Political Economy Evolutionary Economics From Lamarck to Darwin

Political Economy: Evolutionary Economics From Lamarck to Darwin & Back? Steve Keen

Evolution: Metaphor or reality? • Mainstream economics based on analogies: – Mechanics: equilibrium of mechanical system – 19 th century heat dynamics • Essential questions – How does the system reach equilibrium? – What are the properties of equilibrium? • Is the economy mechanical? – Clearly not • Is it ever in equilibrium? – Always changing – Changes both quantitative and qualitative in nature • Are equilibrium questions the right ones to ask? ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 2

Evolution: Metaphor or reality? • Well-accepted concept of continuous change in biology – But in economics? • Irrelevant, a more appropriate metaphor, or the reality of the economy? • Evolutionary perspective asks: – How and why do things keep changing? – What are the feedbacks between different organisms in an ecology? • Are these better questions to ask than equilibrium ones? • Will they result in – Just embellishments to mainstream economics, or – A completely different set of concepts? ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 3

Evolution: Metaphor or reality? • Adaptive change essence of biological evolution: – Individual organisms alter in different ways – More suitably adapted organisms do better – Selection over time weeds out less well adapted… • Can same be said for the economy? Perhaps… – Individual firms/agents alter in different ways – More suitably adapted firms/agents do better – Selection over time weeds out less well adapted… • Possibly some similarity, but some steps (e. g. , weeding out process) not obvious. • So analogy may be useful – But use of analogy should not be constrained by inadequate understanding of evolutionary theory… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 4

Evolution: Metaphor or reality? • Understanding of metaphor influences application – “Pop” evolution is “survival of the fittest” • Favours “law of the jungle” in social situations – Let the weak lose, the strong win – Actual evolution far more complex than this • Symbiotic relationships often important (weak help other weak to be strong) – E. g. , Bees & flowers – Cars & rubber (tyres) • Feedback between evolution and environment – not just environment selects organism, but organism affects environment • E. g. , oxygen! ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 5

Evolution: The early views • Need full appreciation of evolutionary theory/data before we consider analysing economy using evolutionary tools. – And it doesn’t start with Darwin… – Pre-Darwinian “theory” we call “Creationism” today • All creatures supposedly created by deity ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 6

Evolution: The early views • View disturbed by many empirical problems – Fossil record— why did it exist? – “Cruelty” in animal relations—spider-wasp laying eggs in spider— hard to explain from religious position • Lamarck made first systematic attempt to provide natural explanation for diversity in living organisms ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 7

Evolution: The early views ©Steve Keen 2003 • Jean Baptiste Lamarck (17441829) – Became botanist after brief military career – During French Revolution, appointed Professor of Invertebrates (insects & worms)—an area for which there was then no science • Developed classification system & noted great variety of forms • Argued for development of different forms over time— not then-accepted Genesis, but Evolution Political Economy, School of Economics & Finance, University of Western Sydney 8

Evolution: The early views • “We call species every collection of similar individuals produced by other individuals just like themselves… But we add to this definition the assumption that the individuals who make up a species never vary in their specific characteristics and that therefore the species has an absolute constancy in nature. • It is precisely this assumption that I propose to contest, because clear proofs obtained through observation establish that it is not well founded. ” • Argued that what looked like distinct species were often fine gradations from one creature to the next – Gradual change from one individual to another over time gave rise to false impression of specialisation ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 9

Evolution: The early views • “How many genera, … , that the study and the definition of these species are now almost unworkable! The species in these genera, arranged in a series and set beside each other according to an analysis of their natural affinities, display along with those which are close to them, differences so slight that they are modifications of each other and these species get confused, in some way, amongst each other, leaving almost no way of determining in some explicit way the small differences which distinguish them. ” them • “Go back up to the fish, reptiles, birds, even to mammals. You will see everywhere, apart from the gaps which still have to be filled, the modifications which link up neighbouring species … leaving hardly any places for our ingenuity to establish good distinctions. ” distinctions ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 10

Evolution: The early views • Influenced by study of simplest multi-cellular organisms (slugs, etc. ) versus more complex forms • Saw progress from simplest to more complex: – “Must I not think that nature had produced the different bodies endowed with life in succession, proceeding from the simplest to the most highly organized, since, as we go up the animal scale from the most imperfect right up to the most perfect, the organism's organic structure is developed and gradually becomes more complex in an extremely remarkable way? ” way • Natural progress from simplest forms to most complex… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 11

Evolution: The early views • Basis of development of more complex forms is use: • “there is considerable factual evidence proving that the sustained use of an organ leads to its development, development strengthens it, and even makes it grow larger, while a lack of use, use once it becomes habitual, is harmful to an organ's development, makes it deteriorate, gradually diminishes it, and finishes by making it disappear, disappear if this lack of use continues for a long time in all the individuals which appear later through reproduction From this we understand that when a change in the circumstances compels the individuals of an animal race to change their habitual behaviour, the less used organs little by little waste away, while those which are used more develop better and acquire a strength and dimensions proportional to the use which these individuals routinely make of them. ” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 12

Evolution: The early views • Two identical animals on the African plains – One tends to eat leaves on tall trees – Other tends to eat grass • Neck of former grows as a consequence of stretching… • Over generations, offspring of have longer necks, latter remain short… • Development of traits in conjunction with an environment that favours them… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 13

Evolution: The early views • “In this matter of habits, it is remarkable to observe the result in the peculiar form and height of the giraffe… We know that this animal, the largest of the mammals, lives in the interior of Africa and dwells in those places where the earth, almost always arid and without grass, requires the animal to browse on the foliage of trees and constantly to try hard to reach that foliage. As a result of this habit, maintained for a long time in all the individuals of its race, the animal's front limbs have become longer than those at the back, and its neck has grown longer to such an extent that the giraffe, without rearing up on its hind legs, lifts its head and reaches up to six metres in height…” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 14

Evolution: The early views • Basic insights are: – Variation of individuals within one “species” – Fine gradation from one “species” to the next – Environment favours some developments over others • Deduction becomes – “Species” develop by slow accumulation of acquired advantageous differences between individuals • The inheritance of acquired characteristics – Your ancestor develops some aspect of itself, neglects others – These aspects turn up in you – Process over time leads to more complex, more well adapted forms, more noticeably different to other animals… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 15

Darwin: “Natural Selection” • Charles Darwin (1809 -1882) – Abandoned medical studies for clergy – Volunteer naturalist on Beagle 1831 -36 • Galapagos studies • Malthus influence(? ) – Theory of evolution by “natural selection” selection (1859) • Also propounded at same time by Wallace ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 16

Evolution by Natural Selection… • Key concepts – Random variation within species • Most variations deleterious w. r. t. environment • Some advantageous w. r. t environment – Deleterious lower survival odds, advantageous increase survival odds – Advantageous variations dominate via reproduction – Change of species/development of new species • Initial analogy to selection by domestic breeding – Gradualism: “Natura non facit saltum”—“Nature does not make leaps” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 17

The struggle for life & natural selection • “amongst organic beings in a state of nature there is some individual variability… But the mere existence of individual variability … helps us but little in understanding how species arise in nature… All these results … follow inevitably from the struggle for life Owing to this struggle for life, any variation, variation however slight and from whatever cause proceeding, if it be in any degree profitable to an individual of any species, in its infinitely complex relations to other organic beings and to external nature, will tend to the preservation of that individual, and will generally be inherited by its offspring… offspring I have called this principle, by which each slight variation, if useful, is preserved, by the term of Natural Selection. ” Selection ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 18

The “Struggle for Existence” involves… • Competition: – “Two canine animals in a time of dearth, may be truly said to struggle with each other which shall get food and live…” • Environmental pressure: – “a plant on the edge of a desert is said to struggle for life against the drought, though more properly it should be said to be dependent on the moisture. ” • Cooperation/interdependence: – “As the missletoe is disseminated by birds, its existence depends on birds; and it may metaphorically be said to struggle with other fruitbearing plants, in order to tempt birds to devour and thus disseminate its seeds rather than those of other plants…” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 19

The “Struggle for Existence” involves… • Sex: – “This depends, not on a struggle for existence, but on a struggle between the males for possession of the females; the result is not death to the unsuccessful competitor, but few or no offspring. Sexual selection is, therefore, less rigorous than natural selection… [T]he plumage of male and female birds, in comparison with the plumage of the young, can be explained on the view of plumage having been chiefly modified by sexual selection…” • And above all, gradualism and time – Commonly accepted “age of universe” circa 1859 was biblical (5, 000 years) – Darwin “thousands of generations”… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 20

Gradualism… • “Although the belief that an organ so perfect as the eye could have been formed by natural selection, is more than enough to stagger any one; yet in the case of any organ, if we know of a long series of gradations in complexity, each good for its possessor, then, under changing conditions of life, there is no logical impossibility in the acquirement of any conceivable degree of perfection through natural selection In the cases in which we know of no intermediate or transitional states, we should be very cautious in concluding that none could have existed, for the homologies of many organs and their intermediate states show that wonderful metamorphoses in function are at least possible. For instance, a swim-bladder has apparently been converted into an air-breathing lung…” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 21

Giraffes: Darwin’s explanation • Two related slightly different animals on the African plains – One has longer neck than the other • Longer neck allows it to reach food the other cannot – Has more offspring than other animal – Offspring inherit longer neck • Over many generations, new species evolves: the giraffe… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 22

Problems: the incomplete fossil record… • Fossil record acknowledged by Darwin’s time – Very incomplete compared to now • Large gaps between – Fossils themselves – Fossils and today • How to get from “them” to “us”? • Darwin’s explanation: incomplete discoveries— intermediate forms will be found (common ancestor to horse & giraffe…) • “That our Palaeontological collections are very imperfect, is admitted by every one. ” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 23

Problems: the incomplete fossil record… • But not a dismissal of the problem: – “I cannot doubt that all the Silurian trilobites have descended from some one crustacean, which must have lived long before the Silurian age… Consequently, if my theory be true, it is indisputable that before the lowest Silurian stratum was deposited, long periods elapsed … and that during these vast, yet quite unknown, periods of time, the world swarmed with living creatures. – To the question why we do not find records of these vast primordial periods, I can give no satisfactory answer. Several of the most eminent geologists … are convinced that we see in the organic remains of the lowest Silurian stratum the dawn of life on this planet…” ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 24

Problems: mechanism of variation • How does variation arise? – Mechanism not known to Darwin (1859), but discovered contemporaneously by Mendel (1865): “genes” • Cross-pollinate two plants, one with yellow smooth seed, one with green angular • 1 st generation, yellow smooth dominates green angular • 2 nd generation • 4 yellow (3 smooth, 1 angular) • 2 green (1 smooth, 1 angular) • Binary explanation: ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 25

Genes • Characteristics (colour, texture) coded by “gene” with two states (yellow/green; smooth/wrinkled) • Both states stored in each individual – YY or GG or GY – SS or WW or SW • One (Y & S) “dominant”, other (G & W) “recessive” – “Pure” genotype (GG, YY, SS, WW) gives pure “phenotype” (Green, Yellow, Smooth, Wrinkled) – “Mixed” genotype (GY, SW) gives rise to dominant phenotype (Yellow, Smooth) • 1: 2: 1 genotype ratio gives rise to 3: 1 phenotype – 1 pure dominant, 2 hybrid (dominant characteristic visible), 1 pure recessive ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 26

The double-helix • Cell nucleus/Chromosones/DNA discovered 1800 s 1950 • Structure/mechanism of DNA uncovered by Watson & Crick (et alia) 1953: – Each “gene” consists of long chain of DNA (Deoxyribose Nucleic Acid) on chromosones stored in cell nucleus – DNA has • 4 nucleic acids thymine (T), adenine (A), cytosine (C), and guanine (G) joined in pairs as rungs on ladder – A pairs with T, C with G • 2 phosphate-sugar strands as outside of ladder – Replication occurs by splitting of ladder & ½ rung ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 27

The double-helix • Loosely speaking… – 3 bases code for 1 amino acid. (43/2=32; some redundancy) • GCT “Alanine”; CGA ”Glycine” – Many amino acids = 1 protein – Proteins determine organisms characteristics ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 28

How evolution? • Variation needed for evolution – How does variation occur with DNA replication? • Original argument: sexual cross-over + random mutation – Crossover • Genes stored on chromosomes • Chromosome reshuffling in miosis, sexual reproduction reorganises dominant/recessive genes – Mutation • Occasional errors in DNA replication: G turns up where A should be, etc. • Deadly mutations fail, advantageous mutations survive… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 29

The evolutionary orthodoxy circa 1990 • Evolution=random mutation + environmental selection • Accumulation of gradual changes over time gives rise to different species today… • “The blind watchmaker”… • But problems – Fossil record should reveal “missing links” • 150 years after Darwin, gaps still existed—large jumps in fossil record: nature does make leaps • Numerous – How did life itself begin? anomalies lead to new theories… • Can’t gradually go from inanimate to alive! ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 30

Anomalies: “Sudden” evolution • Gradualist argument implies, e. g. – First animal with legs should have no toes – Toes develop as slow mutation of single limb – But first animals with legs had 13 -15 toes! – Later animals had less toes… • Relations between genes – Not just “a gene for this, a gene for that” but • Highly sensitive relations between genes • Genes that cause other genes to fire (“homeobox” genes) – E. g. , leg involves “stump” from body… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 31

Relations between genes… – Homeobox gene mutation causes multiple branching in offspring – Species goes from toeless foot to multi-toed foot in one generation • Random selection implies organism has no “Lamarckian” ability to alter its genotype – no feedback from change in somatic (“of the body”) cells of organism (via virus, acquired immunity, etc. ) to germline “sex” cells – Weissman (1885) tested Lamarck’s “inheritance of acquired characteristics” (& Darwin’s “pangenesis”) theory by chopping off tails of newborn rats • Tail-less rats gave birth to rats with tails… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 32

Somatic to germline mutation • Orthodoxy became existence of “Weissman’s barrier”: – “Genetic encoding goes from sex cells to somatic cells, never other way round” • But… – Lamarck’s theory applied to adaptations done by organism being passed on • Giraffe stretches neck, passes on longer neck to offspring – In Weissman’s test, rats weren’t cutting off their own tails… • Modern Lamarckians (Steele et al. ) say clear evidence for somatic to germline transmission at least in immune system… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 33

Somatic to germline mutation • Antibody genes in sex cells have inherited DNA • When body invaded by virus/bacteria, antibody genes in relevant body cells (“white blood cells”: Blymphocytes) undergo accelerated DNA mutation. – Dilemma for conventional theory—how can rate of “random” mutation be accelerated by organism? • Mutation eventually results in white blood cells that can defeat invader – Mutation written into organism’s DNA • Weissman orthodoxy argues mutation would die with the body • Steele & others found sex cells of body altered to code for new, successful antibody – Acquired characteristic (inherited resistance to disease) passed on to offspring ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 34

Somatic to germline mutation • Conventional theory: evolution only occurs in sex cells – Mutations occur in all cells – Mutations in sex cells passed on to organism, but – Mutations in somatic cells not passed to sex cells • New theory argues – Some mutations in somatic cells passed on to sex cells via “retrogenes/retroviruses” – Normal cell management route is • DNA RNA Protein – Successful mutations of immune system written back into cell DNA via RNA DNA route • “Retrogenes” pass modification of somatic DNA back to germcell DNA Skip Steele quote ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 35

Somatic to germline mutation • “Charles Darwin himself … made the first tentative steps towards a model of acquired inheritance. He called it ‘Pangenesis’, and it has a remarkably modern Lamarckist flavour… there is more to the ongoing debate on the mechanism of evolution than a slavish adherence to the current neo-Darwinian view (as instanced by the uncompromising writings of Richard Dawkins and Daniel C. Dennett) that evolution proceeds only by the natural selection of chance events. ” (Steele et al. : 2) • “…alterations in genes of somatic (body) cells of an animal appear to be transmitted to the genes of the germ cells (eggs & sperm) and passed on genetically to offspring of future generations. ” (3) ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 36

The immune system & directed mutation • Immune system protects organism against disease • Non-adaptive immune systems in early organisms – New deadly disease develops; – Most of population wiped out – Individuals with pre-existing mutation that by chance gave immunity to new disease survive – Inherited “chance” immunity passed on to offspring • Adaptive immune systems in later organisms – New deadly disease develops – Each individual’s immune system tries to develop suitable antigens via accelerated DNA/RNA mutation – Successful individuals live, develop immunity for life • Write successful mutation into own DNA – Their offspring? … ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 37

The immune system & directed evolution? ? New virus Mutated immune cells Successful mutant replicated Coded on cell DNA Base immune cell type Immunity inherited by offspring… ©Steve Keen 2003 Coded onto germline DNA Captured by “endogenous retrovirus” Political Economy, School of Economics & Finance, University of Western Sydney 38

Hypermutation & quantum computing • Quantum mechanics may explain directed evolution – Occurrence of mutations: • DNA as a sequence of protons & electrons • Protons & electrons affected by “quantum uncertainty” – Can’t exactly specify position – About 1 in 50, 000 will be in “wrong” place • Cell error-correction mechanisms reduce rate to 1 in millions, but… • Mutation built into quantum mechanical nature of universe ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 39

Hypermutation & quantum computing – Accelerated mutation: • Fundamental particles can exist in “superposition” of states – “Classical” object (e. g. , coin) can be only “up” (Heads) or “down” (Tails) – Quantum object can be both “Heads” & “Tails” – Measurement forces object to resolve into either “Heads” or “Tails” state – “Quantum computer” can “take every road simultaneously to find the fastest route” – Mutation of DNA may be quantum computing… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 40

Hypermutation & quantum computing – Origin of life: • Can’t invoke natural selection to explain origin of life • Can’t gradually go from inanimate to live – Minimum self-replicating chain of amino-acid reactions 32 acids long – 20 amino acids – Odds of chance development ou. Homes or fall t of all possible amino acid chains 1/2032= 1/1041 • 1041=1015 tonnes • “Primordial soup” would need to be bigger than current mass of world’s rainforests… • Quantum computer “superposition” plus environmental measurement could result in self 41 ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney replicator

Back to economics • Evolutionary theory much richer than simple “survival of the fittest” • Use of analogy(? ) in economics also much richer: – Feedback between organism & environment • Environment selects organism • Organism alters environment • Ditto for firms/economy – Economy selects successful firms – Successful firms shape economy – Directed evolution • Organism partly directs mutation/evolution • Firms “mutate” selves/products to survive ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 42

Back to economics • Symbiosis as well as competition – “Web of life”/ “Web of commerce” • Interdependence of firms/sectors as well as raw competition • Collective behaviour as well as individual • Positive as well as negative feedbacks – “Runaway” processes needed to explain life, anomalies (peacock feathers, human brain)… – “Runaway” processes needed to explain • Success of social systems (capitalism v feudalism) • Success of individual firms/products… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 43

Back to economics • Essential concepts variation & feedback – Different rather than homogeneous products, etc. – Variation in firm size rather perfect competition vs monopoly – Feedback between firms & economy • Not just negative (“increase price decrease demand”) but positive (“increase price increase demand”) – Change the only constant: system never reaches equilibrium • Evolution not just an analogy but what is actually happening: – Adaptive change under organism-determined environment – Our modelling the analogy to actual processes… ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 44

Next week • Early evolutionary thinkers in economics: – Veblen – Schumpeter ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 45

Glossary/Appendix • Retrogenes – Normal function of cell reproduction is • DNA RNA Protein • DNA stores “program” for cell • DNA (double-stranded, very stable molecule information) copied into RNA (single-stranded, less stable molecule) – DNA more stable because of “backup” of second strand • Error on one side can be compared to correct information on other • 1 error per 100, 000— 1, 000, 000 copies • Single-strand RNA has no error checking • 1 error per 1, 000 copies • RNA read by cell mechanism (Ribosome) to produce protein (3 base pairs in RNA 1 amino acid on protein) – Retrogenes/retroviruses work in RNA DNA direction ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 46

Glossary/Appendix • Retrogenes cont’d – Virus (containing only RNA) enters cell – Virus RNA makes DNA copy of itself – DNA copy inserted into cell DNA – Cell then reproduces virus RNA • “Healthy” Cell also has RNA DNA processes (Steele Fig. 1. 2) – DNA produces RNA – RNA mutates – RNA read by cell to produce matching DNA – DNA becomes part of cell instructions – Mutation reproduced in subsequent cells ©Steve Keen 2003 Political Economy, School of Economics & Finance, University of Western Sydney 47