environmental change. I recall the lucifer principle saying something to that effect, along with Jared Diamond in collapse. Do you know of any mathematical/philosophical treatment of that concept?
posted by MisplaceDisgrace at 2:22 PM on October 6, 2011

Frank may be a leftist but his method of attempting to use reasoning from Evolutionary Biology to buttress his arguments is fucking idiotic. I am on his side and I can't take it.
posted by bukvich at 2:23 PM on October 6, 2011

For the record, I don't have a problem with his take on humans wanting relative advantage. That's fine. But you don't really need to appeal to evolution to support that idea. Any of my comments above are just to criticize the stupid assumptions required to make any form of capitalism work.
posted by cthuljew at 2:29 PM on October 6, 2011

The "strawman" leftist position he brings up is a common small-l liberal analysis which interprets collectively undesirable market outcomes as the result of market failure (in the technical sense) due to a lack of competition

there is nothing "leftist" about that theory of "market failure".... that's the classical liberal, now neo-liberal approach. it's the view of the carnegies and mellons, oh herbert hoover...

in Frank's view the woodcutter will work for the highest wage regardless of the higher risk of injury; he will go for the highest wage relative to other woodcutters, rather than discount the high wage by the very real cost of injury and conclude that he is better off with a lower wage with a safer employer.

cost of injury to whom? society? the union of woodcutters? how many other unrealized "negative externalities" could you throw into this model. how does an injured worker cost the business anything? the whole argument is built on the assumption that the injury has some objective and significant cost to the enterprise, else there would be no profit in installing safety guards for a competing enterprise. now, in principle there is some cost in replacing a worker, but if the work is unskilled this will be small.

in Frank's example the employer is easily replaceable, the not-yet-injured worker leaves and finds a safer firm.

Does Frank really believe there is a free market in employers?
posted by ennui.bz at 3:11 PM on October 6, 2011

Nobody has mentioned Thorstein Veblen yet?

Inspired by Darwin, he was the first big proponent of "evolutionary economics", although his ideas have very little in common with the New Right ideology often associated with "Darwinian" economics.

Veblen developed a 20th century evolutionary economics based upon Darwinian principles and new ideas emerging from anthropology, sociology, and psychology. Unlike the neoclassical economics that was emerging at the same time, Veblen described economic behavior as socially determined and saw economic organization as a process of ongoing evolution. Veblen strongly rejected any theory based on individual action or any theory highlighting any factor of an inner personal motivation. Such theories were according to him "unscientific." This evolution was driven by the human instincts of emulation, predation, workmanship, parental bent, and idle curiosity. Veblen wanted economists to grasp the effects of social and cultural change on economic changes. In The Theory of the Leisure Class, the instincts of emulation and predation play a major role. People, rich and poor alike, attempt to impress others and seek to gain advantage through what Veblen coined "conspicuous consumption" and the ability to engage in “conspicuous leisure.” In this work Veblen argued that consumption is used as a way to gain and signal status. Through "conspicuous consumption" often came "conspicuous waste," which Veblen detested.
In The Theory of Business Enterprise, which was published in 1904 during the height of American concern with the growth of business combinations and trusts, Veblen employed his evolutionary analysis to explain these new forms. He saw them as a consequence of the growth of industrial processes in a context of small business firms that had evolved earlier to organize craft production. The new industrial processes impelled integration and provided lucrative opportunities for those who managed it. What resulted was, as Veblen saw it, a conflict between businessmen and engineers, with businessmen representing the older order and engineers as the innovators of new ways of doing things. In combination with the tendencies described in The Theory of the Leisure Class, this conflict resulted in waste and “predation” that served to enhance the social status of those who could benefit from predatory claims to goods and services.

Veblen generalized the conflict between businessmen and engineers by saying that human society would always involve conflict between existing norms with vested interests and new norms developed out of an innate human tendency to manipulate and learn about the physical world in which we exist. He also generalized his model to include his theory of instincts, processes of evolution as absorbed from Sumner, as enhanced by his own reading of evolutionary science, and Pragmatic philosophy first learned from Peirce. The instinct of idle curiosity led humans to manipulate nature in new ways and this led to changes in what he called the material means of life. Because, as per the Pragmatists, our ideas about the world are a human construct rather than mirrors of reality, changing ways of manipulating nature lead to changing constructs and to changing notions of truth and authority as well as patterns of behavior (institutions). Societies and economies evolve as a consequence, but do so via a process of conflict between vested interests and older forms and the new. Veblen never wrote with any confidence that the new ways were better ways, but he was sure in the last three decades of his life that the American economy could have, in the absence of vested interests, produced more for more people. In the years just after World War I he looked to engineers to make the American economy more efficient.

posted by moorooka at 3:16 PM on October 6, 2011

Frank is a leftist. The "strawman" leftist position he brings up is a common small-l liberal analysis which interprets collectively undesirable market outcomes

Leftists are just as likely to spin ridiculous theories based on misunderstood science and metaphor-reality confusion as rightists.

For me the important question is "is this scientifically rigorous" and the answer is no.
posted by delmoi at 3:20 PM on October 6, 2011

also, his comment about cost benefit analysis being immoral is a complete red herring. the problem isn't whether it is or isn't immoral, the problem is that people view safety through a moral lens and make decisions based on their own ethical and moral framework.

the problem with this for Frank is that you can't very well try to model their economic behavior using rational proft maximizing agents, even if the profit maximization is local rather than global selection is relative, if those agents are also asking themselves WWJD.
posted by ennui.bz at 3:37 PM on October 6, 2011

"My exchanges with the evangelists for labor-managed firms were an object lesson in the power of ideology to disable the capacity for critical thinking. ... Over the years I have urged my students to disengage their ideological leanings as completely as possible when thinking about questions of market failure. If they have a hypothesis about why a market has failed in some particular way, the first and most important test of that hypothesis is whether it implies that people have been leaving cash on the table. The narrative put forward by the evangelists for labor-managed firms fails that test unambiguously. If those firms deliver the kinds of advantages claimed by their proponents, entrepreneurs could make billions of dollars by buying conventional firms and reorganizing them as labor-managed units.... In short, theories that imply that vast sums of cash are being left on the table for extended periods are bad theories. "

--Robert H. Frank
The Darwin Economy (pp.35):
posted by dongolier at 4:06 PM on October 6, 2011 [1 favorite]

Metafilter: It's not a merit system, it's just what happened.
posted by sneebler at 5:49 PM on October 6, 2011

My exchanges with the evangelists for labor-managed firms were an object lesson in the power of ideology to disable the capacity for critical thinking...

Does he mean the power of leveraged buy-outs to make big money for brokers while leaving nominally worker-owned businesses with mountains of debt? Or is this another straw-leftist dismissal?

the first and most important test of that hypothesis is whether it implies that people have been leaving cash on the table.

Again, his example of how "woodcutters" would make money off of competitors lack of safety equipment is built on bizarre assumptions. If this is typical of his examples of "leaving money on the table" then...

I think this guy has been baffling the MBA's for too long...

Over the years I have urged my students to disengage their ideological leanings as completely as possible when thinking about questions of market failure...

Oh the irony...
posted by ennui.bz at 6:34 PM on October 6, 2011 [1 favorite]

>disengage their ideological leanings
>the first and most important test of that hypothesis is whether it implies that people have been leaving cash on the table

UR DOIN IT RONG
posted by cthuljew at 9:59 PM on October 6, 2011

nowoutside and MisplaceDisgrace have already mentioned it, but the intersection between Darwin and Economics is actually an existing field of study (well, a field of fields really), usually referred to as Complex Systems.

As already mentioned, putting Darwin's work in the context of economics does not need to make a philosophical statement about economic models. It's easy to jump to the idea of "Darwinian economics" and dog-eat-dog style libertarianism when talking about the two, but there are so many other possibilities. How about if instead of that we just ask the question, "what happens if we try modeling individuals and groups of actors trying to optimize their outcomes, with the addition that they can evolve and adapt to their environment?"

You get the wonderful study of agent-based models, including agent-based computational economics. And, like I mentioend, adapting that viewpoint doesn't necessarily lead to conservative outcomes.

For example, ABMs have been used to show that inequality can arise even when all actors are identical and "fair" exchange of goods takes place (see section 3, Silver et al model).

Another subfield of complex systems is the study of complex networks, and work there also shows that natural monopolies tend to arise without outside regulation. One of the most famous models is Barabasi's work with preferential attachment in complex networks. Say you're generating a random network or graph, a set of nodes (objects) and edges (connections) between the objects. The network is abstract, the nodes and edges could be anything, from websites and the links between them to people and money changing hands.

Now suppose instead of just randomly connecting nodes together, you slowly add nodes to this network, and a node has a slightly higher chance of connecting to an existing node with more connections. Two simple rules, and what arises is very different from a normal Erdős random graph. We see the formation of a "rich-get-richer" effect, where nodes that have a large number of connections only increase their degree.

You can play with this on your own using the wonderful NetLogo program.

I could go on and on about this, talking about the relationship to Axelrod's original with with the iterated prisoner's dilemma and how he turned what seems like a dark-view of human society made up of only self-interested actors into a world where cooperation not only makes sense, it's optimal! But this is already getting quite long.

Combining Darwin with Economics doesn't necessarily lead to GOOGLE RON PAUL. Instead, a close study of the literature shows that many liberal principles have a sound footing in science.
posted by formless at 11:24 PM on October 6, 2011 [4 favorites]

"'Survival of the fittest' is really a bullshit phrase. It would it would really be much more accurate to say 'survival of the least inadequate'."

Sorry, I just really love this video (and the book it's promo for).
posted by cthuljew at 1:18 AM on October 7, 2011 [1 favorite]

Again, his example of how "woodcutters" would make money off of competitors lack of safety equipment is built on bizarre assumptions. If this is typical of his examples of "leaving money on the table" then...

I don't think you have understood that example.

Look, I'm a woodcutter, right? And I have hands. And I, the woodcutter, like my hands. I'd be pretty pissed if I were to get one hacked off by a band saw. That would suck for me, especially because it would make it hard to keep on being a woodcutter. Now, being a woodcutter at all involves some risk of my hand getting cut off. So since this is my chosen profession, I'm obviously willing to accept a certain amount of "risk of getting my hand cut off" if it means getting paid to cut wood. All in all, however, if someone came up with a technology that lessened my chance of getting my hand hacked off, that's something that I, a woodcutter, would be pretty pleased about. That would be a valuable piece of technology, for me. This all makes senses, yes?

So let's say, that I, Woodcutter, am perusing the want ads, looking for a job in a sawmill. Sawmill A is offering a woodcutter job, salary of $1200 bucks a week. Sawmill B is only offering the same job, at salary of $1100 bucks a week --- but Sawmill B has blade guards installed on its equipment which significantly lessen my chance of getting my hand hacked off.

If the decreased risk of getting my hand hacked off is worth at least $100 bucks to me, the guy with the hand, then in theory I'd pick Sawmill B.

Now, a second piece of info: Turns out that for Sawmill Owner, installing and maintaining blade guards on his saws only works out to about $25 bucks a week. So from Sawmill Owner's perspective, he can spend $25 bucks to install blade guards, and hire a skilled woodcutter for $100 less in salary --- his overall costs are have decreased by $75 bucks. Overall, he makes more money, therefore he has every incentive to install blade guards.

That's the argument. Is real life more complex than this example, are there other factors that go into what job a worker chooses, yes, yes, yes. Of course. But the basic principle applies broadly for any piece of safety equipment you can think of --- if it's worth X to the worker, and costs X-1 for the employer, then it's in the interest of the employer to install it. Yet we often find employers reluctant to install even fairly cheap safety equipment, even though workers would say they'd value it greatly. That's the problem that Franks thinks needs explaining.

A leftie might argue that capitalists often collude to oppress the workers --- the idea that, since the ownership has all the power in the relationship, they can ignore the worker's desires. Franks is saying that a lot of the time, it would be in the selfish interest of the capitalist to install such equipment, yet it still doesn't happen.

A libertarian would say, well, that must mean that such equipment isn't actually important to the workers --- that there is no problem (and therefore that any government regulation which forced employers to install safety equipment is a waste of money).

Franks is saying, yes, there is a problem --- that having a blade guard installed can be worth $100 bucks to a woodcutter and yet woodcutters still won't accept $100 pay cut to work in a sawmill with blade guards. Franks says it's because woodcutters are also competing with each other for status --- that accepting the pay cut would drop their relative status a bit, and so they won't do it individually, though any of them would be perfectly happy to accept the "$1100 bucks a week plus blade guards" deal so long as all woodcutters had to accept that deal. Therefore, a government regulation mandating blade guards is actually a good thing.
posted by Diablevert at 4:36 AM on October 7, 2011

Just in case anyone's still reading, I'll try to explain the woodcutter example which seems to be giving so many people so much trouble (and on preview it looks like Diablevert had the same idea - jinx!).

Say a woodcutter gets paid $500 a month.
A woodcutter would derive $50 worth of utility per month from having a hand guard installed.
It costs an employer $30 per month to install and maintain a hand guard.

So we have a woodcutting industry where every woodcutter gets paid $500 per month. A clever employer installs hand guards and cuts woodcutter pay to $455 per month. The woodcutters at this company are happy because instead of $500 per month they are getting:

$455 pay + $50 (utility) from having a hand guard = $505

The employer is happy because instead of $500 per month it is paying:

$455 pay + $30 for the hand guard = $485

This is what Frank means by "money on the table" - there is a free $15 per month available for any employer who installs hand guards. So every employer installs hand guards. This is a desirable collective outcome because everyone is better off than they would be without hand guards.

But Frank says there is another factor that needs to be taken into account: woodcutters, like all humans, place value on their relative position as well as their absolute position. It turns out (and this is the part that, to be fair, Frank doesn't explain so well) that it is worth an extra $100 to a woodcutter to be one of the best-paid woodcutters, and -$100 to be one of the worst-paid.

So the employees of the first employer to install hand guards and cut pay are actually unhappy, because instead of $500 per month they are getting:

$455 pay + $50 (utility) from having a hand guard - $100 (utility) for being the lowest-paid woodcutters = $405

There aren't any competent woodcutters willing to work for $405 per month, so no employer will install hand guards. It works similarly in reverse (if all employers start off with hand guards) - the first employer who removes the hand guards and pays workers an extra $5 can offer:

$455 standard pay + $5 bonus + $100 (utility) for being the highest-paid woodcutter = $560

while actually spending $460, while all of the employers with hand guards are spending $455 + $30 = $485 and can't compete. All employers remove hand guards and woodcutter pay drifts back towards $500.

Frank imagines people who are unaware of the $100/-$100 positional incentive looking at this situation and assuming that it must be the result of a lack of competition in the market.

The leftist says that employers must have a collusive agreement to save $30 a month by refusing to install hand guards. This ignores the fact that (according to the simple model) employers are actually better off with hand guards and lower pay, which explains what Frank means when he writes "Those on the Left who offer exploitation as an explanation of market failure when competition is strong need to explain the jarring implication of their argument—namely, that entrepreneurs are consistently failing to take advantage of lucrative profit opportunities." The libertarian says that there must be a misdescription of the woodcutters' preferences - perhaps they only value hand guards at $20 per month. But both are wrong, because they are ignoring the utility consequences of positional advantage.

If government is willing to step in and force employers to install hand guards, everyone is better off. This is the essence of Frank's argument for regulation and against laissez-faire.

To address another misconception: Frank ignores the transactional costs of changing jobs etc because the model he is attacking ignores them as well, and he is able to defeat that model without even needing to mention its numerous other flaws.
posted by A Thousand Baited Hooks at 4:48 AM on October 7, 2011

from the last few pages of The Darwin Economy:

"A well-designed tax system actually makes the economic pie larger, by discouraging behaviors that cause more harm than good. ... As John Stuart Mill maintained, the government may legitimately restrict individual behavior to prevent undue harm to others. But heavy-handed regulation is almost never the most effective means to that end. As our experience with pollution taxes has demonstrated, it’s generally better to discourage harmful behavior by making it more expensive than by prohibiting it outright. Society’s interest lies in reducing the total amount of harmful behavior, not in reducing harmful behavior by specific individuals. The tax approach keeps total costs to a minimum while restricting options as little as possible, because it concentrates harm reduction in the hands of those who accomplish it most cheaply."
posted by dongolier at 5:15 AM on October 7, 2011

Robert Frank talks about cool stuff at google (from his homepage).
posted by dongolier at 5:37 AM on October 7, 2011

The theory of evolution is completely incompatible with systems theory:

I think that a theory so vague, so insufficiently verifiable and so far from the criteria otherwise applied in 'hard science' has become a dogma, can only be explained on sociological grounds. Society and science have been so steeped in the ideas of mechanism, utilitarianism and the economic concept of free competition, that instead of God, selection was enthroned as ultimate reality.--Perspectives on general system theory / Ludwig von Bertalanffy, p. 142.

posted by No Robots at 7:50 AM on October 7, 2011

instead of God, selection was enthroned as ultimate reality.

So, is systems theory what the kids are calling it these days?
posted by Zed at 8:48 AM on October 7, 2011

Sean Carroll on social science vs. natural science - "Sean Carroll, who writes for the physics blog Cosmic Variance over at Discover, has written an absolute must-read post on social science vs. natural science."

The Map is Not the Territory: An Essay on the State of Economics

All science uses unrealistic simplifying assumptions... The distinguishing characteristic of their [economists’] approach is that the list of unrealistic simplifying assumptions is extremely long... Such models are akin to Tolkien’s Middle Earth, or a computer game like Grand Theft Auto.

The knowledge that every problem has an answer, even and perhaps especially if that answer may be difficult to find, meets a deeply felt human need. For that reason, many people become obsessive about artificial worlds, such as computer games, in which they can see the connection between actions and outcomes. Many economists who pursue these approaches are similarly asocial. It is probably no accident that economics is by far the most male of the social sciences.

One might learn skills or acquire useful ideas through playing these games, and some users do. If the compilers are good at their job, as of course they are, the sound effects, events, and outcomes of a computer game resemble those we hear and see – they can, in a phrase that Lucas and his colleagues have popularised, be calibrated against the real world. But that correspondence does not, in any other sense, validate the model. The nature of such self-contained systems is that successful strategies are the product of the assumptions made by the authors. It obviously cannot be inferred that policies that work in Grand Theft Auto are appropriate policies for governments and businesses...

Economic behaviour is influenced by technologies and cultures, which evolve in ways that are certainly not random but which cannot be described fully, or perhaps at all, by the kinds of variables and equations with which economists are familiar... Economists who assert that the only valid prescriptions in economic policy are logical deductions from complete axiomatic systems take prescriptions from doctors who often know little more about these medicines than that they appear to treat the disease. Such physicians are unashamedly ad hoc...

It is by no means the first time that people blinded by faith or ideology have pursued false premises to absurd conclusions – and, like their religious and political predecessors, come to believe that those who disagree are driven by ‘woeful ignorance or intentional disregard...’

Economic models are no more, or less, than potentially illuminating abstractions... Economics is not a technique in search of problems but a set of problems in need of solution. Such problems are varied and the solutions will inevitably be eclectic...

The economic world, far more than the physical world, is influenced by our beliefs about it... not just deductive logic but also an understanding of processes of belief formation, anthropology, psychology and organisational behaviour, and meticulous observation of what people, businesses, and governments actually do. You could learn nothing about how these things influence prices if you started with the proposition that deviations from a specific theory of price determination are ‘too small to matter’ because all that is knowable is already known and therefore ‘in the price’. And that is why today’s students do, in fact, learn nothing about these things, except perhaps from extra-curricular reading... Far from being ‘too small to matter’, these deviations from efficient market assumptions, not necessarily large, are the dynamic of the capitalist economy.

i've also been wondering, given sims and causality, about people's attitudes towards money, like acting as if we still operate under some specified currency regime, the beliefs and expectations that generates and then what happens when widespread conventional wisdom/opinions/assumptions prove wrong and what resultant (plausible?) 'reaction functions' might arise from that; the other thought i've kind of been entertaining lately is what if you replaced the entire 'profession' of economics with _logistics_ instead?

also btw, here's frank on a progressive consumption tax...

Applied properly, it would lead to simple steps that could liberate trillions of dollars in resources each year — enough to end perennial battles over budget deficits, restore our crumbling infrastructure and pay for the investments needed for a sustainable future. No painful sacrifices would be required. No cherished freedoms would be threatened. Just a few changes in the tax code would suffice...

[M]arkets are far more competitive than ever, just as conservatives maintain, but they’re also hugely more wasteful. The apparent paradox is resolved once we recognize that market failure stems from the very logic of competition itself... If you’re one of several qualified applicants seeking an investment banking job, for example, it’s in your interest to look good during your interview. But looking good is a relative concept. If other applicants wear $600 suits, you’ll make a more favorable impression if you wear one costing $1,200.

Trading up is wasteful for the group, however, because the applicants are no more likely to get the positions if they all spend more on suits. But from each individual’s perspective, that’s no reason to regret buying the pricier suit. When the ability to achieve important goals depends on relative consumption, all bets on the efficacy of Smith’s invisible hand are off...

Scrapping the current progressive income tax in favor of a more steeply progressive tax on consumption is probably the single most productive change we could make... Under a progressive consumption tax, taxpayers would report their incomes, much as they do now. They’d also report their annual savings, much as they do for tax-exempt retirement accounts. The tax would be based on ‘taxable consumption’ — the difference between their income and annual savings, less a standard deduction of, say, $30,000 for a family of four. Rates on additional expenditures would start low and rise gradually with taxable consumption.

Because savings would be tax-exempt, the biggest spenders would save more and spend less on luxury goods, leading to greater investment and economic growth, without any need for government to micromanage anyone’s behavior. Consumers in the tier just below, influenced by those at the top, would also spend less, and so on, all the way down the income ladder. In short, such a tax would attenuate the expenditure cascade that has made life for middle-income families so expensive. Adopting a progressive consumption tax would be like creating wealth out of thin air...

cf. The Evolution of Cooperation - "Why has cooperation, not competition, always been the key to the evolution of complexity?"

oh and the complexity brake :P

The foregoing points at a basic issue with how quickly a scientifically adequate account of human intelligence can be developed. We call this issue the complexity brake. As we go deeper and deeper in our understanding of natural systems, we typically find that we require more and more specialized knowledge to characterize them, and we are forced to continuously expand our scientific theories in more and more complex ways. Understanding the detailed mechanisms of human cognition is a task that is subject to this complexity brake. Just think about what is required to thoroughly understand the human brain at a micro level. The complexity of the brain is simply awesome. Every structure has been precisely shaped by millions of years of evolution to do a particular thing, whatever it might be. It is not like a computer, with billions of identical transistors in regular memory arrays that are controlled by a CPU with a few different elements. In the brain every individual structure and neural circuit has been individually refined by evolution and environmental factors. The closer we look at the brain, the greater the degree of neural variation we find. Understanding the neural structure of the human brain is getting harder as we learn more. Put another way, the more we learn, the more we realize there is to know, and the more we have to go back and revise our earlier understandings.

cheers!
posted by kliuless at 7:49 AM on October 26, 2011 [2 favorites]

Why Economic Models Are Always Wrong
posted by kliuless at 6:19 AM on October 27, 2011 [1 favorite]

Rosenberg on the Nature of Economics
Economics in the Next Ten Years?
Symposium on Elinor Ostrom
posted by kliuless at 6:40 AM on October 27, 2011 [1 favorite]

Hey kiluiless, there's a ton of interesting stuff there. You should do a new post so that people who haven't commented in this thread can see it.
posted by Diablevert at 7:55 AM on October 28, 2011