The Economy as an Organism
The economy is not ours. Often we imagine our market economy as our creation and under our control. While yes, it is man-made, the market has grown and advanced to such an extent that human beings are now dwarfed by it. Originally, the economy was merely a way to sell and produce luxury, relatively uncommon goods; very rarely did people interact with the market out of necessity. Food, water, social interaction, etc. were still provided by the various social systems (religion, family, etc.) and safety nets that people were born into. As the market expanded, however, interaction with it became necessary to one’s health and survival. This shift created a drastically new reality: Human lives became dominated by market forces and monetary exchange. One’s life became entirely defined by how well they fit into the global economic system. In the 21st century, technological innovations improved to such an extent that the global capitalist economy may not need human beings in order for it to keep running. This marks the next step of evolution for the economy. This paper will argue for an understanding of our economy as an organism in order to make sense of the evolution of the market from minor influence of our lives to all encompassing. I will also explore the new relation that the market has with human beings, as well as the potential future that we may face.
Mechanistic metaphors have been the most popular conceptions of the market economy for most of our history. Machines work well, so long as all the parts are implemented. After all the parts are there, the machine can work by itself without fail indefinitely. Of course, any issues with the machine are undoubtedly issues with the inventor or constructor. This idea of the economy served a key political goal as well: laissez faire capitalism. After all, if the economy will follow the models without missing a hitch and make life better for everyone in the system, the maximization fo profit without any intervention is justified. Regrettably, history has not been kind to the mechanized economic model. The practical effects of exploitation, child labor, etc., as well as key blind spots such as the constant change of price, firms, goods, etc., have proven that a better metaphor is needed to understand the economy.
Economists have increasingly turned to biology to understand the economy, and this paper will argue for this view. The economy is alive. It shows signs of life in the changes in price that change by the second at the stock market, it shows signs of life in the expansion and growth of companies. Indeed, the very words of “growth” and “expansion” directly reference a dormant, organic quality to the capitalist system. To push the metaphor further, the stock prices are the blood, the changes in price are the heartbeat, and the firms are the organs. The individuals that work in the companies are the cells, the branches of the companies are the tissue. All these parts work together to commit to one goal: make sure the body survives that way it can grow and expand. Survival and growth are pursued through the profit motive and wealth maximization.
Evolutionary processes occurs to the economy, but also to the firms themselves. As the firms are in competition with one another, the ones that will survive are the ones that will decrease costs and maximize their gains as efficiently as they can. Those that fall behind are either eaten or just killed and the most efficient remains. What is important to note is that no matter which firm wins, the market will always benefit from the outcome. Efficiency creates profit, profit creates growth, and the economy can now cover more land.
It is here that we see the selfishness of the market. The only interest that the market has is to grow and propagate itself. If human beings somehow prevent the market from growing, then it will find a way to abandon or possibly destroy human beings—its creators. Usually, we imagine the market as for us. After all, it provides food, shelter, entertainment, and anything else that we would desire. The fact is, however, that the market only provides for us because the market would lose more than it would gain if it ignored us. This can be seen with the climate crisis that is inching closer and closer. Despite the damage that most everyone knows is occurring, not to mention the catastrophe that most believe will occur, the market does not stop. Another example is seen with the rise of artificial intelligence. What greater cost is there other than human workers? The market is seeking ways to grow without human beings and is starting to replace us with machines who can work much faster at a fraction of the cost.
This is the next step in the evolution of the market organism. Soon, the market—our own creation—will be able to go on without us. It will create, sell, and buy all by itself away from us. It will float away from us, while we will be stuck on Earth, attempting to survive in the world that the market destroyed.
Annotated Bibliography
Barradas, G. (1936). The economic organism. Hooper printing company,.
Barradas focuses on what he calls the economic organism, by which he means firms and corporations. The objective of the organisms life is to produce wealth at the lowest cost that it can. The organism that will win is the one that will succeed at the expense of all other market and non-market organisms. This is the main reason why there is regulation.
Barradas says that the market organism has three organs: the market, stock, and enterprising organ, each with its own functioning.
My claim is that the economy itself is an organism, however the idea of firms being organisms is still useful. After all, the economy is the collection of all economic agents and actions, just like the human body is the collection of all cells, tissues, organs, and organ systems.
Dawkins, R. (2016). The Selfish Gene. Oxford University Press. /z-wcorg/.
Dawkins puts organic bodies and their genes in an entirely new light. The genes of an organism are essentially immortal--there has been relatively little variation in the human genome since Homo Sapiens took the stage. What kept the genes “alive” was the protective, efficient shell that we call our bodies.
In this view, our bodies are not the center for survival and reproduction. Our bodies are just sleeves that our genes inhabit. In this way, our genes are selfish. They don’t care about the host body. In this way, our genes are selfish.
The market system we have is selfish like our genes. We are the tools that the market uses to propagate itself.
Hobbes, T. (2018). Leviathan. Retrieved from
In Chapter 24, Hobbes gives the metaphor of money as the blood of the leviathan. This blood circulates around the body through trade and exchanges. Like the human body, this blood moves from and to the heart which for the leviathan is the capital city.
Hobbes’ metaphor shows that the vitality of the market was apparent hundreds of years ago. The organism metaphor is easier to grasp due to the stock counters, but Hobbes could see it to much earlier.
Also shows that human beings in the leviathan are there for the leviathan and his market, not the other way around.
Hodgson, G. (1993). The economy as an organism—Not a machine. Futures, 25(4),
Hodgson explores how the English language is filled with biological metaphors when talking about money, markets, and businesses.
The economy gets “sick” or “healthy”. Businesses go through “life cycles” or “birth”, “growth”, “health”, “decline”, and “death”.
We also use language of machines and warfare when talking about the economy.
Hodgson, G. M. (1991). Economic Evolution: Intervention Contra Pangloss. Journal of
Hodgson goes over the use of a darwinistic, evolutionary framework that has actually been used to understand social science for the past 200 years. From Thomas Malthus to Milton Friedman, natural selection was used to understand the survival of companies and corporations in an economy. The application of evolution to the economy was historically used to defend laissez faire economic systems, with faith that the fittest or more efficient would survive.
Metcalfe, J. (1992). Variety, Structure and Change: An evolutionary perspective on the
compétitive process. Revue d’économie Industrielle, 59(1), 46–61. https://doi.org/10.3406/rei.1992.1402
Metcalfe explores the evolutionary approach to economic behavior. This evolution occurs through the diversity that is found in economic behavior. The paper explains that each firm strives for advantages in the market, and these advantages are reflected on their share of the market. To extend the metaphor, this market share is the food, water, and shelter of the firm; it determines the firm's survival.
Later the paper explores technical models and equations that help determine the survival or death of a firm.
Metcalfe, S. (2014). Capitalism and evolution. Journal of Evolutionary Economics, 24(1),
Metcalfe’s main claim in this paper is that capitalist economies evolve the way that they do because of the curiosity that individuals inherently have, as well as the increases in knowledge that occurs in the context of the rules and institutions that are set in the economic system. The change that occurs is a selection process of the firms that are most efficient.
Metcalfe also makes the interesting point that fitness is not an intrinsic property found in one particular firm. Rather it emerges through the interaction and competition of multiple firms.
Popescu, C., & Burghelea, C. (2010). The Health of the Economy as a Living Organism.
Theoretical & Applied Economics, 17(2), 79–88. Retrieved from bth.
Popescu and Burghelea describe the economy as a living whole that undergoes constant change and evolution.
They also explain that the economy, as well as all human institutions, communities, organizations, families, etc. share an element of life by virtue of the fact that they are man made. They are embedded with the same things that make human beings alive (reactions, desires, movements, etc.), and therefore go through similar processes.
The paper also says that if we were to really understand the economy as an interconnected organism, we would contextualize all our calculations of costs and benefits to fit the rest of our systems rather than just our monetary ones.
In this way, seeing the economy as an organism may actually curb its “selfishness”.
Sloan Wilson, D. (2015). The Science is Clear. The Economy Is an
Organism—Evonomics. Retrieved October 2, 2019, from Evonomics website: https://evonomics.com/the-science-is-clear-economy-is-an-organism/
Wilson states outright that the economy is an organism. He points out that almost any definition of organism that you can give, the economy fulfills it. In the article, he points out historical examples of biological conceptions of human societies such as Christians referring to the church as the Body of Christ.
He also points out several linguistic connections between biology and economy. The word “corporation” is derived from the latin word “corpus” which means body. We also say that the market and companies “adapt” and “self-organize” which are clear connections to natural selection, a biological phenomenon.
Slobodian, Q. (2015). How to see the world economy: Statistics, maps, and
Schumpeter’s camera in the first age of globalization. Journal of Global History, 10(2), 307–332. https://doi.org/10.1017/S174002281500008X
Slobodian explains the idea of the “world economic organism” which was a popular way for economists to refer to the new globalized economy in the late 1880s. This was talked about as a new “adaptation” of the economy and also considered to be the “highest” organism. They believed that the organism was interested in destroying all nations and to absorb them.
Austrian economist Carl Menger used organic metaphors to describe the economy as well.
This 20-Second Video Summarizes 35 Years of the World’s Economy. (n.d.). Retrieved
October 2, 2019, from https://howmuch.net/articles/world-economy-as-a-living-organism
This quite uncanny video shows an abstract time-lapse of the world’s economy starting from the year 1980 to 2015. The economy is represented as a circle that contains all the world's countries. As time goes on, the countries decrease and increase as time passes.
Of course, the United States dominates the majority of the timeline, however after 2000, China blooms in size, almost surpassing the US in size by 2015.
The economy looks like a cell and inside are all the organelles.
Thomas, B. (1991). Alfred Marshall on economic biology. Review of Political Economy,
Thomas writes about the famous 19th century economist Alfred Marshall and how he often compared the economy to organic processes and considered its parts to be biological. This shows that biological conceptions of the market were around for a long time and that there were many technical considerations trying to apply biological-type theories to economics.
Marshall also believed that economic growth was almost exactly a biological phenomenon.
There is also an attack on the mechanistic view of the economy in that it does not allow for the constant change that is seen in the system.
Warburton, C. (1927). The Social Organism. The Southwestern Political and Social
Science Quarterly, 8(2), 169–178. Retrieved from JSTOR.
Warburton gives a definition of organism that would be very useful for my paper: “An organization based on division of labor and the grouping of similar functional units into organs and systems”. The paper is about human societies and how they are organisms, but an economy fits perfectly into that definition as well.
Our economy is fundamentally based on the division of labor! Also like a human body, it is made up of smaller units that make up one cohesive whole.
Witt, U. (1999). Bioeconomics as economics from a Darwinian perspective. Journal of
Bioeconomics, 1(1), 19–34. Retrieved from ProQuest Central; SciTech Premium Collection. (196674349)
Witt explains bioeconomics, a relatively new school of economics that views the market in the lens of biology. It is a very general approach, mainly focusing on evolutionary models to understand the life and death of companies.
What’s key is that change is emphasized in the models. There is “incessant innovativeness” which is not accounted for in other models.
Comments
Post a Comment