The Competitiveness of Nations in a Global Knowledge-Based Economy

Enframing the World I:

Design for a Philosophy of Econology

Harry Hillman Chartrand

Presented to the 5th Annual

Economics Research Symposium

University of Saskatchewan, October 22, 2005


1.0 Introduction                                                                       

2.0 Design 

3.0 Science

4.0 Philosophy

5.0 Econology

a) Origins

b) Stuart Kauffman’s Persistently Innovative Econosphere

i - Autonomous Agents

ii - Coevolution

iii - Adjacent Possible

iv - Comparative Advantage

v - Other Ideological Commensurates

6.0 Conclusions

7.0 References


Due to the premature demise of the first ‘economistes’, the Physiocrats, the biological metaphor has never successfully been implanted in economics.  Instead, the discipline moved towards the mechanics of manufacturing cum Adam Smith.  Any hope the metaphor would take root with the Darwinian Revolution of the mid-19th century was dimmed by the competitive use of teleology in Marxist economics and the coincidental Marginalist Revolution that successfully imported Newtonian calculus of mechanics into market economics.  And while the American Institutionalist School struggled from the end of the 19th to the middle of the 20th century to inculcate the biological metaphor, it too failed.  Arguably, it was cut off in a Cold War suspicious of all ‘fellow travelers’.  Reaping some ideological results of the recent Genomics Revolution, and the maturation of biological science in general, it is now possible to design a philosophy of econology, i.e., an economics rooted in biology, not mechanics.  To do so I conclude with a narrative drawing on the work of Marjorie Grene in the philosophy of biology, Martin Heidegger in the philosophy of technology, Stuart Kauffman in molecular biology/chemistry and Michael Polanyi in the philosophy of science.


1.0 Introduction                                                                                                   

1.01         I begin with the first word of my title ‘enframing’ which is the essence of technology according to Martin Heidegger, father of post-Marxian philosophy of technology (1955.    Humanity enframes and thereby enables its environment making matter and energy ready at hand as a standing reserve to serve human purpose.  This is the technological imperative.  It is also, as will be seen, a biological imperative of our species.  And, it is, of course, the “state of technical knowledge” or technology that defines the production function of a firm or Nation-State (Samuelson 1961, 570).

1.02         The third word of the title, ‘world’, has three dictionary meanings as: “I. Human existence; a period of this… II. The earth or a region of it; the universe or a part of it… [and,]… III. The inhabitants of the earth, or a section of them” (OED, world, n).  For my purposes, however, I will define the world as composed of the three spheres of theoretical biology.  These are: (i) the geosphere, the world of physics and mechanics; (ii) the biosphere, the world of biology and life; and, (iii) the noösphere, the world of human thought and ideology.  Ideology is like technology but on a higher plane.  It enframes and enables us but instead of matter and energy it enframes human thought – scientific, religious, economic, political, et al.  It makes ready at hand pathways of communication between minds.  Such pathways include, of course, Market and Marxist economics and their Cold War that divided and threatened the world with thermonuclear winter for half a century.  Keynes was right when, concluding the General Theory, he wrote: “the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.  Indeed the world is ruled by little else” (Keynes 1936, 383).

1.03         ‘Design’, the fourth word of my title, brings me back to Heidegger and his argument that the essence of the contemporary world is objectivity resulting from the triumph of ‘representation’ in the arts since the Renaissance and in the sciences since Descartes in the 17th century.  In effect, it is our ability to model or imitate nature, especially but not exclusively using mathematics or in the case of the visual arts of the Renaissance, geometry, that brings certainty and perspective.  Through representation everything in and of the world is brought before us in the perspective of subject/object.  Such representation is, of course, the product of Design.  The result, according to Heidegger, is that we live in “The Age of the World Picture” (Heidegger 1938).  This iconic conclusion is also found in the natural and engineering sciences where confirmation through picture or graph literally means ‘seeing is believing’ constituting what Idhe calls “instrumental realism” (Idhe 1991).  Among the humanities & social sciences, however, it is only in economics that the language of graphs has become a most powerful tool of thought, e.g., the Marshallian scissors of supply and demand.

1.04         The seventh word, ‘philosophy’, means love of knowledge or “knowledge of things and their causes, whether theoretical or practical” (OED, philosophy, n, 1a).  It is primarily with respect to ‘causes’ that I focus in introduction.  To Aristotle, there were four causes: material, efficient, formal and final.  Arguably, the geosphere is governed by material and efficient causes, i.e., when-then or billiard-ball causality.  In the biosphere, however, formal and final causes or ‘causality by purpose’ rules while in the noösphere all four are at play.  Conventional economics can be expressed in terms of these four, i.e., it is primarily a creature of the noösphere. Thus it can be argued that economic inputs are the material cause out of which a thing is made.  Economic outputs are the formal cause, i.e., the form or shape of the final thing designed to satisfy a consumer need.  The efficient cause, or initiating agent, is the firm that makes the thing.  And the final cause of the economic process, its end purpose or teleos, is profit earned by firms in satisfying human wants, needs and desires. 

1.05         ‘Econology’, the ninth word of my title, is a neologism coined in response to Mark Blaug’s observation that: “… no discussion of methodology in economics is complete without a mention of that greatest of all efforts to persuade economists to base their theories not on analogies from mechanics, but on analogies from biology and jurisprudence”, i.e., the American Institutionalists (Blaug 1996, 700).  Blaug goes on to note that few economists claim Thorstein Veblen, John R. Commons and W.C. Mitchell as their mentors.  I do.  I have published extensively in the field of cultural economics (AEA Z000) cum Veblen, about law, specifically intellectual property, cum Commons and, developed many statistical databases cum Mitchell. 

1.06         Metaphor has meaning and cognitive effect.  It enframes one’s thinking.  At one and the same time, it focuses and blinkers our vision.  It leads to ideology defined, for my purposes, as an integrated set or system of internally consistent ideas.  Unlike ‘evolutionary economics’ which, to my mind, begins with mechanics and adds the biological for dynamics, I begin with the biological and add the mechanical only as appropriate.  Hence it becomes econology derived from biology instead of economics derived from mechanics.  The term is intentionally value-laden.  It is meant to elicit or induce affect defined as “emotional reactions marked by physical symptoms and disturbances in thinking” (Sharp 1991). 

1.07         Biology is the science of life.  It is one of the three elemental natural sciences, the others being chemistry and physics.  Arguably, chemistry bridges the gap between the inorganic world of physics and mechanics, i.e., the geosphere, and that of the life sciences, i.e., the biosphere.  In this regard, Stuart Kauffman (2000) argues that life is the natural outcome of chemical complexity, i.e., the tendency of inorganic matter to react chemically, given the proper environmental conditions, results in increasingly complex molecular structures that inevitably lead to life.  In this regard, while it was Immanuel Kant who gave us our modern concept of causality as cause-and-effect, he also saw in the complexity of life a form of causality so complicated that he claimed there could never be a Newton of a blade of grass (Grene & Depew 2004).  Arguably, biotechnology will prove him wrong.

1.08         Having introduced my principal terms I now turn to the design of a philosophy of econology drawing from the philosophies of aesthetics, biology, science and technology for nutrients.   I begin by asking: What is Design?


2.0 Design

2.01         “The tradition that there is a non-rational kind of knowing that rivals or even surpasses rational knowledge is as old as philosophy itself” (Dorter 1990, 37).  These two realms – the rational and non-rational – have been at odds since the beginning of Western thought.  And while the rational is embodied in our contemporary concept of Science, the non-rational has remained a wraith taking many forms, assuming many names and evading systemic identification.  To Plato it was Art or, more properly, techne; to the Church Fathers it was Revelation; to the Scholastics it was analogy; to Adam Smith, it was moral sentiments; to Kant, it was productive imagination; to Michael Polanyi, it was subsidiary or tacit knowledge; to Thomas Kuhn, it was aesthetics, gestalt switching or intuition with “scales falling from the eyes”, “lightning flash” and “illumination” (Kuhn 1996, 155, 111, 123, respectively).  To Erich Jantsch, it was Design (1975). 

2.02         Design is a complex of human capabilities that finds highest abstract expression in aesthetic/intellectual/spiritual experience and highest concrete expression in works of aesthetic and “technological intelligence” (Aldrich 1969, 381).  In brief, it invokes pattern construction and recognition.  It is, however, linked to a form of causality utterly rejected by physics and any positivistic philosophy of science – teleology: “the doctrine or study of ends or final causes” (OED, teleology).  It is also linked to the European Renaissance.  When the Renaissance artist/engineer/humanist/scientist applied the newly invented ‘perspective’ they successfully approximated the original - natural and ancient.  The Arts, specifically the visual arts, ascended to a higher epistemic status and the Renaissance visual artist began a distinct Western European ‘Cult of the Genius’ (Zilsel 1918; Nahm 1950; Kristeller 1954, 510; Woodmansee 1984).  Genius, no matter its social origin, demonstrates god-like powers creating ex nihilo (Nahm 1947).  Such new knowledge changes the way people see, hear and understand the world and themselves.  Social recognition reflected, however, not just the results but also the method: geometric perspective.  The Renaissance genius was a geometer, a mathematician, an image captured in Dürer’s 1514 engraving of Melancolia holding a protractor in his right hand and his chin supported by his left in a pose reminiscent of Rodin’s much later statue The Thinker (1880).  

2.03         Design is about purpose and intent.  As noted above, among his many contributions Immanual Kant (1724–1804) established, as a law of nature, that the formal notion of the if-then relationship corresponds to the concept of cause and effect and that there is a single direction to causality, i.e., Time’s Arrow only moves from cause to effect, from the past into the present and then out into the future by way of prediction (Grene & Depew 2004, 93-4).  This law, however, was limited by Kant to matter defined as lifeless stuff (objects) pushed or pulled by measurable forces through space/time, i.e., the geosphere.  This limitation was required because it was apparent to Kant that material and efficient causes (cause and effect) were insufficient to explain living things, i.e., biology.

2.04         Kant addressed the question of biology in his Critique of Judgement (1790) which is divided into two parts.  The first is the “Critique of Aesthetic Judgment”; the second, the “Critique of Teleological Judgment”.  The ordering is important.  While works of technological intelligence, or artifacts, have purpose, works of aesthetic intelligence have purposiveness or meaningfulness but no purpose, i.e., no utilitarian function.

2.05         There were three aspects of living things that demonstrated to Kant that teleological or final causes were at play.  These were ecology, metabolism and ontogeny.  First, he could see that the web of mutually supportive relationships between various species of plants and animals constituting an ecological community was so complex that linear ‘when-then’ causality was simply insufficient to explain its existence.  Second, in the metabolism of living things “each part is reciprocally means and end to every other.  This involves a mutual dependence and simultaneity that is difficult to reconcile with ordinary causality” (Grene & Depew 2004, 94).  Third, in ontogeny, or development of the individual, the future mature end-state apparently guides successive stages of development.  This is a clear case of formal and final cause.

2.06         Having found teleological processes in living things Kant was concerned to distinguish between Design and designer.  This is, of course, a question that continues to trouble contemporary society.  To do so, Kant distinguished between works of technological intelligence and living things.  Quite simply, parts of a machine are put together by people and parts do not bring other parts into existence, i.e., a machine is not a self-organizing entity.   By contrast: an organism is “a product of nature in which everything is both an end and also a means” and in which the parts are “reciprocally cause and effect of [one another’sl form.” (Grene & Depew 2004, 98-99)

2.07         For Kant all works of technological intelligence are finally caused by human purpose.  Living things, however, do not require human or divine purpose but rather reflect a ‘natural purpose’.  Kant called this form of causality purposiveness.  He was so convinced of the inherent complexity of living things that he claimed:

it is absurd for human beings even to attempt it, or to hope that perhaps some day another Newton might arise who would explain to us, in terms of natural laws [cause and effect] unordered by any intention, how even a mere blade of grass is produced. (quoted in Grene & Depew, 2004, 94). 

This ‘natural purpose’ may now, however, be reducible to chemistry through a fourth law of thermodynamics tentatively proposed by Kauffman (2000).  The tendency towards molecular coevolution finds ultimate expression in DNA, the object of the emerging science of genomics and of biotechnology.  According to Kauffman, this law ascends upwards from the geosphere of molecular chemistry through the biosphere and noösphere emerging into what he calls “the persistently innovative econosphere” (2000, 211-241).

2.08         Today, Design is also operative in psychology, economics and engineering.  With respect to psychology, the compositional unity identified in Baumgarten’s 18th century philosophy of aesthetics - his new science of sensuous knowledge to balance logic as the science of intellectual knowledge (Kristeller 1952, 35) - arguably led to the formation of a new school of psychology in the 20th century.  Gestalt psychology was founded by Max Wertheimer, Kurt Koffka and Wolfgang Köhler in Germany in the early 20th century (Köhler 1959).  The word gestalt derives from the German meaning “a ‘shape’, ‘configuration’, or ‘structure’ which as an object of perception forms a specific whole or unity incapable of expression simply in terms of its parts (e.g. a melody in distinction from the notes that make it up)” (OED, gestalt).  If one looks at a tree one sees a whole, an entity, not a composite of leaves, branches, trunk and root.  If one shifts attention to a part, the whole is lost from view.  In effect, it is perception (knowledge) without reflection or projection.  By reflection I mean interpretation or ‘thinking about’ the meaning of the image.  By projection I mean ‘reading into’ the image an ex poste interpreted meaning.  Or, as Jung says: “image and meaning are identical; and as the first takes shape, so the latter becomes clear.  Actually, the pattern needs no interpretation: it portrays its own meaning” (quoted in Hillman 1980, 37).  Here is knowledge without reason.  Any attempt to analyze it, i.e., to reduce a work to its component elements, sacrifices knowledge of the whole.  Analysis is reductionism, not composition.

2.09         In economics, Nathan Rosenberg has made explicit and extensive use of Design in his studies of innovation and ‘the black box’ (1974, 1976, 1994).  He also complains about “academic snobbery” regarding “matters involving ‘hardware,’ including techniques of instrumentation, [that] are often dismissed as constituting an inferior form of knowledge” (Rosenberg 1994, 156).  Similarly, Dasgupta and David identify the concept of “technological knowledge” which they argue should not “be assigned a subordinate epistemological status” to scientific knowledge, i.e., that derived by linear cause and effect (Dasgupta & David 1994, 494). 

2.10         Ekkehart Schlicht, for his part, identifies pattern recognition as the means by which human institutions, customs and traditions are formed and maintained.  These emerge, he argues, according to “rule preference” which “is of an essentially aesthetic nature” (Schlicht 2000, 40).  Schilicht also notes that “customs, habits, and routines provide the bedrock for many economic and social formations yet our understanding of the processes that underlie the growth and decay of customs is very limited.  The theory of social evolution has hardly commenced to evolve” (Schlicht 2000, 33).  

2.11         Brian Loasby (2003), in turn, replaces the calculatory rationalism of marginalist economics with pattern recognition.  The energy efficiency of pattern recognition compared to continuous calculation has, in evolutionary terms, made pattern recognition the dominant mode of human knowing according to Loasby.  In the simplest terms, pattern recognition is dependent on the quality not the quantity of data.  It is relational not reductive.  According to Loasby, such patterns form ‘connections’ altering the structure of the brain itself.  Such patterns also characterize human behaviour which, when followed by many individuals, becomes what Loasby calls ‘routines’ or I call ‘institutions’, i.e., routinized patterns of collective human behaviour.

2.12         With respect to engineering, Edwin Layton stresses Design as a form of knowledge distinct from Science and highlights the central role it plays in engineering (Layton 1974).  In fact, the earliest expression of engineering knowledge in the West takes the form of design portfolios and the “natural units of study of engineering design resemble the iconographic themes of the art historian” (Layton 1976, 698).  Derek De Solla Price similarly notes that what I call ‘tooled knowledge’ appears first as an artifact which must then be transliterated into a written format that has the “savour of the antiquarian” (Price 1965, 565-566).  Price also highlights the distinct cognitive impact of scientific instruments compared to reason and theory.  This is captured in his description of the impact of Galileo’s telescope as “artificial revelation” (Price 1984, 9).  In fact, works of technological intelligence are recognized or known by their function, purpose or intent (Polanyi 1962a).  In the philosophy of technology this sense is captured by ‘instrumental realism’ (Idhe 1991) and ‘instrumental epistemology’ (Baird 2004).  Baird, for his part, explicitly identifies the “design paradigm as the most promising recent development in the epistemology of technology” (Baird 2004, 149).

2.13         Arguably, technology represents the ultimate in human Design.  As Heidegger (1955) suggests technology enframes and enables human life.  In effect, it constructs a distinct human ecology growing ever more distant from Nature as the knowledge explosion continues to expand.  Consider coming home from the office in a car, unlocking the door to the house, turning on the lights, making supper using appliances, watching television, checking one’s email then driving to the local mall to shop.  All is technology.  Technology enframes and enables us, defines and patterns life in the human ecology.  And technology is Design which, perhaps, can satisfy Kauffman’s hope “to glimpse a constructivist companion to the reductionist thesis” (Kauffman 2000, 268).


3.0 Science

3.01         The unprecedented evolutionary ascent of our species to global dominion, achieved in some twenty-five generations, arguably resulted from the institutionalization of a new way of knowing - the experimental method, or, as it was originally known, ‘experimental philosophy’.   Today, it should be called ‘experimental instrumental science’.   Developed by craftsmen of the late or High Middle Ages of the western European civilization (Zilsel 1945), it was first fully articulated by a late Renaissance genius, Sir Francis Bacon in his Of the Proficience and Advancement of Learning Divine and Humane, published in 1605.  According to Bacon, human dominion was to be achieved by reducing Nature’s complexity through instrumentally controlled experimental conditions forcing her to reveal her secrets.  She did.

3.02         Since the beginning of Western civilization, logic has been accepted as the preferred path to knowledge (Dorter 1990, 37).  It distances us from our passions; it frees us from the distracting world of sensation and emotion.  In the hands of the Romans the Greek logos became ‘reason’ derived from the Latin ratio as in to calculate (OED, reason, n 1).  And from the Romans we derive Science from the Latin scire “to know” which, in turn, derives from scindere “to split” (MWO).  Science today is accepted as the epitome of reason deriving knowledge by splitting or reducing a question into smaller and smaller parts or elements until a fundamental unit or force is revealed, e.g., Bentham’s utile or Newton’s gravity.  Until innovation of the experimental instrumental scientific method, however, such splitting and reducing was restricted to words.

3.03         Reductionism extends to epistemology, i.e., the theory of knowledge.  Knowledge itself has been split into domains, disciplines, faculties and forms with an inevitable increase in incommensurability.  Reductionism has, however, a significant advantage.  It strips away secondary phenomena distinguishing cause from effect revealing, in the natural sciences underlying ‘laws of nature’ (Taylor 1929, 1930; Zilsel 1942).  Its metaphysical legitimacy rests on the testing of cause and effect, or when-then causality with Time’s Arrow moving out from the Past into the Present and then into the Future by way of prediction.

3.04         Arguably, Science is, however, but a special case of Design.  First, experimental instrumental science is, in fact, an organized and routinized pattern of human behaviour, an institution that has been called ‘The Republic of Science’ (Polany 1962b).  This pattern, however, crystallized only very recently (about four hundred years) and remains fragile (Kuhn 1996, 167-168).  This pattern of thought is in fact so recent that Joseph Henderson in his analysis of the four primary psycho-cultural attitudes - social, religious, aesthetic and philosophic – concludes: “we cannot claim for science… the same epistemological authenticity that we can demonstrate in the four basic cultural attitudes” (Henderson 1984, 77).  He suggests, however, that a ‘scientific attitude’ may be emerging as a hybrid of the philosophical attitude “to limit man’s subjectivity to a minimum in observing the nature of man or God” and aesthetic objectivity in “observing nature and man from a significant distance” (Henderson 1984, 77).  This aesthetic distancing, in the hands of the German poet Goethe in fact generated an alternative science.  Known as ‘Goethean Science’, it is exemplified in his Theory of Colours (Goethe 1810) written to refute Newton’s materialistic analysis.  The power and intensity of aesthetic observation is succinctly demonstrated therein.

3.05         Another facet of being a special case of a higher order is evidence of that higher order operating within the special case.  Sparkes thus concludes: “pattern recognition is undoubtedly a deeply ingrained human capability, and that it should be used for the kind of information processing which goes on in science seems beyond reasonable doubt” (Sparkes 1972, 41).  Similarly, the repeated use of the terms aesthetics, design, gestalt and intuition by Thomas Kuhn (1996) in explaining The Structure of Scientific Revolutions is also evidence of the operation of Design within Science itself.

3.06         In summary, experimental instrumental science is a special case of Design, an incredibly productive one in terms of generating knowledge about the geosphere and biosphere, if less productive with respect to the noösphere.  Arguably, its success can be attributed to three factors.  First is the Pythagorean Effect, i.e., exploitation of the cognate relationship between mathematics and the world of matter and energy.  Second is the Instrumentation Effect, i.e., scientific instruments generate evidence not requiring intermediation by a human subject and provide readings at, above and below the threshold of the native human senses.  In effect, this lends metaphysical legitimacy.  Scientific instruments realize the Platonic “belief in a realm of entities, access to which requires mental powers that transcend sense perception” (Fuller 2000, 69).  Furthermore, the language of scientific sensors realizes another ancient Greek ideal, that of Pythagoras, by reporting nature by the numbers.  Third is the Puzzle-Solving Effect of paradigmatic ‘normal science’ (Kuhn 1996) which permits vertically deep insight into increasingly narrow questions, i.e., depth at the cost of breadth of vision.  Arguably, however, it is Science by Design at play in the sense that Science occurs by way of or is a progeny of Design. 

3.07         These three effects, however, are not available in the humanities & social sciences, with the qualified exception of economics.  The Standard Model of economics, alternatively known as the Marshallian, Neoclassical or Perfect Competition Model, fulfils Descartes’ requirement of a science in that it uses deductive logic based on a set of key assumptions whose conclusions are subject to geometric and mathematical proof.  The resulting ‘paradigm’ led, I infer, Thomas Kuhn to single out economics among the other social sciences as best approximating ‘normal science’ (Kuhn 1996, 161).


4.0 Philosophy

4.01         Philosophy, in the dictionary, literally means love of knowledge or “knowledge of things and their causes, whether theoretical or practical” (OED, philosophy, n, 1a).  James Hillman, however, reminds us that to the ancient Greeks “philosophy begins in a philos arising in the heart of our blood” (Hillman 1981, 3) connecting us not to the level-headed Athena or Minerva but to her passionate sister, Aphrodite or Venus.  It also:

refers to Aphrodite in another way. For sophia originally means the skill of the craftsman... Sophia originates in and refers to the aesthetic hands of Daedalus and Hephaistos, who was of course conjoined with Aphrodite and so inherent in her nature... Aphrodite gives an archetypal background to the philosophy of “eachness” and the capacity of the heart to find “intimacy” with each particular event in a pluralistic cosmos.

Now the organ which perceives these faces is the heart.  The thought of the heart is physiognomic.  To perceive, it must imagine.  It must see shapes, forms, faces - angels, demons, creatures of every sort in things of any kind; thereby the heart’s thought personifies, ensouls, and animates the world.  (Hillman 1981, 30)

4.02         Hillman goes on to note that it was Aristotle who separated the meaning of philosophy from its aesthetic base giving it:

the abstract sense of “knowledge of highest objects” and “truth about first principles’”.... This split between wisdom and practical action still detrimentally determines all later Aristotelian-influenced metaphysics, whereas sophia originally implies that thought and action lie together in any single move of the aesthetic hand. (Hillman 1981, 30, fn 39)

4.03         Arguably, it this original linkage of thought and action that grounds Michael Polanyi’s philosophy of science, especially his masterwork Personal Knowledge: Towards a Post-Critical Philosophy ([1958] 1962a).  It is therein that he introduces the concept of tacit knowledge which, today, lays at the heart of a public and private policy controversy concerning the knowledge-based economy (Cowan, David & Foray 2000) and which intimately involves biotechnology (Cambrosio & Keating, 1988).  The conventional interpretation is that tacit knowledge involves knowing-how to do a task, i.e., “in any single move of the aesthetic hand” (Hillman 1981, 30, fn 39).  Such knowledge is tacit in that it cannot be codifed, i.e., written down.  It is involves practical action, not thought.  They policy implications are simple: If it is codified then competitors can easily access knowledge.  If it is tacit, they cannot.  There is to my reading, however, much more to Polanyi’s meaning than is captured by this conventional interpretation.

4.04         Polanyi’s epistemology is explicitly rooted in gestalt psychology (Polanyi Oct. 1962, 605).  Three central concepts define his ideology: subsidiary/focal knowledge, indwelling and displacement.  First, according to Polanyi we know in an integrated stereoscopic manner invoking a conjunction of subsidiary and focal knowledge.  Thus we know “subsidiarily the particulars of a comprehensive whole when attending focally to the whole which they constitute” (Polanyi Oct. 1962, 601).  It is subsidiary knowing that is called “tacit, so far as we cannot tell what the particulars are, on the awareness of which we rely for attending to the entity comprising them” (Polanyi Oct. 1962, 601).  In fact, to the degree that we focus on the whole, its parts cannot be known at the same time in themselves.   Polanyi concludes:

We may call the bearing which a particular has on the comprehensive entity to which it contributes its meaning, and can then say that when we focus our attention wholly on a particular, we destroy its meaning. (Polanyi Oct. 1962, 601)

Polanyi’s focal/subsidiary knowledge is ideologically commensurable in aesthetics with figure/background or melody/note, with Heidegger’s enframing/enabling technology, and, as will be seen below, with Grene & Depew’s biology of invariants/affordances (Grene & Depew 2004).  Arguably, Polanyi would include all as “variants of the same organismic process” (Polanyi Oct. 1962, 610).

4.05         Critically, Polanyi concludes it is:

appropriate to extend the meaning of “tacit knowing” to include the integration of subsidiary to focal knowing.  The structure of tacit knowing is then the structure of this integrative process, and … we shall say that, ultimately, all knowledge has the structure of tacit knowledge. (Polanyi Oct. 1962, 602)

4.06         The integrative or constructionist power of tacit knowing, as defined by Polanyi, is also apparent with respect to the subsidiary or background role played by ideology and technology in our daily lives.  If technology cum Heidegger (1955) tacitly enframes and enables us as physical beings within a human built environment then ideology (inclusive of religion) tacitly enframes and enables us as mental beings within a network of local, regional, national and global communities of ideas.  It is this enframing and enabling of minds within systems of ideas (ideologies) that forms, in part, the noösphere.

4.07         Second, according to Polanyi, the ultimate in tacit knowledge is the human body.  Everything we do in, and know of the world is through our bodies – seeing, hearing, touching, tasting, smelling.  The body, however, is normally transparent to the mind in its doing and knowing.  This transparency Polanyi calls “indwelling”:

Tacit knowing … appears as an act of indwelling by which we gain access to a new meaning.  When exercising a skill we literally dwell in the innumerable muscular acts which contribute to its purpose, a purpose which constitutes their joint meaning.  Therefore, since all understanding is tacit knowing, all understanding is achieved by indwelling.  (Polanyi Oct. 1962, 606)

4.08         Indwelling characterizes not just physical performance but also aesthetic distancing and ‘objective’ scientific observation.  Polanyi concludes that indwelling “bridges the gap between the I-It and the I-Thou, by rooting them both in the subject’s I-Me awareness of his own body, which represents the highest degree of indwelling” (Polanyi Oct. 1962, 606).

4.09         Third, indwelling has a powerful corollary that Polanyi uses to treat experimental instrumental science: displacement.  And it is here that Polanyi meets Heidegger.  A characteristic of human being is displacement of sensation from point of contact to distant source.  Thus, in the use of a hand tool such as a hammer: “the impact that their handle makes on our hands and fingers is not felt in itself at the place where it happens, but as an impact of our instrument where it hits its object” (Polanyi Oct. 1962, 607).  This displacement allows humans to indwell in their tools and technology in what I call existential phenomenology.

4.10         Conspicuous by its absence in all of Polanyi’s epistemology, however, is any reference to codified knowledge.  He treats language but only as an example of tacit knowing.  Fixation of semiotic code in an extra-somatic material matrix does not arise anywhere in his work.  The opposition, if any, is between focal and subsidiary knowledge, not tacit and codified.

4.11         Equally conspicuous by its absence is the term ‘personal’ in discussion about ‘tacit knowledge’ in the current debate concerning the knowledge-based economy (Cowan, David & Foray 2000).  Arguably, this reflects capitalization of labour in market economics in response to the humanisation of labour in Marxist economics.  It is clear from Polanyi’s usage, however, that tacit knowledge is ‘personal knowledge’ and that he was no Marxist.  Put another way, personal knowledge is living knowledge, knowledge fixed in an individual natural person.  From whence it comes – demonstration, experience, experimentation, intuition or reading – does not change its personal nature.  In fact, codified and tooled knowledge take on meaning or function only when mediated by a natural person.  I therefore insist upon the phrase ‘personal & tacit knowledge’ to highlight its root in the natural person.  If, from time to time, I slip and use ‘tacit’ alone, I ask the reader to please, implicitly, read ‘personal’.

4.12         The question remains, however, what physical form does personal & tacit knowledge take?  It comes in two distinct forms.  The first is the matrix of neurons that fix memories (knowledge) as part of one’s voluntary wetware, i.e., that part of the nervous system subject to conscious control, specifically, to recall.  Memories can usually be described and codified, i.e., spoken and transcribed into language or drawn as a picture.

4.13         The second are reflexes (part of one’s involuntary wetware) composed of “the connected set of nerves concerned in the production of a reflex action” (OED, reflex, n, 6 b).  Reflexes refer to the memory of our limbs and digits of how to do something, e.g., ride a bicycle.  Etymologically it is relevant that the word ‘reflex’ derives from ‘reflect’ in the sense of ‘to remember’.  Knowledge is fixed in one’s body parts and nervous system.  This may be the fine practiced motor skills of a brain surgeon or those of a professional bricklayer.  What they share is that such knowledge is tacit, i.e., not subject to articulation and codification - spoken, transcribed or drawn.  It can, however, sometimes be transferred through demonstration, repetition and practice.

4.14         Ultimately, however, all knowledge is personal & tacit.  Coded and tooled knowledge always lead back to a person acting as agent to decode or activate it.  Personal & tacit knowledge is also one-dimensional, a monad: it is known by only one mind.  It is the sum of what an individual knows.  If one is what one knows then personal & tacit knowledge is the definition of the individual human being.  And only the individual can know.  Books and computers do not know nor do they know that they know, nor, arguably, does any other species on this planet.  Companies, corporations and governments or, in Common Law, ‘legal persons’ cannot know (Graf 1957).  Only the solitary flesh and blood ‘natural person’ can know.  This is why Polanyi’s masterwork is entitled: Personal Knowledge.

4.15         If we are to have “knowledge of things and their causes” specifically about econology then on at least two levels we must account for Design.  First, the object of investigation, human being, is biological, i.e., a living thing which exhibits Kantian ‘natural purpose’.  This purpose, according to Darwin, is survival and reproduction through natural selection.  To this Kauffman adds symbiotic coevolution including that of predator and prey, with each organism trying to make a living in the biosphere and/or econosphere (Kauffman 2000).  They exhibit purpose and intent. 

4.16         Second, econology, as “technical knowledge” (Samuelson 1961, 570) a.k.a technology, involves enframing and enabling of the environment through a production process designed to satisfy human wants, needs and desires.  This is the technological imperative.  It is also, however, a biological imperative of the species.  According to Grene & Depew (2004), all organisms live in an active environment enframed by invariants facing affordances - opportunities and dangers – that constantly challenge the organism in its purpose – survival and reproduction.  In an environment, all knowledge is orientation.  Invariants act like a picture frame defining one’s field of vision becoming subsidiary to our focused attention on affordances.  Many organisms do not, however, simply adapt to the environment.  Some actively seek to adapt and modify it to better satisfy their needs, e.g., the ant, bee and beaver.  Essentially this involves constructing new invariants, e.g., colonies, hives or lodges. 

4.17         Of all organisms on Earth, humanity has had the greatest success in structuring its environment.  Tools, specifically the tooled knowledge they contain, are the means by which wr animate and organize Nature.  They move, shape and change it to suit human purpose.  In fact, before art, culture or language, there was tool making.  Tools provide primae facia evidence of the arrival of our species: artifacts left by our first ancestor, homo habilis or the ‘handy man’, some two and a half million years ago (Schuster 1997).  Using its opposable thumb, humanity reached out to shape the material world to compensate for its frailty – no great size, no claws or talons and tiny canine teeth.  To eat and survive predation, the human brain reached out with finger-thumb coordination to grasp and shape parts of the world into tools with which to then manipulate other parts, e.g., to kill game, plant seeds, build shelters.  It appears, from the fossil record, that the opposable thumb preceded and, in a path-dependent manner, contributed to the subsequent and rapid growth and development of the human brain itself.  

4.18         According any philosophy of econology cannot exclusively rely on reductive methods and the when-then, billiard-ball, material/efficient causality of the geosphere.  Equally, it cannot rely exclusively on the formal/final or causality by purpose of the biosphere.  Its meaning is also found in the noösphere, where all four forms of causality are at play. 


5.0 Econology

5.01         If there is to be a philosophy then we must have knowledge of econology and its causes.  To gain such knowledge we need to apply Polanyi’s stereoscopic theory of knowledge invoking conjoint consideration of focal and subsidiary knowledge.  Focal knowledge concerns the tools, standards and techniques or the praxis of economics.  Subsidiary knowledge concerns the context in which praxis takes place.  For purposes of this paper I will not, however, pursue this line of reasoning.  Rather I will first consider the origins of econology through four revolutions: the Republican, Marginalist, Marxist and Genomics Revolutions.  Second, I will interpret biological metaphors developed by Stuart Kauffman emerging out of the most recent revolution to extend molecular biology and genomics into what he calls “the persistently innovative econosphere” (Kauffman 2000).


a) Origins

5.02         The economy – local, regional, national or global - seen in biological terms raises radical questions.  The word ‘economy’ derives from the ancient Greek oikos meaning ‘house’ and nemo meaning ‘manage’, i.e. managing the house.  It shares this root with ecology, or oikogie, meaning modes of life and relations within the house and with ekistics or the science of human settlement (Doxiadis 1976) which also derives from oikos but carrying the ancient Greek sense of founding a colony like Syracuse in Sicily or the city states established by Alexander the Great in India at the end of the 4th century B.C.E.

5.03         In this light, the question becomes what is the ‘house’ now requiring management?  In its original meaning it was a self-sufficient or autarkic rural estate.  Questions of management, however, ascended to higher orders of human settlement as the self-sufficient village, town and city which:  

is the place of art... The magus, the poet who, like Orpheus and Arion is also a supreme sage, can make stones of music.  One version of the myth has it that the walls of Thebes were built by songs, the poet's voice and harmonious learning summoning brute matter into stately civic forum.  The implicit metaphors are far reaching: the “numbers” of music and of poetry are cognate with the proportionate use and division of matter and space; the poem and the built city are exemplars both of the outward, living shapes of reason.  And only in the city can the poet, the dramatist, the architect find an audience sufficiently compact, sufficiently informed to yield him adequate echo.  Etymology preserves this link between “public”, in the sense of the literary or theatrical public and the “republic” meaning the assembly in the space and governance of the city. (Steiner, 1976)

5.04         The city, of course, is the ultimate example of human technology enframing the environment but things have changed dramatically since the days of Orpheus and Arion.  A global society in which there is contiguous urban development separated only by natural barriers has been called the ‘Ecumenopolis’ by urban designer Constantinius Doxiadis (1976, 327).  This global reality is strikingly portrayed in a composite photograph of “The World at Night” published by NASA (November 27, 2000).  It provides visual evidence of humanity enframing its planet.  Put another way, we now have truly entered Heidegger’s “Age of the World Picture” (Heidegger 1938).  We see it as a world city whose shimmering lights soar out into the infinite blackness of space. 

5.05         Econology was inherent in the work of the French Physiocrats of the 18th century who believed agriculture was the source of economic surplus.  Plant one seed; harvest a thousand.  The whole of France was represented as a farm and the policy question was how to manage it best.  Unfortunately, Madame Guillotine separated the Physiocratic head from the Physiocratic body in the Terror of the French Revolution.  Waiting in the wings on the other side of the English Channel, however, Adam Smith proposed that economic surplus flowed from the division and specialization of labour in manufacturing not from agriculture, i.e., from mechanics not from biology.  England, after winning the Napoleonic Wars, then adopted at least some of Smith’s suggestions initiating the self-regulating marketplace (K. Polanyi 1944).  It must be noted, however, that Adam Smith succeeded in moving management of the house upscale addressing the question of the wealth of nations.

5.06         Two subsequent and related revolutions in the 19th century fostered development of economics as mechanics and stifled econology.  These were the Marginalist and Marxist Revolutions that led to the subsequent mid- to late 20th century Market/Marx Wars that threatened all life on the planet with thermonuclear annihilation.  In effect, Marxist economics saw the technological imperative as the teleological or final cause of economic development.  The Marginalists, however, successfully adapted Newtonian calculus of mechanics to the consumer and firm generating the elegant Standard Model of economics satisfying Descartes’ test of a science.  Economics henceforth was ruled by cause and effect, by material and efficient cause, with little or no place for formal and final or teleological cause which, of course, included biology. 

5.07         Thus by the mid- to late-19th century, economics had formally split into two opposing camps, each providing the base for an ideological program and reflecting, among other things:

· conflicting theories concerning the impact of culture or stage of cultural development on economic behaviour - yes for Marxists, no for the mainstream;

· conflicting theories of value, specifically whether labour was the only productive factor as Marxists believed or, whether capital was the most productive as the mainstream contended;

· conflicting beliefs in the efficacy of collectivist solutions to political economic problems such as the role of the Party as revolutionary vanguard and the dictatorship of the proletariat versus individualist solutions such as pluralistic democracy and the market mechanism; and,

·  conflicting theories about the legitimacy of private property deemed exploitive by the Marxists and essential by the mainstream. 

5.08.        It is ironic, however, that in the above list it is only the sanctity of private property that separates Jeremy Bentham from Karl Marx (Keynes 1949, 96-7).  It was, according to Marshall (1920, 628, ft 2), only the terror of the French Revolution that stopped Bentham from embracing public ownership of all means of production and of consumption.  For Marx, revolution was, of course, the means to achieve that very end.  In a sense, Marx was the son Bentham never had.  In this regard, Keynes concludes that “the final reductio ad absurdum of Benthamism” is Marxism (Keynes 1949, 96-7).  It is also ironic that the end point, the point omega, of the Standard Model is perfect competition in which no one exercises market power, all costs are internalized in market price, all benefits are captured by the consumer and there is therefore no need for the State, an outcome paralleled by the eventual Marxian withering away of the State under perfect communism. 

5.09         The ideological effect of this great schism, to my mind, also explains  why a formal sub-discipline concerning culture and economics, i.e., cultural economics, was not formally recognized until the early 1990s.  Similarly, it explains why the philosophy of technology did not become formally organized in the Anglosphere as the Society for Philosophy and Technology until 1983 (Idhe 1991, 4).  Arguably, Marxism is a philosophy of technology with teleological emphasis on the technological imperative.  Like culture, technology was not a politically correct object of formal academic study.  object of formal academic study.  As pointed out by Idhe, however, in western Europe significant strides were made, after Marx, with respect to the philosophy of technology, e.g., Heidegger (Idhe 1991).  Resolution of this schism is a subsidiary objective of this paper. 

5.10         In spite of the best efforts of the American Institutionalist School, in the early to mid-20th century, to revivify economics with the biological metaphor, (Blaug 1996, 700), the Marginalist juggernaut increasingly turned economics towards mechanics.  It also turned attention away from questions about management of the State and towards management of the firm.  Modern microeconomics was born.  Whether this was an ideological response to Marxist emphasis on the State is a question that must for now remain unanswered.  Nonetheless, it was not until John Maynard Keynes’ General Theory in 1936 that macroeconomics emerged and the modern system of national income accounting was born.  Furthermore, mainstream resistance to overt economic management continues, witness the dominant policy role played by the school of rational expectations and the monetarists.

5.11         It is now some seventy years after Keynes’ General Theory and economics confronts a knowledge-based economy with the visible and global consequences of human technology progressively, and in my opinion inevitably, enframing more and more of the environment enabling it, making it ready at hand to serve human purpose.  This is the way of life.   With the Genomics Revolution, however, it is no longer just the geosphere that is being enframed.  It is also the biosphere.  We must recognize our unique contemporary situation.  We can now inject (or infect) ‘natural’ with human purpose.  We are arguably beginning the final chapter in human dominion over the planet Earth extending our grasp out from the geosphere to the living core of the biosphere, its DNA.  One practical implication is that “it has become possible to think that biology can, for the first time, join physics and chemistry as a ‘technoscience’” (Grene & Depew 2004, 345).  In effect, the planet Earth has become the house in need of management because all of it is being enframed inside a human ecology as a standing reserve ready at hand to serve human purpose. 


b) Stuart Kauffman’s Persistently Innovative Econosphere

5.12         The theoretical implications of the Genomics Revolution for economics and the possibility of an econology are only now being adduced.  Put another way, it is only recently that new biological metaphors capable of supporting an econology have emerged.  These are most apparent in the work of molecular chemist/biologist Stuart Kauffman (1995, 2000).  Kauffman’s intellectual affinity to economics as well as his debt and contribution to it is apparent throughout his work.  In this regard, he recommends a series of very sophisticated mathematical techniques for application in economics.  Their sophistication is such that I am not qualified to judge their internal workings or technical merits.  I have, however, strong epistemic reservations about low grade social scientific data fueling ever more sophisticated mathematical models, i.e., garbage in garbage out.  Such low quality evidence should not be confused with that generated, without human mediation, in the natural & engineering sciences including biology. 

5.13         Nonetheless, a number of Kauffman’s metaphors have, I believe significance for mainstream economics and any future econology.  I will examine four of them: the autonomous agent, coevolution, the adjacent possible and comparative advantage.  I will briefly consider two other ideologically commensurate concepts shared by biology and economics – division & specialization of labour and natural selection.


i - Autonomous Agents

5.14         Kauffman’s central concept is the autonomous agent (Kauffman 2000, 49-79).  This is a Kantian-like entity with natural purpose acting on its own behalf in an environment and able to reproduce itself through “thermodynamic work cycles” (Kauffman 2000, 49).  For Kauffman, such work cycles involve, in almost Heideggerian fashion, the constrained or enframed linkage of endergonic (energy requiring) and exergonic (energy releasing) chemical reactions whereby:

the coherent organization of … constraints on the release of energy … constitutes the work by which agents build further constraints on the release of energy that in due course literally build a second copy of the agent itself…” (Kauffman 2000, 72)

5.15         Kauffman thus descends Kant from the cellular to the molecular level where he finds autocatalytic sets of “self-reproducing molecular systems” (Kauffman 2000, 130).  In effect, he finds the origin of life in chemistry.  He argues that life is the inevitable outcome of some threshold concentration of organic chemicals widely dispersed throughout astronomical space.  While this may be so, like Kant asserting there would never be a Newton for a blade of grass, Kaufman concludes that while linking exergonic and endergonic reactions is essential to definition of an autonomous agent, life itself is a “mysterious concatenation of matter, energy, information, and something more …” (Kauffman 2000, 47).

5.16         In the biosphere there is also a hierarchy of autonomous agents.  Kauffman points to the evolutionary transition from single-cell organisms without nuclei, prokaryotes, to eukaryotes, i.e., single-cell organisms with a nucleus plus mitochondria in animals or plastids in plants using chlorophyll.  He concludes that:

eukaryotic cells are symbionts of two or more earlier separate autonomous agents that contributed the mitochondria, the plastids, and perhaps the nuclear structure of eukaryotes into a single novel reproducing entity, the eukaryotic cell. (Kauffman 2000, 120)

5.17         Life, of course, has burgeoned far beyond single-celled creatures.  Kauffman notes there are some 265 different cell types in the human body (Kauffman 2000, 182).  Each is an autonomous agent.  Each, however, collectively combines to form a higher order agent – an organ - that, in turn, forms a functioning part of a yet higher order agent – the individual human being.  Kauffman takes this hierarchy up from the geosphere of chemistry to the biosphere to the noösphere and beyond to the universe itself.  The process I characterize as the increasing diversity and complexity of autocatalytic systems pursuing Kantian natural purpose.  This process is also active in what Kauffman calls the econosphere where there are similarly higher and lower order autonomous agents like the individual and the firm.  He argues that humanity exhibits the same basic pattern of behaviour as all life - making a living:

The parallels are at least tantalizing, and probably more than that.  While the mechanisms of heritable variation differ and the selection criteria differ, organisms in the biosphere and firms and individuals in the econosphere are busy trying to make a living and explore new ways of making a living.  (Kauffman 2000, 216)


ii - Coevolution

5.18         The mechanism driving increasing diversity and complexity is coevolution defined as the mutual evolutionary influence of two species (molecular, organic or economic) that become dependent on each other.  Each exerts selective pressures on the other, thereby affecting each others’ evolution.  This often involves morphological coconstruction, e.g., the shape of an orchid flower matching the bill of the hummingbird.  Coevolution and conconstruction apply in both symbiotic and predator/prey relationships between autonomous agents.

5.19         Kauffman argues that the primary mechanism of molecular evolution is not the template model of sequentially constructing DNA step-by-step up the ladder.  Rather it is through coconstruction of its segments by sets of mutually dependent autocatalytic molecules that then integrate the parts into a new coherent living whole.  This catches the Kantian sense that “each part is reciprocally means and end to every other.  This involves a mutual dependence and simultaneity that is difficult to reconcile with ordinary causality” (Grene & Depew 2004, 94).

5.20         Given an ever changing fitness landscape, autonomous agents constantly adapt, adjust and evolve or go extinct, e.g., out of business, sometimes in avalanches of change.  They do so by experimenting with mutations called preadaptations or exaptations which:

… in an appropriate environment [are] a causal consequence of a part of an organism that had not been of selective significance [but] might come to be of selective significance and hence be selected.  Thereupon, that newly important causal consequence would be a new function available to the organism.” (Kauffman 2000, 130)

Arguably, in a knowledge-based economy, research & development (R&D) plays a commensurable role.   It should be noted, however, that the concept of the self-organizing universe based on coevolution was first (to my knowledge) put forward by Eric Jantsch in Design for Evolution (1975) and then The Self-Organizing Universe (1980).

5.21         There are at least two other important characteristic of life on a fitness landscape.  First, having reached a peak of fitness if the rate of mutation, change or experimentation becomes too rapid, i.e., crosses some threshold, then “the population ‘melts’ off the fitness peak and wanders away across the fitness landscape” (Kauffman 2000, 155).  This is arguably the case with the ‘de-industrialization’ of traditional First World economies.  Second, among the many border or transition states identified by Kauffman as characteristic of life one of the most intriguing is that life exists on the quantum/classic frontier.

it is probably of more than passing interest that real living entities, cells, do straddle the classical and quantum boundary.  One photon hitting a visual pigment molecule can beget a neural response.  In short, real living systems straddle the quantum classical boundary.  If there is a tendency of coevolving autonomous agents to increase the diversity of alternative events that can occur, then living entities must eventually hit the Heisenberg uncertainty limit and abide at least partially in the quantum realm. (Kauffman 2000, 149)


iii - Adjacent Possible

5.22         But from where do preadaptations and exaptations come?  According to Kauffman, using chemical reaction charts as his model, they come from the ‘adjacent possible’ consisting “of all those molecular species that are not members of the actual, but are one reaction step away from the actual” (Kauffman 2000, 142).  Extended to the noösphere, it is those thoughts and ideas which are candidates for application at the next level of ideological evolution. Economic and biological systems expand or explore the adjacent possible as quickly as possible subject to timely selection of the fit and unfit, e.g., going out of business.  If selection takes too long, then fitness may decline or simply melt away.  Arguably, this explains ‘de-industrialization’ of some First World Nation-States.  They maintained existing plant and equipment, e.g., in steel production, until fully depreciated through voluntary (and sometimes involuntary) quotas on imports from developing Asian producers who were investing in the best new technologies emerging from the adjacent possible.  The fitness of the West fell, at least in terms of the traditional manufacturing-based economy.

5.23         A characteristic of the chemical adjacent possible is that its size (the number of possibilities) increases exponentially faster than the increase in the diversity, complexity and number of autonomous agents.  For example, a doubling in diversity may result in a fourfold or greater increase in the size of the adjacent possible, i.e., the number of new possible forms just one step away from becoming actual.  This, Kauffman argues, is one reason for the proliferation and diversification of life.  The same may be said for knowledge itself.  From this conclusion he argues there may be a fourth law of thermodynamics involving:

a tendency for self-constructing biospheres [and econospheres] to enlarge their workspace, the dimensionality of their adjacent possible, perhaps as fast, on average, as is possible ...  (Kauffman 2000, 244)

This means an exponential increase in the ways and means by which autonomous agents make a living is the inevitable outcome of increased diversity and complexity.  The transition from an agricultural- to a manufacturing-based economy demonstrates such an exponential increase in job opportunities, not just in number but in the kinds of jobs.  New niches appear.

5.24         Kauffman is, however, critical of contemporary economics for its treatment of compliments and substitutes in what he calls the technological adjacent possible.  Quite simply, the Standard Model offers no explanation for the emergence of compliments or substitutes or for the increasing diversity and complexity of new goods and services, e.g., the book versus the DVD.  Kauffman uses the classic example of the automobile replacing not just the horse but also the network of goods and services associated with it.  He points out the new web of compliments that followed innovation or emergence of the automobile.  These included paved roads, garages, gasoline stations, parking lots, car insurance, the drive-in, then the drive-thru, etc.  Such ‘Kauffman webs’ are, at least in part, commensurate with Paul David’s “network externalities effects” in economics (David 1990, 356).  Kauffman would have us, however, look much deeper into the adjacent possible for compliments and substitutes to enhance economic fitness.


iv - Comparative Advantage

5.25         If the production function is the most elegant contribution to thought by economics, i.e., Y = f (K, L, N), then the theory of comparative advantage is one of its most obscure.  When challenged by mathematician Stanislaw Ulam to “name me one proposition in all of the social sciences which is both true and non-trivial,” the Nobel Prize winning economist Paul Samuelson responded with the theory of comparative advantage because:   

That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them. (Samuelson 1969)

5.26         This obscurity partially results because the theory engages a complex web of economic ideas including absolute advantage, division and specialization of labour, exchange, factor endowments, opportunity cost, production possibility frontiers, relative prices and trade.  Furthermore, it would more accurately be called the theory of comparative cost rather than of advantage.  And, of course, some of its results appear counter-intuitive. 

5.27         Semantic obscurity has lead to the theory finding general expression as a numeric example such as that first used by David Ricardo to demonstrate the theory in his 1817 book The Principles of Political Economy and Taxation. In his case, the example concerned wheat and wine production in England and Portugal.  In summary, comparative advantage means that mutually beneficial exchange is possible whenever relative production costs differ prior to trade.  One of its counter-intuitive deductions, however, is that if a country enjoys an absolute advantage in the production of all goods and services, i.e., can produce all of them cheaper than anyone else, it is still better off trading with other countries.  The theory was used by Ricardo to counter arguments favouring protective tariffs and trade barriers which, intuitively, promise national prosperity.  It continues to serve this free-trade purpose.

5.28         The theory of comparative advantage, in effect, separates consumption from production.  Without trade, a nation can only consume what it produces.  With trade, it is able to consume more than it produces.  Put another way, by specializing in what it does best, a nation can afford to buy more of what it does worst.

5.29         For Kauffman, and biology in general, the advantages of trade are old news:

Economics has its roots in agency and the emergence of advantages of trade among autonomous agents.  The advantages of trade predate the human economy by essentially the entire history of life on this planet.  Advantages of trade are found in the metabolic exchange of legume root nodule and fungi, sugar for fixed nitrogen carried in amino acids.  Advantages of trade were found among the mixed microbial and algal communities along the littoral of the earth’s oceans four billion years ago.  The trading of the econosphere is an outgrowth of the trading of the biosphere. (Kauffman 2000, 211)

5.30         To demonstrate the advantages of trade, Kauffman uses a biological example that, to my mind at least, is intuitive:

Consider two bacterial species, red and blue.  Suppose the red species secretes a red metabolite, at metabolic cost to itself, that aids the replication rate of the blue species.  Conversely, suppose the blue species secretes a different blue metabolite, at metabolic cost to itself, that increases the replication rate of the red species.  Then the conditions for a mutualism are possible.  Roughly stated, if blue helps red more than it costs itself, and vice versa, a mixed community of blue and red bacteria may grow.  How will it happen?  And is there an optimal “exchange rate” of blue-secreted metabolite to red-secreted metabolite, where that exchange rate is the analogue of price?  (Kauffman 2000, 216-17)

5.31         How it will happen and at what rate is determined by coevolution.  The benefits of trade lead each to adjust to the other until optimal growth is achieved by both.  Without each others help, individually each would be less fit.  In such a symbiotic relationship there is also the potentiality for the emergence of a higher order autonomous agent, e.g., prokaryotes coevolving into eukaryotes, or European Nation-States coevolving as the European Union. 


v - Other Ideological Commensurates

5.32         There are at least two other sets of ideas shared by biology and economics.  These are the division and specialization of labour and natural selection.  Precedence, however, must be given to economics.  Kauffman, in his eulogy of the growing diversity and complexity of life, draws on a root planted by Adam Smith (1723-1790) with his observation that the division and specialization of labour is limited by the extent of the market.  With respect to natural selection, Darwin himself recognized a debt to economist Thomas Malthus (1766-1834), one of Smith’s immediate successors, and his observation that the food supply grows arithmetically while human population grows exponentially.  And Kauffman draws a parallel between survival of the fittest in biology and business failure in economics where the ‘survivor principle’ was coined by 1982 Nobel Prize winning economist George Stigler.  The economic principle, however, lacks a determinant mechanism of selection.  When asked which firms are successful, Stigler answers those that survive, no matter why.  It should also be noted that Kauffman’s explanation of mutualism or coevolution in molecular biology is based on the advantages of trade which conceptually links to yet another of Smith’s immediate successor, David Ricardo (1772-1823).


6.0 Conclusions

6.01         Due to the premature demise of the first ‘economistes, the Physiocrats, the biological metaphor was not successfully implanted in economics.  Instead, the discipline moved to the beat of mechanical efficiencies in manufacturing cum Adam Smith.  Any hope that it might take root with the Darwinian Revolution of the mid-19th century was dimmed, however, by the competitive use of teleology in Marxist economics and the near coincidental Marginalist Revolution that successfully imported Newtonian calculus of mechanics into mainstream or market economics.  Arguably, this led, near the end of the century, to the splitting off of Agricultural Economics from the mainstream.  And while the American Institutionalist School struggled from the end of the 19th to the middle of the 20th century to inculcate the biological metaphor, it too failed.  Arguably, it was cut off in a Cold War suspicious of all ‘fellow travelers’.   In this regard, it has been argued that the philosophy of science itself was re-directed through the ideological efforts of James Conant, President of Harvard University, coming to flower in his protégé’s most influential work, Thomas Kuhn’s The Structures of Scientific Revolutions (Fuller 2000). 

6.02         Beyond ideological considerations, however, biology as a science, was, until the Genomics Revolution, essentially descriptive and imprecise about the actual processes of life.  Genomics began some fifty years ago with the discovery by Watson and Cricks of the DNA double helix.  Their suggestion that it could split into complementary strands established the physical basis for the encoding and transmission of genetic information within an individual organism and between generations.  In this regard, the New York Times on June 13, 1953 ran an article entitled “Clue to Chemistry of Heredity is Found” calling DNA “a substance as important to biologists as uranium is to nuclear physicists.” (Overbye 2003).  

6.03         Nonetheless, the impact of this revolution has had little, if any, effect on mainstream economics.  For example, in a JSTOR title search of articles, reviews and opinion pieces containing the word ‘biotechnology’, only seven entries (5 articles and 2 reviews) were found in the major economic journals between the 1880s and 2000.  It is important to note that JSTOR posts only issues that are at least five years old, i.e., articles published in 2005 will not be available online until 2010.  It also excludes newer and more specialized economic journals.  Nonetheless, it is clear that 20th century mainstream economics did not focus significant intellectual resources on the question of biotechnology.

6.04         Of the five articles, four concern the central entrepreneurial role of academic scientists in the formation of the American biotechnology industry (Arora & Gambardella 1990; Audretsch & Stephan 1996; Lerner & Merges 1998; Zucker, Michael, Darby & Brewer 1998).  In other words, economic interest focused on the efficient cause of the industry, the entrepreneur, not on its material (biotechnology), formal (biotech goods & services) or final (profit earned satisfying different human wants, needs or desires through biotechnology) causes.

6.05         Reaping some of the ideological benefits of this revolution it is now possible, however, to design a philosophy of econology, i.e., an economics rooted in biology, not mechanics.   To do so I offer the following narrative.

6.06         Following Grene & Depew (2204), every organism lives in an active environment enframed by invariants and filled with affordances.  All knowledge is orientation relative to environmental constants a.k.a. invariants, and to opportunities and threats, a.k.a. affordances.  Following Polanyi (Oct. 1962), knowing is achieved by each organism through the conjunction of subsidiary knowledge of invariants and focal knowledge of affordances.  Following Heidegger (1955), adaptation of an organism includes adaptation to and adaptation of the environment by introducing ‘artificial’ invariants to enframe and enable parts of the environment as a standing reserve, ready at hand to serve the organism’s purposes.

6.07         Following Kauffman (2000), every organism earns its living, fulfilling its Kantian ‘natural purpose’ of survival and reproduction, through coevolution and preadaptation.  Coevolution involves not just predator/prey relationships but, and more commonly, symbiotic relationships reflecting the benefits of specialization and mutual trade that may lead to emergence of a higher order organism. Preadaption, on the other hand, involves tapping the ‘adjacent possible’, experimenting with “all those molecular species that are not members of the actual, but are one reaction step away from the actual” (Kauffman 2000, 142).  Preadaptation is one reason for the proliferation and diversification of life and ways of making a living. 

6.08         Also following Kauffman, however, all references to ‘organism’ made above are to be replaced by ‘autonomous agent’ which allows application of the narrative from the geosphere of molecular chemistry through the biosphere of living things into the noösphere of human thought and ideology as the econosphere populated by business firms and enterprise engaged in coevolution and preadaptation of new substitute and compliment goods & services as well as whole new species or classes, that, in turn, may spawn entirely new webs of compliments and substitutes in what Kauffman calls “the persistently innovative econosphere” (Kauffman 2000, 211-241).


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