The invitation came, rather disappointingly, by conventional mail. Still, it sounded enticing: "The Cato Institute and the Bionomics Institute invite you to Now What? Living With Perpetual Evolution, the fifth annual Bionomics Conference." Leading the list of speakers for the Nov. 13-15 conference was Gregory Benford, one of my favorite science-fiction writers. And at the top of the card was a stirring quotation from Bionomics Institute founder Michael Rothschild:
Like a deep-sea volcano bursting to the surface, spewing out vast new lands soon to be inhabited by a complex ecosystem, the Web is creating a virtual landscape that will soon be occupied by an awesome array of economic organisms. ... It's evolution at warp speed. Strap yourself in.
The Cato Institute is a libertarian think tank noted mostly for its adamant opposition to government regulation. But what on earth (or in cyberspace) is bionomics--and why is Cato (and ForbesASAP, which is a co-sponsor of the conference) promoting it?
Although you have to look at Rothschild's 1990 book, Bionomics: Economy as Ecosystem, to get the full flavor, the essential tenets of the movement are spelled out on the Bionomics Institute home page, which offers a primer called "Bionomics 101." The primer explains:
[A]ll traditional schools of economics are based on the concepts of classical physics, while bionomics is based on the principles of evolutionary biology. ... [O]rthodox economics describes the "economy as a machine." ... Instead, bionomics says that an economy is like an "evolving ecosystem." A modern market economy is like a tropical rainforest.
Sounds good, doesn't it? Bionomics has won converts not only at the Cato Institute but also among a wide variety of influential people ranging from Newt Gingrich to Clyde Prestowitz. (Fortune has described it as "a policymakers' version of The Celestine Prophecy.") And Rothschild is certainly a bright, energetic fellow. There are, however, two big weaknesses in his thinking: He doesn't know much about economics, and he doesn't know much about evolution. When I say that Rothschild doesn't know much about economics, I don't mean that conventional economics is right and his ideas are wrong--although where they differ that is generally true. I mean that his description of what conventional economics is all about bears no relation to what actual economists believe or say.
Take, for starters, his assertion that "orthodox economics describes the 'economy as a machine.' " You might presume from his use of quotation marks that this is something an actual economist said, or at least that it was the sort of thing that economists routinely say. But no economist I know thinks of the economy as being anything like a machine--or believes, as Rothschild asserts a bit later, that because the economy is like a machine, it is possible to make precise predictions. (In fact, it was economists who came up with the famed "random walk" hypothesis about stock prices, which says that they are inherently unpredictable.)
It gets better. Rothschild tells us, "I know this is hard for non-economists to believe, but orthodox economics essentially ignores technological change." That is even harder for economists to believe. In fact, I don't know how I'm going to break the news to the guy in the next office. You see, poor Bob Solow is under the impression that he got the Nobel Prize for his work on technological change, in particular for his demonstration that technology, not capital accumulation, historically has been the main driving force in economic growth. On a different subject, it's going to be a shock to environmental economists--who have spent decades arguing that one good way to control pollution is to create a market in emission permits--to learn that this is an idea unique to bionomics and totally at odds with orthodox economic thinking. And I'm not feeling too good myself: Rothschild insists that conventional economics depends on the assumption of diminishing returns and that, as a result, economists have completely ignored the possibility of increasing returns. Does this mean I have to give back that medal the American Economic Association gave me for my work on increasing returns and international trade?
W ell, all this is more or less the usual. Whenever a manifesto about economics contains a sentence that begins, "Orthodox economics assumes that ..." it almost always completes that sentence with something strange and unfamiliar. In just the last two years, I've learned that I believe that gross domestic product is the sole measure of economic welfare, that growth at more than 2.5 percent always causes inflation, and that sudden speculative attacks on currencies can't happen. I've also learned that the Nobel Memorial Prize in Economic Sciences keeps going to supply-siders--or should that be Marxists?
What is surprising, however, is that a man who proposes to replace what he imagines to be the mechanistic worldview of conventional economics with a new view based on evolutionary biology should know so little about the discipline that supposedly inspires him.