You can access Part I of this review here:
http://political.epinions.com/book-review-3689-3581C57F-39B3EA9F-prod5

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On the 82nd page of Bionomics, Michael Rothschild encapsulates his analogy between ecology and economy:

“The biological and economic systems owe their similarity of form to their similarity of function. In nature, organisms convert genetic information into tissues. In the economy, organizations turn technological information into products. Since both information realms are constrained by limited resources, they evolved similar ways of efficiently turning resources into more information.”

So then, if you’re to look at the economy as an ecosystem, corporations are the biological organisms living and competing to survive in that environment. These corporate life forms can then be broken down into work “cells;” the GE jet engine factory in Durham, North Carolina is one of GE’s work cells, the plastics division in Pittsfield, Massachusetts is another. And, to further over-simplify this analogy [;-)], small businesses, like the corner deli or your neighbor’s home-based tax service, can be likened to single-celled organisms.

What I’ve come to understand from Rothschild’s argument are three foundational similarities between an ecosystem and an economy:

1. Modes of Production

Rothschild explains at length the parallel production flows of an economic work cell and a biological cell. For example, a biological cell takes in food molecules, which are processed (digested) by the lysosomes before protein assembly and RNA duplication can begin, just as a recycling plant or corner deli must acquire and prepare its raw materials for production into pop-bottle sweaters or a ham & swiss on rye.

He then briefly sums up this correlation, addressing the five basic functions of manufacturing/cell reproduction: “All plant and animal cells use this suite of five organelles for information processing (nucleus), materials preparation (lysosome), component assembly (ribosome), packaging (Golgi), and energy release (mitochondria).” [p.85]

2. Reliance on Diversity

Communism, based on the economic power of the community (as opposed to the individual), suggests we look at the world according to what is “common,” or shared among us. Rothschild emphasizes that this is more than just a political leaning; it’s a psychological mindset. He quotes a Soviet lawmaker as describing communism as a ‘slave psychology’: “It is possible to be hungry, but everyone must be equally hungry. If one person lives well and another person lives better, this is capitalism. It’s better for everybody to be hungry.”

Unfortunately, communism results in shortages and hunger because it denies the importance of diversity, individuality, and the necessity for workers, departments, and companies to find niches and to specialize according to their talents and skills. “Marx’s emphasis on the community contradicts the organic principle of compartmentalization. All living things are composed of small units. Efficiency in a world of limited resources demands differentiation, specialization, and diversity. No complex organisms are made of one cell that has grown immensely large.” [p.108]

The importance Rothschild places on diversity is echoed by the Santa Fe Institute’s Stuart Kauffman in At Home in the Universe: “Standard macroeconomic models of growth are single-sector models – a single stuff is produced and consumed. Growth is seen as increasing amounts of stuff produced and consumed. Such a theory envisions no role for the growth of diversity of goods and services. If this growth in diversity is associated with economic growth itself, as is supported by some evidence, then diversity itself may bear on economic take off… diversity probably begets diversity; hence diversity may help beget growth.”

3. Tendency toward Decentralization

The main difference between an economy and ecosystem is in the form “failure” takes; in an economy, it’s bankruptcy; in an ecosystem, death. Still, failure is to be avoided, and inefficiency in obtaining resources, processing information, or manufacturing can result in the “death” of a company or an organism.

So how do biological and economic organisms discover optimum efficiency? As the size of an organism increases, efficiency is found in, among other things, decentralization. In smaller organizations, such as the GE factory mentioned earlier, centralized control can work, but in larger companies, lots of “little mayors” work more efficiently than one bloated King. Charles Fishman, discussing GE’s jet engine factory in the October 1999 issue of Fast Company magazine, notes how differences in scale can directly affect the viability of centralized control: “The system at GE/Durham -- where there are 170-plus employees, all reporting to a single plant manager -- can't apply to all settings. Jack Fish, who now manages a 4,000-person facility for GE's locomotive-manufacturing division, says, ‘Durham is truly special. What they're doing there works only with a certain size of business. You couldn't do that with a 2,000-person facility. You'd run out of runway with that kind of structure.’”

In Bionomics, Rothschild says essentially the same thing, using the human brain as an example. “The cost of keeping our brains fed would be far higher if the body’s information processing were not decentralized. Although we tend to think of ourselves as being in complete command of our bodies, most of life’s choices – like the ‘decision’ to produce more of a certain enzyme in a particular cell – are left to that cell… Decentralized decision-making means the cell doesn’t have to wait for a command from the brain. If each of our 10,000 billion cells required direct instructions on what to do and when to do it, our brains would be impossibly massive.” [p. 96] And that massive brain’s nutritional needs would severely compromise the body’s overall efficiency.

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According to 1) universal modes of production, relying on 2) diversity and 3) decentralization, a natural capitalistic system of production and exchange not only provides workers’ salaries, it also improves the lives of human beings by spurring technological innovations and progress. Just 100 years ago it took the average housewife 8 hours of hard labor to accomplish what a modern washing machine does by itself in a 60-minutes cycle. The enormity of household chores alone was at least partly responsible for delaying women’s liberation; there simply wasn’t enough time in a day for a middle-class Victorian woman to keep a home running and attend outside pursuits. Does it surprise you to know that it wasn’t protests or politics so much as affordable technology that liberated women?

The emphasis here is on affordable technology. Without high efficiency in washing machine design and plant production, your basic Kenmore would have been too expensive to ever benefit society. In a similar vein, Rothschild explains how Gutenberg’s printing press made it possible for everyone (not just the rich) to record ideas and information on paper. Gutenberg’s wasn’t the first press ever conceived, but it was the first one that was affordable: “For decades prior to Gutenberg, Dutch artisans had used presses to print images carved into wooden blocks. The Chinese had been using the wood-block technique for centuries. But hand-carving individual letters was extremely slow and expensive. With Gutenberg’s adjustable mold, forming letters was simple, and the cost of a single piece of type – printing’s basic component – plummeted.” [p.101] Until a society can afford its technology, innovation is useless. But without the incentive to profit from our own ideas, innovation is rare. It’s a symbiotic relationship between inventors and society, between producers and consumers, between bees and flowers, that can inspire an ecosystem or an economy.

But, as Rothschild points out, “Some flowers plants produce no nectar, [using] rich fragrances to entice bees into entering and pollinating their flowers… some bumblebees bite holes in the base of flowers to suck out the nectar without servicing the plants… Exploitation – where the benefits of a relationship flow in one direction – is commonplace.” [p.141] A solution to the “natural” problem of exploitation is exactly what Marx and Engels were hoping to create.

Today, many socialist thinkers openly admit that capitalism works according to a “survival of the fittest” evolutionary model, and therein lies their complaint: the poor (less economically fit) are exploited by the rich (more economically fit), and while that may be a paradigm acceptable for lower life-forms, it’s unacceptable for intelligent, caring human beings. Their mistake, however, is believing that the evolutionary model targets the individual worker, when, in actuality, it doesn’t. “Like death in the ecosystem, bankruptcy is an essential aspect of the economy,” Rothschild writes, “but while bankrupt organizations die, unemployed workers do not. In the economy, natural selection acts upon the organization, not the individual.” [p.103, emphasis added]

In fact, in its purest form, capitalism is mutualistic. “The vast majority of economic relationships are mutually beneficial… Competition imposes a harsh discipline that keeps most organizations from crossing the line that separates mutualists from parasites. Cooperative relationships generate cost savings that are shared between the partners as profits… since personal gain causes millions of workers in thousands of specialized organizations to cooperate in making complex products and services, profit is something that society ought to encourage.” [p.142]

Midway through the book, Rothschild cites an extremely appropriate 1908 quote by Samuel Gompers, first president of the American Federation of Labor: “The worst crime against working people is a company which fails to operate at a profit.” If that quote doesn’t resonate with you, please re-read this review.

Part III will address the concept of a self-directing economy, mirroring the concept of a self-balancing ecosystem.



Recommended: Yes

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