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The link to evolutionary theory

The association with evolutionary theory is more productive. The rationale is as follows: all living organisms are studied with the help of biology and evolutionary theory. Why should human life be different? We expect it to be more complicated, since humans can reflect on their own actions, but not fundamentally different. Evolutionary theory and the notion of change (progress, development, cycles) give the discipline of economics stronger predictive power than it has by using equilibrium theories. This should lead us to distrust the use of algebra for solving economic problems. Even logic and history are far better building blocks for the social sciences than most of mathematics, which should be seen primarily as just a more efficient language. For instance, if economists had remembered the history of what happened among the leaders of the Western world's central banks at the beginning of the twentieth century, rather than spending their time developing mathematical formulae like "Value at Risk" and the Black-Scholes formula for option pricing, then perhaps the collapse of the banking system might have been avoided. In that case, perhaps someone would have drawn a parallel with earlier financial crises and asked the right questions. But we had already abandoned the historical method, and with it we abandoned appreciation of economic history. It might seem odd to take a step back and advocate more history, but the question is whether there is more to be gained by leaving it behind. Consider the discipline of marketing as an example. Despite scientific paper numbering hundreds of thousands, there are very few self-critical historical articles in this field, and few observers even seem to find that strange. Likewise I argue too for a return to syllogisms, despite the fact that the tradition of formal logic is unfashionable, to say the least. Clear thinking requires no less.

From one point of view we are all part of the same competitive system: individuals, organizations, and nation states. These entities are only different aspects of the same biological mechanism whereby Nature defines who is fit to survive and reproduce. Of course in a modern welfare state the implications are never as drastic as that, because we can choose to live a different life and rescue those who stumble (even though that just means that we are transferring responsibilities between citizens). The fundamental mechanism is the same, always present, always reminding us of what is required in order to survive and prosper. From the individual's point of view this struggle takes the form of competition, expressed in modern times primarily in the form of economic competition. In other words, we learn to compete today mainly through some form of economic performance (whether we work in the private or the public sector), rather than by fighting. Ultimately it is the sum of the activities of all individuals in a society that determines the competitiveness of a nation. In just the same way, and much as we may dislike it, it follows that in every nation there are those who contribute to the competitiveness of the State and those who live off it. It also follows that there are nations which systematically perform better than others. This we know from measures such as GDP, unemployment rates, fiscal deficits, borrowing levels, credit ratings, etc. In the short run, measured in years and sometimes decades, we see this from the rise and fall of firms. In the long run, measured in generations and centuries, we see it from the rise and fall of great nations and empires.

 
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