By Michael Baxter, economics writer
Do you ever ask yourself: what is the purpose of life? I suppose if you want to be really Darwinian about it, it is to spread your DNA as far and wide as possible. And what’s interesting about that is that trying to do it can create some pretty perverse effects.
It can explain, for example, belligerence; vampires that vomit up their supper to feed others; the thrusting masculinity that some say caused the finance crisis, and it can explain economic bubbles.
It is just that these things are not necessarily as bad as you think they are. Oh and by the way, the existence of entrepreneurs may be down to similar reasons.
Take as an example a poor fellow called Jamuka. He was killed by his half-brother while still pretty young, almost certainly too young to have children. Yet looking at things from a strictly Darwinian point of view, he was enormously successful; much of his DNA spread across the world, and lives in over 16 million men who are alive today. Jamuka was a risk taker, living with a group of risk takers. Early and untimely deaths were common. It is just that his half-brother, who of course shared much of his DNA, happened to be called Tamujin and today is known as Genghis Khan. Since 16 million men today can claim direct descent from the great Khan, this means that a diluted form of Jamuka’s DNA also resides in those same men. Yep, a pretty successful fellow was our Jamuka.
It is called inclusive fitness. From a Darwinian point of view it may not make sense to risk your life to save a stranger, but — and I paraphrase the evolutionary scientist JBS Haldane here — it may make sense to risk your life to save two of your brothers, or eight of your cousins.
And from the idea of inclusive fitness we can explain suicidal bees, which die to save the hive; vampire bats which vomit up their food to feed other vampire bats; altruistic behaviour in humans, and sheer outright aggression. It can also explain that irrational sense of optimism that most entrepreneurs have in common.
It is not conscious. And now I quote from the Blindfolded Masochist: “A man who sees a girl he fancies does not immediately think: “Cor blimey! Think of the healthy children she’ll raise.” The parts of the female he may find attractive may well provide those benefits, but his own thoughts are likely to be somewhat less profound. Likewise, a young foolhardy male does not think: “My behaviour makes sense. If my brothers and I behave like this, at least one of us will be highly successful at mating. Let’s attack the tribe next door, and steal all of their women. Only one of us has to breed.
“On the contrary, the foolhardy male, the warrior with battle-lust truly believes he will be the successful one. His expectations may not be realistic, but his poor sense of risk assessment serves a purpose. Maybe it is this same trait that encourages the risks taken by gamblers, by entrepreneurs, by adrenalin junkies. Risk takers have confidence in their ability, in the inevitability of their success. While they are blind to reality, blind to the harm they may cause themselves, in terms of propagating DNA it serves a purpose.”
It just so happens that, as far as the economy goes, such irrationality, when it exists in entrepreneurs, is good. For the desire to be an entrepreneur may not be rational. Failure is probably the most likely outcome. It’s just the odd successes that feed humanity.
And that may explain why we get bubbles.
Programmer Danny Hillis carried out an experiment in which he tried to create a computer program for sorting numbers by mimicking the force of natural selection. He tried to make the program evolve using randomness, and by setting in parameters that favoured the best adaptations, which could then mutate. His experiment sort of worked; at least he managed to evolve a pretty good program. But no matter how many times he re-ran the experiment, the resulting program was never as good as what a competent programmer could produce. Then he had a brain wave; he introduced predators into the system, and lo and behold, evolution became more innovative. The resulting program was much, much better.
The real world may be like that. In nature it is possible that evolution can get stuck, and it may take an external event such as a meteorite to induce change. It is not commonly known, but until 1820 economic growth per head was something that hardly happened. The average Brit in 1820 was barely better off than his equivalent during Roman times. Then something happened to kick start a new era of growth. We have no way of knowing how long this new era will last.
But for an economy to expand a degree of randomness is required. Creative destruction can help, as can bubbles. Not the credit bubble of the noughties, which was pretty useless, but where would the internet be today without the dotcom bubble? Where would the US have been in 1900 without a bubble in the construction of railroads?
The behaviour that creates bubbles is irrational. But for the economy as a whole, that may not always be a bad thing.
Michael Baxter, firstname.lastname@example.org