Home > Uncategorized > Is economics becoming an evolutionary science? Veblen at the 2018 ASSA conference

Is economics becoming an evolutionary science? Veblen at the 2018 ASSA conference

In 1898 Thorstein Veblen asked ‘Why isn’t economics an evolutionary science?’. At the ASSA 2018 conference Avsar, Duroy and Scorsone mused about this. Below, the abstracts of their papers. Here, Mark Thomas about this.

Avsar’s article is, with its link to neurology, truly Veblenian in spirit. An interesting question is: it seems that the behavior of hunter-gatherers, who have little property as they can’t carry it with them, have behavior that is more economic rational than the behavior of people with a lot of property. Does the institution of property itself destroy economic rationality? And if so, how does this relate to market behavior?

Duroy’s article is about the question if selfish behavior, which sometimes is good for individuals, destroys groups on which these people depend for survival. We might call this the Trump-effect.

Scorsone might give more attention to the work of Norbert Elias, who states that changing interdependencies does not only change institutions but also people themselves.

Rojhat B. Avsar:

This paper treats the “market” as an “adaptive” institutional innovation existing alongside many other institutions. Human societies have adopted various social organizations, from reciprocity to exchange, to deal with the survival challenges. Markets may be evaluated in this vein. That said, the market system is unique in that Sapiens interact with one another (virtual strangers in most cases) in a way that is seemingly incompatible with their tribal past. Sapiens are, in fact, capable of generating institutions that are conducive to establishing and maintaining such relationships that are key to their survival. What Adam Smith called “propensity to barter” wouldn’t have come about unless Sapiens had a set of neural networks specialized in social exchange (e.g. cheater detection) enabling them to engage in effective reciprocal relationships which characterized their foraging past. In this paper, we draw on Evolutionary Psychology to articulate the origin of Sapiens’ capacity for complex social relations that make the existence of markets possible in the first place. Evolutionary Psychology provides a compelling theory of such psychological adaptations which renders it useful for investigating compatibility of markets with human nature.

Quentin Duroy:

While competition and cooperation are two collective traits of our species, the neoliberal mantra of maximization of self-interested goals in a context of individual competition is decidedly un-natural. The impact of neoliberal doctrine on social structure and relationships among individuals as social agents is wreaking havoc on many countries, institutions and individual lives through the rise and strengthening of illiberal movements and regimes all over the world. In this article I propose to contextualize the un-naturalness of neoliberal principles through a review of the recent literature on evolutionism and culture group selection. In particular I will argue that neoliberal principles (and aspects of neoclassical theory) are parasitic upon genetically and culturally-evolved pre-dispositions towards morality and deservingness. Only in cases in which individuals are perceived as groups of one could competition be an effective allocative mechanism (a phenomenon I refer to as hyper-individualism). However, in the absence of cultural learning and accumulation it is likely that ‘groups’ of hyper-individualists will falter since they will undermine the collaborative aspect of human nature.

Eric Scorsone:

Institutional economics, both old and new, have focused on two forms of analysis – institutional performance and institutional change. Relative prices (North), transaction costs (Williamson), ceremonial and instrumental values (Ayers), and technological change (Bush) have all been identified as explanatory variables of institutional change. These explanations, however, fail to consider the most fundamental cause of institution change: changes in human interdependence. According to Schmid, interdependencies are present when the possibility exists that “one person’s actions…affect the welfare of another person.” These interdependencies are the result of the unavoidable physical characteristics of goods (goods being defined as situations, conditions, and things of value). In the face of these interdependencies, institutions “are sets of ordered relationships among people that define their rights, their exposure to the rights of others, their privileges and their responsibilities [and thereby] sort out the potential interdependencies and provide order and predictability to the [transactions of] the parties.” If institutions provide the framework of rules within which economic actors deal with these interdependencies, then changes in perceived interdependencies are likely to result in collective action that produces changes in institutions. This paper will examine changes in interdependencies as the fundamental origin of institutional change and will incorporate many of the prior theories of institutional change into a comprehensive theory of institutional change.

 

  1. dmf
    • January 9, 2018 at 11:37 am

      Mirowski here seems much deeper than the above abstracts suggest. Anyone else catch his reference to Chomsky? This relates to the psychological slant on Fregeian logic which led to the Algol68 theory of types, including the ‘references’ of the Fregeian “sense and reference” logic which the American ‘C’ left out.

  2. January 10, 2018 at 9:23 am

    According to Robert Guesnerie, a market is a coordination device in which: a) the agents pursue their own interests and to this end perform economic calculations which can be considered an operation of optimization and/or maximization; b) the agents generally have divergent interests, which lead them to engage in c) transactions which resolve the conflict by defining a price. Consequently, to use Guesnerie’s words, “a market opposes buyers and sellers, and the prices which resolve this conflict are the input but also, in a sense, the outcome of the agents’ economic calculation.”

    The advantage of this definition is it stresses the essential anthropology of markets and market participants:
    • a market implies a distinct anthropology, one which assumes a calculative agent or more precisely what we might call “calculative agencies”;
    • the market implies an organization, so that one must talk of an organized market (and of the possible multiplicity of forms of organization) to consider, the variety of calculative agencies and of their distribution;
    • the market is a process in which calculative agencies oppose one another, without resorting to physical violence, to reach an acceptable compromise in the form of a contract and/or a price. Hence, the importance of the historical dimension which helps us to understand the construction of markets and the competitive arrangements in which they are stabilized, for a time and in a place;
    • This point needs to be borne in mind is that the agents enter and leave the exchange like strangers. Once the transaction has been concluded the agents are quits: they extract themselves from anonymity only momentarily, slipping back into it immediately afterwards;
    • This sudden metamorphosis is not self-evident; it is highly paradoxical. As Mitchel Abolafia points out it is not easy to make this relationship of strangeness compatible with the unavoidable fact that the agents are in touch with each other during the transaction.

    Anthropologists call this market anthropology a calculative agency. So, what is a calculative agency?

    Detailed discussion of calculative agency is impossible here. However, two features stand out.
    1. The ability to calculate is not an intrinsic property of Homo Sapiens. But neither is the competence to create and live within markets purely a culturally or socially constructed dimension of humans. It is instead both. Evolution (biological) provides some of the means for calculation, in interaction with human cultures.
    2. The general question we are forced to answer is: how can agents calculate when no stable information or shared prediction on the future exists? Rules, conventions, or cultural devices cannot direct performance completely since all entail irreducible margins of interpretation. These margins of interpretation can be removed only during interaction, negotiation, or discussion. Thus, all calculation is created via ongoing interaction, negotiation, or discussion. Of the moment agent-networks are thus the source of calculativeness.
    3. In buying-selling Homo Sapiens don’t share their cultures or “human nature.” Homo Apertus (open human) replaces Norbert’s Homo Clausus (closed being in a closed personality). Homo Apertus only considers network of direct and indirect relations surrounding it. This is accomplished via framing. Framing demarcates, regarding the network of relationships, those which are considered and those which are ignored. Framing makes markets (buying-selling) possible by leaving our relationships not relevant or necessary for buying-selling. This is not of course possible in any final or complete way. Frames overflow. If framing disentangles humans from what must be ignored in markets, then entangling endangers markets. Economists recognized this. Economists invented the notion of externality to denote all the connections, relations, and effects which agents do not consider in their calculations when entering into a market transaction. Then economists proceeded to count externalities irrelevant to economic study. Markets function only by leaving out externalities. Current economic doctrine views markets as the answer to everything, economically speaking. Noting they are dependent on externalities would be not just an embarrassment, but an attack on doctrine.

    Cultural evolution in action.

    • January 10, 2018 at 10:24 am

      Curiously, Ken does not mention the role of money in all this, but rightly emphasises the face to face nature of markets. I like to think of markets in terms of the original purpose of people coming together in markets to exchange their surplus without ‘benefit’ of money. I exchange my surplus for that of someone else, who perhaps generously gives me all I need of what is surplus to him, despite his only needing a little of mine. I appreciate the favour and we go away friends. Same happens with kindly traders in small shops today. The problem is when the surplus is not that of the agent we are confronted with, who is acting under orders as the agent of someone else who perhaps in turn is an agent of someone with a surplus of money. Then arguments about fair exchange begin to arise, with the terms of that dictated by those with a surplus of money. That pursuit of fairness leads only to dissatisfaction and emnity.

      • January 12, 2018 at 10:31 am

        Dave. One of the modes of action for Sapiens is calculation, as I’ve explained. I’ve laid out some of how this is made possible. Markets are one of the frames used for this mode of action. Markets are a vehicle to “calculate” a price acceptable to buyer and seller. Everything else is framed out, always with limited success.

        Money is part of the market frame. Money’s main contribution to markets is to provide a unit of account without which calculation would be impossible. However, the crucial role of money is elsewhere. Money is required above all–even if this point is often overlooked–to delimit the circle of actions between which equivalence can be formulated. It makes commensurable that which was not so before. For example, chemical plants create physical effects that do harm to humans. How can these effects be handled in markets? Once identified and acknowledged, such market overflowing, if it is to be framed and thus internalized within the market, must be measured. This measuring involves the establishment of a metrology, anchored in techno-scientific instruments, which enables the agents concerned to establish quantitative correspondences between a cause (e.g., the discharge of dioxin) and an injury (e.g., a probability of cancer). This correlation between a risk of death and the activity of a factory, established by means of laboratory experiments and epidemiological research, creates a link between two distinct series of events. But for this relationship (between a discharge and deaths) to become calculable by the agents, it is not enough merely to prove its existence; it must be expressed in the same units. This is where money comes in. It provides the currency, the standard, the common language which enables us to reduce disparity, to construct an equivalence and to create a translation between a few molecules of a chemical substance and human lives. Money arrives last in a process of quantification and production of figures, measurements, and correlations of all kinds. It is the final piece, the keystone in a metrological system that is already in place and for which it simply guarantees unity and coherence. Alone it can do nothing; combined with all the measurements preceding it, it enables a calculation which makes commensurable that which was not so before: grams of dioxin and a human life. Thanks to it the agents can measure the investments required to reduce the risk of death below an identified threshold. Money establishes an ultimate equivalence between the value of a human life and that of investment in pollution abatement. It also establishes the other end of this equivalence—how much profit for the chemical plant is just and legitimate, in terms of the injury vs. benefit of the plant.

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