Hitting the Bull's Eye With Uncanny Accuracy

Jag Bhalla posts (13 July) in Scientific American HERE

“Science’s Mobile Army of Metaphors”

“Metaphors are our shortest stories. They are economical explanations that shape our understanding (itself a “mobile army of metaphors”). But badly mixed metaphors from physics and biology animate economics, creating “confusion’s masterpiece.” Another Shakespearean phrase, “invisible hand,” is partially to blame.

Science’s theories—its verifiable stories—also use metaphors. Some are loose analogies, others formal models. Orthodox economics abuses both kinds, misapplying oversimplified evolutionary ideas, like survival of the fittest, within an ill-fitting framework from physics. Its conceptual skeleton is: rational self-interest in competitive markets, led by an invisible hand, creates the best social equilibrium.

But, as I’ve described, biological and economic self interest are different. And what economists call rational can produce poor, sometimes even self-undermining, results.

Adam Smith made “invisible hand” famous. He first used the phrase in his History of Astronomy: “nor was the invisible hand of Jupiter…employed,” to mean that nothing supernatural was needed to explain physical phenomena. Smith lectured on Shakespeare, and likely knew the phrase from Macbeth (misdeeds are hidden by night’s “bloody and invisible hand”).

But “invisible hand” emergent equilibria in economics, evolution, and physics are crucially different. Self-organization—parts spontaneously creating ordered wholes—seems “natural.” But it’s usually also dumb. Humans can do better.

Evolution’s “invisible hand” story, typically sold as biology’s great “unregulated” competitions (thereby ignoring widespread cooperation) produces unintelligently designed results and regularly delivers foreseeable disaster. Narrowly self-interested competition in biology doesn’t guarantee efficient outcomes. And it can be as dumb as trees in economics. Social coordination can be less wasteful and more productive, if intelligently done.

General Equilibrium theory in economics was developed under the guidance of a physicist, Josiah Gibbs, who Einstein called “the greatest mind in American history”. Gibbs invented statistical mechanics to describe the behavior of large ensembles, like gases. Its metaphoric appeal for economics is obvious. However the “invisible hand” equilibria of physics emerge from parts interacting with uniform predictable consistency. But people aren’t like gas particles or biological billiard balls. We evolved behavioral flexibility and complex interdependent variable reactions.

Newton’s science is, metaphorically and fundamentally different than Darwin’s. Newton’s systems have clockwork causality; they converge on mechanically calculable patterns. Physicists have invented powerful mathematical tools for predicting their development and specific results. But Darwin described an open, generative, and divergent process with less predictable effects. Its general shape is describable by the mathematical methods of physics, but its specific outcomes aren’t so predictable (e.g. evolution, unlike anything in physics, needs game theory).

Evolution gave us capacities for intelligence, foresight, and social coordination. With these we can avoid the dangers of dumb “invisible hand” self-organization. It fits not our nature to ignore them. Such sub-natural metaphors of human nature exclude what’s best about us.”

Comment

There is hardly anything I would disagree with this post in “Scientific American”.  It hits the bull’s eye with uncanny accuracy.

I would add what I hope is an helpful observation.

While the use of the metaphor in Shakespeare’s MacBeth is correct, the history of the “invisible hand” metaphor goes back much further to classical and medieval times (See Emma Rothschild, “Economic Sentiments: Adam Smith, Condorcet and the Enlightenment”, 2001, pp. 116-56, Harvard), and John Harrison, “Adam Smith and the History of the Invisible Hand”, History of Ideas, 2010).   The metaphor was widely used in Smith’s times, often by preachers, using it theologically (including Hugh Blair, a popular sermoniser, and close friend of Smith’s).

However, the main thrust of Jag Bhalla’s column is an excellent account of the use of metaphors in science and highly relevant to Smith’s use of this particular one (and its misplaced use by many modern economists).