Economics

The Science is Clear. The Economy Is an Organism

When we pretend homo economicus is real

Share with your friends










Submit
More share buttons
Share on Pinterest

By David Sloan Wilson

Just as Ronald Reagan rode tall on his horse in one western movie after another before entering politics, a fictional character named Homo economicus has been riding the economic range for decades, captivating ever larger audiences. The problem is, when we pretend that the story enacted by Homo economicus is real, it causes us all to ride off a cliff, as I recount in a previous essay titled “Change the Story. Survival of the Fairest Companies”.

Get Evonomics in your inbox

Can a story really be so powerful that it overrides experience, scientific evidence, logic, and common sense? Of course it can, as Eric Hoffer showed us long ago in his book The True Believer. The problem is to spot the stories told by true believers and avoid the temptation of true belief in ourselves. Some cases are easy to spot, such as religious zealotry, but others do a better job of masquerading as reality. The story enacted by Homo economicus is an example of such a stealth religion. Theologian Harvey Cox nailed it in his 1990 Atlantic Monthly article titled The Market as God, which begins this way:

“A few years ago a friend advised me that if I wanted to know what was going on in the real world, I should read the business pages. Although my lifelong interest has been in the study of religion, I am always willing to expand my horizons; so I took the advice, vaguely fearful that I would have to cope with a new and baffling vocabulary. Instead, I was surprised to discover that most of the concepts I ran across were quite familiar.”

The True in True Believer refers to a willingness to stick to a given belief to the bitter end, but the same word has two other meanings. A belief can be true when it corresponds to factual reality, as in a scientific truth. A belief can also be true when it leads to a desired outcome, in which case we call it realistic. Let’s call a belief that is true in all three senses a Triple T Belief. It is scientifically correct, causes us to thrive as human beings, and is so compelling that we stick with it through thick and thin. That’s a form of True Belief worth wanting.

Get Evonomics in your inbox

Stories are what make any given belief compelling—the third T. The reason that Ayn Rand remains a household word is because she made a bunch of arcane ideas come to life through stories. Likewise, what is remembered and rehearsed about historical figures such as Adam Smith and Friedrich Hayek bears very little resemblance to the real people and their ideas. They have been rendered into fictional characters enacting dramas that help us make sense of the world and ultimately to motivate action. Too bad that these stories only deliver on the third T and not the other two.

I believe that a story centered on the fact that the economy is an organism can deliver on all three T’s. First, it is scientifically true. Everything that we call an organism today is a highly regulated society of lower-level units that once led more fractious lives. In fact, the battle between prosocial and antisocial behaviors still takes place within our bodies (e.g., cancer) and will never be entirely won. The best organized animal societies such as beehives, ant colonies, and termite mounds truly deserve to be called superorganisms—and that includes our own societies, as E.O. Wilson rightly stresses in his book The Social Conquest of Earth. Human societies (including but not restricted to economies) have been metaphorically compared to single organisms since antiquity, but now the comparison can be said to be scientifically true—the first T.

Second, acting upon the concept of the economy as an organism is likely to lead to far more intelligent and sustainable practices than the story enacted by Homo economicus. Key concepts such as “regulation”, “self-organization”, “adaptation” and “selection” are seen in a new light. The unregulated pursuit of self-interest by lower-level units such as individuals and corporations becomes obviously cancerous for the welfare of the whole. At the same time, the concept of society as an organism can lead in nightmarish directions. It’s good to be part of something larger than ourselves in some ways, but as individuals we don’t want to become mindless and expendable workers, which is what happens in some animal societies and could happen in human society if we aren’t careful. The second T requires knowing what to avoid as well as what to embrace.

Third, the concept of society as an organism (again, including but not restricted to economies) functions well as a story that anyone can understand. Christians have been telling each other the story for millennia—the Body of the Church, governed by Christ. Beehives are pictured on road signs in Utah because the Mormons, following a long Christian tradition, admire the way that bees work tirelessly for their groups. The word corporation is derived from the Latin word for body (corpus). Futurists wax poetic about global consciousness and the planetary brain. The story can have a happy or tragic ending, as I have already stressed, but in both cases it is easy to make the concept of society as an organism come to life in the mind of the average human, which is the power of story.

A few authors are beginning to tell the story of modern economies as organisms, along with related comparisons such as ecosystems and gardens. Examples include Eric Liu and Nick Hanauer’s The Gardens of Democracy, George Cooper’s Money, Blood, and Revolution, Victor Hwang’s The Rainforest, and Howard Bloom’s Global Brain. With due respect to these authors, their handling of the concept is still largely metaphorical and doesn’t make full use of the scientific foundation that now exists for the concept of society as an organism (the first T) and its application to modern economics (the second T). This is not surprising, because the first two T’s are very new and still in their formative stages. “The Economy is an Organism” as a Triple T belief is still a work in progress, requiring a collaboration between scientists, policy experts, and storytellers. It is our best shot at a story with a happy ending.

The following books and articles begin to provide the scientific foundation for the concept of an economy as an organism (the first T) and its practical applications (the second T).

Biglan, A. (2015). The Nurture Effect: How the Science of Human Behavior Can Improve Our Lives and Our World. Oakland CA: New Harbinger Publications; 1 edition.

Boehm, C. (2011). Moral Origins: The Evolution of Virtue, Altruism, and Shame. New York: Basic Books.

Corning, P. (2008). Holistic Darwinism: Synergy, Cybernetics, and the Bioeconomics of Evolution. Chicago: University of Chicago Press.

Gowdy, J., & Krall, L. (2015). The economic origins of ultrasociality. Behavioral and Brain Sciences, 1–63. http://doi.org/10.1017/S0140525X1500059X

Haidt, J. (2012). The Rightious Mind: Why Good People are Divided by Politics and Religion. New York: Pantheon.

Maynard Smith, J., & Szathmary, E. (1995). The major transitions in evolution. New York: W.H. Freeman.

Maynard Smith, J., & Szathmary, E. (1999). The origins of life: from the birth of life to the origin of language. Oxford: Oxford University Press.

Padgett, W., & Powell, J. (2012). The Emergence of Organizations and Markets. Princeton: Princeton University Press.

Wilson, D. S. (2015). Does Altruism Exist? Culture, Genes, and the Welfare of Others. New Haven, CT: Yale University Press.

Wilson, D. S., Hayes, S. C., Biglan, A., & Embry, D. (2014). Evolving the Future: Toward a Science of Intentional Change. Behavioral and Brain Sciences, 37, 395–460.

Wilson, D. S., & Gowdy, J. M. (2014). Human ultrasociality and the invisible hand: foundational developments in evolutionary science alter a foundational concept in economics. Journal of Bioeconomics, 17(1), 37–52. http://doi.org/10.1007/s10818-014-9192-x

Wilson, E. O. (2012). The Social Conquest of Earth. New York: Norton.

2015 October 20


Donating = Changing Economics. And Changing the World.

Evonomics is free, it’s a labor of love, and it's an expense. We spend hundreds of hours and lots of dollars each month creating, curating, and promoting content that drives the next evolution of economics. If you're like us — if you think there’s a key leverage point here for making the world a better place — please consider donating. We’ll use your donation to deliver even more game-changing content, and to spread the word about that content to influential thinkers far and wide.

MONTHLY DONATION
 $3 / month
 $7 / month
 $10 / month
 $25 / month

ONE-TIME DONATION
You can also become a one-time patron with a single donation in any amount.

If you liked this article, you'll also like these other Evonomics articles...




BE INVOLVED

We welcome you to take part in the next evolution of economics. Sign up now to be kept in the loop!

  • Helga Vierich

    However, I’m afraid that Wilson’s “euosocial” human is not real either. I have read the Social Conquest of the Earth. Flight upon flight of fancy. As is summed up nicely in this post “ Famed evolutionary biologist E.O. Wilson argues it’s on account of humanity’s unusual genetic mutation, or “knockout gene,” that gave rise to eusociality, or the social condition that allows non-reproductive members of a species to support its reproductive members.” http://bigthink.com/videos/edward-o-wilson-on-eusociality

    Well think again. Has it somehow escaped the notice of every biologist that it is, almost without exception (slaves), that it the reproducing younger adults in every society that do most of the work of supporting the non reproducing youngsters and the elderly? Has it escaped wilson’s notice that the kind of dense urbanized state systems often generate vast numbers of refugees and migrants (where is this knockout gene then?), and that there is no evidence whatsoever that the conquest of earth was done by densely populated states? For his information, it was done tens of thousands of years before the first city ever existed, and it was done by hunter-gatherers, whose individual social networks spanned hundreds and even thousands of miles, and cross linguistic and continental barriers, facilitating an often torrential flow of information, skills, technologies, and genes. The “tight knit” little band with limited networks, constantly in competition with other tiny human enclaves is a fantasy. We humans do not have “Palaeolithic minds” bewildered by modern industrial networking and economic systems. (see page 243 in Social Conquest) and we did not need to become new mutated KIND of human (economicus or pacified) to live in dense cities and states.

    If you are serious about developing an evolutionary model of economic systems, at least found this model in science, including that on human interactions with the planet’s actual ecology. THAT is the proper setting for such an effort.

  • Helga Vierich

    I know this sounds like democracy, but bear with me here: What if the people who are working in the on-demand economy owned it?

    ‘There is a movement underway to create a real sharing economy online, one in which people can truly co-own and cogovern the platforms they rely on. This means bringing together new technology with the long history of democratic, cooperative enterprise.’

    http://www.fastcoexist.com/3051845/the-peoples-uber-why-the-sharing-economy-must-share-ownership

    • lwaaks

      “The long history of democratic, cooperative enterprise”? Are there examples of successful enterprises in this vein or are you talking about a history of ideas?

      • Helga Vierich

        Cooperative work and sharing of ideas go together… and yes, actually, most human societies throughout our history as a species have worked this way…although the term “democratic” is more correct at the extreme ends of the spectrum, applying to the more mobile foragers and to the most democratic of the modern states – like a few in Europe.

        • Most human societies in history and pre-history were very tiny, tightly knit, closely related. Everyone knew each other and each other’s business. Hayek and Smith were dealing with the much more difficult problem of what Hayek called the Extended Order, large societies in which economic actors only occasionally were on a first-name basis with each other. Most of us, most of the time are indirectly dealing with millions of our fellow human beings in incomprehensibly vast economic networks of exchange. How could such things possibly work? Bottom-up? Top-down? Ordered by God? You can see the problem. We humans evolved in the tiny societies I described above. Our thought processes grew out of the assumptions laid down in such societies–assumptions such as intentionality guiding all of our efforts Emergent properties play no role whatsoever in such thought processes Hayek and Smith were bucking a very deep trend in human thought when they engaged in analyzing the emergent extended order. Intentional cooperation and sharing can only work when we actually know each other. Everything else in economics must occur in response to highly abstract signals, such as prices and wages. All dreams of establishing a fair economy, a planned economy, a democratic economy must founder on the reefs of the unknowable Extended Order and its dense and rapid flow of information exchange. The would-be regulator’s inbox is overflowing. The Red Queen’s Race is lost.

          • Swami Cat

            Well said, Sally

            Decentralized systems really are hard for humans to grasp. Adam Smith and the Scottish philosophers really hit on a paradigm shift when they saw how decentralized order can emerge. Darwin was clearly inspired in part by Smith.

  • Pingback: The New Story. The Economy is an Organism - Evo...()

  • Dylan DelliSanti

    I find this article severely lacking in charity. Do you know who else argued that economists take homo economicus too seriously? F.A. Hayek and the other Austrian economists. Why, when there are obviously better and more nuanced defenses of the market out there, would you continue to beat up on a straw man? I’d suggest reading Hayek’s collection of essays in Individualism and Economic Order.

  • michaelstrong

    This is a stunningly ignorant article with respect to economics. As another commenter notes, the Austrian economists have never assume homo economicus. Mises simply starts from the premise that human beings are goal-directed. Hayek’s entire framework is extremely evolutionary and organic. Moreover, despite rejecting homo economicus, they and other Austrians tend to be more inclined towards free markets than are those mainstream neo-classical economists who do use homo economicus.

    When Sloan writes, “Second, acting upon the concept of the economy as an organism is likely to lead to far more intelligent and sustainable practices than the story enacted byHomo economicus. Key concepts such as “regulation”, “self-organization”, “adaptation” and “selection” are seen in a new light.” it is clear that he has no detailed knowledge of either market mechanisms nor governance mechanisms. On the market side, most classical liberals and libertarians favor a combination of property rights and common law remedies for violation of those rights that can, in fact, result in “sustainable practices.” Individual fishing quotas, sulfur dioxide trading, and various systems for auctioning water rights are all examples that Sloan should study before making sweeping and inaccurate claims.

    On the governance side, there is a vast literature on the specific mechanisms of governance and what outcomes they are likely to have under various conditions. Most of this literature is based in observation and has nothing whatsoever to do with “homo economicus” (for a start see the work of Nobel laureates North, V. Smith, Ostrom, Buchanan, Coase, and Williamson). It turns out that creating effective governance is a tricky and subtle issue. The notion that a shift in metaphor would do much to solve problems seems to be based on a cartoon version of economics and a faith-based version of government.

    Yes, there are many absurd economic models in leading journals based on overly simplified assumptions that often resemble homo economicus. I believe that both Austrian and New Institutional Economics are much more empirically accurate frameworks within which to understand real world economic phenomena. Much of the neoclassical work based on homo economicus is unrealistic and worthless. And, in some very specific contexts, including financial market regulation, it can lead to misleading policy conclusions.

    I suspect Sloan has heard rumors of these legitimate concerns about certain aspects of economics which then led him to leap to wildly misinformed statements about economics as a whole. I highly recommend that he read Armen Alchian’s classic 1950 paper on “Uncertainty, Evolution, and Economic Theory” along with a more recent application of Alchian’s evolutionary framework by Manne and Zywicki, “Uncertainty, Evolution, and Behavioral Economic Theory,” along with plenty of Hayek and the other Nobel laureates named above.

  • Helga Vierich

    Why are you developing mere metaphors when there is a real system that evolves over time and that the economy is one part of — culture? Besides.this mat ephor is already old – – culture was called the “super-organic” by Alfred Kroeber and following upon that, there was this book “The Evolution of Institutional Economics; Agency, Structure, and Darwinism” by Geoffrey M Hodgson.. it ams out in 2003 and deals mainly with American economic institutions, but might be of some help.

    On the other hand, how about restructuring this so that the economy represents an essential link between the planet’s ecology and the cultural and cognitive niche within which every human deme is situated, and then developing some ideas about how all these interconnected and communicating niches and demes have evolved through time into this dynamic and rich set of cultures comprising the human species? It might be a good idea to read the work of Dr.Angus Deaton, who is professor or economics at Princeton. He has some ideas that might be useful for the ideas you are developing. Here is a video of a talk he gave a few years ago. https://www.youtube.com/watch?v=2KFZQksWhcU#t=2370

  • Pingback: 1 – The New Story. The Economy Is an Organism - Exploding Ads()

  • David Whitlock

    Economy as organism or economy as ecosystem are both good metaphors.

    The problem is that humans have hyperactive agency detection and virtually always impute top-down causation. Even in organisms, there is very limited “top-down” causation. Most of the signaling is “bottom-up”. Individual cells must signal to adjacent cells so as to maintain a self-organizing criticality. Only then can organism-spanning signals propagate and cause organism-wide effects (and enable the emulation of top-down control).

    The “problem” of calling eusocial behavior a type of “altruism” is because “altruism” is a top-down anthropomorphic motivation. It is a category error to impute “altruism” to bees. Bees act as their physiology directs them to act, plus some noise. The reproductive output of a bee hive (fertile queens and drones) is more related to the workers than to the queen or drone founders. Who is being “altruistic”? The workers who generate fertile virgin queens and drones? or the queen enslaved by those workers to generate those fertile virgin queens and drones?

    What is important in eusociality is the communication that signals cooperative behavior. That cooperative behavior can only be as “cooperative” as the precision and fidelity of the signaling allows. Cells in an organism accurately signal what they need, and what they can produce from what they need. The “goods and services” produced by a cell, necessarily match the “goods and services” consumed by that cell to sustain itself and generate the “goods and services” the cell produces.

    So long as a cell receives sufficient “goods and services” (glucose, O2, signals, albumin, hormones, lipids, metals) to sustain itself and produce the “goods and services” the organism needs that cell to produce, then the organism can survive and grow and converts substrates into descendants by the specialized reproductive cells (germ cells). If the cell does not receive enough “goods and services” to sustain itself, it dies and is cleared. If cells consumes more “goods and services” than the organism can sustain, then the organism dies of the tumor those cells have become.

    “Profit” isn’t something that has meaning or can be measured for individual cells. The “profit” of the whole organism is the number of reproductive units produced. If individual cells could grow (“profit”) at the expense of the whole organism, they would and the whole organism would die from the tumor.

    This is what the financial sector has become through monopoly power and unpriced externalities. The only “good and service” that the financial sector produces is efficient allocation of capital. If the financial sector was efficiently allocating capital among the non-financial sector industries, then the non-financial sector should be growing at historically high rates, and should be growing faster than the financial sector. It is not. The growth of the financial sector and financial sector profits is at an all time high and greatly exceeds the growth of the non-financial sector.

    My conclusion is that the financial sector is growing through parasitic extraction of value from the non-financial sector. If this continues, then the economy will succumb to the “tumor” of the financial sector.

    • Jukka Aakula

      You are right.

      Even the Scandinavian well-fare states were not designed top down as organisms. Instead they were based on high trust communities pre-existing the well-fare states. (Compare with Putnam and Northern Italy.)

      And then on top of that some top-down design worked well.

      When the Swedish socialist government started a very top-down regulation of the society it did not work anymore. The efficiency of the society went down. Sweden made a lot of de-regulation after that.

  • If the economy is an organism and all of us economic actors need regulating, who does the regulating? In a body, the regulators are generally enzymes, which regulate various chemical processes, including each other. I would suggest that if you are serious about considering the economy an organism, you begin taking Hayek and Smith much more seriously. They engaged the best they could in analyzing the economy as a self-organizing, self-correcting system in their times, as free-market economists are doing in these times. The idea of an industrial-style, top-down, tightly regulated economy has long since faded in these information saturated, emergent, self-organizing times. Hayek and Smith are good role models for those who wish to engage with 21st century economic thought.

  • Here is a blog post that describes the economy as an organism.
    Global network of local communities, each aligned with the local water cycle and energy conditions (i.e. Climate) planning for the food, water, energy and housing needs for a fixed population… Kind of a 21st century, Internet powered version of how all traditional societies functioned..
    ‘Designing Cities for Freedom and Equality – Why we need a Circular Economy’
    http://www.polisplan.com.au/client/pages/Entry.aspx?id=195

  • Jukka Aakula

    The whole state / economy as an organism is hardly very fruitful. Corporations or communities as organisms certainly is very fruitful. Or ok Nazi Germany was a society as an organism. The Scandinavian wellfare states have / had some features of organism as “Folkhem” but at the same time the once who work well like Sweden have liberalized their economies a lot.

    This is a complicated issue and I think DS Wilson oversimplifies it as much as the “market believers”. States or societies as organism easily become very unpleasant corporative societies. The Sanders side enthusiasm on Scandinavia is almost like the leftist enthusiasm on Sovietunion in 30ies. Sweden is working very well partly due to the high trust of the past homogenous society, partly due to huge liberalization of economy. But Finland is working not at all due to the strong corporatism and dependence on big companies and cartels.

    The progressives of the US like Theodore Roosevelt were killing the cartels i.e. creating more markets not less – more efficient markets. US needs more efficient markets by creating taxes on CO2 etc. and needs more efficient social policy and health care system. I assume.

    • David Whitlock

      I agree that “free riding” can kill a society as organism, but what constitutes “free riding” needs to be carefully considered.

      In the context of a self-sustaining society, taking care of infants and children is an essential part of what the society must do, or the society goes extinct. Supporting single mothers, infants and children is not any kind of “free riding”. Emitting CO2 into the atmosphere without dealing with the consequences is “free riding”. Compelling people to work for less than living wages is free riding. Avoiding taxes by bribing legislators is free riding (whether it is legal “lobbying” or illegal overt quid pro quo bribes). When the profits gained by free riding can be used to extract more profits and used to facilitate more free riding, the society as organism cannot survive.

      Avoiding paying taxes to pay for necessary services (like police, fire, government, roads) is free riding.

      Paying lower wages isn’t necessarily free riding, if the wage earners can support themselves and their dependents on what they earn. If they can’t, then it is free riding. $7.50 could be a “living wage”, if there was free, single payer health care, free food, free housing, free transportation, free education, free childcare, free clothing. If you want to pay non-living wages, then you need to pay enough in taxes for sufficient government services to make non-wage income transfers sufficient that people and their dependents can live on what they make. If you are unwilling to do that, then you are the free rider and are unsustainably exploiting the society you are a part of.

      • Jukka Aakula

        Pretty much agree.

        Inside a community freeriding also mean you are not punishing those who do not follow the norms commonly agreed. Or you do not contribute otherwise for the benefit of the community. In most cases freeriding becomes predominant in any community sooner or later – it may take even hundred years but still – and the community collapses more or less. Sometimes the community is able to correct the problem but in most cases not.

        • David Whitlock

          Just because “norms” are “agreed to”, doesn’t make them benefit the community or not be “free riding”.

          If something is essential (like water) and doesn’t have a price (like ground water in Texas), then it is an essential unpriced externality and “the market” cannot deal with it in a sustainable way. All “the market” can do is compel the first person to exploit it to exhaustion (or the second, or third, or fourth person will).

          That is why all fisheries managed by “the market” have collapsed.

          • Jukka Aakula

            “Just because “norms” are “agreed to”, doesn’t make them benefit the community or not be “free riding””

            Norms can be benefitial or non benefitial.

            But free riding is a technical term – meaning one who does not contribute to the public goods like maintaining the norms or paying taxes – not a moral term – meaning e.g. one who acts in a way which is benefitial for the community.

            If norms are sick, free riding is a good thing. If taxes are used to create a police state or for corruption, free riding is a good thing,

          • Jukka Aakula

            “That is why all fisheries managed by “the market” have collapsed.”

            I agree.