Just an odd observation in relation to the latest Econtalk podcast that covered the contrast betwen Adam Smith and David Ricardo on trade seems to improve the standard of living of all participants. In particular, Russ Roberts noted how the two came to different mechanisms that drive the improvement from trade (Smith: economy of scale. Ricardo: specialization).
What came to mind for me when listening to the podcast was how the two particular ideas on the same issue may be more closely related than even what Roberts thinks. Personally, I think the two ideas are tied to each other as a form of natural selection (or social selection if you prefer to bring Malthus into the discussion) because if you have both a sizable population that freely exchanges (or competes) matched with that same population drifting into specialized areas (subpopulations that ‘speciate’), then you really have evolution of an economy more so than you just have it growing in terms of wealth. Rather, you have economies developing into more complex systems which more goods and services come about with each generation or cycle of the economy as a whole.
What I want to ask everyone on the forums is this: doesn’t it seem strange that two seemingly unrelated ideas may have something to say about biological evolution (and equally, that biological evolution has something to add in return to economics?)?
Maybe I’m just rambling here, but I find it odd that such ideas never seem to get noticed by economists, even the professors at my university find my observation a bit odd. shrugs
I think you’re on to something. I’ve thought for a while that Economics has more in common with Biology than Physics because it makes perfect sense: Evolution is driven by environmental pressures that make certain traits more advantageous than others and, likewise, the entrepreneur is driven by environmental pressures (ie: funding, supply/demand conditions, geography) that make certain products more desirable than others. The biggest difference is that the entrepreneur, in a sense, gets to choose his evolutionary path in attempting to predict the future conditions of demand and arranging production to meet them. However, as mortal beings entrepreneurs are limited by imperfect knowledge and so are still very much beholden to the viccissitudes of their environment.
**Edit: Niall Ferguson actually gave a talk on a very closely related subject a while ago.
No, definitely not. The affinities between them are very interesting. Here is a relevant passage from “Human Action”:
[quote=“Ludwig von Mises, “Human Action”, Section 8.1, “Human Cooperation”, boldfaced text added by I. Ryan”]
The principle of the division of labor is one of the great basic principles of cosmic becoming and evolutionary change.The biologists were right in borrowing the concept of the division of labor from social philosophy and in adapting it to their field of investigation. There is division of labor between the various parts of any living organism. There are, furthermore, organic entities composed of collaborating animal individuals; it is customary to call metaphorically such aggregations of the ants and bees “animal societies.” But one must never forget that the characteristic feature of human society is purposeful cooperation; society is an outcome of human action, i.e., of a conscious aiming at the attainment of ends. No such element is present, as far as we can ascertain, in the processes which have resulted in the emergence of the structure-function systems of plant and animal bodies and in the operation of the societies of ants, bees, and hornets. Human society is an intellectual and spiritual phenomenon. It is the outcome of a purposeful utilization of a universal law determining cosmic becoming, viz., the higher productivity of the division of labor. As with every instance of action, the recognition of the laws of nature is put into the service of man’s efforts to improve his conditions.
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Also, to answer the question of the title of your thread more generally, the law of returns, for example, is certainly a “physical law”.
I think that, while there are parallels, they only go so far. The environment in which organisms reproduce or die is inanimate. The environment in which entrepreneurs earn profits or losses, is driven by purposeful consumers.
I’m pretty sure it is not. While it is a quantitative law, it is premised on properties of economic goods. It only applies to production, and not the physical world generally, as the second law of thermodynamics would, for example.
What if the theory of natural selection imitated various 19th century economic developments? Just a thought. But yes, if natural selection was an indubitable truth, then its close theoretical relationship to various economic phenomena may imply some sort of deeper yet unknown connection. Maybe some hidden law of the universe–an “underlying structure.” Both are technically deterministic, implying some sort of natural order. Of course, this is pure speculation.
Going off of this, the competition and evolution in nature is a given. Only humans can interfere with it. Our evolution is Lamarckian , and has to be maintained and provided for constantly.