Tuesday, August 31, 2010

Answers to the Poll Results

The only things listed in my poll that are not spontaneous orders (bottom-up organization vs. top-down): a business, the computer you are working on, a work of art, and non-democratic governments. And, arguably, religion (though I suspect everyone thinks every religion but their own was organized bottom-up). All the rest are spontaneous orders, self-organizing systems, creative processes.

Sunday, August 29, 2010

Friday, August 27, 2010

The Sunflower's Reason

The wise sunflower nods toward the sun --
Its arc is eminently rational --
As is the tastiness of its ripe seeds,
Seductive kernel in the striped hull --

How clever! It gets birds to spread its seeds
And humans to domesticate it so
The species can proliferate its gold
And have its seeds protected from the snow.

The sacrifice of seeds makes perfect sense
For all the flower has to gain. It fills
The fields in monocultures it could not
Achieve alone -- it covers well-tilled hills.

The flower's flavorful seeds fulfill all
The species needs -- the choice to coexist
With other species much more rational
Than making poisons with which to resist.

The bees will get their pollen, nectar -- man
Will get the honey and the seeds, all three
Cooperating to make mutual trade,
For nothing ever in this life is free.

Thursday, August 26, 2010

Economy as a Process vs. Economy as a System.

Is an economy a system or a process? The answer to this question will tell you what theory is able to create an accurate model of the economy.

To date there are three basic system theories, and one process theory.

Systems can be described as:

1) Equilibrium

2) Cycles

3) Chaotic

Process are described by bios theory, developed by Hector Sabelli.

If an economy is a system, then any one of the systems theories may be the most accurate model for how to understand how an economy works. But if an economy is a process, then bios theory will provide the most accurate model (of all the models we have available).

I will note this: the order of complexity goes, from least to most: equilibrium, cycles, chaos, bios.

If an economy is a simple system, it can be described using equilibrium. If it is a complex system, it can be described with chaos (and, of course, if it is somewhere in between, it can be described with cycles). And we see all three being used. It is possible for each to provide some useful information about an economy precisely because, even if an economy is a process, it will contain within it chaos, cycles, and equilibria as less complex constiuent parts. Thus, an equilibrium theory can tell us something about an economy, even if it may be a special case, or an attempt to remove time from the equation to allow us to understand what is happening in a given moment. But that is in fact all an equilibrium theory can do. A cycle theory is more complex, and can explain more things. We can get things ranging from Austrian Business Cycle Theory (which is really a theory which explains why the economy sometimes is simpler than it should be, and thus acts accordingly) to Schumpeter's creative destruction theory of entrepreneurship (insufficient, to be sure, but a great improvement on equilibrium theories, and moving in the right direction, toward process). A chaos theory is more complex yet -- we get the introduction of such concepts as self-organization, strange attractors, and dissipative structures (where you have to have change to maintain the structure, meaning that the more things change, the more they stay the same). Yet each of these do not allow for creativity. Nothing new is made -- the system is merely maintained. With equilibrium, it is maintained at a stable point; with cycles it is maintained at and between two stable points; with chaos, you have the entire phase space investigated, but once it is investigated, you reach a steady-state. Do any of these sound like an actual economy?

Bios theory describes processes which are in fact creative. In mathematical terms, a new phase space is created. Thus, bios can appear to be chaotic -- and will indeed have chaos as its immediate foundation (with cycles, and equilibrium as even deeper foundations), including self-organization -- but rather than simply filling the given phase space, a biotic process creates a new phase space, which it can then investigate.

Sabelli identifies the following as essential features of creative processes:

1) diversification -- "variety increases with time" (20)

2) complexification -- that is, it must be heterogeneous

3) novelty -- "non-repetitive change" (21) which is "beyond chance" (22)

4) episodic patterning -- that is, new patterns of limited lifetime (complexes) are generated (22)

5) autogenesis/autodynamic -- "Every change brings on the enxt one, so there is a correlation between steps (autocorrelation)" (22)

6) irreversibility /asymmetry -- that is, time matters

7) spontaneity

8) aperiodic patterning -- power law distribution, and highly sensitive to inputs (23)

9) non-stationarity -- "creative biotic processes have a global sensitivity to initial conditions absent in chaotic attractors" that cause the system to jump into a new phase space (83-4).

Such biotic processes are "generated by action, conservation, and bipolar feedback" (8). To have any kind of physical process, you have to have action, matter, and information. To have a biotic process, the information you need is bipolar feedback. All of these should sound familiar to Austrian economists. Sabelli points out too that bios creates levels of complexity such that "Simple processes have priority, and complex processes have supremacy" (8). In other words mathematical processes have priority, and physical processes have supremacy; physical processes have priority, and chemical processes have supremacy; chemical processes have priority, and biological processes have supremacy; biological processes have priority, and psychological processes have supremacy; psychological processes have priority, and social processes (such as economies) have supremacy (Sabelli reverses these two, but it makes little sense to think that a social process can exist prior to its constituent parts -- humans). The parts create the processes, and "In turn, complex processes feedback into their simple environments and control it through their greater informational content" (8). This is one kind of bipolar feedback -- self-organization creating the process, and the process influencing those interactions. In economic terms, though, "Bipolar feedback includes cooperation and competition as well as abundance and scarcity" (10), and supply and demand (567).

Indeed, what kind of economy does bios theory describe? What kinds of economies to the systems theories describe? What would one expect to happen if you based your economic policies on each of the systems theories described? What would one expect if one based them on process theory?

Monday, August 23, 2010

Theater of the Spontaneous Orders

In my paper on The Spontaneous Orders of the Arts, I quote Russell Berman as saying

Dramatic literature, in its convening of the community, tends toward decisive activism, while the novel, with its focus on individual interiority among a polyphony of characters and addressed to the private reader, tends toward a dispersion of power. The former resonates with democracy per se, the mobilized public, the latter with liberalism and the lives of individuals. (164)

Now take this idea and combine it with this insight from Scott Atran and Joseph Heinrich in "The Evolution of Religion", that we one can collectively engage "emotions and motivations using music, rhythm, and synchrony" (Biological Theory 5(1) 2010, 23). More, synchrony results in strangers being more likely to cooperate "by strengthening social bonds among group members" and all three contribute to the instilling of "committment and trust" (23). In other words, drama would be even more effective in the way Berman suggests if it included rhythmic poetry, music, and dance. It is perhaps no coincidence that ancient Greek tragedy involved all of these elements.

Now, I supposed that one could object that opera includes music and poetry/songs. And many musicals include all three. But how many musicals are indeed serious? And who sees contemporary opera?

What kind of theater could create the feeling of integration into the social spontaneous orders?

Sunday, August 22, 2010

Marxism -- Secular Religion

I have often argued that Marxism is a religion. I have recently even argued that Marxists and other advocates of central planning believe in what is essentially economic creationism (which is really just a development of the former theme). But let us consider my claim in light of the following definition of relgion by Scott Atran and Joseph Henrich in "The Evolution of Religion: How Cognitive By-Products, Adaptive Learning Heuristics, Ritual Displays, and Group Competition Generate Deep Committments to Prosocial Religions" in Biological Theory 5(1) 2010:

the cultural evolution of prosocial religions and the historical rise of large-scale civilizations involve the dynamic interaction of the by-products of adaptive cognitive mechanisms (e.g., minimally counterintuitive beliefs and overextended agent concepts), adaptive learning heuristics (e.g., emulation of successful and prestigious individuals), credibility-enhancing ritual displays (e.g., self-sacrifice and costly comitments to seemingly preposterous beliefs), and cultural group selection for those packages of rituals, devoltions, and beliefs that best sustain in-group prosocial norms (e.g., monumental undertakings, sacred values). (19)

Now, one may argue about exactly how pro-social Marxism actually is (I think it is deeply anti-social insofar as we are talking about social mammals, but it is certainly pro-social if we are talking about social insects), but let us look at the rest.

Does it have "minimally counterintuitive beliefs"? Certainly. Who isn't in favor of justice, equality, and fairness? None of these are counterintuitive. What makes it "minimally counterintuitive" is that the equality comes about from acting as though people were equal in fact and actuality, rather than under the law. The opposition to private property is also minimally counterintuitive -- it's easy to imagine any number of utopian systems without private property. It has nothing to do with reality or how people actually behave, but it's easy to imagine.

Does Marxism involve "overextended agent concepts"? Most definitely! Marxism treats the economy as an agent with goals and purpose that should thus be taken control of by someone with godlike knowledge and reason (thus overextending agent concepts among people as well). They act as though it is rational to discuss justice as an element of the market economy. It is not. It is not precisely because they overextend agent concepts into spontaneous social orders in which teleological concepts are inapplicable.

Does Marxism involve "emulation of successful and prestigious individuals"? Another way of asking this: does it have heroes? Again, it most certainly does. Marx, Engels, Castro, Lenin, Mao, and now that fool Hugo Chavez.

Does Marxism involve "self-sacrifice and costly committments to seemingly preposterous beliefs"? Again, most definitely. First, you have the preposterous beliefs that constitute Marxism itself in it concepts of human nature, human action, the nature of the economy, the nature of justice, the possibility of egalitarianism as a social reality -- pretty much everything. It is an endless stream of preposterous beliefs. And committments to it have proven over and over again to be costly -- in wealth, economic growth, and in human life. The rhetoric of every communist country is and has always been "one must sacrifice one's self to the collective."

Does Marxism engage in "monumental undertakings"? Look at the monuments built in the former Soviet Union and in Communist China. Look at Stalin's 5-Year Plans.

Does Marxism have "sacred values"? That's all Marx ever offered.

None of this applies to the free market spontaneous order.

Saturday, August 21, 2010

Internalism vs. Externalism in Evolution and Order

A short piece in "Biological Theory" 5(1) 2010 by Marta Linde Medina titled "Two "EvoDevos"" points out that there are two theories of how life is organized and how it evolved: :the externalist and the internalist perspectives, also called functionalism and structuralism, respectively" (7). She observes that "Darwinism, and consequently, the standard theory of evolution, derives from the externalist perspective. From this point of view, living matter is a passive and non-intrinsically ordered entity, requiring organic form to have been forged by an external agency. This framework is the result of importing Newtonian mechanics into the study of living organisms by both preformationists and Darwin during the 18th and 19th centuries respectively" (7) On the other hand, we have the iternalist perspective, where "living matter is an active agent---an excitable medium capable of self-organization, i.e., capable of exhibiting "order for free" by the interaction between different subcomponents, without requiring an external organizing factor" (7-8). She observes that the latter was also how Kant imagined organisms to be.

This is also the issue in economics, culture, and other areas of social organization. Where does that organization come from? Does it come from the outside (i.e., from government), or is it properly organized internally? The answer for social organization and evolution, including for economies, is the same as that for the brain's organization and evolution, biological organization and evolution, and even --dare I say -- cosmological organization and evolution. I have posed this as creationism vs. self-organization. This is another way of stating it that keeps things scientific for those squeemish at the fact anti-market thinkers believe in economic creationism. Those who oppose markets and think the government is the answer to everything are externalists -- and just as wrong. Newtonian economics is as wrong as Newtonian cognitive theory (which requires the Cartesian homonoculus) and Newtonian biology.

Finally, she observes that "From the externalist perspective, where organization is a product of chance and sorting, the existence of organizational principles is denied and evolution is considered a historical narrative. from the internalist perspective, organic form is the result of the laws of organization, implying that evolution has a law-like component" (9). This last observation should sound very familiar to Austrian economists.

Friday, August 20, 2010

F.A. Hayek's Amazing Book "The Sensory Order"

Reading F.A. Hayek's "The Sensory Order" at the same time one is reading other works on how the brain works, on complex adaptive systems, and on bios theory helps one really see how incredibly brilliant and ahead of his time Hayek was -- on a subject he was technically not an expert in. Hayek argues, for example, that the brain creates an internal model of the world, and that it necessarily does so; Stuart Kauffman argues that this is necessarily a feature of all living things as complex adaptive systems in general, and of brains in particular. Hayek takes the approach he does because he believes that understanding mental processes will help us to understand economic processes; Hector Sabelli in "Bios" argues that "The continuity of evolution requires that the same fundamental forms must be expressed in physical, biological and pyschological processes" (4-5) -- and similar social systems such as economies. Thus, to understand one helps one to understand the other. Hayek argues that we sometimes process similar things as different and different things as similar; Dehaene in "Reading in the Brain" points out that we do exactly this in reading different shapes of letters as the same (L or l) and similar shapes as being different (depending on context).

A good example of the latter -- what is this: |

It is either a line segment, a capital letter I, a lower case letter l, or the number 1. The same image is processed differently.

Hayek argues that our minds are made as modules; evolutionary psychologists make the same argument. Hayek argues that these modules are processed by a general intelligence; David Sloan Wilson makes the same argument. Hayek argues that as over a given span of time, sensory imputs do not so much "evoke specific responses but increasingly merely to modify and control behaviour in the light of the whole situation" (5.33); Hawkins in "On Intellgience" observes that this is exactly how vision actually works, by periodically checking to see if everything is the same as it was before.

"The Sensory Order" was published in 1952. Amazing.

Thursday, August 19, 2010

Central Planning Misallocates Resources -- Education Edition

Last night I had a discussion with my wife, who is an elementary school teacher, about how there is no correlation between spending per pupil and educational outcomes. In fact, there is almost a negative correlation. She pointed out that her district did in fact spend a lot, and the educational outcomes were some of the best in the nation. True enough (not that that's a real horse race in this country). Still, I argued, most of the spending on technology was a complete waste, because there was no correlation (again, more of a negative one) between use of technology in a classroom and educational outcomes. I argued that most of what we do in education is a distraction. I'm not sure she really believed me.

One of the pieces of technology in question is one my wife was exciting to get. She told me that everyone in the district received these new computer pads that you can write on and with which you can project what you write using a projector that comes with it. A thousand dollars apiece, and each teacher in the district got one. Everyone is being trained on them, and everyone is expected to use them. My wife has been looling forward to using it, so my diatribe against technology in the classroom really rained on her parade.

Today, my wife comes home and tells me that the lights on the projectors have been burning out. The lights are $300 each, and the district doesn't have any money available for new bulbs. In other words, when the bulb runs out, the pad is practically useless for classroom use (it will still work on the computer -- but you can't have 20 kids sitting around a laptop). So those whose projector bulb has already blown will be unable to use it at all -- and it will sit in the corner, collecting dust. A thousand dollar paperweight. The rest, knowing the looming problem, will be reluctant to use the pad for fear that the bulb will burn out and they won't be able to use it at all.

You have to love the outcomes of central planning. Combine it with fad-chasing, and you have the public school system in a nutshell.

My wife confessed to me that she almost didn't want to tell me what happened with the bulbs. Not only will they likely be pedagogically useless -- it turns out each one will soon become literally useless.

Musings on the Place of Justice in the Spontaneous Orders

The purpose of an economy is to produce goods people want -- the result of which is to improve people's material conditions. This is based on individuals' subjective values. No system of justice can be based on subjective values. What, then, does justice have to do with economics?

If justice cannot be based on subjective values, does that mean it is based on objective values? What can we mean by "objective" here? Or is there a third option?

A work of art, literature, etc. may represent people acting virtously or unvirtuously, but that does not make the work itself virtuous or unvirtuous. One can make ethical judgments of the characters (including the narrator in a work of literature), but not of the work itself. Only aesthetic judgments apply.

Justice must be moral, but not all actions judged immoral are unjust. This implies that justice emerges out of the moral order, but is not the same as the moral order.

This implies that each kind of spontaneous order -- economic, artistic, scientific, moral, etc. -- has its own criteria of judgment that is separate from issues of justice. When is justice ever applicable to any of these spontaneous social orders? Perhaps only when the participants of the orders do something within those orders that are truly dysfunctional, that expel them from the order -- thus throwing them into the legal order.

However, please note that there is little one can justifiably point to in the artistic order that would result in your being thrown out of the order and into the justice order. The same is true of science -- falsifying data doesn't get you in legal trouble (most of the time), but it does get you ejected from the scientific order. If justice in the legal sense makes little sense in these orders, why does it make sense for any of the other orders? The economy, for example?

Monday, August 16, 2010

Beauty and Paradox from My "Diaphysics"

A thing is beautiful if it is paradoxical. Beauty has or contains the following features:

Complexity within Simplicity


Emergent from Conflict

Evolutionary (changes over time)

Generative and Creative

Hierarchical Organization

Play (a nonserious thing done seriously)

Reflexivity or Feedback



Scalar Self-Similarity


Unity in Multiplicity

These are also features of the universe as a whole. Christian Fuchs lists the following features as aspects of self-organization:



Cohesion (digial-analog)


Bottom-up Emergence

Downward Causation


Feedback Loops, Circular Causality


Relative Chance


Globalization and Localization

Unity in Plurality (Generality and Specificity)

And for Emergence, he lists the following aspects:

Synergism (productive interaction between parts)






If we compare the lists, we can see there is a correlation between self-organizing complex systems and beauty. Each have the same attributes. "Cognition, co-operation and communication are phenomena that can be found in different forms in all self-organizing systems. Information is a relationship that exists as a relationship between specific organizational units of matter (Fuchs). All beautiful objects are information-generating systems. And to the extent that something is a self-organizing system, it is beautiful.

Sunday, August 15, 2010

Darwinian Conservatism by Larry Arnhart: Lewis, Aristotle, and Practical Reason

Darwinian Conservatism by Larry Arnhart: Lewis, Aristotle, and Practical Reason

Good stuff. Arnhart is doing good work on the evolution of morals and the moral spontaneous order.

Hayek In Mind Essay Proposal

This is the project I am working on now:

As humans evolved more social behaviors, we evolved an improved ability to detect intentions in others, to the point of it becoming almost instantaneous. One result, though, is that “Our ancestral sociality endowed us with a hair-trigger when it comes to detecting intentions, even where there are none. When confronted with impersonal processes, we prefer to see design, purpose and agency” (Tonaka, Jiro. “What is Copernican?” The Evolutionary Review Vol. 1, pg. 8). This has resulted in errors in understanding the economy, society, culture, and even the brain. This tendency is perhaps why Descartes developed his mind-body dualism, and his homunculus theory of the mind.

F. A. Hayek proposes a way out of this designer fallacy. Hayek proposes a bottom-up emergence of system-wide patterns from the interactions of the system’s parts. This is the theory of mind advanced in The Sensory Order. To the extent that Hayek is talking about what is called general intelligence, he has proven to be mostly correct. What, then, do we make of the modular theory of the mind, as proposed by proponents of evolutionary psychology? Does that disprove Hayek – or does Hayek disprove evolutionary psychology? Or might they be reconciled?

Recent work in cellular regulatory systems suggests there are three basic structures: simple hierarchical structures, complex, decentralized systems, and intermediate forms (Nitin Bhardwaj, Koon-Kiu Yan, and Mark B. Gerstein. “Analysis of diverse regulatory networks in a hierarchical context shows consistent tendencies for collaboration in the middle levels.” Proceedings of the National Academy of Sciences, 2010). We see similar structures in social organizations, with humans evolving in simple, hierarchical societies, and those societies evolving through intermediate-structured societies to complex, decentralized spontaneous orders. It seems likely the brain evolved in a similar fashion, and still retains elements of each, with human general intelligence as described by Hayek finally emerging. The modules proposed by evolutionary psychologists represent intermediate levels of complexity whose structures in humans are modified by human general intelligence structures. And more rigidly hierarchical structures in turn underlie the modules.

This has consequences for behavior, including moral and economic behavior. We would expect limits on behavior – and the kinds of systems humans will create naturally and can live in. More, if the three basic structures also follow the patterns of stability found in regulatory systems, we would expect simple, hierarchical systems to be most delicate and, thus, resistant to change, while complex, decentralized systems would be most robust and able to change (which is indeed a feature of general intelligence). We would expect behaviors associated with our most primitive brain features – inherited from territorial lobe-finned fishes – to be most rigid and unchangeable.

To traverse all of this, an interdisciplinary approach is necessary. The mind is an embodied complex system whose structure is created by complex interactions among genes, the body, and the social environment – each of whose structures resemble each other. At their most complex levels, Hayek seems to have created the most accurate models of the latter two. With modifications, Hayek’s insights can continue to move us forward in understanding the most complex entities known to man: our societies and our brains.

Saturday, August 14, 2010

Some Excerpts from My Book "Diaphysics"


Bios theory [which was developed b Hector Sabelli] shows that growing, changing, creative systems are nonlinear and exist on the borderlands between order and disorder. Complete order---and complete disorder---both are definitions of being dead. A salt crystal is an example of complete order--a gas in a closed container at a constant pressure and temperature is an example of complete disorder. Living things exist on the edge of order and disorder, the realms of chaos and bios, wherein lies the principle of growth. Living things are systems, and systems have order and disorder---the heart is a system (which is part of the circulatory system, which is part of the organismal system) that can have neither completely orderly beats, nor completely random beats, but must have beats that are mostly orderly, with some disorder, which means the beats are biotic, creating a mandala shape when their time series is transformed by sine and cosine, complementary opposites. Cell membranes are orderly and disorderly---they are liquid crystals, fluid yet solid, as the proteins and phospholipids slips past each other. All living things live on the principle of growth, live in the realm of order and disorder, live lives far from equilibrium.


If the principle of growth and stability for life is in the nonlinear, far-from-equilibrium realm between order and disorder, this would be the principle of growth and stability for systems of living things as well, icnluding superorganismal systems such as ecosystems, economies, and governments. Indeed, studies of ecosystems show they are not stable---at some sort of equilibrium---but are in fact always in flux, always changing, in time. And the way they change follow power laws---with many small changes, a few medium-sized changes, and very few large changes, as we see in avalanches of sand when we pile sand up one grain at a time. They are systems far-from-equilibrium, always growing, in a state of orderly disorder---disorderly order. If something were to happen to make any given ecosystem stop changing---which is to say, stop growing---that ecosystem would die off. Ecosystems are stable only so long as they are constantly in flux, constantly changing. Thus, they cease being the ecosystem they are within the next moment, forever changing---deserts move in and recede, forests expand and recede, grasslands expands and recede. Meandering rivers cut off oxbow lakes where new kinds of fish evolve---to be introduced ot the river when the meandering river merges again with the oxbow lake. The new fish compete with the other fish in the river, pushing some to evolve, others to go extinct, others into other habitats. They change as the river changes, flowing into new species with the flow of time and the flow of the very river in which they live.


Without cooperation, nothing could get together to create complexity. Without conflict, no tensions would exist to lead to creativity. The universe has evolved greater complexity and greater creativity---meaning cooperation and conflict (love and strife, eros and eris) are necessarily present. Everything in the world is both in conflict and in cooperation. Both, simultaneously.


All bonds are created through the combination of attraction and repulsion---chemical bonds, atomic bonds, love bonds, and economic bonds. Love and strife make the world.


There are no natural systems controlled by a central authority.


A natural economy is a bottom-up hierarchical self-organising open system. A natural society is a bottom-up hierarchical self-organising open system. A natural culture is a bottom-up hierarchical self-organising open system. Bottom-up hierarchical self-organizing systems contain a great deal of redundancy, which is what makes them robust. The more complex a system is, the more redundancy it has to have to reimain stable. Remove redundancy---that is, simplify the system and make it more "efficient"---and you kill the system. If one part of a completely efficient system breaks down, the entire system breaks down. This is why socialism is always going to be a failure---as though it being a dehumanizing system were not enough of a reason. Systems theory warns us "that the Leviathan of organization must not swallow the individual without sealing its own inevitable doom" (Bertalanffy, "General Systems Theory" 53).


In economics, supply and demand curves have a point called the equilibrium point. This point only exists in a land without time. What we need is steady-state economics, recognizing the economy as a dynamic system. Still, the supply-demand curve is a useful fiction that more people need to be more faimilar with so fewer demagogues will have the ability to successfully lie to us about the causes of prices (competition among producers drive prices down; competition among consumers drive prices up).

Spontaneous Order and Far-From-Equilibrium Systems

In atomic-chemical environments, we have three states of matter: solid, liquid, and gas. This is what people generally understand to be true, but it's in fact only 3/5 of the picture. In fact, we have transition states between solid and liquid and between liquid and gas. Crystals, for example, are solid and orderly. Water is of course liquid between just above 0 C and just below 100 C. But there is a transition state between crystal order and liquid chaos known as liquid crystals. Another feature of this transition state is that it is far-from-equilibrium, meaning the parts interact in a dynamic fashion, creating strange atractors and, thus, complex dynamics, in their interactions. This is a dynamic order of a different kind than that of crystals, but which appears disordered relative to the simple crystal order. What has all these fatures, of dynamic, far-from-equilibrium liquid crystal order? Living cells, of course. As Peter T. Macklem in "Emergent Phenomena and the Secrets of Life" observed, "We the living exist in a complex regimen in the phase transition between order and chaos. We are there because that is the only place we can be both ordered but adaptable, stable but able to evolve. Crystals are stable and ordered but cannot adapt or evolve. Weather evolves but is unstable and cannot survive" (J. Appl. Physiol. 104: 1844-1846, 2008). However, as we can see from the way I have described it, Macklem is only partly right. Life is not in the transition state between crystals and weather, but between crystals and water. There is in fact something in the transition state between water and weather, and those are known as hurricanes. One will note that hurricanes can and do in fact survive sometimes for days or even weeks at a time. In both kinds of order that occur in the phase transitions, there is a "narrow range of energy consumption over which phase transition occurs" (Macklem). Hurricanes occur if and only if the exact right conditions occur. But if we consider the number of tropical storms and hurricanes in any given year, we can see how often the exact right conditions can in fact occur. And clearly the right conditions occured for the emergence of life becasue, well, here we are.

Of course, what we are talking about here is phase transitions between states of matter. This region will of course be more orderly in the region between solid and liquid than it will be between liquid and gas. The stability of the order between solid and liquid will create more opportunities for the development of strange attractors to create more complex order within such a system. This level of stability is probably why simple cells are able to develop into more complex organisms -- the greater order creates more structural possibilities.

One such structural possibility comes about with the brain. The brain is a complex network of communicating cells with a pretty tight and complex level of communication. Information is able to be transmitted across the entire network of neurons in a more rapid way than a muscle cell in the toe could communicate information to a skin cell on the scalp without neurons (i.e., it would have to rely on chemical diffusion, or at best transmission through the blood stream -- both of which are highly imprecise). The brain is thus more complex than any other organ. Other organs are more orderly -- but it is precisely the brain's disorderliness, pushing it into the realm of phase transition, that makes it more complex. Indeed, the human brain probably lies in the phase transition between order and chaos. A human brain too orderly is likely to be more like an animal's brain, while a human brain too chaotic is likely to exhibit features of mental illness. More creative people perhaps lie closer to the chaotic region, where the brain is farthest-from-equilibrium without falling into complete chaos, allowing them to be highly creative. Indeed, the far-from-equilibrium region is the region of maximum creativity. The healthy human brain thus lies in the phase transition between order and chaos. Too much disorder, the the system falls apart -- gets thrown into chaos (and mental illness in the brain); too much order, and the system rigidifies. How do we get too much order in a complex system? Simplfying processes create too much order. As the system simplifies, it first enters into more and more regular rhythms, becoming more and more predictable in its behavior, until it collapses into a more rigid order lacking growth and creativity. The closer it approaches simple order and, thus an equilibrium state, the closer it approaches death. In the cell this means dying. In the brain, this means collapse into animalistic behaviors.

And what of the kinds fo systems which arise out of the interactions of people? As with each of the systems mentioned, you have to have a certain number of elements before you are able to achieve complex dynamics. This varies from system to system. But one reaches a point where there are enough elements interacting in complex enough fashion that a phase transition occurs, and one gets far-from-equilibrium states with complex dynamics. F. A. Hayek called this spontaneous order. We can find it in social orders of all kinds -- from the arts to morality to language to the economy. Societies range in structure from rigid order to chaos. From a global perspective, a state of wandering tribes would constitute "chaos". Constructivist societies -- various forms of socialism, for example -- would likely consider "rigid order" in this definition. The kind of society that would emerge in the phase transition, made up of networks of people of high enough concentration and population size, would constitute spontaneous orders. Such an economy, for example, would neither be one of rigid order (that is, an economy at equilibrium) nor of chaos. We can compare the state of an economy to that of the brain. One with too much chaos does not have enough structure. It flies apart -- or, more likely, has never come into being. One at equilibrium is dead (one may note that an economic theory where equilibrium is assumed is an economic theory of a dead economy). One approaching equilibrium is dying -- and the first indication of its dying is that it has entered into regular cycles. Of course, an economy may not die at one go. Rather, it may emerge into a less complex state -- move from a typical unemployment rate of 5% to one of 10%, say. Something as complex as an economy could simply ratchet itself into rigidity and death.

A healthy economy, on the other hand, is one with complex dynamics, a network structure that is far-from-equilibrium, structured by both positive aand negative feedback and, as a consequence, creative. Prices, goods, labor, capital do not reach equilibrium and, as a result, create entrepreneurian opportunities. Goods are moved to where they are needed and new products are invented. Resources, including labor and capital, are thus properly allocated within relatively short periods of time. This is a theory of a real economy.

Friday, August 13, 2010

Polanyi on "Life's Irreducible Complexity"

I recently discovered an old article by Michael Polanyi, "Life's Irreducible Structure" in the 21 June 1968 Science in which he discusses complexity and emergence in relation to biology. It is amazing how far ahead of his time Polanyi was -- it took almost 30 years for Polanyi's ideas (which are further developments of Bertalanffy's ideas from before WWII on complex systems) to become fairly well-established facts and to increasingly become mainstream ideas, at least in the sciences. They ought to be mainstream ideas in the human sciences, including economics, but alas they are mainstream only among the Austrian economists.

Consider Polanyi's observation that a complex system with emergent properties "is subject to dual control: (i) control in accordance with the laws that apply to its elements in themselves, and (ii) control in accordance with the powers that control the comprehensive entity formed by these elements" (1311).

In biological terms, the biochemical cycles give rise to the cell, which in turn determines what biochemistry can and will take place. You need to understand both to understand biochemistry and cell biology. But let us consider this too from the standpoint of economics. You need to understand human action to understand how an economy can emerge out of those interactions. In turn, the economy that emerges affects the kinds of actions people will engage in. That economy is going to have strctures and patterns that cannot be reduced to the interactions of acting humans, yet necessarily emerge from those interactions. Or, as Polanyi observes, "the operations of a higher level cannot be accounted for by the laws governing its particulars on the next-lower level" (1311).

But there is more to it than this. As I observed, the higher level sets a boundary to what the lower level actions can be within that higher level system. "Each level relies for its operations on all the levels below it. Each reduces the scope of the one immediately below it by imposing on it a boundary that harnesses it to the service of the next-higher level, and this control is transmitted stage by stage, down to the basic inanimate level" (1311). To put it concretely: the kind of economy we act within will affect our mental state, which will affect our biological state, which will affect our biochemical state, which will affect our atomic state. At the same time, atomic behavior affects chemical behavior affects biological behavior affects mental behavior affects the economy. How this latter works, according to Polanyi, is that each lower level "evokes the ontogenesis of higher levels, rather than determining these levels" (1311). In other words, new levels of complexity are evoked, while those higher levels encourage the behaviors of the lower levels. There may be a kind of determinism within a level -- but it is a determinism appropriate only to that level. The determinism of physics is thus appropriate to that level and only to that level.

One of the consequences of this is that emergence reverses the drive toward nihilism inherent in the deterministic, entropic world view. As Polanyi observes, "a boundary condition which harnesses the principles of a lower level in the services of a new, higher level establishes a semantic relation between the two levels. The higher comprehends the workings of the lower and thus forms the meaning of the lower" (1311). One gets more and more meaning the higher the level. Those who recognize the economy as a spontaneous order emerging from the interactions of individual human beings thus recognize the meaningfulness of that system; nihilism vanishes with each emerging level of complexity. But those who seek to reduce the economy to a lower level -- who think of it as deterministic, able to be controlled or even nudged in the "right" direction -- seek to reduce meaning in the world, are seeking to reduce the economy to less than it really is; nihilism emerges with such attempts to eliminate its complexity. Such people are no different from anyone who would seek to "improve" a living organism by reducing its complexity -- turning it into a pile of chemicals and, thus, killing it.

The Tragic Institutions

An old article is back: The Tragic Institutions

Thursday, August 12, 2010

Monday, August 09, 2010

How to Collapse a Complex System: Stop Change

Here is an interesting short article on ecosystems as far-from-equilibrium systems. Most notable is the observation that without mutations, the entire system collapses, while even a small mutation rate allows the system to remain robust. Change "mutation" to "technological innovation" or "ability to adapt" and this applies equally to the economy.

Advanced Austrian Economics

I just got back from a great week in New York. I was at the Advanced Austrian Economics Seminar put on by the Foundation for Economic Education. I saw a few people I already knew: Bill Butos, Peter Lewin, Steve Horwitz, Bruce Caldwell, and (if meeting someone for literally a minute is knowing someone) Pete Boettke. More, I got to meet several others, including Israel Kirzner ( a brilliant, brilliant mind!), Chrispher Coyne, Peter Leeson, Mario Rizzo, Lawrence White, and Larry Reed. I learned a lot. More, I was stimulated in my thinking on some of my own projects investigating spontaneous orders. Especially involving the use of the concept of the entrepreneur. I think that will be a very fruitful development of my thinking of the spontaneous orders of the arts. I was also encouraged by Pete Lewin to pursue further my idea on self-organized criticality and cycles. Overall, a good week. Now I just need to get enough published to get invited to be on the other side of the desk.