Shakespeare’s Invisible Hand in Economics


Metaphors can be our shortest stories: their compact explanations often shape our view of the truth. But like stories taken out of context, badly mixed metaphors from biology and physics mislead many economists. And Shakespeare’s “invisible hand” is partly to blame. Here's how:

1. Science’s theories—its verifiable stories—often have metaphors built into their formal models (sometimes implicitly). The conceptual skeleton of economics—that an “invisible hand” guides rational self-interest in competitive markets to optimal social equilibria—mixes a loose biological analogy (competition ensuring efficiency and survival-of-the-fittest) with ill-fitting formal models from physics.

2. Adam Smith popularized the “invisible hand” idea. He lectured on Shakespearean imagery and would have known of the line “And with thy bloody and invisible hand” in Macbeth. Smith first used the phrase in his History of Astronomy“nor was the invisible hand of Jupiter ever apprehended to be employed," meaning no hand-of-god was needed to explain astronomy.

3. Perhaps the most prominent “invisible hand” in biology is in evolution, where we know it produces unintelligently, undesigned results. Yet competition in biology doesn’t guarantee efficiency (“tree trunks are standing monuments to waste”) and regularly delivers foreseeable disaster. Unless it’s intelligently guided, competition in economics can be as dumb as trees.

4. General equilibrium theory in economics was shaped by Josiah Gibbs (the physicist Einstein called “the greatest mind in American history”). Gibbs invented statistical mechanics to describe the behavior of large aggregates like gases. An appealing metaphor since economies are also large aggregates? Well, the “invisible hand” equilibria of physics emerge from parts that interact utterly consistently. But people aren’t gas particles or biological billiard balls. We evolved behavioral flexibility. Our actions and reactions vary (complexly, often game-theoretically).

5. Newton’s science is metaphorically and structurally different than Darwin’s. Newton’s systems have closed causality and converge on mechanically calculable patterns. Physicists have good mathematical tools for predicting their specific results. But Darwin described open, generative, and divergent processes with less predictable outcomes. The shapes of these processes are stable, but their resulting “endless forms” aren’t as pre-calculable. Economics, though it loves physicsy-math-tools, has unavoidable evolution-like aspects (and evolutionists don’t find physicsy-math-models to be that useful).

6. “Invisible hand” emergent equilibria in physics, biology, and economics are crucially different. Self-organization—parts spontaneously ordering themselves into wholes—in “nature” is dumb. Intelligent humans can sometimes do better.

7. Biological and economic self-interest are different (e.g. all biological appetites are limited). And what economists call rational can produce poor, sometimes self-undermining, results (examples here).

Nature gave us tools to avoid the dangers of dumb “invisible hand” self-organization. Perhaps the point of being human is to use our evolved capacities for foresight and intelligent social coordination to organize a relationally rational way to live.

 

Illustration by Julia Suits, The New Yorker Cartoonist & author of The Extraordinary Catalog of Peculiar Inventions.

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Homo sapiens have been on earth for 200,000 years — give or take a few ten-thousand-year stretches. Much of that time is shrouded in the fog of prehistory. What we do know has been pieced together by deciphering the fossil record through the principles of evolutionary theory. Yet new discoveries contain the potential to refashion that knowledge and lead scientists to new, previously unconsidered conclusions.

A set of 8-million-year-old teeth may have done just that. Researchers recently inspected the upper and lower jaw of an ancient European ape. Their conclusions suggest that humanity's forebearers may have arisen in Europe before migrating to Africa, potentially upending a scientific consensus that has stood since Darwin's day.

Rethinking humanity's origin story

The frontispiece of Thomas Huxley's Evidence as to Man's Place in Nature (1863) sketched by natural history artist Benjamin Waterhouse Hawkins. (Photo: Wikimedia Commons)

As reported in New Scientist, the 8- to 9-million-year-old hominin jaw bones were found at Nikiti, northern Greece, in the '90s. Scientists originally pegged the chompers as belonging to a member of Ouranopithecus, an genus of extinct Eurasian ape.

David Begun, an anthropologist at the University of Toronto, and his team recently reexamined the jaw bones. They argue that the original identification was incorrect. Based on the fossil's hominin-like canines and premolar roots, they identify that the ape belongs to a previously unknown proto-hominin.

The researchers hypothesize that these proto-hominins were the evolutionary ancestors of another European great ape Graecopithecus, which the same team tentatively identified as an early hominin in 2017. Graecopithecus lived in south-east Europe 7.2 million years ago. If the premise is correct, these hominins would have migrated to Africa 7 million years ago, after undergoing much of their evolutionary development in Europe.

Begun points out that south-east Europe was once occupied by the ancestors of animals like the giraffe and rhino, too. "It's widely agreed that this was the found fauna of most of what we see in Africa today," he told New Scientists. "If the antelopes and giraffes could get into Africa 7 million years ago, why not the apes?"

He recently outlined this idea at a conference of the American Association of Physical Anthropologists.

It's worth noting that Begun has made similar hypotheses before. Writing for the Journal of Human Evolution in 2002, Begun and Elmar Heizmann of the Natural history Museum of Stuttgart discussed a great ape fossil found in Germany that they argued could be the ancestor (broadly speaking) of all living great apes and humans.

"Found in Germany 20 years ago, this specimen is about 16.5 million years old, some 1.5 million years older than similar species from East Africa," Begun said in a statement then. "It suggests that the great ape and human lineage first appeared in Eurasia and not Africa."

Migrating out of Africa

In the Descent of Man, Charles Darwin proposed that hominins descended out of Africa. Considering the relatively few fossils available at the time, it is a testament to Darwin's astuteness that his hypothesis remains the leading theory.

Since Darwin's time, we have unearthed many more fossils and discovered new evidence in genetics. As such, our African-origin story has undergone many updates and revisions since 1871. Today, it has splintered into two theories: the "out of Africa" theory and the "multi-regional" theory.

The out of Africa theory suggests that the cradle of all humanity was Africa. Homo sapiens evolved exclusively and recently on that continent. At some point in prehistory, our ancestors migrated from Africa to Eurasia and replaced other subspecies of the genus Homo, such as Neanderthals. This is the dominant theory among scientists, and current evidence seems to support it best — though, say that in some circles and be prepared for a late-night debate that goes well past last call.

The multi-regional theory suggests that humans evolved in parallel across various regions. According to this model, the hominins Homo erectus left Africa to settle across Eurasia and (maybe) Australia. These disparate populations eventually evolved into modern humans thanks to a helping dollop of gene flow.

Of course, there are the broad strokes of very nuanced models, and we're leaving a lot of discussion out. There is, for example, a debate as to whether African Homo erectus fossils should be considered alongside Asian ones or should be labeled as a different subspecies, Homo ergaster.

Proponents of the out-of-Africa model aren't sure whether non-African humans descended from a single migration out of Africa or at least two major waves of migration followed by a lot of interbreeding.

Did we head east or south of Eden?

Not all anthropologists agree with Begun and his team's conclusions. As noted by New Scientist, it is possible that the Nikiti ape is not related to hominins at all. It may have evolved similar features independently, developing teeth to eat similar foods or chew in a similar manner as early hominins.

Ultimately, Nikiti ape alone doesn't offer enough evidence to upend the out of Africa model, which is supported by a more robust fossil record and DNA evidence. But additional evidence may be uncovered to lend further credence to Begun's hypothesis or lead us to yet unconsidered ideas about humanity's evolution.