1997-10-29 - «Vitamin B»(October 28, 1997) The Power of Ecobabble

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From: Robert Hettinga <rah@shipwright.com>
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From: Robert Hettinga <rah@shipwright.com>
Date: Wed, 29 Oct 1997 22:49:29 +0800
To: cypherpunks@cyberpass.net
Subject: <<Vitamin B>>(October 28, 1997) The Power of Ecobabble
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From: "VitaminB"<VitaminB@bionomics.org>
To: "DAILY DOSE"<DAILY_DOSE@maxager.com>
Date: Tue, 28 Oct 1997 17:37:57 -0800
Subject: <<Vitamin B>>(October 28, 1997) The Power of Ecobabble
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Vitamin B:
Your Daily Dose of Bionomics

October 28, 1997

The Power of Ecobabble

Paul Krugman is, without doubt, a well known economist.  With
a professorship at MIT and a publication list long enough to
impress Stephen King, those Nobel guys in Sweden are
really the only ones he hasn't impressed.  In other words,
just the kind of successful, mainstream economist who
wouldn't give Bionomics the time of day.

Until last week, that is.

We don't know why, but out of the blue, Paul Krugman
chose to devote his entire _Slate_ column to an analysis
of Bionomics (much like a shark will analyze a tuna).
Maybe he was wondering why he, a clear expert in the field
of evolutionary economics, wasn't invited to speak at our
conference (Nov 13-15 in San Francisco plug plug plug).
Maybe he actually doesn't think that language and
metaphors matter to our mental maps of the economy.
Or, maybe he got asked just one too many times, "So,
Prof. Krugman, what do you think of _Bionomics_, and
this guy Rothschild?  He's been talking about biology
and economics since 1990."

In any case, we're genuinely pleased to see he's spending
so much time thinking about Bionomics -- you simply can't
write this forcefully about something off-the-cuff.

For those who haven't read it yet, the article is included below:


The Power of Biobabble
Pseudo-economics meets pseudo-evolution.
By Paul Krugman

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.

Paul Krugman is a professor of economics at MIT whose books include
_The Age of Diminished Expectations_ and _Peddling Prosperity_.

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-----------------
Robert Hettinga (rah@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
The e$ Home Page: http://www.shipwright.com/
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