darwinEvolutionary Economics Theory
The Science of Choice

garden of forking pathsThe Science of Choice ...

think opportunity costs ... the genes themselves do cost benefit analysis

Evolutionary Economics theory originated outside the orthodox neo-classical tradition, however perhaps that tradition was enriched rather than contradicted. Was neo-classical theory a special case in a much more complex reality; Complex Adaptive Systems?

Evolutionary Economics, the science of choice, survival choice ... and the co-operative institutions which have evolved to guide choices ... think opportunity costs?

How do we choose between alternatives? Apples or pears? Guns or butter? Save or consume? Buy or rent? Debt or equity? Work or play? Arts or science? Cricket or football? Cynthia or Jane? Jesus or Mohamed? Good or Bad?

Go left or go right at the fork in the path, what is best for you and for other folk in the long term?

To buy or not to buy, that is the question … and the dilemma is compounded by blind ignorance, uncertainty & risk in a world of complexity, change, conflict & scarcity ... how can we acquire 'know how' to guide decisions when Darwin suggested the future was unknowable?

Fundamental truth about all happenings  -

Xenophanes -

‘The Gods did not reveal, from the beginning, all things to us, but in the course of time through seeking we may learn & know things better. But as for certain truth no man knows it, nor shall he know it, neither of the Gods nor yet of all things that I speak. For even if by chance he were to utter The Final Truth, he would himself not know it: for all is but a woven web of guesses’

decisions were experiments in the brain, conscious or unconscious, nobody could foresee the emergent unknowable future of intended or unintended consequences and nobody knew how other folk would respond to any of your decisions ... 

Everything was contemporaneous, interconnected, interactive, interdependent & emergent in one whole shebang & caboodle.

The only way to proceed was by trial & error and remembering what worked ... not a dismal prospect?

ConsilienceWhen push came to shove these questions were so fundamental, so hugely profound, that understanding involved the many scientific disciplines of E O Wilson 'consilience'  - 

Thermodynamics (complexity, change, conflict & scarcity)

Emergent Feedback (hierarchies of evolutionary stable structures)

Non-Linear Maths (computer simulations)

Molecular Biology (neo-Darwinian synthesis copy/vary/natural selection)

Neuroscience (hierarchies of naturally selected neural networks & circuits as survival aids)

Evolutionary Psychology (self-conscious choices as flip flopping emotions of excitement & fear discovered 'know how' and memory & reason accumulated 'know how')

Economic Anthropology ('know how' accumulated across generations in institutions & cultures, it was not lost)

Game Theory (cooperative synergies) 

Biological History (evidence of gene/culture coevolution & social animal synergies) 

 ... 10 topics with ethics, law and scientific methodology thrown in a vain attempt to avoid loose ends? Evolutionary Economics becomes the science of sciences? A mighty task and our own ignorance precludes any detailed answers here ... but we do know where to find some suggestions! Start with 1,000 references listed in 'The Evolutionary Foundations of Economics', edited by Kurt Dopfer ... but remember Evolutionary Economics was an ex post explanation of the immense complexity of life - 'a garden of forking paths' - it could never be an ex ante prediction of outcomes.

Hard Work1. Thermodynamics

increasing complexity, change, conflict & scarcity

The driving force involved in all economic survival tricks and all other happenings, comes from the dissipating energy flows associated with the laws of nature which have been working their magic since at least the big bang. The expanding universe with its associated temperature gradients always increased entropy and the opportunity for hard work!

Dissipating energy flows in local open complex systems produce novel structures and some survived - those structures in turn interacted and increased complexity as energy flows intensified - history unfolded as a series of emergences ... but work was involved ... there's no free lunch.

Perhaps the most relevant example for economic decisions & the human brain was the capture of dissipating energy by photosynthesis which powered metabolism. All economic costs ultimately resulted from the loss of useful energy gradients due to the spontaneous action of the 2nd law of thermodynamics ...

NB It was the 2nd law that guaranteed change ... stuff happened ... ice melted ... iron rusted ... roofs leaked ... proteins were synthesised ... and there was something rather than nothing.

Emergence Langton2. Emergent Feedback

hierarchies of evolutionary stable structures

Physical, chemical & biological structures emerged & interacted as feedback further increased the complexity, change, conflict & scarcity, the diversity of structures some of which were stable.

On the edge of chaos energy streams could 'work' to counter the corrosive effect of the 2nd Law of Thermodynamics. Such individual 'tricks' could interact with others resulting in self organised patterns. A trick was an activity achieving an unpredictable end.

Traditional economics was unwittingly modeled by closed systems and the 1st Law of Thermodynamics which predicted non existent stable equilibriums.

Evolutionary economics based on open systems and the 2nd Law of Thermodynamics predicted emergent structures, patterns and novelty associated with dissipative systems far from equilibrium.

Interactions resulted in stochastic events which could push non-linear systems towards attractors - local niches which were stable, impossible to predict and difficult to change - characterised as - 

dynamic, changing, irreversible and history dependent

non-linear, sensitive to initial conditions and path dependent

chaotic, deterministic (cause & effect) but bounded and never repeating, unpredictable (effects became causes)

complex mixes of stocks & flows with multiple positive & negative feedback loops with different delays & timescales

Emerging structures constantly interacted & fedback and the process constructed a hierarchy with further interactions and further emergence -

laws of nature & 2nd law of thermodynamics  = maths tricks 

material & energy  = physics tricks

elements & molecules  = chemistry tricks   

metabolism & morphology  = biology tricks   

unconscious neural networks  = psychology tricks   

conscious generate & test in the imagination  = imaginative tricks

self conscious cultural learning from others  = culture tricks   

A multiplicity of hierarchical symbiotic loops of different origins from different times and places, which interacted, overlapped and repeated whenever and wherever there was energy and synergy. 

Only a very few interactions resulted in survival synergies, the vast majority resulted in useless failure, but some stable structures did emerge.

Economics was real complexity science not a description of supernatural social myth and magic.

NB no one was 'in charge' of the design from above ... an evolving whole shebang & caboodle just happened ... self consistent, self organisation emerged ... patterns, behaviour & institutions emerged ... Chris Langton drew a picture ... emergence in a local environment was the missing in neo-classical economics and difficult to get your head around

Non Linear Bifurcations3. Non-linear Mathematics

computer simulation

Evolutionary equations produced non-linear bifurcation patterns not neat solutions.

The science involved in economic survival tricks was based on non-linear mathematics.

The availability of cheap computing power from around the 1980s enabled the investigation of evolutionary equations which when iterated could result in unpredictable irreversible bifurcations and patterns; the emergence of counter intuitive order.

Traditional scientific reductionism inevitably excluded emergent concepts which simply vanished when you focused on the individual constituent interactions. Undoubtedly there was some complex chemical cause and effect for economic behaviour but it was meaningless. 

Interesting equations were of the type - the value of x at time 'n+1' = a function of x*(1-x) at time 'n' ... 'x' was multiplied by itself involving interaction, feedback and non-linearity. A nonlinear system was one whose behaviour was not simply the sum of its parts.

These equations didn't have easy solutions and the emerging tricks were only possibilities, being dependent of history and supersensitive to the initial conditions which could never be pinned down, being massively diverse and recursive. 

Overwhelmingly most physical systems were inherently non-linear ... Newton's maths couldn't describe complex, emergent, unpredictable, novel, patterns of economic activity ...

NB look at the maths ... look into the telescope ... old linear maths dominated neo-classical economics, new non-linear maths was illuminating evolutionary economics.

Richard Dawkins4. Molecular Biology

neo-Darwinian synthesis copy/vary/select - natural selection

Some structures survived & replicated when interactions resulted in survival synergies; natural selection.

The economic process was Neo-Darwinian adaptation, the differential survival of inherited variants as competing alternatives. Understanding started with biological evolution, where most work was done and where Darwin and Mendel's theories originated. However the basic copy/vary/select process could be applied quite generally, the entity being copied, the source of variation and the laws governing selection needn't be detailed to understand the process.

The focus of economics was on the evolution of 'know how', this was not some biological analogy but real emergent structures, real science. An evolutionary process took place, not one that selected genes and organisms and took millions of years, but one that occurred within each individual brain within a lifetime, replicated and mediated in social cultural environments.

'Know how' was valuable production, energy dissipation was the cost (a sort of entropy cost of producing 'know how').

The 'know how' 'trick' was survival, evolutionary tricks were random variants which proved better at surviving than their parents and the reproductive success of individual variants was seen in changing populations. Learning how to survive was relentless discovery & accumulation from trial & error experiment.

Richard Dawkins suggested that it was an awful stretcher but genes did cost/benefit analysis ... 'as if' marginal utility and opportunity costs were calculated - 

'What really happens is that the gene pool becomes filled with genes that influence bodies in such a way that they behave 'as if' they made complex, unconscious, cost/benefit calculations for survival'

Darwin offered 4 breakthroughs -

inheritance from surviving species produced stable accumulations of tricks

natural selection of random mutations produced directional change towards increasing complexity

imaginative grasp of the delusion of design

public education through scientific evidence - observation, theory, hypothesis, experimental validation & peer review ... and 'The Origin of Species' ...

NB economics was not knee jerk hysteria about predicting the unknowable future, complex design was unplanned.

NB long necked giraffes resulted from the death of the short necked variety ... design was not intention but rather, weeding out.

(level 1 - selfish genes - a few genes survived because their physics and chemistry helped survival that's why they survive!)

(level 2 - epigenetic evolution - genes were not alone in the universe, they interacted and competed for survival in an environment of nutrients and poisons, nature and nurture were the same soup!)

Myelination5. Neuroscience

hierarchies of networks & circuits of survival 'know how'

Economic 'know how' as survival synergies emerged from biological neural heuristic interactions.

Understanding the process of decision making whether unconscious or conscious, was at the heart of economics. Scientists were beginning to understand how neural networks & circuits did cost/benefit analysis which was far too complex for computers.

Darwinian processes built the brain (genes & metabolism) and in the brain the same process discoverd & accumulated tricks (memes & associations) when perceptions of the environment were associated with neural networks & circuits. A motor ability to 'wiggle' the environment meant animals could generate & test ideas and their effects both in the imagination and in reality ... and if they 'worked' they were remembered.

Layer upon layer of complexity was constructed by this trial & error feedback process of copy/vary/select and eventually, late in the evolutionary day, consciousness and self-consciousness emerged. 

 A behaviour was perceived as plausible & deliberate & rational & purposeful & intentional but plans were not what they seemed to be. They appeared 'as if' planned and performed with skill and awareness. But this was hindsight and extrapolation that deluded us into a belief about 'good judgment' and knowledge of the future.

There was no Cartesian Theatre, just physical matter, 85 billion autonomous neurons working together. A conscious plan for the future was brain chemistry. For sure choices were mediated by hard wired survival instincts, but intelligent design was nothing more than a process of trial & error, discovery & accumulation. Innovation involved generating & testing new loops, imitation involved remembering successful loops from the past.

Matt Ridley was good with words - it was nature via nurture, nurture turns on nature - as encoded genes were expressed and resulted in behaviour and such behaviour then became a part of a complex environment which fed back and had an effect on how genes were expressed and the survival chances of those genes.

Individual decision making behaviour resulted from neural networks and circuits in the brain adapting to their environment. We generated & tested and rules of thumb emerged guiding behaviour and decisions.

Economics was wary of simplistic cause & effect models and did not involve a rational, calculating, commanding & controlling economic man ... what survived was unknowable until the fat lady sang ...

NB tricks survived because they help survival that's why they survived ...

(level 3 - instinctive behaviour - biology built neural systems which generated & tested survival behaviours, like short necked giraffes, birds which didn't build nests died out!)

Brights6. Evolutionary Psychology

individual self-conscious decision making; memory, reason accumulates & flip flopping emotions discover

Layer upon layer of useful 'know how' was discovered through flip flopping diversity & accumulated through memory & learning and eventually self consciousness emerged.

Once learning networks & circuits were in place in the brain, a hierarchy of yet more new tricks became possible -

speed learning tricks - individual intentions (Maslow's hierarchy). Testing ideas in the imagination dramatically sped up the discovery & accumulation of potential individual survival tricks. 

interaction tricks - beliefs about someone else (Robin Dunbar's 'Sally Ann Test' and empathy). People were different and there was a social 'problem' because other folks wiggles could help and harm. Individual brains discovered and accumulated specialist 'know how' but useful production resulted from sharing and fairness in functional groups.  

language tricks - establishing reciprocal communication (Steven Pinker and shared attention). The penny had to drop in another brain, all you could do was sense and wiggle (generate & test) but communication involved symbolic coding and decoding. 

synergy tricks - cooperation & trust (Robert Axelrod and establishing credentials). Persuading folk you're a cooperator and not a parasite was easier with the benefit of a shared history and experience.

morality tricks - social instincts (Herbert Gintis, John Robinson, Arthur Peacocke, Bishop Spong and emotional 'social capacities' for cooperation in groups). Altruistic behaviour tended to grow in populations whenever long term synergies outweighed the 'sucker' costs. Eventually a hard wired propensity or belief emerged from deep down in the skull mediating decisions. The peahen perhaps needed more cooperative psychological propensities from her mate, rather than material excess, if more of her pea chicks were to survive.

cheat detection tricks - defensive immunities (Matt Ridley and tit for tat strategies). The propensity for cooperation in trustworthy groups and the associated benefits opened up opportunities for parasites and predators. Counter strategies co-evolved to protect benefits. Immune systems and cognitive cues identified selfish parasites & predators and altruistic groups protected themselves by confronting violence and threats.

cultural economic tricks - group enlargement (Adam Smith and specialisation & scale). Democratic communities which tolerated different lawful ideas tended to establish trust in strangers which briought more opportunities to discover synergies. Markets and companies evolved as tricks which encouraged and extended cooperative economies of scale and division of labour between more and more strangers. A local focus on discovering 'profit' resulted in the production of global survival value in excess of costs for all folks in the long term.

 All these 'tricks' - intentions, empathy, fairness, cooperation, trust and cheat detection really existed as instincts honed by aeons of evolution. As neural networks reinforced by oxytocin and dopamine could now be investigated with the techniques of neural science.

The science underpinning moral sentiments as a universal expression of biological cognitive & emotional emergent phenomena has been recently summarised by The Brights. Moral sentiments were an expression of biology, they were universal throughout the globe & not confined to self conscious folk but also apparent in infants and animals. Remember the peahen needed cooperative psychological propensities from her mate if her pea chicks were to survive.

We were ignorant of what it was we did not know even though we knew more than we could ever say ...

Economics did not involve Freudian slips but deep down in the skull survival networks & circuits mediated decisions ...

Richard Dawkins, 'The Evolution of Evolvability -

'Evolution has no foresight. But with hindsight those evolutionary changes which look as if they were planned with foresight are the ones that dominate successful forms of life. It is cumulative selection that is evolutionarily interesting for only cumulative selection has the power to build up new progress on the shoulders of earlier generations of progress and hence the power to build formidable complexity of life'.

NB an invisible hand promoted an end which was no part of intention ...

Cultural Anthropology7. Anthropology

survival 'know how' accumulated across the generations in competitive cultures

Universal human social behaviour involved the emergence of a cognitive bias, empathy as innate moral sentiments.

Technological and organisational 'know how' were evolutionary survival tricks, too vast for individual experience or perception. Individuals specialised and cooperated enabling 'know how' to accumulate in emergent social institutions.

Folk had a genetic propensity to 'use their imaginations' and innovate and imitate, and successful behavioural traits emerged from several sources -

biological history and instincts

individual innovative experiments, real and imaginary

peers and imitative experience

ancestors and cultural learning

It was cultural social learning that had become the dominant process enabling the survival of human activity systems. Cultural coherence emerged from individual interactions at the lower level but, somewhat confusingly, at the same time, the emerging coherence effected the survival chances of the individual interactions.

Economies of specialisation & scale were embodied as survival 'know how' in cultural institutions ...

NB society was not a 'thing' but a tapestry, an emergent property of lower level interactions ... we were dwarfs standing on the shoulders of giants ... most of them far away and long dead ...

(level 4 - cultural 'know how' - the brain generated ideas, imaginations and memory led to symbolic learning and communication with others, there was no discontinuity!)

Cooperative Synergies8. Game Theory

economic cooperative synergies

Universal human social behaviour involved the opportunity costs of 'tit for tat' cooperation.

Game Theory refocused economics on Adam Smith's 'moral sentiments' & trust and the cooperative synergies of specialisation & scale underpinning interactions of social animals & trade ... the myth of the dismal science of selfishness was destroyed.

Cooperation was a behavioural survival trick which exploded in all evolved economic systems.

Man was a clever animal but more important man was a social animal because synergy benefits emerged from economic interactions. Game Theory was an area of science studying economic iterations and Evolutionarily Stable Strategies through computer simulation.

Economic output was survival 'know how' from the synergies of cooperation. 

In a nutshell cooperation was profitable 'cos of synergies, it was win/win, 2+2=5.

Again the peahen needed cooperative psychological propensities with her mate, not material excess, if her pea chicks were to survive.

NB it was profitable to cooperate ... and uneconomic to beggar my neighbour ... the dice were loaded

Baldwin Effect9. Biological History

evidence of gene/culture coevolution & social animal synergies

From moral & cooperative interactions emerged science & the arts and wealth creation and the ideas of comparative advantage and total factor productivity.

Human behavioural traits were tricks that survived to become 'rules of thumb' or 'know how'.

Historical 'success' unfolded as, at each level, structures & behaviour that failed died out. Self consistent coherence emerged from a sifting process involving rewards and punishments but at the same time new experiments created new diversity.

Most experiments failed and most new evidence was likely to be wrong ... but some were fruitful, spreading patterns of behaviour whenever tests and the rigours of time found reinforcement from the environment. Such behaviours were 'path dependent' and became 'locked into' successful history and as survivors they became part of the future environment.

Evolutionary Economics explained current decision making by learning from the past and imagining the future possibilities as DNA evolved ... The Baldwin Effect -

'a pre-existing inherited variant with a survival advantage in the local environment will always increase in population frequency as alternative variants die out, this changes the environment which then inevitably feeds back and influences the survival chances of any new variant’

NB chasing profits & cutting losses ... creative destruction ... an arms race ... a man's gotta eat or be eaten ... if you don't the Japanese will ...

One Whole Shebang & Caboodle10. Complex Adaptive Systems

Universal Darwinism everything is contemporaneous, interconnected, interactive, interdependent & emergent in one whole shebang & caboodle

One whole shebang & caboodle was evolving nothing else was going on, just Darwin's process of natural selection - copy - vary - select.

One continuity not only the butterflies, rabbits and great apes in the trees but also NB the Boeing 747 in the sky!

Anthropomorphic reasoning suggested folk interpreted what was not human in terms of human characteristics.

Anthropic reasoning suggested the cookie must have crumbled that way so it was no surprise that folk only observed the survivors.  

Economics could not be separated out from the evolving multi level 'whole shebang & caboodle' of Universal Darwinism. The power of explanations was revealed by understanding economics as a integral part of complex interactive interdependent system of human behaviour which was itself part of a complex environment. At every level stable structures emerged from interactions at a lower level creating complex dissipative open systems.

Understanding ontology came from the interactive whole shebang & caboodle - energy, matter, chemistry, biology, immune systems, neural networks & circuits, instincts, language, social behaviour and culture - choices at one level were always tested against alternatives at other levels. Self consistency was guaranteed as everything effected everything else, economics was embedded in an historical trajectory of a nested set of sets -

Morality evolved (conscience), altruism was a trick which encouraged and extended social learning and economic interactions between different individuals. 

Law evolved (natural law), tort law was a trick which encouraged and extended social learning and economic interactions between groups of different strangers. 

Science evolved (rational learning), scientific methodology was a trick which encouraged and extended social learning and economic interactions between groups of different strangers where knowledge was tacit, incomplete and dispersed.

Economics evolved (synergies of specialisation & scale), evolutionary economics was a trick which encouraged and extended social learning and economic interactions between groups of different strangers where knowledge was tacit, incomplete and dispersed by a scientific explanation of behavioural choice. 

The whole shebang & caboodle emerged as neo-classical economics evolved into Evolutionary Economics as all these disciplines led to deeper understanding of decision making. As the copy/vary/select process continued to include in -


learning and


niches were constructed in the environment which fed back and influenced the survival chances of future variants. The process was not random, statistical uniformities emerged and the uniformities of evolutionary economics could be investigated. But beware, statistical uniformities in Complex Adaptive Systems weren't what they seemed to be.

Evidence mounted as science continued to confirm these evolutionary concepts as plausible ... but more to come ...

Santa Fee Institute was a leading light illuminating evolving systems and debunking deterministic intelligence - 

even if all possible long term behaviors of a system were simple, determining which one will occur for an imprecisely known initial state was essentially impossible.

Conclusion - while mathematical models could force us to quantify our understanding of the causal relations among the various components of a complex issue and while the ability to analyze these models with the tools of modern nonlinear dynamics could sharpen our perceptions of what may occur, the fundamental limitations caused by the very COMPLEX nature of, and the inherent UNCERTAINTY, these problems meant that the models must always be interpreted ... to paraphrase Dickens ... as images of what might be, rather than what must be. They could never substitute for human analysis, collective wisdom, and political will. Nonetheless, coupled with these attributes, mathematical modeling of environmental and socio-political issues could contribute vitally to the development of a new and more stable world order.

Human Activity Systems -

Human activity systems were non-linear systems, deterministic (causes & effects), but unpredictable (imprecise initial conditions).

System trajectories started to diverge slowly, some predictability was possible but then they would bifurcate. Emergent end states were impossible to predict. The long term future was unknowable.

Behaviour tended to be planned on the initial trajectory which was temporary maybe a few seconds (particle physics), or maybe millennium (cosmology).

Behaviour tended to be planned assuming the environment didn't change as a result of planned behaviour. But every action of everybody changed the environment which changed planned responses (effects were causes).

Uncertainty,  -

Everybody must plan not only to respond to the reaction of others to your plan but also to the reaction of others to your response to the reaction of others to your plan and their plan ... and more.

Attack the forces in the field or better attack the plan of the forces in the field ... etc ... etc ...

The brain couldn't cope so we just tried something and looked what happened and immediately tried something else before competitors work out what had happened!

However all was not lost there were implications -

experiment with care - awareness of the networks of interconnections and understanding the limits to knowledge about the global consequences of local actions may lead to more care & restraint?

patterns emerge - universality of nonlinear systems implied that we could hope to understand many apparently disparate systems if we observed a few simple behavioural rules of thumb resulting in patterns in one system we could use similar reasoning to interpret another system.

responsive adaptation - experiment and learn from market outcomes and planning failures

business entrepreneurs drive economic change through creative destruction

small errors in demand micro management could result in cycles of instability

competitive diversity, mergers & acquisitions and bankruptcy encourage faster adaptation; monopoly, regulation and debt & high tax stultify innovation

Economics was no longer about rational 'economic man' in stable equilibrium ... institutionalised technology was endogenous and no longer an exogenous 'black box' ...

What was passed on to the next generation was an overall package, warts and all ... a whole shebang & caboodle where systems were impossible to isolate for tidy analysis ... 

Evolved Complex Adaptive Systems were intensely economic. An insightful paper from Paul Krugman in 1996 made the link -

Economics emerges from interactions among intelligent, self-interested individuals. Suggesting folk are very smart about finding the best strategy.
Biology emerges from the interactions of self-interested individuals, genes 'trying' to propagate as many copies of themselves as possible. Suggesting folk are very myopic about finding the best strategy.
But both Economics & Biology explain behavior in terms of an equilibrium among maximizing individuals.
There is a need to simplify to make models comprehensible. Neo-classical economists made progress by adopting the useful fiction of maxima & equilibrium.
John Maynard Smith's 'Evolution and the Theory of Games' is a startling book. The field does look like, to a remarkable degree, neoclassical economics.

There were at least seven difficult questions often left out of orthodox economic teaching & discussion and if economics was the science of choices the silence was deafening -

origins (Darwin's Dangerous Idea) - universal Darwinism, the study of moral sentiments and not intelligent design.
Why was there no evidence of a successful designer? Paul Krugman's biology was intensely economic.

liberal democracy (Jeffersonian Democracy) - economic anthropology, the study of co-operating communities & synergies, 2 + 2 = 5. Synergies illuminated the debate about Plato's conundrum of mob rule & emasculation of the wise.
Why did liberal democracy involve moral sentiments and not 'winner takes all' as 51% voted out 49%?

opportunity costs (Freedom to Choose) - Theory of Mind glimpsed the impossible difficulties of working out how the alternative cookie would have crumbled ... and there were always different interpretations of how it did, in fact, crumble!
Why was the Theory of Mind so difficult?

comparative advantage (Globalisation of Trade) - Paul Krugman's difficult ideas were counterintuitive.
Why were 'natural selection' and 'comparative advantage' so difficult to grasp?

money measurement (Central Bank Balance Sheets) - business ethics, fake money & seigniorage.
Why couldn't money be 'created out of nothing'?

XS tax burden (Coin Clipping) - economic inefficiency, distortions, irrecoverable losses and gluts & queues.
Why did gluts & queues always cost money?

average tax burden (Total Factor Productivity) - survival know how and technological innovation.
Why did technological innovation solve problems and not the traditional factors of production?

EmergenceBottom Line - understanding Complex Adaptive Systems, Consilience, Universal Darwinism and Economics, The Science of Choice ...

Discovery & Accumulation - Historical Evidence - Hard Work, Honesty & Thrift ... genes themselves did cost/benefit analysis, as the Darwinian process of copy/vary/select grew 'know how' at 3% pa compound through simple rules of thumb - 'observation, maths theory, testable hypotheses, experimental validation & peer review', 'tit for tat cooperation' and 'satisficing behaviour'  

Ten topics contributed to the seminal concepts of evolutionary economics - tit for tat cooperation & justice, satisficing decision making & market coordination 'as if' a control loop.

The evolutionary process described one whole throbbing shebang & caboodle which was not simply too complex, changing, conflicting & scarce for megalomaniacs to intelligently design but impossible to design because of randomness, diversity, uncertainty, emergence and accumulation over deep time ... all imponderables of The Laws of Nature.

Nothing else was going on just Darwin's process of natural selection - copy - vary - select.

History Timeline = 13.6bya Big Bang -- 4.3bya Earth -- 2.4mya Apes -- 100,000ya talking -- 10,000ya writing -- 8 years ago Daniel Whelan!

Physics, Chemistry, Biology, Physiology. Psychology, Economics, Politics & Religion ...

Bottom up causation provided the possibility space for what happened, but did not determine the outcomes because of feedback

Top down causation provided necessary but not sufficient conditions for what happened. The outcomes depended on the environment (the context).

Causation -

1. laws of nature - initial conditions - algorithmic - cause & effect in isolated systems

2. data dependent - set points if/what/then - thermostats

3. adaptive - environment changes 

4. biology - set points themselves were naturally selected -

5. psychology - (intelligent design) - self conscious imagination prunes out errors after learning - feelings & intentions - rationality & understanding - laws & money

Outcomes changed the environment which always fed back and constrained the survival chances of lower level activity ... the whole shebang & caboodle had to be self-consistent to survive.

The Penny had to Drop

Adverse Selection = 'Would you buy a 2nd hand car from this man' = due diligence, caveat emptor

Moral Hazard = 'If it's free put me down for two please' =

Opportunity Costs = 'There's no such thing as a free lunch' =

Fatal Conceit = 'By the time you've worked it out the numbers have changed' =

Lethal Debt = 'I promise to pay the bearer' = 'I have a government guarantee'

Animal Spirits = 'flip flopping fear and excitement'

Economics = 'Science of choice, not soothsaying' = 'why did nobody warn us of the 2008 financial crisis?' 

complexity, change, conflict & scarcity = uncertainty, randomness, graininess


PS Distinguish between 'know how' and 'events'. Events were happenings, bits of information sometimes factual, sometimes opinion, but there was no meaning, no understanding, no clarity, no 'know how' ... until disputed evidence was placed into an historical context of scientific theory. 

PPS Don't despair. Education and learning were not elitist privileges ... division of labour, scale economies and empirical scientific method guaranteed that some self conscious individuals would participate and absorb cultural 'know how' ... and ensured survival tricks could not be on the secrets list ...

NB Universal Darwinism ... everything else was myth, magic & mirrors ... and the danger of a belief in magic was that the learning process was slowed down ... adaptation was slowed down ...

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