The fifth article of the concrete methodology for building social capital
SEOUL, KOREA - We need a new framework for the nature and causes of long run economic/catallactic[i] growth and development in societies. We may call this process economic/catallactic evolution, and observe that although it has been occurring for hundreds of years, it has itself seemingly evolved in the past half-century or so into a percolating global network now as a knowledge-based Catallaxy. Strictly speaking, all economies are knowledge based and always have been. But the signal truth of the matter is that knowledge is now a much more prominent explanation of the wealth of nations.
In the 1700s, the dominant explanation for the wealth of nations was the power of agricultural production to produce a surplus. Interestingly, the rather obvious fact that this was based on detailed and specific knowledge of land management, animal husbandry, crop and stock breeding, harvesting, processing and the like was mostly ignored, and instead the factor of land and other natural resources came to be identified with the locus and origin of value. The Physiocratic school adopted this explanation.
However, from the British industrial revolution onwards, it became plainly apparent that the accumulation of capital was of enormously greater significance to national wealth than either the quality of arable land or the quantity of primary production. What mattered most was transformation. This epoch was to be dubbed “capitalism” by Karl Marx in reference to the central importance of the stock of capital goods in the production of wealth.
But the nineteenth century was also an epoch of massive expansion of global trade and markets that underscored the contribution of the scale and scope of markets to the creation of value. So from the Palaeolithic to the late 1700s, the wealth of nations was secularly explained in terms of primary production from the “natural capital” of land. We may call this first epoch resourcism.
From the industrial revolution to the twentieth century, the growth of wealth was largely to be explained as capital accumulation for secondary production. We call this second epoch early capitalism.
By the twentieth century, however, we entered a phase of rationalization of technologies and markets that resulted in the emergence and global coordination of large-scale manufacturing enterprises and the drive to market control through scale and scope. This third epoch is mature capitalism, which takes us to about the 1970s.
Since then, the explanation of modern economic/catallactic growth has come to rest increasingly on knowledge and on the conditions and mechanisms that drive its growth. There are of course many precursors to this, such as for example in the development of engineering and technology in textiles, chemicals and transport.
But in our fourth epoch, which is where we are now, the growth of knowledge and the re-coordination of that knowledge systematically extends to all economic/catallactic domains. We shall call this fourth epoch the phase of enterprise or, if a synonym is sought: venture capitalism. In venture capitalism, the growth of wealth is a consequence of the origination of novel ideas and their subsequent adoption and retention by other agents through a process of market-based re-coordination. Nowadays, economic/catallactic systems evolve as knowledge grows. As because knowledge continuously grows, economic/catallactic systems continuously evolve.
However, biological evolution and economic/catallactic evolution are directly related in the sense that economic/catallactic evolution is an emergent product of biological evolution. Biological evolution began billions of years ago with the emergence of a self-replicating macromolecule (whether RNA or DNA) that, from there, unfolded the fantastic panoply of adaptations and variations that is the “branching tree of life.”
And on one of these many branches there emerged the human species, capable of symbolic communication and cultural transmission of knowledge. Thus began cultural evolution and its main driver, economic evolution. Economic evolution is therefore emergent from biological evolution in the specific sense that on the substrate of economic evolution is the human species as the carrier and originator and regenerator of all economic rules.
Our civilization depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. The extended order is probably the most complex structure in the universe – a structure in which biological organisms that are already highly complex have acquired the capacity to learn, to assimilate, parts of supra-personal traditions enabling them to adapt themselves from moment to moment into an ever-changing structure possessing an order of a still higher level of complexity.
For Darwin's answer to the sources of the order is overwhelmingly an appeal to a single singular force: natural selection. Within each species some individuals leave more surviving offspring than others, so that the inheritable traits (genes) of the reproductively successful become more numerous in the next generation. This is natural selection: the non-random differential reproduction of genes. Natural selection is the gradual natural process by which biological traits become either more or less common in a population as a function of the effect of inherited traits on the differential reproductive success of organisms interacting with their environment.
We must delineate the spontaneous sources of order, the self-organized properties of simple and complex systems which provide the inherent order evolution has to work with ab initio and always. We must understand how such self-ordered properties permit, enable, and limit the efficacy of natural selection. We must see organisms in a new light, as the balance found, the collaboration achieved, when natural selection acts to further mold order which preexists. In short, we must integrate the fact that selection is not the sole source of order in organisms.
We must understand which properties of complex living systems confer on the systems their capacities to adapt. For Darwin simply assumed that the accumulation of advantageous mutations was possible, and yet the capacity to do so is not self-evident. Some systems can hardly adapt at all. Indeed, we must investigate the possibility that selection itself achieves the kinds of organisms which can adapt successfully. Therefore, we must also wonder whether there may be characteristic features so deeply requisite for the capacity to adapt in a co-evolutionary process that their presence in organisms is itself a law-like consequence of selection operating on complex co-evolving systems.
Simple and complex systems can exhibit powerful self-organization. Such spontaneous order is available to natural selection and random drift for the further selective crafting of well-wrought designs or the stumbling fortuity of historical accident. Why do self-interested agents cooperate for their common good, or achieve the reciprocity between self-interested individuals
The method is based on an evolutionary approach: more successful strategies become more frequent in the population we know that the parallels between human communities and insect states do not reach very far. The amazing degree of cooperation found among social insects is essentially due to the strong family ties within ant hills or bee hives. The bee-hive can be viewed as a watered-down version of a multicellular organism. All the body cells of such an organism carry the same genes, but the body cells do not reproduce directly, any more than the sterile worker-bees do. The body cells collaborate to transmit copies of their genes through the germ cells, the eggs and sperm of their organism. In a bee hive, all workers are sisters and the queen is their mother. It may happen that the queen had several mates, and then the average relatedness is reduced; the theory of kin selection has its share of complex and controversial issues. But family ties go a long way to explain collaboration.
Viewing human societies as multi-cellular organisms working to one purpose is misleading. Most humans tend to reproduce themselves. Plenty of collaboration takes place between non-relatives. And while we certainly have been selected for living in groups, our actions are not as coordinated as those of liver cells, nor as hard-wired as those of social insects. Human cooperation is frequently based on individual decisions guided by personal interests Humans often collaborate with non-related partners. Cooperation among close relatives is explained by kin selection. Genes for helping offspring are obviously favoring their own transmission. Genes for helping brothers and sisters can also favor their own transmission, not through direct descendants, but indirectly, through the siblings’ descendants: indeed, close relatives are highly likely to also carry these genes.
Massively disordered systems can spontaneously "crystallize" a very high degree of order. Much of the order in organisms may be the direct result not of natural selection but of the natural order selection. The selection achieves the complex systems capable of adaptation, which achieve a "poised" state near the boundary between order and chaos, and the state optimize the complexity of tasks that the systems can perform and simultaneously optimizes evolvability.
[i] Whereas the word economy suggests that people in a community possess a common and congruent set of values and goals, catallaxy suggests that the emergent properties of a market (prices, division of labor, growth, etc.) are the outgrowths of the diverse and disparate goals of the individuals in a community.