SYNOPSIS: Crank Economics, under the name of other disciplines, is still stupid.
The invitation came, rather disappointingly, by conventional mail. Still, it sounded enticing: "The Cato Institute and the Bionomics Institute invite you to Now What? Living With Perpetual Evolution, the fifth annual Bionomics Conference." Leading the list of speakers for the Nov. 13-15 conference was Gregory Benford, one of my favorite science-fiction writers. And at the top of the card was a stirring quotation from Bionomics Institute founder Michael Rothschild:
Like a deep-sea volcano bursting to the surface, spewing out vast new lands soon to be inhabited by a complex ecosystem, the Web is creating a virtual landscape that will soon be occupied by an awesome array of economic organisms. ... It's evolution at warp speed. Strap yourself in.
The Cato Institute is a libertarian think tank noted mostly for its adamant opposition to government regulation. But what on earth (or in cyberspace) is bionomics--and why is Cato (and Forbes ASAP, which is a co-sponsor of the conference) promoting it?
Although you have to look at Rothschild's 1990 book, Bionomics: Economy as Ecosystem, to get the full flavor, the essential tenets of the movement are spelled out on the Bionomics Institute home page, which offers a primer called "Bionomics 101." The primer explains:
[A]ll traditional schools of economics are based on the concepts of classical physics, while bionomics is based on the principles of evolutionary biology. ... [O]rthodox economics describes the "economy as a machine." ... Instead, bionomics says that an economy is like an "evolving ecosystem." A modern market economy is like a tropical rainforest.
Sounds good, doesn't it? Bionomics has won converts not only at the Cato Institute but also among a wide variety of influential people ranging from Newt Gingrich to Clyde Prestowitz. (Fortune has described it as "a policymakers' version of The Celestine Prophecy.") And Rothschild is certainly a bright, energetic fellow. There are, however, two big weaknesses in his thinking: He doesn't know much about economics, and he doesn't know much about evolution. When I say that Rothschild doesn't know much about economics, I don't mean that conventional economics is right and his ideas are wrong--although where they differ that is generally true. I mean that his description of what conventional economics is all about bears no relation to what actual economists believe or say.
Take, for starters, his assertion that "orthodox economics describes the 'economy as a machine.' " You might presume from his use of quotation marks that this is something an actual economist said, or at least that it was the sort of thing that economists routinely say. But no economist I know thinks of the economy as being anything like a machine--or believes, as Rothschild asserts a bit later, that because the economy is like a machine, it is possible to make precise predictions. (In fact, it was economists who came up with the famed "random walk" hypothesis about stock prices, which says that they are inherently unpredictable.)
It gets better. Rothschild tells us, "I know this is hard for non-economists to believe, but orthodox economics essentially ignores technological change." That is even harder for economists to believe. In fact, I don't know how I'm going to break the news to the guy in the next office. You see, poor Bob Solow is under the impression that he got the Nobel Prize for his work on technological change, in particular for his demonstration that technology, not capital accumulation, historically has been the main driving force in economic growth. On a different subject, it's going to be a shock to environmental economists--who have spent decades arguing that one good way to control pollution is to create a market in emission permits--to learn that this is an idea unique to bionomics and totally at odds with orthodox economic thinking. And I'm not feeling too good myself: Rothschild insists that conventional economics depends on the assumption of diminishing returns and that, as a result, economists have completely ignored the possibility of increasing returns. Does this mean I have to give back that medal the American Economic Association gave me for my work on increasing returns and international trade?
Well, all this is more or less the usual. Whenever a manifesto about economics contains a sentence that begins, "Orthodox economics assumes that ..." it almost always completes that sentence with something strange and unfamiliar. In just the last two years, I've learned that I believe that gross domestic product is the sole measure of economic welfare, that growth at more than 2.5 percent always causes inflation, and that sudden speculative attacks on currencies can't happen. I've also learned that the Nobel Memorial Prize in Economic Sciences keeps going to supply-siders--or should that be Marxists?
What is surprising, however, is that a man who proposes to replace what he imagines to be the mechanistic worldview of conventional economics with a new view based on evolutionary biology should know so little about the discipline that supposedly inspires him.
Rothschild's lack of familiarity with evolutionary theory may not be obvious to uninformed readers--his book bristles with ostentatious footnotes and seemingly learned references. It happens, however, that I am an evolution groupie. I started as a fan of great popularizers like Richard Dawkins and Steven Pinker, and I have since graduated not only to hero worship of the leading evolutionary theorists but also to reading textbooks and even journal articles. And so when I picked up a copy of Bionomics, the first thing I did was check out the author's treatment of my heroes and of what I knew to have been the important developments in evolutionary theory since Darwin. His record was perfect: Not one of the right people was mentioned, not one of the key developments discussed. The bionomics version of what evolutionary theory is about has as little to do with the real thing as its version of what economics is about does.
What the bionomics guys apparently think evolution is about is constant, breathless change--strap yourself in!--change so rapid that everything is unpredictable, that the rules themselves are constantly changing. Rothschild seems, in particular, to view evolutionary thinking as the antithesis of "equilibrium economics." Apparently nobody told him that equilibrium thinking--the idea that in order to understand how individuals interact, it is often useful to ask what would happen if each individual was doing the best he or she could given what everyone else is doing--is almost as prevalent in evolutionary theory as it is in economics. In fact, the really funny thing is that for the most part the bionomics program has already been implemented: Economics already is very similar to evolutionary theory, and vice versa. However, neither field looks anything like bionomics.
OK, enough already. The really interesting question is why the Cato Institute and other free-market conservatives should be willing to squander their intellectual credibility by associating their names with this sort of thing. After all, conventional economics already has lots of nice things to say about free markets. Why not stick with Adam Smith?
Part of the answer, I suspect, is sociological. Traditional conservative causes like the gold standard tend to have a musty, old-fashioned feel. They sound like the sort of thing that appeals mainly to rich old men (and conservative think tanks are, of course, mainly funded by rich old men). Young, vigorous conservatives are therefore always looking for ways to seem more fashion-forward. Some of them parade their knowledge of pop culture, some make a point of being photographed wearing miniskirts, and some go for what we might call the Wired style of economic rhetoric--the continual assertion that things are changing! so fast! that we have to use lots! of exclamation points!!!
But there is also a more serious reason that bionomics appeals to the free-market faithful: They find the conventional case for laissez-faire too modest, too conditional, for their tastes. Standard economic theory offers reasons to believe that markets are a good way to organize economic activity. But it does not deify the market system, and it even offers a number of fairly well-defined ways in which markets can fail, or at least could be helped with government intervention. And that, for some conservatives, is just not good enough.
Bionomics doesn't actually provide any coherent argument in favor of free markets. In fact, Rothschild's original book seems to hedge its bets: It spends a full chapter ("Japan's Secret Weapon") explaining how government-business cooperation makes the Japanese economy invincible (remember, the book was published in 1990). But what the doctrine lacks in serious argument it makes up for in rhetoric. The economy is an ecosystem, like a tropical rain forest! And what could be worse than trying to control a tropical rain forest from the top down? You wouldn't try to control an ecosystem, wiping out species you didn't like and promoting ones you did, would you?
Well, actually, you probably would. I think it's called "agriculture."
What do we learn from the willingness of extreme free-market conservatives to associate themselves with crank doctrines like bionomics? I think the main lesson is that their faith in free markets is just that: a faith, which does not rest on either logic or evidence. Belief comes first; then they look for arguments to justify that belief. And they are therefore not too scrupulous about the quality of those arguments, or of those who produce them.
Anyway, I guess I won't attend the conference. I would have liked to meet Benford; but I couldn't stand to watch the author of Great Sky River demeaning himself by consorting with such disreputable company.