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5.2. Evolutionary theory versus environmental adaptation

In order to apply evolutionary theory to the social sciences we need to distinguish between a number of different issues. One problem is that people mean different things by the word "evolution". The term is often used to refer to the fact that all living organisms are linked by descent from a common ancestor. Alternatively, it is sometimes used to refer to ideas about how the first living organisms appeared; that might instead be called "abiogenesis". We also use "evolution" when we really mean natural selection, which is just one of the many mechanisms of evolution.

Francois Perroux (1983: 23) defines evolution as "changes that are interlinked, as opposed to a 'random' succession of events and structures occurring in irreversible and historical time". These changes are what we may call genotypic changes.

In a strict sense then, non-heritable changes are not part of what we call evolution. Instead we may call them environmental adaptations. To many social scientists it seems that environmental adaptation is more relevant than evolution to their own subjects. Evolutionary theory is relevant chiefly to the natural scientist, who studies behaviour over generations. Not even the long-term business cycles of Schumpeter and the Kiel School bear much relation to evolution. What seems to be most relevant for evolutionary economists is therefore Man's phenotype, where phenotype is defined as the morphological, physiological, biochemical, behavioral, and other properties exhibited by a living organism. An organism's phenotype is determined by its genes and its environment.

At the cultural level mutation is not uninteresting to economists either: Chinese and Pakistanis are at least two mutations apart, Europeans and Africans perhaps as many as six or more. There are particularly many mutational differences within the African continent as this is where Homo sapiens first evolved.94We need to consider what role, if any, these particular genetic differences have for economic behaviour. As a comparison, modern neuroscience is showing a genetic basis for behavioral differences between the sexes: for instance, females communicate more sensitively than males.

Then there is the variable of change. We acquire new customers, develop and buy new computers, and communicate with one another using new tools and behaviour. We must distinguish between those changes which are "evolutionary" and those which are not. Evolution in biology refers to (i) "the biological process in which inherited traits become more or less common in a population over successive generations", recognizing that (ii) "Over time, this process can lead to speciation, the development of new species from existing ones" (Wikipedia article on "evolution"). Under (i), we need to discover whether, say, a travelling salesman's son becomes better at selling, whether younger people today are able to use computers more efficiently than older people, and to what extent the content of our communication and way of communicating are changing with each new generation. Under (ii), we need to discover how rapidly these inherited changes occur. What biologists disagree about is not whether these changes occur, but whether they are continual or happen in occasional bursts (so-called punctuated equilibrium, advocated for instance by Stephen Jay Gould). The extreme case of change, in which an animal's lineage diverges into separate species, seems to have little relevance for the study of economics, for the foreseeable future at least (ii above). What cannot be ignored by economists is the modification of "inherited traits" (i). What we need to discover is whether these changes have any implications for our economic models, and how significant they are. In other words, we need to ask what are inherited traits and what are explanatory factors to be accounted for in economic theory? It should be possible to begin coming up with answers to these questions soon thanks to the advance of genetic research. Without ever forgetting the contribution attributable to Man's free will, we should be able to explain how a given individual will behave, based on his or her genome together with what we know about how he or she has acted in the past (habit). This is the project for the real social sciences. When we achieve this we are starting a real scientific study of Man, not before.

For evolution to continue, there must be mechanisms to create or increase genetic variation, and mechanisms to decrease it. The mechanisms of evolution are mutation, natural selection, genetic drift, recombination, and gene flow. These can be grouped into two classes: those that decrease genetic variation and those that increase it. We can treat the physical properties of the world as constants. Human behaviour is changing. It is Man's appreciation of how the physical properties can be exploited which evolves. Then there are the other limitations as to Man's action related to his resources; the material, capital and what man is capable of doing.

What are then the fundamental building-blocks of evolutionary economics? From a materialist perspective these could be material, capital, people, and actions. By acting on material mankind initiates an evolution which is proper to his species. Since mankind has chosen not to share material in common, but to control it through the institution of private property, capital is another building-block. Capital and private property are products of political law. Other man-made limitations include social rules and ethics, whether these are causes or effects.

The first question is why Man acts as he does? The answer will tell us what kind of actions to expect, which will help us foresee the direction of our evolution. When facing a decision, man participates in the process as a whole being; his interests are not only economic, but aesthetic, sexual, and humanitarian. These other interests cannot be assumed away if we are to understand the underlying causes or motives for human action and to suggest realistic answers. Or, as Veblen (1899: 10) puts it: "Changes in the material facts breed further change only through the human factor. It is in the human material that the continuity of development is to be looked for; and it is here, therefore, that the motor forces of the process of economic development must be studied if they are to be studied in action at all". This is a materialist approach, without necessarily being a Marxist one.

We appreciate the complexity of the task when we consider that we must list all the possible motives for action Man can have, and decide which motives are strongest for each set of possible actions. We would need to do this for all human beings and all their economic actions every day. And it will be difficult to decide which actions are economic and which are not, since an economic action may be caused by a non-economic action. Unless we can achieve this, which at this point seems well-nigh impossible, we will not achieve complete certainty about our evolution.

The question then becomes, how accurate an estimate can we make of a person's, a company's, or a nation's evolution, based on what we can observe? And will it be accurate enough to be worth our undertaking? We can always describe economic actions in terms of basic principles of evolutionary science and make them serve as examples without pretending that they have predictive capabilities, in much the same way as case-studies are written today: as descriptive data that resemble real life. One thing is clear: the better the knowledge we have about a subject's actions, the greater the likelihood of getting accurate predictions. It will not do to sit at a desk and draw general conclusions from small data-sets. This is a major difference from the mechanistic approach, whose advocates believe that useful conclusions can be drawn from mathematical reasoning once a number of limited variables are found and defined. The major problem here is that they are way too few to be of much value.

The natural sciences nowadays are concerned with "dynamic" relations and series. Unlike chemistry, which was able to move away from its taxonomic stage and develop into a modern science, economics ignored new developments in the study of biology and chemistry and clung instead to the idea of natural rights, with its roots in the writings of the eighteenth-century French physiocrats, men such as Quesnay, Baudeau, Le Trosne, and Mirabeau, but also Condorcet, Gournay, and Turgot (cf. Veblen 1899: 2). These men laid the groundwork for the British development of economics, which evolved into the Lausanne school with its refinement of the mechanistic programme as applied to economics, and that in turn led to the blossoming of the new approach in the USA with the neoclassical school, first of all the Chicago school of economics, setting so the standard and the definition of what the Nobel Prize in economics should reward.

It may be that the marginalist school will fade away as the American empire declines, or because the number of remaining marginalists drops below some critical mass, rather than as a consequence of the persuasiveness of evolutionary arguments. Others would argue that the marginalist school will wither when other schools can make better predictions about economic behaviour. And these possibilities are not exclusive.

This is a constructivist perspective on social-science paradigms. Identifying the limitations of the marginalist approach, criticizing its assumptions, in a word "deconstructing" it, is only a first step, and will not be enough to make evolutionary economics a real alternative. Besides, many marginalists would agree with their critics to an extent: "our approach is an over generalization of reality, but it is the only way we know to develop an economic science". If evolutionary economists want to offer an alternative, they must develop an alternative method which yields answers to real-life problems.

The deconstructionist critic argues that marginalist economics typically assumes perfect competition, meaning that all parties have equal ability to compete. This assumption is refuted by what is called the Matthew principle, from the words of the evangelist: "for whosoever hath, to him shall be given", implying that it is easier for the rich to accumulate than the poor (Boulding 1981: 75). This is relevant to evolutionary economics since economic development is almost bound to increase inequality, particularly in its early stages (op. cit.: 77). The great evolutionary development of the last two hundred years has undoubtedly increased world inequality (loc. cit.), even though more people are enjoying a higher standard of living. These facts in themselves will put further pressure on the marginalist school.

The activity is itself the substantial fact of the process, and the desires under whose guidance the action takes place are circumstances of temperament which determine the specific direction in which the activity will unfold itself in the given case. ... The economic life history of the individual is a cumulative process of adaptation of means to ends that cumulatively change as the process goes on, both the agent and his environment being at any point the outcome of the last process. His methods of life today are enforced upon him by his habits of life carried over from yesterday and by the circumstances left as the mechanical residue of life of yesterday. (Boulding 1981: 75-7)

In mainstream economic theory these forces are assumed away. Another important assumption in marginalist economics is the maximization of gain. In reality, do we try to maximize gain, or to minimize the fear of loss? Do we compete against all alike, or less against certain groups, family, and neighbors? Marginalist economics also assumes free choice. This is questioned by a number of physicists and neurobiologists. Research by Angela Sirigu showed that experimental subjects formed a conscious intention to perform an action only slightly after they had in fact started to perform it. If that is true, it puts the whole of rational choice literature into question.

Possibly the most convincing argument for an evolutionary approach in the social sciences was propounded by the Russian scientist Petr Kropotkin. Kropotkin (1902: vii-x) observed two aspects of human life which may help to explain behaviour. One was the extreme severity of the struggle for existence, and the great loss of life when food is scarce (the law of Mutual Struggle). The other was the fact that bitter struggle for the means of existence fails to occur among animals of the same species (the law of Mutual Aid). When food was plentiful he observed the phenomena of mutual aid and mutual support. Thus individuals who enter the market economy from a situation of mutual struggle are often more motivated to work and succeed.

The concept of struggle for existence as a factor in evolution was introduced by Darwin and Wallace. The idea of the law of Mutual Aid was suggested by Kropotkin's professor at the university in St Petersburg, Karl Kessler, who was also dean of the university. Kropotkin essentially took up Kessler's side as and proved both of them empirically.

When Man has more than enough money to live he sets out to help his fellow man. This observation speaks against the assumption of constant competition, but fits well with observations of billionaires' behaviour, for instance in the USA recently, at least on the face of things. Bill Gates and Warren Beatty, like Rockefeller and Carnegie before them, have decided to give away large parts of their fortunes to charity. The problem can also be seen from a more selfish perspective: it is easy to spend a million dollars on consuming, but difficult to spend a billion dollars. There are only so many things to buy. Our needs may stay constant, but we want different things. Giving may still be an expression of pure self-interest, as when it results in greater power and an enhanced reputation.

The problem from the perspective of economic theory is that we have constructed our economic models with the individual as the reference point, acting to maximize his own self-interest at the present moment. Our models have been set up to portray economic life as a matter of seeking to maximize satisfaction of our wants, assuming that the individual knows what is best not only for himself, but indirectly also for others. All these assumptions must be questioned.

The discipline of economics has been imposing individualist assumptions, not only at the cost of thinking about society, but also at the cost of thinking for the long term. Attempts by economists like Nicholas Georgescu-Roegen to discount for future generations were rejected since it was thought - justifiably - that this would make our economic models very complicated. But perhaps even more important was that it would call into question the way we live. Georgescu-Roegen was a mathematician, so he did not object to the complexity, but it was argued that the models would be difficult to explain to a non-mathematical audience and to practicing businesspeople, and difficult to apply. His ideas about discounting for future generations were seen as a political statement which broke with existing utilitarian practices. They were seen as a threat to our modern liberal democracy built on free trade. Thus, from being the favorite student and follower of Schumpeter, he soon became an outsider, and went to teach at minor universities. But in reality, of course, the accepted margin a list or neoclassical models are just as political as the models advocated by Georgescu-Roegen. But worse, and as I will show in more detail, they are leading Man's development in the wrong direction, encouraging the consumption of future generations' resources.

Some will see this as implying a rather somber outlook on human existence, but there is another element to consider, as mentioned before: our ability to shape our own evolution. We have the ability to change our nature by altering our ideas and actions (habits). In the short run we can adopt new habits, in the long run we can expect changes through genetic modifications and mutations. That is, we are not necessarily the pre-programmed competitive machines we are sometimes made out to be, but a complex competitive organism where only one aspect is mechanical. Thus, to be considered truly human in today's world one requires a good portion of empathy and an interest in others' wellbeing. These values are already becoming part of our nature. Science has shown that we have become more human just by living closer together in cities. These findings refute the idea, held by some, that we were more social and more caring when we lived in small isolated groups. The fact that we can include empathy in our equations, however, does not mean that we must abandon evolutionary theory or our biological explanatory models. Empathy is part of nature, and can be explained as such.

Social ideas have influenced us for millennia, but they first had significant impact on our lives during the period we call the Enlightenment, in the eighteenth century, through the writings of philosophers such as Voltaire, Montesquieu, Rousseau, Hume, Kant, and Schiller. To ignore the values bequeathed to us by these men and others would mean to close our eyes to human evolution. We should not allow ourselves to be reduced to mere animals, not even when we get bored with the entire project of civilization (as sometimes seems to happen) and decide to inflict massive destruction on our own kind. Afterwards we wake up full of remorse.

This, then, must be the full perspective of any introduction to the literature of competitive advantage, if we are to address the interests and concern of all mankind. The biological perspective is important not only because it gives us scientific data (since we indisputably are a part of evolution), but also because it helps us to realize our limitations. When evolutionary theory was abandoned at the turn of the last century (economics) and again at the end of the Second World War (political science), we swapped realism for elegant models and politically-correct opinions about the world, which have merely ended by making our studies less useful and putting our species in greater danger. Instead we need more realistic models that can incorporate the idea of change.

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