If You’re Happy, Be Afraid

August 24, 2017

Photo Source: Wikimedia Commons

 

      If you are currently happy, living a life that you can afford, enjoy your job, love your friends, love your mate, and live in a comfortable place, then I hate to tell you this, but you have already been given a sign that the party is almost over.  In evolution, the success of species’ populations is based on how well they adapt to their current environment. Environments are always changing; they are always in flux.  From the Big Bang on, the universe has been in a constant state of change.  Things may seem the same from our human perspective being that we only live around eighty or so years. However, Earth is moving away from the (dying) sun, our continents are still in the process of moving around, and there is always the giant asteroid-super volcano-massive earthquake problem that has and will happen to Earth.  So, why does being currently happy and successful indicate problems in the future?  What being happy and successful now signals is that you currently have the skills, temperament, DNA, etc. to be successful in the environment for which you live.  However, it also signals that when the environment changes (and it will change), you will be at a disadvantage precisely because you are so well adapted now.  Why?  Because you have developed routines, some conscious, some unconscious, that have led to you being well adapted.  In evolutionary economics, ‘routines’ could be analogous to genes or DNA.

 

      From Dr. Brendan Markey-Towler, an Industry Research Fellow at the School of Economics University of Queensland Australia (Meduim.com, 6-1-17):

 

       “Evolutionary Economics is a field which looks at the economy as an evolutionary system, not a system constantly in or tending toward equilibrium.  From that simple idea springs a discipline which offers a radically different view of the economy, and profoundly important practical implications for industry and government.”

 

       While there are several aspects unique to evolutionary economics, the one I am trying to point out is the idea of adaptation and routine.  What economists started to see was that the economy or market behaved just like biological evolution where there was a constant flux of successful companies being toppled by new world-shifting technologies or ideas.  Horse and buggy, candles, and typewriters are just a few examples of successful ideas being toppled over by new inventions.  Today, we see the rise of Amazon and the fall of the American shopping mall.  Even the home computer is dying as people increasingly use their phone to communicate, search the web, and interact through social media.  The first economist to notice this was Joseph Schumpeter (1883-1950) (later to be known as the father of evolutionary economics).  “He coined the term ‘creative destruction,’ and generations of economists have adopted it as a shorthand description of the Free Market’s messy way of delivering progress.” (econlib.org)  Essentially, what Schumpeter saw was that the evolution of markets (or the economy) was a process of creative destruction or new innovations rising up and destroying the old, established ideas.  The rich, happy candle maker never conceived that the weird, possibly dangerous, Edison light bulb would ever put him out of business, and in one of the most public failings ever, Kodak never saw digital photography as a threat.  Kodak had an army of engineers, yet they did not take the digital camera seriously.  

 

      But why? How? How could these companies not see it coming?  How come the happy and successful do not see the environmental change in time enough to change?  Or when they do see the environmental change, why didn’t they adapt?  The second major work (apart from Schumpeter’s Capitalism, Socialism, and Democracy, 1942) attributed to being the intellectual foundation for evolutionary economics is Richard Nelson and Sidney Winter’s An Evolutionary Theory of Economic Change (1982).  In this masterwork, Nelson and Winter argue that companies have ‘routines’ for which all of their process of business are run on.  Everything from hiring, to developing new products, and to sales and marketing are all ran through norms or routines that are deeply embedded and very often dark, or not consciously known though nonetheless functioning.  They argue that ‘routines’ function nearly identically to genes or DNA in biology.  When a company is successful, it argues that its ‘routines’ have successfully adapted to their environment.  The problem is that when the environment changes, and it will change, as we learned from Schumpeter (the very nature of the market is creative destruction—just like the very nature of physical and biological evolution) that companies rarely acknowledge or address their ‘routines.'  Instead, companies often will try to become more efficient with efficient meaning higher profit for goods sold.  Layoffs, cheaper materials, finding cheaper labor, and automation are all examples of ways companies scramble to improve when they find themselves not competing as well as they used to.  An evolutionary economist would argue that what has happened is a new innovation has arrived, and it is destroying the environment for which you live.  Most firms will die, however, if you can't see it is primarily your routines that are keeping you from adapting, then you will die too….  Because that is the ray of hope…adaption.  Lamarck was the second father of evolutional theory (apart from Darwin), and he saw that in times of great stress, some animals or species actually change their behavior and pass that behavior on to their progeny through mate selection.  Meaning that if the animal figures out how to secure food post-apocalypse in a totally novel way, then surely that animal would attract more females.  Likewise, companies that find themselves not doing well (when they had done well in the past) should immediately understand that the environment has changed and that they must first locate all of their routines (as many of them will be unconscious) and then start switching them up.

 

     This is but a tiny window into evolutionary economics.  It is, I believe, the most accurate model so for produced.  It points to a better way for people, companies, and governments to understand, plan, and predict the market, leading to a better way to make policy, plan ahead, and protect the most vulnerable in our society.  I also love some the more personal possibilities in examining the principles of evolutionary economics.  It is very Taoist.  The only thing that does not change is that everything is always changing.  So, maybe if you do find yourself almost smug in your current comfort and success—maybe you should start investigating all of your routines—because while they are working for you now, they may be your death knell in the future.

 

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