Smith, Bastiat, Darwin, Hayek, Shermer

by Don Boudreaux on January 5, 2006

in Complexity & Emergence

Tyler at Marginal Revolution mentions this fascinating list of "dangerous ideas."  Tyler does not, though, single out my favorite one; it’s by Skeptic magazine’s Michael Shermer.

Here the link (you’ll have to scroll down a bit); and here, below, is Shermer’s entire idea.

Where goods cross frontiers, armies

Where goods cross frontiers, armies won’t. Restated: where economic borders are porous between two nations, political borders become impervious to armies.                

Data from the new sciences of evolutionary economics, behavioral economics, and neuroeconomics reveals that when people are free to cooperate and trade (such as in game theory protocols) they establish trust that is reinforced through neural pathways that release such bonding       hormones as oxytocin. Thus, modern biology reveals that where people are free to cooperate and trade they are less likely to fight and kill those with whom they are cooperating and trading.

My dangerous idea is a solution to what I call the "really hard problem": how best should we live? My answer: A free society, defined as free-market
     economics and democratic politics — fiscal conservatism and social liberalism — which leads to the greatest liberty for the greatest number. Since humans are, by nature, tribal, the overall goal is to expand the concept of the tribe to include all members of the species into a global free society. Free trade between all peoples is the surest way to reach this goal.

People have a hard time accepting free market economics for the same reason they have a hard time accepting evolution: it is counterintuitive. Life looks intelligently designed, so our  natural inclination is to infer that there
  must be an intelligent designer — a God. Similarly, the economy looks designed, so our natural inclination is to infer that we need a designer — a Government. In fact, emergence and complexity theory  explains how the principles of self-organization and emergence cause complex systems to arise from simple systems without a top-down designer.

Charles Darwin’s natural selection is Adam Smith’s invisible hand. Darwin showed how complex design and ecological balance were unintended consequences of individual competition among organisms. Smith showed how national wealth and social harmony were unintended consequences of individual competition among people. Nature’s economy mirrors society’s economy. Thus, integrating evolution and economics — what I call evonomics — reveals that an old economic doctrine is supported by modern biology.

(Hat tip to Steve Davies.)

Addendum: My colleague Kevin McCabe writes to me (in an e-mail) the following after having read Shermer’s post:

Actually, the link between
oxytocin and trust is less clear.  Oxytocin seems to be more related to
social approach behaviors and less linked to response behavior.  I
think a better link is between market integration and trust.  With
increased trading opportunities why engage in mutually costly behaviors
when you can trade?  Dan [Houser] and I and Maria Paganelli are designing
experiments to test this.  Kevin.

And a well-respected psychologist friend calls Shermer’s intepretation of the oxytocin results "breathtaking" — by which I don’t think he means "amazingly brilliant"!

So while I remain quite convinced that our human natures are such that we generally flourish best when free — including economically free — those of us who aren’t professional biologists, psychologists, or neuroeconomists should remain humble in whatever use we make of these disciplines.


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