Okay, okay, okay… It was at the European Association for Evolutionary Political Economy in November of 1996 (which is before the blogging Krugman we all know
and love). In this talk, Krugman offers some bridges in between the two fields, finds common ground, and even suggests that we use the same methodologies to accomplish our studies. Which I think is appropriate given that the variables studied in both of our fields are not as concrete as physics but can be infinitely more complex (and thus, according to Michael Shermer, more difficult).
Here are some notes:
Krugman offers a four-part approach to economics:
- Economics is about what individuals do.
- Individuals are self-interested.
- The individuals are intelligent.
- The primary focus of these individuals is their interactions.
The primary difference between evo-bios and econs is that evo-bios don’t assume requirement number (3). Agents in evo-bios can be myopic. My own interjection here is that agents need not seem rational to the outside observer, only that they are rational insofar as their rationality is bounded.
Reading John Maynard Smith’s (not Keynes’) “Evolutionary Genetics” is probably a good start to recognizing the parallels between the fields.
The differences between evo-econs and neoclassicals is that evo-econs want to get away from maximization and equilibria. I think the latter is a recurring theme in heterodox economics, especially that of Austrian which lends some bias into my formal training. Nonetheless, I often argue that the economy is always trending towards an ever-changing equilibrium; therefore, it is always in disequilibrium. If we ever reached equilibrium, either communism has succeeded or the human race is extinct… possibly both.
Krugman points to Leslie Orgel’s Second Law: “Evolution is smarter than you are.” Maybe so, if only in that evolution is an organic process and there is no way that any one person can predict the eventual outcomes of these marginal changes over time. We can’t necessarily know a priori what is and is not efficient. Often we assume whatever outcome is reached is inherently efficient. Also, evo-bios look at evolution from a stationary perspective, and not in a dynamic shift that is presently occurring. This is not so much unlike certain models in economic growth theory.
The most useful concept in this talk is that of “Evolutionary Stable Strategies.” These are the strategies that any one agent should follow given the strategies everyone else is following. Krugman points to equilibrium, but I think more towards game theory (both have equilibria, but game theory allows for probability of repeated games).
In conclusion, Krugman offers sage advice on what econs can learn from evo-bios: “that models are metaphors, and that we should use them, not the other way around.” Many economists fully believe in their mechanisms versus acknowledging them for what they are, merely useful fictions that allow us to simplify the complexity that is human action.