Free Markets and Evolution

This is really a continuation of the previous post, which can be found here. Evolution is the finest example of emergent complexity, but it is not the first such example. The first idea proposed that was based on emergent complexity was free market economics influenced by the ideas of Adam Smith.

Evolution follows a few basic laws of biology, that when put together emerge into an extremely complex structure, the life around us. Free market economics follows a few basic laws of human interaction between one another, that when put together emerge into an extremely complex structure, the market around us. Here are some of the laws behind free markets. First, people want to maximize their revenue and minimize their cost, basically put, people want to get as much possible for the least amount of work. If I sell female sex dildos I would like to sell each dildo for a million dollars, I would be so happy if I can make such a revenue. But the problem is that the women also follow their own rules of economics, that is why wish to pay as little as possible, they would love to get those dildos for free. Therefore, there needs to be some sort of compromise between penis hungry women who want dildos and money hungry me who wants to sell them for a million. I realize that at a million dollars no one would buy. But if I give them out for free, or sell them at a dollar, nearly every women would buy, but then I make no money, in fact lose money because my revenue does not pay off my cost. This brings up to the second rule. People act to maximize their profits. The first rule is more of a wish, what we all want, the second one is really how people act in relation to other people around them. Let us return back to the dildo example. If my prices are too high then I will have few buyers, so my total revenue would be the few buyers multiplied by the price per dildo. If my prices are too low then I will have many buyers. My goal, as a profit maximizing individual, is to maximize the function of price multiplied by number of buyers. It will turn out that the price at what I sell my dildo's will have to be some sort of reasonable price, it will not be able to be too high for that will diminish my profits. Even in a primitive economy where there is just one seller not subject to the rules of competition he will still be controlled by these rules of economics, he will have to sell his products at a price that will determine his profit maximization, not his own desire. The third rule is competition, similar to the competition of the species in evolution. Competition are buyers choosing their selection from the people who can best suit their interests. Sellers who cannot satisfy their buyers sufficiently well will die out, as species do in evolution. So not only do sellers have to compromise with buyers they have to battle against each other for survival. The fourth rule is perhaps supply and demand. There are more rules but these are among the most important ones. When these rules are put together the individual members of an economy will emerge into a very complex market system. Just consider the stock market. Notice how so rapidly the price of stocks are changing. No one person is controlling those prices, rather these prices emerge and change based on the complexity created by buyers and sellers coming together in the market.

Of course, this is a model for how people act, not a perfect description. Not all people are subject to these laws. These laws are in the worst-case scenario if all people were selfish greedy people. In actuality, people make other kind of decisions based on their values too. The wages of labor from employers to their workers will be determined by the market not by how little an employer wants to pay or how much the workers want to be paid. Even in the worst-case scenario of a selfish greedy employer who lives for the purpose of exploiting the workers will not be able to set the wages of labor as little as he pleases if his goal is to maximize his profits. But in actuality most employers are good people that have some respect towards their workers. So they would lean a little in the benefit of the worker. The rules above would aplply to the kind of society which consists of only evil employers. In actuality, life is a little better than the implications from the free market rules above.

In this regard free market economics is really identical to evolution. They are really the same theory just applied in different ascepts, both of them are specific examples of emergent complexity. The main point of evolution is that there is no central designer behind life, in fact bottom-up complexity will do a far more successful job at this than any central designer can. Free market economics is similar. The main point of free market economics is that there should be no central planner. Evolution implicitly rejects God, free market economics implicitly rejects Gov. The complexity of the market will emerge by itself and that any attempt to plan the market with a central designer will lead to less efficiency than otherwise would have happened, because the market is too complex for any planner.

I write this post both towards any atheist liberals reading this or any religious conservative who reject evolution that may be reading this. For the religious conservatives who reject the theory of evolution, you should think of evolution as the same concept as free market economics (yes, I know, conservatives are not really in favor of free markets, they do support anti-trust policy and the FDA along with other regulations, but they at least have some understanding and support for free markets). You agree that government is inefficient and that markets should be the way to go. So now think of evolution as being the same concept. Life does not need a central designer just like an economy does not need a central planner. It can emerge by its own structure. If you can see how the market can operate in absence of a central planner then try to understand and see how evolution can operate in absence of a central designer. For the atheist liberals the same advice applies to you too. Try to understand the reasoning behind free market economics. Do not just dismiss it as some crazy insane non-sense theory. It is counter-intuitive, I agree, but at first evolution is counter-intuitive too, try to see past your initial intuitive feeling and try to understand how this market complexity can emerge from within in absence of central planners.