No one would question the fact that economic systems have planning within them and that successful business ventures have elaborate planning often right down to the tiniest percentage of a market share point and how to capture it. But is the system itself planned?
Consider the same question from a biological perspective. Is an ecosystem planned or spontaneous? Is the evolution of biological organisms planned or spontaneous? How might one frame this as a question that can be tested? For example in a planned system one should be able to describe the outcomes. The outcome of natural evolution is biological organisms that can be broadly grouped into species, genera, families and so on. The outcome of ecosystems is individual and species associations and relationships into patterns depending on their interactions. Those are the forms of the results. In each case a conceptually simple process of elimination based on how well the fit is to the conditions. In the case of evolution, the selection takes place at the genetic level and is expressed at the individual level. In the case of the ecosystem, selection takes place at the individual level and is expressed at the species level.
To be planned or even just to be predictable, we should be able to predict what the roster of species will be from evolution. However that is really not possible. The underlying process is just too random, even though it is entirely based on what came before. So what species will evolve next is essentially a chance process. The same is true of ecosystems. Although we can describe in general or even detailed terms what we observe, but it is virtually impossible to predict what species associations will occur or what dependencies will develop if the conditions are shifted, or if one creates an artificial ecosystem and introduces species into it. Certainly we will not be able to predict what will happen to the current intricate dependencies and interrelationships in an ecosystem 100 years into the future as the world climate systems shift.
In both ecosystems and in the course of evolution a simple implacable system operates to weed out the unfit; in one case genes, in the other individuals. Are econosystems the same?
Econosystems have been evolving for about 100,000 years, the base unit of that evolution is the individual entrepreneur’s information base as well as the historical base of information on which he can build. This is expressed in the equivalent of an individual in biology — the business enterprise or corporation. Groups of these businesses or corporations that have very similar characteristics can be thought of as the equivalent of species. I have suggested naming them “lucrespecies.”
Econosystems operate in a manner that is essentially the equivalent of ecosystems. Like ecosystems, the individual business enterprise of corporation is the level of selection where the business thrives, survives, or fails and is eliminated. This selection results in associations and dependencies amongst the lucrespecies that survive.
Although one could probably predict what general form many lucrespecies would take as the result of the next few thousand years of economic evolution, no prediction of what the the actual lucrespecies might be in the future because there is no predetermined definition or plan for the future businesses or corporations, any more than there is a predetermined plan for the species of animals and plants that will evolve. Who would have predicted the enormous social media lucrespecies like facebook, or google, or twitter even a few years ago? And being able to predict the interrelationships even of more traditional lucrespecies such as Walmart and its dependent businesses is equally impossible for the simple reason there is no master plan, no predetermined scheme for the economy.
There is a great deal of planning inside the econosystem. All of these plans are figuring out how to optimize or increase the share of resources or market while staying within the rules, more-or-less, to augment the wealth and survivability of the business. Often the planning is highly innovative and builds cleverly on the known variables but at the same time reaches out experimentally to see if a new innovation will garner even more of a share of the market or a bigger profit. As economic and technological or other environmental conditions shift, businesses revisit their plans and attempt to adapt to the new conditions. Businesses succeed or fail based on how well these plans meet the competitive market or fail because they didn’t adapt, or they invested too heavily in the untested innovations.
This model is essentially identical to the biological metaphor. Species in an ecosystem play by the rules according to the characteristics they have been dealt genetically, just as businesses play by the rules according to their characteristics designed by the owner as he figured what to sell, how to build it and to whom he should sell it, modelling the business on other similar businesses. Variations in ecosystems reflect species’ competitive or adaptive strategies in the context of the ecological mix of species, competitive relationships, dependencies, basic resources, and adapting to novel conditions. Variations in econosystems reflect businesses’ competitive or adaptive strategies in the context of the economic mix of businesses, competitive relationships, dependencies, basic resources, and adapting to novel conditions.
Part of the reason the two systems are not “planned” is because the future is not known, so they both develop according to the way each entity within them adapts to the situation in the short (ecological) and in the long (evolutionary) term. Each type of econosystem whether it was the first barter system or the most recent capitalist system was not pre-designed or pre-planned, it simply and spontaneously grew out of the existing system in response to the changing conditions. Capitalism evolved in reaction to a suite of changed conditions, and is itself similar in nature to an ecosystem in that they both involve individuals competing or adapting. The results of the individuals’ successes or failures is expressed in the types of species or lucrespecies that succeed or fail and ultimately in the nature of the relationships that develop amongst the successful species to form the patterns we see in both systems.
For example, If the systems were planned we should be able to accurately predict what will come next. Take the econosystem for example. Currently we have a selection of centrally controlled econosystems, ranging from dictatorial regimes where individuals are not allowed to own wealth except as the dictator allows. We also have a selection of econosystems that are not centrally controlled, but which may be regulated by policy and legislation. Within the econosystems that are not controlled centrally the dominant is a mix of individual or family enterprises and capitalism operating side-by-side. The arena for the on-going activity of the econosystem is the market. Governments can place regulatioins of varying degrees of severity on markets as well. The concept of free market is a market in which there are no regulations to control pricing or distribution. In general, but not always, it is assumed there is also a governmental control of the external social laws against theft, murder, etc. Where there is no central government applying basic laws, individuals are assumed to have the right to defend themselves to preserve their life, liberty, property, and health as first expressed by John Locke in the 1600’s. In a free market it is assumed that pricing, supply and demand will find the balance at any time by virtue of their interplay.
As these econosystems continue to evolve, the next innovation that gives rise to a new system will be … where? What will it look like? You can guess, but that’s all you will be doing. In fact, the next step in the evolution of the econosystem will be a spontaneous, unplanned, non-deterministic development reflecting the local conditions, the mix of lucrespcies available to draw on, and the variations on the themes or inventions from the existing technologies that arise, are tried, and succeed or fail. That is the sense in which John Locke and others used the term. It is completely consistent with the biological metaphor I have been using throughout this series of blogs.
Yes, econosystems arise, evolve, and form complex interrelationships spontaneously.