Economy/Ecology

2005-05-10

In Consilience, biologist Edward O. Wilson shows that he has a firm grasp of ecological thinking but a weak grasp of economic thinking:

Economic theorists, despite the undoubted genius of many, have enjoyed few successes in predicting the economic future, and they have suffered many embarrassing failures.

Among the successes are the partial stabilizations of a few national economies. In the United States the Federal Reserve Board now has enough knowledge and legal power to regulate the flow of money and prevent -- we trust! -- the economy from spinning into catastrophic inflations and depressions. On another front, the driving force of technological innovation on growth is reasonably well understood, at least roughly and in retrospect. On yet another, capital-asset pricing models have a major influence on Wall Street.

We are better off if economists speak than if they remain silent. But the theorists cannot answer definitively most of the key macroeconomic questions that concern society, including the optimal amount of fiscal regulation, future income distribution within and between nations, optimal population growth and distribution, long-term financial security of individual citizens, the roles of soil, water, biodiversity, and other exhaustible and diminishing resources, and the strength of "externalities" such as the deteriorating global environment. The world economy is a ship speeding through uncharted waters strewn with dangerous shoals.

First, metaphors matter, and the metaphor of an economy as a nationally-owned ship implies that a national government should be steering it (perhaps we even need a world government to coordinate among all those stubbornly independent nations for the sake of the world economy). Thus Wilson's longing for magical planners with the knowledge and legal power to regulate the money supply, distribute income, set population growth, ensure financial security, husband natural resources, and save the environment.

Wilson misses the crucial point that economic order is spontaneous, organic, and emergent in much the same way that linguistic or ecological order is. Was the order inherent in the English language legislated, or did it emerge naturally? The answer is obvious (heck, even the French language emerged naturally, although the Académie Française would like to control it). Closer to home for Wilson as a biologist, consider how silly it would be to complain that ecologists have failed because they do not have the knowledge and legal power to regulate the food supply, optimally distribute flora and fauna across biospheres, set the population of individual species, and ensure the biological security of individual animals.

I agree with Wilson that we need to connect economic thinking more closely with the insights of biology and psychology. But fundamentally misunderstanding the nature of economic life does not provide a strong basis for consilience between the biological and social sciences.


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