Wednesday, January 22, 2014

Good Sense on Economics, Adaptation, Complexity and Evolution


William Peakin, business correspondent, author of the ‘Evolution of Wealth” in “Holyrood”, Scotland’s fortnightly political and current affairs magazine covering issues debated at the Scottish parliament in Edinburgh, manages to cover this broader debate in an informed manner that shames the narrow, blinkered focus of many of our leading economists in US and Europe in a short article “Evolution of Wealth”, “We need to rethink the meaning of work, consumption and prosperityHERE
Comment 
This is quite the most perceptive short article I have read on the current debate among economists on how a market economy operates, ‘warts and all’ as Oliver Cromwell might have put it.
It addresses a basic problem for modern and classical economists on the nature of markets and how they were analysed by neo-classical and post neo-classical modern economists.
Peakin reports how Eric Beinhocker, executive director of a joint research programme between the Institute for New Economic Thinking and Oxford University, recalls “sitting in a thatched hut, leaning against a wall made of dung, talking to a group of Maasai tribesmen. They were feeling sorry for the former venture capitalist and McKinsey & Company consultant because he had told them he had no cattle. But they were also bewildered; how could this poor man afford to travel and own a camera?”  
From analysing the importance of such natural misconceptions and their clarifications, Beinhocker suggests that “Modern evolutionary theorists believe that, like gravity, evolution is a universal phenomenon, meaning that no matter whether the algorithm is running in the substrate of biological DNA, a computer program, the economy, or in the substrate of an alien biology on a distant planet, evolution will follow certain general laws in its behaviour.
“If the economy is truly an evolutionary system, and there are general laws of evolutionary systems, then it follows that there are general laws of economics – a controversial notion for many.
“Saying that there are laws of economics does not imply that we will ever be able to make perfect predictions about the economy, but it does imply that we might someday have a far deeper understanding of economic phenomena than we do today.
These ideas were preceded by a remarkable transformation from the regular lives of humans in the open savannah: the discovery of value, not measured in pounds, pence or dollars, but in what the products of human labour, including endeavour, enabled humans to do.   All human history, including the long, very long, pre-history story of the creative blessing of the use of valued items, ideas, and their accessibility to every widening numbers of others besides their creators.
What William Peakin, business correspondent, author of the ‘Evolution of Wealth” in “Holyrood”, Scotland’s fortnightly political and current affairs magazine covering issues debated at the Scottish parliament in Edinburgh, manages to cover this broader debate, in an informed manner that shames the narrow focus of many of our leading economists in US and Europe.  
Certainly, his presentation of the post-classical theorists on complex, adaptive systems, recently discussed on Lost Legacy, and, more thoroughly, in David Simpson’s “The Rediscovery of ClassIcal Economics: adaptation. Complexity and growth” (Edward Elgar) 2013, is a welcome gale of good sense. 
I cannot recommend too highly that you follow the link and read it (and pass it round). William Peakin deserves acclamation for his perceptive presentation of Eric Beinhocker’s ideas, particularly from my own vantage point, because he does not mention anything about the mythical “invisible hand” nonsense that is the usual resort of the mystics dominating our profession!

2 Comments:

Blogger airth10 said...

Beinhocker doesn't mention the invisible hand but he does mention 'phenomena'.

I don't remember Adam Smith using the word phenomenon but in using the IH metaphor that is what he was referring to, a phenomenon, something that was difficult to discern or explain. Otherwise the invisible hand would not be invisible, but visible.

4:29 pm  
Blogger airth10 said...

Gavin,

You may be interested in this, then: http://phys.org/news176365278.html

5:29 pm  

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