The Economy is an Ecosystem, Not Like an Organism

Bertalanffy warned that we shouldn’t compare the economy to an organism, because that would lead to tyranny.

We see this mistake being made in an interview with David Sloan Wilson in Evonomics, where he argues that F.A. Hayek argued that the economy was like an organism. Wilson argues that Hayek is right, but that doesn’t mean the economy shouldn’t be regulated.

The problem is that Wilson — and to the degree Hayek made the organism comparison, Hayek — is wrong. The economy is nothing at all like an organism. It is like an ecosystem.

An organism has goals, like an organization does. Both organisms and organizations are goal-oriented. In social species, there are the same kinds of hierarchies within the group as we find in firms and government organizations. And the group also has goals, which relate to the ongoing survival of the individuals within the group and to which the individual members often submit, as that ensures their own survival.

An ecosystem does not have goals; they allow organisms to achieve their goals, that is all. Any given ecosystem is a result of organismal action and is not a result of any goals being set by any given organism, even as those organisms are trying to achieve their own goals, and using and responding to the ecosystem to achieve them. Similarly, the economy is a result of human (inter)actions and are not of human design. They do not have goals and cannot be given goals. The economy is an environment in which people…