Advanced Political Economy: Evolutionary Economics

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Advanced Political Economy Evolutionary Economics

• From Lamarck to Darwin Back?

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Evolution Metaphor or reality?

• Mainstream economics based on analogies
• Mechanics equilibrium of mechanical system
• 19th century heat dynamics
• Essential questions
• How does the system reach equilibrium?
• What are the properties of equilibrium?
• Is the economy mechanical?
• Clearly not
• Is it ever in equilibrium?
• Always changing
• Changes both quantitative and qualitative in
  nature
• Are equilibrium questions the right ones to ask?

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Evolution Metaphor or reality?

• Well-accepted concept of continuous change in
  biology
• But in economics?
• Irrelevant, a more appropriate metaphor, or the
  reality of the economy?
• Evolutionary perspective asks
• How and why do things keep changing?
• What are the feedbacks between different
  organisms in an ecology?
• Are these better questions to ask than
  equilibrium ones?
• Will they result in
• Just embellishments to mainstream economics, or
• A completely different set of concepts?

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Evolution Metaphor or reality?

• Adaptive change essence of biological evolution
• Individual organisms alter in different ways
• More suitably adapted organisms do better
• Selection over time weeds out less well adapted
• Can same be said for the economy? Perhaps
• Individual firms/agents alter in different ways
• More suitably adapted firms/agents do better
• Selection over time weeds out less well adapted
• Possibly some similarity, but some steps (e.g.,
  weeding out process) not obvious.
• So analogy may be useful
• But use of analogy should not be constrained by
  inadequate understanding of evolutionary theory

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Evolution Metaphor or reality?

• Understanding of metaphor influences application
• Pop evolution is survival of the fittest
• Favours law of the jungle in social situations
• Let the weak lose, the strong win
• Actual evolution far more complex than this
• Symbiotic relationships often important (weak
  help other weak to be strong)
• E.g., Bees flowers
• Cars rubber (tyres)
• Feedback between evolution and environment
• not just environment selects organism, but
  organism affects environment
• E.g., oxygen!

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Evolution The early views

• Need full appreciation of evolutionary
  theory/data before we consider analysing economy
  using evolutionary tools.
• And it doesnt start with Darwin
• Pre-Darwinian theory we call Creationism
  today
• All creatures supposedly created by deity

And so on...
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Evolution The early views

• View disturbed by many empirical problems
• Fossil recordwhy did it exist?
• Adherents answer was to test our faith!

• Cruelty in animal relationsspider-wasp laying
  eggs in spiderhard to explain from religious
  position

• Lamarck made first systematic attempt to provide
  natural explanation for diversity in living
  organisms

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Evolution The early views

• Jean Baptiste Lamarck (1744-1829)
• Became botanist after brief military career
• During French Revolution, appointed Professor of
  Invertebrates (insects worms)an area for which
  there was then no science
• Developed classification system noted great
  variety of forms
• Argued for development of different forms over
  timenot then-accepted Genesis, but Evolution

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Evolution The early views

• We call species every collection of similar
  individuals produced by other individuals just
  like themselves But we add to this definition
  the assumption that the individuals who make up a
  species never vary in their specific
  characteristics and that therefore the species
  has an absolute constancy in nature.
• It is precisely this assumption that I propose to
  contest, because clear proofs obtained through
  observation establish that it is not well
  founded.
• Argued that what looked like distinct species
  were often fine gradations from one creature to
  the next
• Gradual change from one individual to another
  over time gave rise to false impression of
  specialisation

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Evolution The early views

• How many genera, , that the study and the
  definition of these species are now almost
  unworkable! The species in these genera, arranged
  in a series and set beside each other according
  to an analysis of their natural affinities,
  display, along with those which are close to
  them, differences so slight that they are
  modifications of each other and these species get
  confused, in some way, amongst each other,
  leaving almost no way of determining in some
  explicit way the small differences which
  distinguish them.
• Go back up to the fish, reptiles, birds, even to
  mammals. You will see everywhere, apart from the
  gaps which still have to be filled, the
  modifications which link up neighbouring species
  leaving hardly any places for our ingenuity to
  establish good distinctions.

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Evolution The early views

• Influenced by study of simplest multi-cellular
  organisms (slugs, etc.) versus more complex forms
• Saw progress from simplest to more complex
• Must I not think that nature had produced the
  different bodies endowed with life in succession,
  proceeding from the simplest to the most highly
  organized, since, as we go up the animal scale
  from the most imperfect right up to the most
  perfect, the organism's organic structure is
  developed and gradually becomes more complex in
  an extremely remarkable way?
• Natural progress from simplest forms to most
  complex

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Evolution The early views

• Basis of development of more complex forms is
  use
• there is considerable factual evidence proving
  that the sustained use of an organ leads to its
  development, strengthens it, and even makes it
  grow larger, while a lack of use, once it becomes
  habitual, is harmful to an organ's development,
  makes it deteriorate, gradually diminishes it,
  and finishes by making it disappear, if this lack
  of use continues for a long time in all the
  individuals which appear later through
  reproduction. From this we understand that when a
  change in the circumstances compels the
  individuals of an animal race to change their
  habitual behaviour, the less used organs little
  by little waste away, while those which are used
  more develop better and acquire a strength and
  dimensions proportional to the use which these
  individuals routinely make of them.

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Evolution The early views

• Two identical animals on the African plains
• One tends to eat leaves on tall trees
• Other tends to eat grass
• Neck of former grows as a consequence of
  stretching
• Over generations, offspring of have longer necks,
  latter remain short
• Development of traits in conjunction with an
  environment that favours them

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Evolution The early views

• In this matter of habits, it is remarkable to
  observe the result in the peculiar form and
  height of the giraffe We know that this animal,
  the largest of the mammals, lives in the interior
  of Africa and dwells in those places where the
  earth, almost always arid and without grass,
  requires the animal to browse on the foliage of
  trees and constantly to try hard to reach that
  foliage. As a result of this habit, maintained
  for a long time in all the individuals of its
  race, the animal's front limbs have become longer
  than those at the back, and its neck has grown
  longer to such an extent that the giraffe,
  without rearing up on its hind legs, lifts its
  head and reaches up to six metres in height

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Evolution The early views

• Basic insights are
• Variation of individuals within one species
• Fine gradation from one species to the next
• Environment favours some developments over others
• Deduction becomes
• Species develop by slow accumulation of
  acquired advantageous differences between
  individuals
• The inheritance of acquired characteristics
• Your ancestor develops some aspect of itself,
  neglects others
• These aspects turn up in you
• Process over time leads to more complex, more
  well adapted forms, more noticeably different to
  other animals

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Darwin Natural Selection

• Charles Darwin (1809-1882)
• Abandoned medical studies for clergy
• Volunteer naturalist on Beagle 1831-36
• Galapagos studies
• Malthus influence(?)
• Theory of evolution by natural selection (1859)
• Also propounded at same time by Wallace

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Evolution by Natural Selection

• Key concepts
• Random variation within species
• Most variations deleterious w.r.t. environment
• Some advantageous w.r.t environment
• Deleterious lower survival odds, advantageous
  increase survival odds
• Advantageous variations dominate via reproduction
• Change of species/development of new species
• Initial analogy to selection by domestic breeding
• Gradualism Natura non facit saltumNature
  does not make leaps

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The struggle for life natural selection

• amongst organic beings in a state of nature
  there is some individual variability But the
  mere existence of individual variability helps
  us but little in understanding how species arise
  in nature All these results follow inevitably
  from the struggle for life. Owing to this
  struggle for life, any variation, however slight
  and from whatever cause proceeding, if it be in
  any degree profitable to an individual of any
  species, in its infinitely complex relations to
  other organic beings and to external nature, will
  tend to the preservation of that individual, and
  will generally be inherited by its offspring I
  have called this principle, by which each slight
  variation, if useful, is preserved, by the term
  of Natural Selection.

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The Struggle for Existence involves

• Competition
• Two canine animals in a time of dearth, may be
  truly said to struggle with each other which
  shall get food and live
• Environmental pressure
• a plant on the edge of a desert is said to
  struggle for life against the drought, though
  more properly it should be said to be dependent
  on the moisture.
• Cooperation/interdependence
• As the missletoe is disseminated by birds, its
  existence depends on birds and it may
  metaphorically be said to struggle with other
  fruit-bearing plants, in order to tempt birds to
  devour and thus disseminate its seeds rather than
  those of other plants

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The Struggle for Existence involves

• Sex
• This depends, not on a struggle for existence,
  but on a struggle between the males for
  possession of the females the result is not
  death to the unsuccessful competitor, but few or
  no offspring. Sexual selection is, therefore,
  less rigorous than natural selection The
  plumage of male and female birds, in comparison
  with the plumage of the young, can be explained
  on the view of plumage having been chiefly
  modified by sexual selection
• And above all, gradualism and time
• Commonly accepted age of universe circa 1859
  was biblical (5,000 years)
• Darwin thousands of generations

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Gradualism

• Although the belief that an organ so perfect as
  the eye could have been formed by natural
  selection, is more than enough to stagger any
  one yet in the case of any organ, if we know of
  a long series of gradations in complexity, each
  good for its possessor, then, under changing
  conditions of life, there is no logical
  impossibility in the acquirement of any
  conceivable degree of perfection through natural
  selection. In the cases in which we know of no
  intermediate or transitional states, we should be
  very cautious in concluding that none could have
  existed, for the homologies of many organs and
  their intermediate states show that wonderful
  metamorphoses in function are at least possible.
  For instance, a swim-bladder has apparently been
  converted into an air-breathing lung

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Giraffes Darwins explanation

• Two related slightly different animals on the
  African plains
• One has longer neck than the other
• Longer neck allows it to reach food the other
  cannot
• Has more offspring than other animal
• Offspring inherit longer neck
• Over many generations, new species evolves the
  giraffe

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Problems the incomplete fossil record

• Fossil record acknowledged by Darwins time
• Very incomplete compared to now
• Large gaps between
• Fossils themselves
• Fossils and today
• How to get from them to us?

• Darwins explanation incomplete
  discoveriesintermediate forms will be found
  (common ancestor to horse giraffe)
• That our Palaeontological collections are very
  imperfect, is admitted by every one.

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Problems the incomplete fossil record

• But not a dismissal of the problem
• I cannot doubt that all the Silurian trilobites
  have descended from some one crustacean, which
  must have lived long before the Silurian age
  Consequently, if my theory be true, it is
  indisputable that before the lowest Silurian
  stratum was deposited, long periods elapsed and
  that during these vast, yet quite unknown,
  periods of time, the world swarmed with living
  creatures.
• To the question why we do not find records of
  these vast primordial periods, I can give no
  satisfactory answer. Several of the most eminent
  geologists are convinced that we see in the
  organic remains of the lowest Silurian stratum
  the dawn of life on this planet

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Problems mechanism of variation

• How does variation arise?
• Mechanism not known to Darwin (1859), but
  discovered contemporaneously by Mendel (1865)
  genes

• Cross-pollinate two plants, one with yellow
  smooth seed, one with green angular

• 1st generation, yellow smooth dominates green
  angular

• 2nd generation
• 4 yellow (3 smooth, 1 angular)
• 2 green (1 smooth, 1 angular)

• Binary explanation

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Genes

• Characteristics (colour, texture) coded by gene
  with two states (yellow/green smooth/wrinkled)
• Both states stored in each individual
• YY or GG or GY
• SS or WW or SW
• One (Y S) dominant, other (G W) recessive
• Pure genotype (GG,YY,SS,WW) gives pure
  phenotype (Green, Yellow, Smooth, Wrinkled)
• Mixed genotype (GY, SW) gives rise to dominant
  phenotype (Yellow, Smooth)
• 121 genotype ratio gives rise to 31 phenotype
• 1 pure dominant, 2 hybrid (dominant
  characteristic visible), 1 pure recessive

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The double-helix

• Cell nucleus/Chromosomes/DNA discovered
  1800s-1950
• Structure/mechanism of DNA uncovered by Watson
  Crick (et alia) 1953
• Each gene consists of long chain of DNA
  (Deoxyribose Nucleic Acid) on chromosomes stored
  in cell nucleus
• DNA has
• 4 nucleic acids thymine (T), adenine (A),
  cytosine (C), and guanine (G) joined in pairs as
  rungs on ladder
• A pairs with T, C with G
• 2 phosphate-sugar strands as outside of ladder
• Replication occurs by splitting of ladder ½ rung

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The double-helix

• Loosely speaking
• 3 bases code for 1 amino acid. (43/232 some
  redundancy)
• GCT?Alanine CGA?Glycine

• Many amino acids 1 protein
• Proteins determine organisms characteristics

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How evolution?

• Variation needed for evolution
• How does variation occur with DNA replication?
• Original argument sexual cross-over random
  mutation
• Crossover
• Genes stored on chromosomes
• Chromosome reshuffling in miosis, sexual
  reproduction reorganises dominant/recessive genes
• Mutation
• Occasional errors in DNA replication G turns up
  where A should be, etc.
• Deadly mutations fail, advantageous mutations
  survive

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The evolutionary orthodoxy circa 1990

• Evolutionrandom mutation environmental
  selection
• Accumulation of gradual changes over time gives
  rise to different species today
• The blind watchmaker

• But problems
• Fossil record should reveal missing links
• 150 years after Darwin, gaps still existlarge
  jumps in fossil record nature does make leaps
• How did life itself begin?
• Cant gradually go from inanimate to alive!

• Numerous anomalies lead to new theories

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Anomalies Sudden evolution

• Gradualist argument implies, e.g.
• First animal with legs should have no toes
• Toes develop as slow mutation of single limb
• But first animals with legs had 13-15 toes!
• Later animals had less toes
• Relations between genes
• Not just a gene for this, a gene for that but
• Highly sensitive relations between genes
• Genes that cause other genes to fire (homeobox
  genes)
• E.g., leg involves stump from body

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Relations between genes

• Homeobox gene mutation causes multiple branching
  in offspring

• Species goes from toeless foot to multi-toed foot
  in one generation

• Random selection implies organism has no
  Lamarckian ability to alter its genotype
• no feedback from change in somatic (of the
  body) cells of organism (via virus, acquired
  immunity, etc.) to germline sex cells
• Weissman (1885) tested Lamarcks inheritance of
  acquired characteristics ( Darwins
  pangenesis) theory by chopping off tails of
  newborn rats
• Tail-less rats gave birth to rats with tails

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Somatic to germline mutation

• Orthodoxy became existence of Weissmans
  barrier
• Genetic encoding goes from sex cells to somatic
  cells, never other way round
• But
• Lamarcks theory applied to adaptations done by
  organism being passed on
• Giraffe stretches neck, passes on longer neck to
  offspring
• In Weissmans test, rats werent cutting off
  their own tails
• Modern Lamarckians (Steele et al.) say clear
  evidence for somatic to germline transmission at
  least in immune system

34
Somatic to germline mutation

• Antibody genes in sex cells have inherited DNA
• When body invaded by virus/bacteria, antibody
  genes in relevant body cells (white blood
  cells B-lymphocytes) undergo accelerated DNA
  mutation.
• Dilemma for conventional theoryhow can rate of
  random mutation be accelerated by organism?
• Mutation eventually results in white blood cells
  that can defeat invader
• Mutation written into organisms DNA
• Weissman orthodoxy argues mutation would die with
  the body
• Steele others found sex cells of body altered
  to code for new, successful antibody
• Acquired characteristic (inherited resistance to
  disease) passed on to offspring

35
Somatic to germline mutation

• Conventional theory evolution only occurs in sex
  cells
• Mutations occur in all cells
• Mutations in sex cells passed on to organism, but
• Mutations in somatic cells not passed to sex
  cells
• New theory argues
• Some mutations in somatic cells passed on to sex
  cells via retrogenes/retroviruses
• Normal cell management route is
• DNA?RNA?Protein
• Successful mutations of immune system written
  back into cell DNA via RNA?DNA route
• Retrogenes pass modification of somatic DNA
  back to germcell DNA

Skip Steele quote
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Somatic to germline mutation

• Charles Darwin himself made the first
  tentative steps towards a model of acquired
  inheritance. He called it Pangenesis, and it
  has a remarkably modern Lamarckist flavour there
  is more to the ongoing debate on the mechanism of
  evolution than a slavish adherence to the current
  neo-Darwinian view (as instanced by the
  uncompromising writings of Richard Dawkins and
  Daniel C. Dennett) that evolution proceeds only
  by the natural selection of chance events.
  (Steele et al. 2)
• alterations in genes of somatic (body) cells of
  an animal appear to be transmitted to the genes
  of the germ cells (eggs sperm) and passed on
  genetically to offspring of future generations.
  (3)

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The immune system directed mutation

• Immune system protects organism against disease
• Non-adaptive immune systems in early organisms
• New deadly disease develops
• Most of population wiped out
• Individuals with pre-existing mutation that by
  chance gave immunity to new disease survive
• Inherited chance immunity passed on to
  offspring
• Adaptive immune systems in later organisms
• New deadly disease develops
• Each individuals immune system tries to develop
  suitable antigens via accelerated DNA/RNA
  mutation
• Successful individuals live, develop immunity for
  life
• Write successful mutation into own DNA
• Their offspring?

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The immune system directed evolution??
Mutated immunecells
Successful mutant replicated
New virus
Coded on cell DNA
Base immunecell type
Hypothetically...
Immunity inherited by offspring
Captured by endogenous retrovirus
Coded onto germline DNA
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Hypermutation quantum computing

• Quantum mechanics may explain directed evolution
• Occurrence of mutations
• DNA as a sequence of protons electrons
• Protons electrons affected by quantum
  uncertainty
• Cant exactly specify position
• About 1 in 50,000 will be in wrong place
• Cell error-correction mechanisms reduce rate to 1
  in millions, but
• Mutation built into quantum mechanical nature of
  universe

40
Hypermutation quantum computing

• Accelerated mutation
• Fundamental particles can exist in
  superposition of states
• Classical object (e.g., coin) can be only up
  (Heads) or down (Tails)
• Quantum object can be both Heads Tails
• Measurement forces object to resolve into either
  Heads or Tails state
• Quantum computer can take every road
  simultaneously to find the fastest route
• Mutation of DNA may be quantum computing

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Hypermutation quantum computing

• Origin of life
• Cant invoke natural selection to explain origin
• Cant gradually go from inanimate to live
• Minimum self-replicating chain of amino-acid
  reactions 32 acids long
• 20 amino acids
• Odds of chance development outcomes of all
  possible amino acid chains 1/2032 1/1041
• 1041 amino acids weight 1015 tonnes
• Primordial soup would need to be bigger than
  current mass of worlds rainforests
• Quantum computer superposition plus
  environmental measurement could result in
  self-replicator

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Back to economics

• Evolutionary theory much richer than simple
  survival of the fittest
• Use of analogy(?) in economics also much richer
• Feedback between organism environment
• Environment selects organism
• Organism alters environment
• Ditto for firms/economy
• Economy selects successful firms
• Successful firms shape economy
• Directed evolution
• Organism partly directs mutation/evolution
• Firms mutate selves/products to survive

43
Back to economics

• Symbiosis as well as competition
• Web of life/ Web of commerce
• Interdependence of firms/sectors as well as raw
  competition
• Collective behaviour as well as individual
• Positive as well as negative feedbacks
• Runaway processes needed to explain life,
  anomalies (peacock feathers, human brain)
• Runaway processes needed to explain
• Success of social systems (capitalism v
  feudalism)
• Success of individual firms/products

44
Back to economics

• Essential concepts variation feedback
• Different rather than homogeneous products, etc.
• Variation in firm size rather perfect competition
  vs monopoly
• Feedback between firms economy
• Not just negative (increase price?decrease
  demand) but positive (increase price?increase
  demand)
• Change the only constant system never reaches
  equilibrium
• Evolution not just an analogy but what is
  actually happening
• Adaptive change under organism-determined
  environment
• Our modelling the analogy to actual processes

45
Next lecture

• Early evolutionary thinkers in economics
• Veblen
• Schumpeter

46
Glossary/Appendix

• Retrogenes
• Normal function of cell reproduction is
• DNA?RNA?Protein
• DNA stores program for cell
• DNA (double-stranded, very stable molecule
  information) copied into RNA (single-stranded,
  less stable molecule)
• DNA more stable because of backup of second
  strand
• Error on one side can be compared to correct
  information on other
• 1 error per 100,000,0001,000,000,000 copies
• Single-strand RNA has no error checking
• 1 error per 1,000 copies
• RNA read by cell mechanism (Ribosome) to produce
  protein (3 base pairs in RNA?1 amino acid on
  protein)
• Retrogenes/retroviruses work in RNA?DNA direction

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Glossary/Appendix

• Retrogenes contd
• Virus (containing only RNA) enters cell
• Virus RNA makes DNA copy of itself
• DNA copy inserted into cell DNA
• Cell then reproduces virus RNA
• Healthy Cell also has RNA?DNA processes (Steele
  Fig. 1.2)
• DNA produces RNA
• RNA mutates
• RNA read by cell to produce matching DNA
• DNA becomes part of cell instructions
• Mutation reproduced in subsequent cells