Darwinian Processes

Classical economics is an analysis of what happens in the "marketplace," which operates under Darwinian conditions. Recently, there has been an increasing tendency to explain things in terms of "market behavior," and to apply "market-based mechanisms" to a wide range of problems. These instances often glorify Schumpeter's idea of "creative destruction."

What is not happening is an examination of the real-world consequences of these views. Who are the winners, who the losers? Are market solutions always politically and morally acceptable? Do "Darwinian" mechanisms really apply to human societies, and, if so, when, where and to what extent? I examine some of these questions in what follows.

Darwinian Evolution

At the start, I think we should understand the use of the term "Darwinian" in the foregoing is inaccurate, not at all what Darwin's Theory is about. The misappropriation of Evolutionary Theory is best described as "Social Darwinism," which was invented about a century ago by Spengler and others. To make this distinction between Darwin and the Social Darwinians, we should first know the basics of Darwin's Theory. That theory has been improved, and itself evolved into modern neo-Darwinism, which is what most scientists believe these days.

The very first difference between Darwin's Theory and Social Darwinism is the former is based on scientific observations and experiment; the latter is not. That organic evolution has occurred is well established by fossils, other geological evidence and modern observations. There are several reports of on-going evolution among Darwin's finches in the Galapagos islands. Insects have evolved quickly to overcome the use of pesticides. Bacteria and viruses are known to evolve in less than a century to occupy new environments. So, organisms of all kinds adapt to their environment, which means that, as the natural environment changes, living things change as well. Further, those organisms that best use the environment survive "the best," and those that do not adapt may not survive at all. Evolution is a verified, observable fact, not a theory, at the core of Darwin's Theory and neo-Darwinism.

But, how did organisms evolve; what was the mechanism of evolution? Darwin realized that "survival of the fittest" was a result of reproduction; i.e., reproduction was the mechanism of change. Darwin discovered that, somehow, organisms adapted to an environment pass on their qualities to their offspring. Organisms that cannot adapt to an environment either do not reproduce, or, if they do, their offspring soon die off. Thus, "the fittest" are those who manage to reproduce fertile offspring; and that is all "survival of the fittest" means.

It is worth repeating this widely misunderstood point: To be fit means surviving long enough to reproduce, and then actually reproducing offspring that also reproduce. "Fitness" can be measured: in the simplest case, one counts the population of a species over time. There is nothing abstract or metaphysical about Darwinism or fitness; it is quite concrete and experimental.

Darwin did not know how adaptive qualities were inherited. Following Lamarck, Lysenko proposed the theory that individuals somehow "learned" the qualities required to survive and passed them on. Lysenkoism involved the notion that such learned qualities were immediately stored in the genes, but Lysenko did not propose a mechanism. Thus, according to Lysenko, plants that survived harsh winters would engender offspring that could survive harsh winters. Lysenkoism ignored Mendelian genetics, but was a convenient theory for Stalin in his desire to remake Russians into "Soviet Man." Of course, within twenty years after Lysenko's disastrous crop theories caused a famine, it was clear to biologists that inheritance is transmitted by genes that follow Mendelian rules. Those genes are made of DNA, embedded in chromosomes, another observed and verifiable fact at the core of Darwinian theories.

Within the Darwinian community, there is a dispute about how fast evolution proceeds. There is Darwin's original notion of a slow, regular process, which is one kind uniformitarianism. In the late 20^th century, Stephen Jay Gould proposed that evolution alternated between rapid change and stasis; thus, "punctuated" evolution. There's a lot of evidence and theoretical support on both sides of that dispute. For example, there's the fact that disease bacteria are known to evolve in hospitals just a few years to new and devastating forms immune to our antibiotics. For myself, I need to say Prof. Gould and the facts convinced me long ago.

But, the argument over uniform or punctuated evolution does not challenge the essentials of Darwinism. It's a fact that evolution happened and continues to happen. It's a fact that our genes (genotype) are responsible for our appearance and functionality (phenotype). It's a fact that organisms respond to environmental changes, some successfully and some not.

Lamarck and Lysenko were wrong in proposing that organisms "learned" from the environment; i.e., that acquired characteristics were inherited. The genes are altered by independent processes, which sometimes result in a change of phenotype. Most mutations are either lethal or silent (when the mutation occurs in inactive, non-coding DNA). Over geologic time, the environment is the independent variable; the evolution of species is the dependent variable. Organisms take a "guess," as it were, as to how to succeed in changed circumstances, and win or lose by the luck of the genetic draw.

Darwinism

There are several conclusions to be drawn from these basic notions. Most importantly, genetic variation, hence evolution, occurs in individuals randomly. There is no notion of "progress" in Darwinism; there is just change. This is one of the sharpest differences between Social Darwinism - a political and social theory - and scientific Darwinism. Darwinians cannot claim to predict the direction of evolution, or place any valuation on what happens. What is good or bad evolution is entirely in the mind of the beholder; "Mother Nature" does not care about the welfare of her dependents.

Darwinians believe it is impossible, or very unlikely at best, to predict the "use" of any phenotype. We cannot answer the question, 'why does a bird have wings?' Nor can we answer the question, 'how did the bird acquire wings?' What we do know is that birds acquired wings and all the other stuff required to master aerodynamic flight. Those acquisitions were probably the result of small changes in bird-like animals (probably related to theropod dinosaurs) over millions of years. It is now thought, for example, that many dinosaurs may have had feathers. Only birds made use of feathers to fly; apparently, pterosaurs did not. Does it follow from the "nature" of feathers that their possessors are destined to fly? Apparently not. I do not know of any examples that show the development of phenotype presages a "progressive" evolution of species. There are, however, lots of examples of unchanging species that died out as a result of environmental stress.

When an accumulation of changes establishes itself in such a way that a species is divided into two or more non-interbreeding groups, we say that the species has races. If the races are unable to cross-fertilize, then they have become a new species. The changes that result in new races or species are not pre-destined or purposeful. In many cases, they are the result of environmental isolation; e.g., speciation among Galapagos (Darwin) finches is continuing for this reason. In other cases, there is some functional variation that leads to racial characteristics and preferences, thence to species. For example, birds of paradise are exquisitely sensitive to the mating dances, plumage or practices of would-be partners. Fickle females seem to have given males incentive to endure even greater demands, even though some male behavior and enhancements may be counter-productive in the struggle for survival.

Speciation is not a predictable event. It can happen for thousands of different "reasons," none of which are foreseeable. This is a direct consequence of the random nature of mutation, even if the environment varies in some regular manner. Organisms are not forced to adapt to the environment; many do not and just die. Even a moderately changing, benign environment does not encourage any adaptation. If the genes mutate in a way that results in a phenotype that takes advantage of the environment, then change is possible. But, even the combination of a favorable environment and phenotype do not guarantee the success of genetic change. Suppose that a male bird of paradise evolves a new, more glorious song or feather, but the female hates it. Clearly, that change will have to await the development of more appreciate females.

So, Darwinism is not about progress, but about random changes. It is about the interaction of organisms and their environment. It does not provide a method for predicting the success or failure of any genotype or phenotype. Therefore, Darwinism is inherently retrospective in its outlook. If there are any prospects in Darwinism, they lie entirely in the statistical analysis of prior outcomes. But even the most sophisticated analyses cannot tell us where, for example, the human race is going or how long our species will last.

Ruled Out

Since Darwinian theory cannot predict outcomes, any other theory that relies on evolutionary ideas is similarly disabled. Of course, non-Darwinian theories can make any assertions they please in their own realm; it's just that such claims cannot be about evolution as understood by scientists.

In particular, Social Darwinism is a colossal misnomer, because there is nothing Darwinian about it. The Social Darwinians believe that human history is directional, that it has a purpose. One component of Social Darwinism is the Victorian concept of progress. This is the belief that human history has changed from worse to better, that people today are better off than before. Progress was inferred from measured changes in national income, standard of living, education, health, etc. If all of those things and others as well were improvements on an earlier state of affairs, then it could be said there was progress There is nothing terribly wrong with that view, as so far stated, because it amounts to a definition of "progress." However, the Social Darwinians went further, claiming that this "progress" would not only continue, but take a course they predicted. Most interesting, Social Darwinian progress would benefit European-derived cultures most, because they had made the most of it. It should not be a revelation that Social Darwinism originated in Germany and England. It also found many followers in the United States, where it was associated with Manifest Destiny and the White Man's Burden.

Another misuse of Darwinism is eugenics, at least as represented by the Eugenics Movement most popular on the United States during the 1920s. According to Eugenicists, the race would be improved by genetic selection to eliminate the weak, diseased, and infirm. Most of all, the race would be relieved of the dreaded Morons, who threatened to undo all progress and turn us back into Neanderthals. According to the Eugenics Society, Morons did not have the intellectual ability to sustain our modern, industrialized, scientific society. They represented a drain on society, since their more intelligent brethren had to support them. By practicing birth control and abortion, as well as mandatory sterilization, society would save itself huge expenses and stop being held back by this "genetic burden." Some ideas of the Eugenicists were actually adopted and practised in the United States, particularly in the South, until the 1960s. Surgical sterilization was forced on poor women, convicts and, especially, black women.

There was a widespread reaction against the Eugenicists in the 1930s, partly because the Great Depression made most Americans realize they were Morons. Charlie Chaplin satirized the Eugenicists, making them appear to be the Morons. In the 1920s, Eugenics seemed a more reasonable idea, when it was easy to feel the other guy deserved liquidation. This sort of feeling has been popular again in the United States since conservatives took power in 1980: the feeling that some of us are more deserving than others. Evidently, it is much easier to support eugenic ideas when one is successful than otherwise. Eugenics is almost always meant to apply to someone else.

Similarly, Social Darwinism went out of favor after its heyday in the 1920 and 30s. That was a result of an unfortunate connection between Social Darwinism and Adolph Hitler. The Nazis used Social Darwinian and Eugenicist ideas in their political programs, one of which was the genocide of the Jews, mentally incompetent, gypsies, other "inferior races" as well as political opponents. Once the Final Solution was put into operation, anyone who was identified as a member of those groups was subject to arrest, deportation to concentration camps, and eventual liquidation. For unknown reasons, the true intentions and practices of the Nazis were not manifest to most people in America and England until very late in World War II. Once the horror of Auschwitz and the other camps was discovered, Social Darwinism became a very unpopular philosophy. Despite that, Social Darwinism has had a resurgence in the last decade, especially since George W Bush got selected President.

What is clear is this: Eugenics and Social Darwinism appeal to people who feel they are better than others. Both of these groups make severe judgements about the worthiness of their compatriots, based on criteria they say is scientific. Believers are often willing to go to great lengths to eliminate people they dislike, showing that they have a great stake in the outcome.

That stake is emotional and prejudicial; it does not have a basis in scientific theory or fact.

Markets are Markets

Market fundamentalists analogize the workings of markets to Darwinian evolution. Their analogy is just that: an analogy. Markets are not Darwinian within the scientific meaning of Darwinism.

Classical economics and evolutionary theory are not at all similar. If the analogy held, one could use classical economic theories to describe and analyze evolution; but you cannot. Evolution is best described as a stochastic process, meaning that events are only probable. The randomness of evolution can be modeled using chaos theory. It is not clear that there is any "best" solution for any given set of boundary conditions.

Classical economics is inspired by Newtonian mechanics. There are always solutions to the equations of state. Thus, there are optimal prices, maximum profits, and most efficient uses of productive capacities. There is an assumption that there is demand for each product offered in the market at some price (the market clearing price). There is nothing random about a classically defined market. Like Newton's clockwork, it is in principle possible to calculate outcomes for all time, if the boundary conditions are well defined.

In most cases, when "Darwinian" is used to describe markets or outcomes, the speaker intends to suggest the unfeeling nature of market situations. The word is most often applied to the condition of labor, or the losers in some economic battle. Such people are considered victims of the "Law of the Jungle." Winners are not thought of as having benefited from Darwinian circumstances.

I think the intention of using such words and phrases is to excuse the fate of those penalized, possibly unfairly. It is shrugging off misfortune, by saying 'that's life.'

Competition

The analogy between "free markets" and the Darwinian struggle for survival is often meant to emphasize the competitive nature of markets.

Darwinian evolution is said to proceed by 'survival of the fittest.' Market fundamentalists have a particular interpretation of that phrase. In their view, producing 'the fittest' is a Good Thing, or Progress. The whole point of the competition, according to those capitalists, is not only to produce a winner, but a 'more fit' or 'better' winner. Thus, competitive markets result in constant improvements in toasters and coffee pots.

As previously argued, the notion of progress is not found in Darwinian theory; there is just change. So, if competition in markets results in improved products, that competition is not necessarily Darwinian. If the purpose of competition is to bring about desirable change, that competition is not Darwinian at all. Darwinian competition is just a struggle without purpose. Whichever organisms are left standing are the "winners" of a Darwinian competition, for as long as they stand. Sometimes, there are no winners at all; i.e., everything dies. Massive die-outs or catastrophes are just as Darwinian as an "improved" species.

All species compete for a 'place under the sun,' both among themselves and with other species. This is not a purposeful competition, not does it produce any product. There is no marketplace. It just happens because each organism has to eat something to live, as mandated by the 2^nd Law of Thermodynamics.

Human marketplaces are quite different. To the extent that there is competition, it is motivated by greater desires than merely eating, although eating is an important motive for human competition. For the most part, people do not live or die on account of their market transactions. They do become better or worse off (as measured by other human beings), which means the competition has "floors" and "ceilings." In most societies, there is a limit how much any one individual can take away from the market and how much any individual is required to sacrifice for it. For example, in America, bankruptcy puts a floor under losses, while taxes and other regulations are intended to prevent someone "breaking the bank."

Regulatory limits are observed in the markets of even the most primitive societies. Suppose, for example, one person or group is allowed to come in and buy all the staple crops. What are the rest of the people going to have for dinner? The market exists because of a division of labor. Someone sows the seed and tills the fields. Extra help is usually needed to harvest the crops. Someone else brings the harvest to market and sells it. What cannot be sold is stored by another agency. All of these people have to be fed, clothed and maintained for the system to work (whether you recognize it as a system or not). If someone buys out the staples (corners the market, gets a monopoly), then either the workers don't get fed, or they have to pay too much for what they get. If they pay too much, they will be deprived of something else. Either way, the system is disrupted and production is reduced. That is why not even Pharaoh commandeered the entire crop from his ancient Egyptian subjects.

Thus, human markets benefit from limited competition, which is regulated to achieve certain purposes. Again, that is not at all what happens in nature.

Preferences

Why would anyone prefer institutions that have little regard for individuals? There is, of course, the argument that no one should be above or beyond the law. In order for there to be equal justice, the law must be blind to particular individuals.

On the other hand, there is nothing to prevent such laws from being equally, grossly unjust and unfair to almost everyone. The law should recognize the peculiar circumstances of individual lives, if it recognizes the principle of compassion.

Similarly, why would we prefer impersonal markets to economic conditions that take account of individuals?

Market fundamentalists almost always propose a market to solve every problem. I have never heard one of them admit a market does not work, or, worse, that classes of markets have problems. For this reason, I look upon market fundamentalists (aka ultra-capitalists, neo-classical economists, free marketers, etc) as true believers, not scientists.

Most people feel they ought to be treated fairly. Most people do not like the idea of being subjected to the 'Law of the Jungle.' Most people do not like being cheated or robbed. For those reasons and many others, markets are regulated. People do not willingly participate in free-for-alls, because they rightly perceive that they will come out losers most of the time. So, most people are not market fundamentalists, and don't support market fundamentalism in its basic assumptions.

Most people prefer a well regulated market to the unregulated Law of the Jungle. When market fundamentalists try to excuse the faults of a poorly regulated market, by making an analogy to natural conditions, this is a misuse of science. When market fundamentalists try to suggest markets produce improving products, by analogy to evolution, this is another misuse of science.

The greatest misuse of science, in my opinion, is attempting to elevate neo-classical economic theories to a status like that of Darwinian evolution. In fact, there is nothing "natural" about market fundamentalism, except that "free markets" are a human invention. There is no reason a market need be regulated or unregulated except so far as it serves human purposes. There is nothing magical or sacrosanct about markets that prevents human intervention as required to achieve desired results.
 

In defending their beliefs, I think market fundamentalists should leave Darwin's good name out of it.