by From Peter Radford “Mathematics is the art of the perfect. Physics is the art of the optimal. Biology, because of evolution, is the art of the satisfactory”. That’s Sydney Brenner speaking. He should know a thing or two. He won a Nobel Prize. It’s a shame, is it not? Economies are always changing. Not just in terms of innovation and all the normal things we think of as change, but also in more simple terms: in the people making up an economy change. They are born and they die. And they change their minds along the way. Whether you think that evolution is the best description of all that change, you cannot deny the existence of change. Indeed we applaud change. It is the very essence of improvement. It is the heart and soul of all the Great Enrichment that has bestowed our
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from Peter Radford
“Mathematics is the art of the perfect. Physics is the art of the optimal. Biology, because of evolution, is the art of the satisfactory”.
That’s Sydney Brenner speaking. He should know a thing or two. He won a Nobel Prize.
It’s a shame, is it not? Economies are always changing. Not just in terms of innovation and all the normal things we think of as change, but also in more simple terms: in the people making up an economy change. They are born and they die. And they change their minds along the way. Whether you think that evolution is the best description of all that change, you cannot deny the existence of change. Indeed we applaud change. It is the very essence of improvement. It is the heart and soul of all the Great Enrichment that has bestowed our current prosperity upon us.
And yet.
And yet economists prefer to imitate physics and not biology. They pursue the mythical optimal instead of studying the satisfactory. And, as a result, they have failed to understand much of real economies.
Apparently no amount off mockery, cajoling, or elegant persuasion can shift economics from its obsession with things that don’t exist. No matter how many times we observe the nonsense of equilibrium, or maximization, or that mythical optimal, economists set off in hapless pursuit once again.
In what must be one of the greatest examples of intellectual misdirection economists urge each other on in developing ever more refined examples of the non-existent. Only to end up with ever less relevance. The path-dependence is absurdly entrenched and equally difficult to ignore. No, the sun does not rotate around the earth. Sorry. It just doesn’t.
And economies are never in equilibrium. They just aren’t.
They are changing. All the time.
And rebranding something as ‘dynamic’ does not alter the fundamental error. It just adds another circle to the already overburdened set of circles that attempt to explain how the sun rotates around the earth.
How is it that a bunch of such clever people can stay so ignorant so stubbornly and for so long?
One the one hand they describe the amazing properties of equilibrium, and on the other they try to describe the helter-skelter turmoil of growth. The two don’t fit together. One, to borrow Brenner’s words, is a search for an optimal. The other is merely satisfactory. They are incompatible.
Which is why economists have failed so lamentably and for so long to explain growth from within their core method — the method itself defies the possibility of sufficient change.
This failure has become a major obstacle to progress. The financial and business press is full of articles bemoaning the current apparent slowdown in growth rates around the world. That slowdown needs both explanation and remedy we are told. It would be great if economists could wade in with a coherent and successful theory of how growth began and how it might continue. I stress coherent. The occasional heuristic or ’educated’ opinion is insufficient.
It isn’t just me.
Here’s a few paragraphs from David Susskind’s article in the Financial Times a month or so ago — he makes a similar statement in his recent book “Growth: A History and A Reckoning”:
Yet despite all that intellectual firepower, we still lack definitive answers to the question of what causes growth. “The subject has proved elusive”, wrote the economist Elhanan Helpman in 2004, “and many mysteries remain.”
There is an old-fashioned view of productive activity that pictures the economy as purely a material thing. From this perspective, growth is driven by building impressive things that we can all see and touch — faster trains, wider roads, more houses.
However, the little we do know suggests that it does not actually come from the world of tangible things, but rather from the world of intangible ideas; not from guzzling up ever more finite resources — land, people, machines, and so on — but from discovering new ideas that make ever more productive use of those resources. Or, more simply, sustained economic growth comes from relentless technological progress.
He gets straight to the heart of the matter.
Economists, most anyway, will heartily endorse the notion that technological progress is important. Our more argumentative historians will argue endlessly over what came before the beginning of that ‘relentless technological progress’ — was it a cultural change? A scientific revolution? Something to do with religion? The possibilities to split hairs are endless and a lot of fun.
But technology seems to be important,.
So where is it in all those iconic growth models?
And the two words ‘relentless’ and ‘progress’ both speak to disequilibrium. They speak to an economy that appears to have more in common with an evolutionary perspective rather than an optimizing perspective. How can we locate an optimum in something that is always changing? How do we have any idea of its potential to settle in an equilibrium, if it isn’t ever static?
There’s no point in repeating all that. It is well rehearsed stuff. Economists prefer to bury their collective heads in the sand and carry on as if no one has noticed their futility.
And, you all know my favorite criticism.
For a discipline that so prides itself on rigor and elegance, the confused jumbles that are ‘labor’ or ‘capital’ are beyond embarrassing. No one know what they are precisely. So embedding them in all that rigor and elegance merely invites the inevitable failure. It invites the production of a measure of our ignorance.
Economies are built upon the evolution of useful knowledge and the application of energy to the information we have acquired along the way. The combination of information and energy with the physical resources surrounding us it what produces economic activity. Yes, ‘knowledge’ is also a vague term. But less vague than ‘labor’ or ‘capital’ both of which stretch across too far a distance and get conflated at times. Besides, viewing growth as the steady acquisition and application of information is, however difficult an idea, a more accurate starting point.
Moreover, learning cannot be described as optimal. It simply is. We are never quite sure whether it is the ‘best’. We can never know that. But we can examine and deploy its usefulness. We can solve problems.
Karl Popper once said that ‘All life is problem solving’ and that, ultimately, is all we are trying to do when we engage in economic activity. Solving problems. It is not a search for the perfect. It is not a search for the optimal. It is a search for the useful. Brenner would call it the search for the satisfactory.
He knew a thing or two.