evolutionaryeconomics

We should not leave the general subject of the evolutionary perspective without a brief glance at the movement of thought in the late nineteenth and early twentieth centuries that went by the name of "Social Darwinism."

This was indeed an attempt to apply the evolutionary perspective, as it practitioners saw it, to social systems. It is particularly associated with the name of Herbert Spencer in the United Kingdom and W.G.Sumner in the United States. It unfortunately incorporated a profoundly erroneous view of the nature of evolution in its theoretical structure. It gave evolutionary theory a bad name, especially in sociology, from which it has taken a long time to recover.

Its major error was that it completely underestimated the complexity of ecological interaction which is involved in the selection process. It laid too much stress on the competitive aspects of natural selection, which it used to justify in social systems politics of unbridled competition and to deny the role of government and political structure in the social evolutionary process.

Bioevolution is characterized by constant ecological interaction, which is selection, under conditions of constant change of parameters, which is mutation. Some of the parametric change is physical, such as changes in climate, ice ages, soil erosion, mountain building, flooding tides, and so on. The basic source of change in the biological parameters, however, is genetic mutation, that is, change in the structure of the genetic instructions contained in DNA with consequent change in the nature of the individuals of species which these genetic instructions produce.

The record of the rocks suggests something more than mere change, for we also detect a directionality, a “time’s arrow.” The earliest forms of life seem to have been something like viruses and then one-celled organisms like bacteria that did not leave many durable traces, though these are beginning to be discovered.

The next great step was the development of many-celled organisms, beginning with plants. These begin to leave more traces, for even soft and perishable structures leave imprints in mud, which then harden and thus are preserved. Then come animals in enormous variety, invertebrates, insects with exoskeletons, then the vertebrates with internal skeletons, and so on.

We seem to be able to trace several directionalities here. One is an increase in the size of the individual organism from the minute viruses to the blue whale, which seems to be the largest living thing that ever existed. This increase in size is the result of an increase in certain kinds of complexity.

Complexity is a difficult concept to reduce to any kind of linear scale, yet we have little doubt that the human being is more complex than a virus or the amoeba. An element of this complexity is the development of what might be called control or cybernetics; the development of, for instance, improved perceptual apparatus, from the slightly light-sensitive skin to the eye, from a vague sensitivity to air waves to the ear.

We see control developing also in warm-bloodedness and with the development of a large number of cybernetic systems within the organism which sustain the stable internal environment in the face of changing external environments. Pleasure and pain make up another aspect of control, for this leads into behavior, which sustains the internal environment of the organism and improves eating, drinking, breathing, and avoiding predators.

The invention of sex, which comes fairly early, is certainly part of the increasing complexity. This leads to a speeding up of genetic change because in sexual reproduction individuals share the genes of both parents; this leads to larger and more complex gene pools in the species, greater variations in individual organisms, more rapid spread of favorable mutations through the species, an increased variability in behavior patters among species because of the ever-present problem of getting the males and females together.

I must confess I am still a little puzzled as to why sex turned out to be such a good idea, as against asexual reproduction, but the answer is presumably that it permitted an enormous increase in the complexity of the organism. It would certainly be hard to see how asexual reproduction could work beyond the level of the cell, or at least the worm. It is certainly hard to imagine the human being dividing into two halves, and then each half growing into a complete person.

The last “time’s arrow” in evolution is the development of awareness, consciousness, and intelligence. It seems almost impossible to pinpoint the moment at which this emerges, as it does so imperceptibly out of control and out of the pain and pleasure elements in control.

Wordsworth may just have been a romantic poet when he wrote: “and ‘tis my faith that every flower enjoys the air it breathes.” But the only evidence for the existence of pain in other organisms and in ourselves is the observation of behavior which is similar to our own when we feel pain, as no one has ever felt the pain of another directly. The same presumably goes for pleasure.

When an amoeba rejects a stone and accepts food or a sunflower turns its face toward the sun as it moves across the sky, we seem to run into a phenomenon of preference, thou

There is nothing impossible about an organism that could feel pain but could not express it. Boiling a carrot alive certainly produces less empathy in us than boiling a lobster, and mush less than boiling another person, because of differences in expressiveness.

Two empirical processes tend to confirm our image of the pattern of evolution. One is the importance of negative evidence. We have never found the skeleton of a mammal in the Cambrian rocks, or the remains of an automobile in any human deposit of more than a hundred years ago.

Negative evidence is always theoretically a little insecure, and if we found the remains of a spaceship and an extraterrestrial being in some part of the world entombed in ancient mud, it would radically change our image of the past. Still, until it is contradicted, negative evidence has to be taken very seriously. And the negative evidence for the evolutionary arrow is very strong: in fact, up to now, indubitable.

A second empirical clue is the parallel between the records and durable deposits which are made by existing systems and the durable deposits of the past. The fact that oysters exist in the present means that when we find an old oyster shell we have a very strong suspicion that it was an oyster that produced it. If we discovered a planet on which life was extinct but had left a fossil record, we would find this record much harder to interpret than the one we find on our own planet.

The question of what it is in the system of evolution which gives us a directionality or a “time’s arrow” in these various dimensions is a difficult question and by no means fully answered. Why, for instance, did the process of mutation and selection in biological organisms not produce a genetic equilibrium long ago in which all mutations were adverse?

There may well have been times in the evolutionary process when biological change was very slow and something like a genetic equilibrium seems almost to have been reached. A very interesting question here is the role of catastrophe in the process of evolution. Certainly some kind of catastrophe is indicated when one geological era gives place to the next. There are frequently extinctions of large species and then a sudden burst of evolutionary development.

An important concept here is that of the “empty niche” - that is, a species that would have a positive population in an ecosystem if it existed. If an empty niche is filled, of course, whether by mutation or by migration, this changes all the other niches in the system, expanding some and contracting others, with perhaps some odd populations going to zero and becoming extinct. It is clear, for instance, that presettlement Mauritius had empty niches for pigs and humans, and that once they arrived, the niche of the dodo shrank to zero.

The directionality of the evolutionary process can be explained, in part at any rate, by the hypothesis that there are more likely to be empty niches at the “top” – that is, for species of greater complexity, control, or consciousness, than there are at the bottom, where the niches for the simpler species are likely already to have been filled. Once a mutation fills an empty niche at the top, however, this may create empty niches for still more complex species, as the “top” itself expands.

Once biological evolution had produced the human race, a whole new pattern set in, though very slowly at first. We can trace creations of evolutionary potential in the past, such as the development of DNA and life itself, the transition of anaerobic to aerobic organisms, transition to multicellular organisms, the development of sex, the movement from sea to land, the development of the vertebrate skeleton, and so on.

The coming of the human race is undoubtedly one of these. With this, evolution went into a new gear in terms of human artifacts, which are of three kinds. The first are “things” - material objects, from the first eolith and chipped flint, through clothing, houses, pottery, metal wares, and ships, to computers and space probes. Second, going along with these and assisting in their production, we have organizations, from the band and the tribe to the church, the corporation, the nation state, and the United Nations. Finally, these help to produce by a learning process new categories of persons and occupational specialists, from hunters and gatherers to farmers, to kings and computer programmers.

Each of these artifacts is a species, each of them has a population, each of them interacts with many others and with biological artifacts, and the physical and chemical environment. Human artifacts are as much a part of the world ecosystem as are tuberculosis bacteria and rabbits. The same principles of ecological interaction under constant change of parameters continue to apply. The same principle that there are likely to be empty niches for artifacts of greater complexity, control, and perhaps eventually consciousness, also applies.

There are, of course, important differences between societal and biological evolution. Each new phase of evolution introduces new elements into the overall system of change. Thus, the genetic information which produces biological artifacts is contained in the organisms themselves. The genetic information which produces human artifacts is contained in human beings, human organizations, and material artifacts which are different from the ones produced.

With the advent of the human race something that might almost be called “super sex” came into evolution, whereas biological evolution never got beyond two sexes. The production of human artifacts is “multiparental,” in the sense that the genetic information which organizes the production of human artifacts is contained not just in two other artifacts, but in a very large number of artifacts of great variety – human beings themselves, blue-prints, libraries, computers, and so on.

This undoubtedly is the main reason why the development of human artifacts enormously speeded up the pace of evolution, just as the development of biological sex speeded it up, simply because of the enormous increased potential not only for change and variety but also for the spread of the genetic information which organizes the production of artifacts. The “gene pool” of human artifacts is the whole sphere of human knowledge in brains, books, and computers spread over the face of the earth.

The development of human consciousness also enormously changes the process of evolution. Biological evolution proceeds on the whole by unconscious interaction and nondialectical processes. Two species, for instance, can be ecologically competitive or cooperative without either of them being the slightest degree aware of the other. There is little conscious interaction in the biosphere, except in sexual selection, in predation, and the avoidance of predation. This rises in importance with the higher animals, but it is still fairly minor in its effects.

With the human race, conscious interaction becomes of greater importance and the niches for human artifacts are determined in part by consciousness, for instance by the demand for them and by human images of the future.

Finally, we come to economics, with which this book is mainly concerned. Economic life is essentially a subset, and a fairly large one at that, of total human activity in history. We should expect it, therefore, to follow the general principles which govern the evolution of humans and human society, and we should also expect it to have some peculiarities of its own.

Economics deals with that portion of human activity, as we shall see, which deals with the production, consumption, distribution, and exchange of economic goods. To this old taxonomy, I would add storage and enjoyment of stocks of economic goods, with production and consumption being merely the additions to and the subtractions from these stocks. We can think of economic goods, therefore, as part of the general ecosystem of the world.

Any good with an existing stock clearly has a niche of some sort, although that may be very temporary. Then the ecological interaction provides a selective mechanism. In the case of economic goods, this is very powerfully affected by the attitudes of human beings toward them.

Thus, an economic good for which there is no demand will have no niche in the system. Mutation in economic goods consists of the constant invention of new ones. This has gone on from the beginning of the human race. Many of these new goods do not find a niche and do not survive; others have a niche and expand into the system, with consequent changes in all the other niches.

In the case of economic goods the ecological interaction is mediated strongly though the price system, as we shall see. It is also mediated by such things as populations of financial instruments which exhibit interest rates, profit rates, and so on. These have little or no counterpart in the biosphere. We also find phenomena like unemployment, labor markets, inflation, and so on, which, again, have no counterpart in the biosphere.

Nevertheless, we shall find the evolutionary perspective extreme illuminating in explaining the ongoing processes of economic life and its political and social environment. Economics has rested too long in an essentially Newtonian paradigm of mechanical equilibrium and mechanical dynamics.

Oddly enough, as we shall see, economics had something to do with developing the evolutionary perspective. In a very real sense, Adam Smith and Malthus were evolutionary theorists, and so was Alfred Marshall.

It was Walras and his successors who mathematicized so successfully the Newtonian system that the evolutionary perspective was lost. This little volume is intended to provide at least a prospectus for its discovery.

Evolutionary Economics is a way of looking at the great complexity of economic and social life in terms of the fundamental concepts of ecological interaction and mutation. It sees commodities, for example, as species in the changing social and economic ecosystem.

Kenneth Boulding carefully explains such evolutionary concepts as energy and entropy with respect to economics, concluding with a discussion of the prospects of an evolutionary approach for bettering human conditions. At the same time, an elegant history of economic thought is provided, as Boulding traces his ideas back to Adam Smith, Malthus, and the classical (essentially evolutionary) economists - and predicts the end of the "Newtonian" thinking of the last 100 years.

Boulding describes his dynamic model with charm, clarity, and vivid imagery that will fascinate students and professional economists alike. Evolutionary Economics will also provide provocative reading for a broad range of social theorists and socialscience historians.

One of the striking things about the human race is that it has the capacity, which is now in considerable part realized, of developing an image of the whole universe as it spreads out in space and time. It is doubtful whether even the most intelligent non-human creature on earth has developed more than an image of its immediate environment or its own life-span.

This extraordinary ability of the human race is in large measure a result of its capacity for interpreting the present structures of which it is aware as records of the past, for it is by interpreting these structures as records that we are able to build up in our minds images of the past, extending now perhaps 10 or 20 billion years.

The record of the past is, of course, very imperfect. In the first place, it is only a minute part of the past which leaves records at all. Furthermore, the record of the past is not only a very small sample but an extremely biased one, biased by durability, for only what is durable in the past survives into the present. We build up our image of the past by our interpretation of these durables: light waves, hydrogen atoms, rocks, fossils, bones, prints, impressions, chipped flints, pots, ruins of buildings, shells, middens, durable human artefacts, inscriptions, papyri and scrolls, books and cassettes.

Out of these fragments of the past that have survived we construct images in our minds of the world or even the universe as a succession of constantly changing states through time. How we do this is still a bit of a puzzle. We have, in the first place, an enormous capacity for fantasy, for imagining worlds that we have not experienced; the innumerable myths of religions, the gods of Japan and of Olympus, the adventures of the Odyssey, the world of faerie and of midsummer night's dreams, the romantic and the Gothic novel, and science fiction. Some of this we recognize as fantasy, some we believe to be the truth.

The belief that a particular image is true may just come from authority. When we are children, we believe what our parents tell us, and even when we are adults, we believe what those in authority over us tell us. The other source of the belief that something is true is evidence, and that again is puzzling, as to what evidence is convincing and what is not. Evidence is what confirms or contradicts an image of the world. In some cases, evidence is easy and unambiguous. This is frequently the case in ordinary daily life. We have an image in our mind of our friend's house; we go there, we find it has burned down, we perceive therefore our image was untrue, and we revise it accordingly.

Even in our daily life, however, evidence is ambiguous. What was it we ate that gave us a stomach ache? What did I do to my wife that made her angry? The ambiguity of evidence is what gives the detective story its interest and the law its terrifying hold over us. Were Sacco and Vanzetti guilty?

In some cases we resolve the ambiguity of evidence by experiment. This has been very important in science. It only applies, however, to systems which are stable, repeatable, and divisible, such as chemical systems, in which, for instance, all hydrogen atoms are essentially similar.

We cannot do experiments on unique events, and we cannot experiment on the past. We may probe its records experimentally, but otherwise all we can do is make records, collect durables, compare them, interpret them, and perceive inconsistencies between our image and the record.

New records are discovered; new durables emerge, like Carbon 14; lost documents are discovered, like the Dead Sea scrolls; and our image of the past changes. It is always, however, very insecure, very fragmentary, and constantly subject to change.

Under these circumstances, it seems brash to talk about an evolutionary perspective. How can we possibly know anything about the enormous complexities of the past with the extremely meager and biased evidence that we have?

Two considerations give us reason to go on being brash. One is the capacity of the human mind for perceiving not only logical necessities, the kind that are involved in mathematics, but also what might be called empirical necessities, or near necessities, images of systems and relationships which "almost have to be that way."

Many of the great laws of science are indeed truisms or near-truisms. They do not really require any empirical evidence, except perhaps in regard to the field of their application. Conservation laws are a good case in point. If there is a fixed quantity of anything, all we can do is push it around. A certain increase in one place must mean a corresponding decrease in other places.

Even the famous second law of thermodynamics, the entropy principle, has this quality of being a new truism, especially if we restate it in terms of negative entropy or potential, in which case it takes the generalized form that, if anything happens, it is because there is a potential for it happening, and after it has happened, that potential has been used up.

A fundamental principle I call frivolously the "bathtub theorem" is really an example of the entropy law in very simple form, that the increase in the quantity of anything is equal to the additions minus the subtractions. This might also be called the basic law of population, and again it is an identity.

The principle of ecological interaction is the first foundation of the evolutionary perspective. It is also in structure very close to being a truism. We define an ecosystem as a system of interacting populations of different kinds or species. Then we suppose that the additions to and subtractions from, and therefore, the rate of growth of the population of any one species depends upon, or in mathematical terms is a function of, the size of all the populations in the ecosystem, including its own.

Essential to the existence of an ecosystem is the law of eventually diminishing growth of any one population as its size increases. As the population of any species grows, its rate of growth will decline until eventually it is zero, at which point the population is said to be in equilibrium and is occupying a "niche."

Here, again, this is what might be called an empirical truism, proof or which is that if it were not so far any species, its population would expand forever until it filled a continually expanding universe.

The law of diminishing returns in economics is a special case of the empirical truism, proof of which is that if it were not so, we could grow all of the world's food in a flower pot, and everybody knows this is absurd. An empirical truism, therefore, might also be defined as a proposition which, if it were not true, would lead to absurdity.

The evolutionary perspective supposes, therefore, that at any one moment in time or space there will be an ecosystem and that with a given set of parameters this will move to an equilibrium at which the rate of growth of all populations in it is zero.

In some places this equilibrium is remarkably stable, for the parameters are stable. On the surface of the moon, for instance, the interaction of its various rocks has virtually ceased. It had changed very slowly indeed over at least 3 billion years, apart from the impact of an occasional meteorite, until the intrusion of the human race, the garbage of which may well be around for another 3 billion years.

On earth, however, the evidence suggests that ecosystems have been extremely unstable and have undergone constant and irreversible change in their parameters. This is because of the development of life and therefore of populations of species which are self-reproducing and which have constant additions and subtractions.

On the moon the population of rocks suffered neither addition nor subtraction, so they are very stable, apart from an occasional addition from outer space. With the advent of DNA, on earth, with its two extraordinary properties of self-reproduction and of organizing the growth of reproducing phenotypes, a process of extraordinary irreversible change began on earth, which is bioevolution. The principal evidence for this, of course, is fossil remains, which can be dated, at least approximately, by their position in the sequence of rocks and now, of course, to some extent by radioactive dating.

Kenneth E. Boulding, the author of Evolutionary Economics, is one of the magisterial figures in the field of social science. The recipient of thirty honorary degrees and a variety of other awards, he has served as president of six major scholarly societies and taught at universities in seven countries.

His hundreds of articles and pamphlets cover a broad range of topics, and he has written over thirty books, including the widely discussed Ecodynamics.

With his wife Elise, he was a pioneer in the field of peace and conflict research.

At the time Evolutionary Economics was published in 1981 Boulding was Distinguished Professor of Economics Emeritus at the University of Colorado, and Director the Program of Research on General Social and Economic Dynamics in the university's Institute of Behavioral Science.