In 1873, thirteen years after the legendary confrontation over the theory of evolution between the Anglican bishop Samuel Wilberforce (“Soapy Sam”) and the evolutionary biologist Thomas Henry Huxley (“Darwin’s bulldog”), Wilberforce died in an equestrian fall. Of Wilberforce’s tragic end Huxley quipped to the physicist John Tyndall, “For once, reality and his brain came into contact, and the result was fatal.”
When it comes to such basic forces as gravity and such fundamental phenomena as falling, our intuitive sense of how the physical world works—our folk physics—is reasonably sound. Thus, even children get the humor of cartoon physics where, for example, a character runs off a cliff but does not fall until he realizes that he has left terra firma. (This phenomenon is known as Coyotes interruptus, in honor of Wile E. Coyote, who frequently fell to his doom in this manner while chasing his roadrunner nemesis.) But much of physics is counterintuitive—ranging from quantum mechanics in the micro world to global general relativity in the macro world—as is the case in many other disciplines as well, and before the rise of modern science we had only our folk intuitions to guide us.
Folk astronomy, for example, told us that the world is flat, celestial bodies revolve around the earth, and the planets are wandering gods who determine our future. Folk biology intuited an élan vital flowing through all living things, which in their functional design were believed to have been created ex nihilo by an intelligent designer. Folk psychology compelled us to search for the homunculus in the brain—the ghost in the machine—a mind somehow disconnected from the brain.
The reason folk science so often gets it wrong is that we evolved in an environment radically different from the one in which we live. We evolved in what the evolutionary biologist Richard Dawkins calls “Middle World”—a land midway between large and small, fast and slow, young and old.1 Out of literary preference, I call it Middle Land. In the Middle Land of space, our senses evolved for perceiving objects of middling size—between, say, ants and mountains. We are not equipped to perceive bacteria, molecules, and atoms on one end of the scale, and quasars, galaxies, and expanding universes on the other end. In the Middle Land of speed, our eyes are adroit at detecting objects moving at a walking or running pace, but the slow growth of mountains and the movement of continents on one end of the scale and the fast speed of light on the other end, for all intents and purposes, are imperceptible. In the Middle Land of time, we live a scant three score and ten years, far too short a time to witness evolution, continental drift, or long-term environmental changes. This is one reason why it is so difficult for so many people to accept the theory of evolution or the science of global climate change. Evolution and climate change are counterintuitive, in the sense of representing change on a scale that we are unaccustomed to dealing with in our Middle Land lives.
Causal inference in folk science—that is, determining cause-and-effect relationships in the real world—is equally untrustworthy. We correctly surmise designed objects such as stone tools to be the product of an intelligent designer, and thus naturally assume that all functional objects in nature, such as eyes, must have been similarly intelligently designed. Lacking a cogent theory of how neural activity gives rise to consciousness, we imagine mental spirits floating within our heads.
Since its inception as a science, economics has been mired in controversy over how to apply its data and theory to devise prescriptive solutions for descriptive problems. Market solutions to social problems are generally received with skepticism. Businessmen are distrusted, corporations looked at askance. There is also a well-known resentment against those who have most benefited from markets. This distrust and antipathy have their roots in folk science and in the limitations of our Middle Land intuitions about markets and the economy. Folk economics leads us to disdain excessive wealth, label usury a sin, and mistrust the invisible hand of the market. What we do not understand we often fear, and what we fear we often loathe. (As one New Yorker cartoon featuring two people in conversation reads: “I hated Bill Gates before it became so fashionable.”)
The reason for folk economics is that in the small bands of hunter-gatherers in which we evolved there were no capital markets, no economic growth, no accumulation of wealth, no excessive disparity between rich and poor, very little division of labor, very little concentration of labor (most hunter-gatherers were multitaskers), and certainly no invisible hand at work. To see where the Middle Land of folk economics evolved and why it tasks us today, the following chart presents a rough approximation of our evolution from hunter-gatherers to consumer-traders:
Time Before Present |
Group |
Number of Individuals |
100,000–10,000 years |
Bands |
10s–100s |
10,000–5,000 years |
Tribes |
100s–1000s |
5,000–3,000 years |
Chiefdoms |
1000s–10,000s |
3,000–1,000 years |
States |
10,000s–100,000s |
1,000–present |
Empires |
100,000s–1,000,000s |
In this evolutionary time line there is an economic transition from the equal distribution of economic wealth among bands to the emergence of hierarchical wealth as a token of status and power among tribes; egalitarianism falls apart as bands and tribes coalesce into chiefdoms and states. Thus, in the modern world, a tension arises between our selfish desire to gain greater wealth and our social desire for equality (or at least that no one should be inordinately unequal—either too rich or too poor). In monstrously large modern states we have both abject poverty and unimaginable wealth, which causes considerable consternation. In most nations this translates into political policy to raise the poor and lower the rich, because during our evolutionary tenure we lived in a zero-sum (win-lose) world, in which one person’s gain meant another person’s loss. This is why reciprocity and food sharing are so important to hunter-gatherer peoples, and why they evolved customs and mores to enforce the sharing of the products of communal efforts at hunting and gathering.
The Ache of eastern Paraguay, for example, are full-time nomadic hunter-gatherers whose men make extended foraging excursions. The meat from hunting kills is shared widely within the tribe, and the individual hunter who actually makes the kill does not own it. However, the anthropologists Kim Hill and Hillard Kaplan discovered that the most successful hunters enjoyed greater access to women and reproductive success in the form of more surviving offspring. Further, Hill and Kaplan noted that because participation in the hunting groups was fluid and uncertain, the best hunters were encouraged to go on expeditions via offers of such practical and social rewards as child care and higher status in the group. And the food sharing and reward system was most prevalent in game hunting, which carries a low probability of success, whereas the highly predictable and readily available products of gathering are shared only within the nuclear family.2 In like manner, the Inuit developed a system whereby they award the prized upper half of a polar bear’s skin to the hunter who made the first strike on the bear with his spear. Since the long mane hairs of the bear skin are used to line women’s boots, the hunter thus receives additional recognition at home from the recipient of his prize.3 Men like to impress women and seek status and recognition from their male peers, and this fact can be exploited to the benefit of the social group.
Today, however, we live in a nonzero world in which improved science and technology has increased productivity to the point where we can generate ever-increasing amounts of food from the same or even fewer resources. But our brains operate as if we are still living in that zero-sum Middle Land.4
The great historian Arnold Toynbee proclaimed that “The Wealth of Nations and the steam engine destroyed the old world and built a new one.” The Nobel laureate economist George J. Stigler called The Wealth of Nations “the most important substantive proposition in all of economics.”5
If Adam Smith’s theory of economics is so profound and proven, why do some people reject it, as others reject the theory of evolution? Natural selection and the invisible hand—evolution and economics—are not religious tenets that one swears allegiance to or believes in as a matter of faith; they are factual realities of the empirical world, and just as one would not say “I believe in gravity,” one should not proclaim “I believe in markets.” The resistance to accepting free market economics involves specific social and psychological factors.
Because humans evolved in small groups of a few dozen to a few hundred individuals in hunter-gatherer communities, in which everyone was either genetically related or knew one another intimately, most resources were shared, wealth accumulation was almost unheard of, and excessive greed and avarice were punished. Thus we naturally respond to a free market system in which conspicuous wealth is paraded as a sign of success with envy and anger, and the expectation is that someone or something more powerful than those greedy individuals should implement corrective action. Call it evolutionary egalitarianism. Further, throughout most of the history of civilization, economic inequalities were not the result of natural differences in drive and talent between members of a society equally free to pursue their right to prosperity; instead, a handful of chiefs, kings, nobles, and priests exploited an unfair and rigged social system to their personal benefit and at the cost of impoverishing the masses. Our natural response is to perceive such inequalities as ill-gotten gains and to demand controls from the top down to limit the amount of wealth accumulated by any one individual. Whenever anyone says “They should do something about it,” the they that is invoked is inevitably the social institution with the most power—in our case, the government.
Humans also have an amazingly low tolerance for economic ambiguity. Free markets are chaotic and uncertain, uncontrollable and unpredictable. Most of us have a low tolerance for such environments, and we have learned to expect that social institutions such as the government will bring a level of certainty to society. Earthquakes and hurricanes are called acts of God, and over the past century we have come to rely on acts of Government to make the necessary adjustments and provide comforting security, especially when we have not done so for ourselves. People who cannot afford (or who choose not to purchase) insurance against such acts of God typically expect government agencies such as the Federal Emergency Management Agency (FEMA) to rescue them when the risk reaches reality.
The economist Daniel Klein recounts a poignant example of the influence of the God of Government on economic policy, even on the policy proposals of a Nobel laureate economist. In a session of the 1995 annual meeting of the American Economic Association, Klein asked the Nobel laureate MIT economist Robert Solow why he did not favor school vouchers, which apply free market principles and mechanisms to public education. Solow responded, “It isn’t for any economic reason; all the economic reasons favor school vouchers. It is because what made me an American is the United States Army and the public school system.” Klein suggests that people resist free market economics because of their “tendency to see and love government as a binding communitarian force.” Klein calls this The People’s Romance, derived from a shared use of government services and a willingness to let the government define the boundaries of our in-groups. “Government creates common, effectively permanent institutions, such as the streets and roads, utility grids, the postal service, and the school system. In doing so, it determines and enforces the setting for an encompassing shared experience—or at least the myth of such experience.”6 Anyone who is skeptical of a government solution to an economic or social problem, then, is easily labeled as an out-group member, a rebel without a collective cause.
For most people, economic beliefs arise out of tribal, political commitments—liberals are supposed to be against an unregulated free market, conservatives for it—folk economics of another form. Yet both liberals and conservatives endorse the practice of hefty economic regulations and big government; they differ only on how much regulation should be passed and upon whom it should be imposed. Liberals want corporations regulated and government in the boardroom, whereas conservatives want a big military and government in the bedroom. Liberals call attention to fiscal abuse and budgetary malfeasance in the military, and yet as my friend and colleague David B. Schlosser, a businessman and congressional candidate from Arizona, points out, “Liberals like to think that assigning a ‘good’ task to the government (health care, for example) automatically imbues the entire process with an inherent effectiveness. They ignore the fact that the government employees making decisions for the tasks they favor are the same people whom liberals do not trust to make good decisions for themselves. Why would we want to put medicine into the hands of the same bureaucracy that pays $800 for Army wrenches and $2000 for Air Force toilet seats?”7 As the social commentator and political humorist P. J. O’Rourke quipped: “If you think health care is expensive now, wait until you see what it costs when it’s free!”
But tribal conservatives are not off the hypocritical hook, most notably in their claimed desire for less government in economic policy—except for government subsidies for big business. Ralph Nader correctly calls this “corporate welfare,” and abuses can be found in the oil industry, large swaths of agriculture and farming, and especially defense contracting. One might argue that such subsidies are good for America, but they inevitably result in distortions in the decisions that consumers would normally make in the absence of such interventions into the economy. Conservatives also abandon free market principles and turn tribal when it comes to foreign trade, believing in the zero-sum ideology that producing a product cheaper overseas is not a gain for American consumers in the form of cheaper products, but a loss for American jobs and manufacturing.8 Under every administration of the past century—Democratic and Republican—the government has grown in size along with the taxes needed to pay for it. And nearly everyone still holds to the folk belief that in order for our economy to be healthy, it must be heavily regulated from the top down.
Yet the single most common myth found in objections to both the theory of evolution and free market economics is based on the presumption that animals and humans are inherently selfish and that the economy is like Tennyson’s memorable description of nature: “red in tooth and claw.” After the Origin of Species was published, the British philosopher Herbert Spencer immortalized natural selection in the phrase “survival of the fittest,” one of the most misleading descriptions in the history of science and one that has been embraced by social Darwinists ever since, who apply it inappropriately to racial theory, national politics, and economic doctrines. Even Darwin’s bulldog, Thomas Henry Huxley, reinforced what he called this “gladiatorial” view of life in a series of essays, describing nature as a system “whereby the strongest, the swiftest, and the cunningest live to fight another day.”9
This view of life need not have become the dominant one.10 In 1902, the Russian anarchist and social commentator Pyotr Kropotkin published his rebuttal to Spencer and Huxley in his book Mutual Aid. Calling out Spencer by phrase, for example, Kropotkin notes: “If we . . . ask Nature: ‘who are the fittest: those who are continually at war with each other, or those who support one another?’ we at once see that those animals which acquire habits of mutual aid are undoubtedly the fittest. They have more chances to survive, and they attain, in their respective classes, the highest development of intelligence and bodily organization.” In numerous trips to the wild hinterlands of Siberia, Kropotkin discovered that animal species there were highly social and cooperative in nature, an adaptation for survival that he deduced played a vital role in evolution. “In the animal world we have seen that the vast majority of species live in societies, and that they find in association the best arms for the struggle for life: understood, of course, in its wide Darwinian sense—not as a struggle for the sheer means of existence, but as a struggle against all natural conditions unfavourable to the species.” The same is true with human communities, he continued, noting the evidence of mutual aid in “savages,” “barbarians,” medieval towns, and even modern societies. “The mutual protection which is obtained in this case, the possibility of attaining old age and of accumulating experience, the higher intellectual development, and the further growth of sociable habits, secure the maintenance of the species, its extension, and its further progressive evolution. The unsociable species, on the contrary, are doomed to decay.”
Kropotkin may have been an anarchist, but he was no crackpot when it came to human nature. “There is an immense amount of warfare and extermination going on amidst various species,” he admitted, noting that “the self-assertion of the individual” is the other “current” in our nature that must be recognized. However, he added, “there is, at the same time, as much, or perhaps even more, of mutual support, mutual aid, and mutual defense. . . . Sociability is as much a law of nature as mutual struggle.”11
It is a matter of balancing these dual currents of selfishness and self-lessness, competition and cooperation, greed and generosity, mutual struggle and mutual aid. That this view of life was eclipsed by that of Spencer and Huxley probably has to do with where they were developed: the more competitive economy of the United Kingdom versus the more egalitarian economy of Russia.12 Since Adam Smith was Scottish, he has long been associated with the selfish/competitive view of life, as commentators routinely discount (or don’t even know about) his earlier work on the moral sentiments in which he argued that people are also social, empathetic, and cooperative.
Life is intricate and complex and looks intelligently designed, so our folk science intuition leads us to infer that there must be an intelligent designer. Analogously, economies are intricate and complex and look designed, so our natural inclination is to infer that we need an intelligent designer. The God of Government is thus considered the intelligent designer of our economic systems.
Yet life and economies are not intelligently designed from the top down; they arise spontaneously out of simpler systems from the bottom up. The explanation for this design may be found in the sciences of emergence and complexity theory, in which complex systems arise from simple systems. Life and economies, like language, writing, the law, civilizations, and cultures, all arise spontaneously as self-organized emergent properties from within systems themselves and without the aid of a blueprint design by a clever engineer. Neither God nor Government is needed to explain such phenomena. In their stead, natural selection and the invisible hand explain precisely how individual organisms and people, pursuing their own self-interest in their struggle to survive and make a living, generate the emergent property of complex ecologies and economies. As we shall see, ecologies and economies are Complex Adaptive Systems (CAS): systems in which individual particles, parts, or agents interact, process information, learn, and adapt their behavior to changing conditions.
An ecology is a complex adaptive system that evolved to solve the problem of how so many unrelated organisms and species in large biological communities can coexist in relative harmony. An economy is a complex adaptive system that evolved to solve the problem of how so many unrelated strangers in large cities can coexist in relative harmony. Charles Darwin and Adam Smith, each in his unique way trying to solve a specific problem, together stumbled across an elegant solution to what turns out to be a larger, overarching phenomenon: the emergence of complexity out of simplicity. The solution hinges on our evolved natures as individuals coupled to the nature of evolutionary systems and how they behave as collections of individuals acting on their evolved natures, or the evolution of complex adaptive systems.