Thinking Beyond Science

Humans have an amazingly low tolerance for economic ambiguity. The modern free market is inherently chaotic, unpredictable, and uncontrollable, which leaves most people uneasy in the face of so much uncertainty. As a result, societies have developed a strong expectation that social institutions—especially governments—will provide certainty and stability in ways that feel comforting, especially during times of crisis. When natural disasters like earthquakes or hurricanes strike, we refer to these as “acts of God.” Yet increasingly, people expect “acts of Government”—like disaster relief agencies—to step in when the risks materialize and individuals are left exposed.

The Illusion of Design: Who’s In Control?
Because life is intricate and looks intelligently designed, our intuition leads us to believe there must be some kind of designer. The same tendency applies to our understanding of economies: these systems seem highly structured, tempting us to assume that a wise, top-down authority—the “God of Government”—is guiding them. In reality, both life and economics arise spontaneously from the bottom up. Complexity theory and the science of emergence show that order arises naturally: organisms and markets both develop intricate structures and adaptivity through millions of individual decisions and interactions, not by following a pre-set plan or central authority.

How Society, Economy, and the State Evolved
Over the past ten thousand years, human organization evolved from bands of hundreds, to tribes, then chiefdoms, and finally states and empires. At each stage, social and economic structures became more layered and specialized—the division of labor led to artisans, craftsmen, politicians, bureaucrats, and tax collectors. This complex web is what we call the modern state economy, built on both collaboration and hierarchy.

Group Psychology & Tribal Economics
Our deep-rooted group psychology, shaped during the Paleolithic era, continues to impact us today. Back then, the success of human groups depended on in-group harmony and out-group suspicion, a survival tactic that eventually helped us outlast and out-fight rival groups. This tribal mindset, now transplanted into modern economics, often manifests as protectionism and mercantilism—preferring our own nation’s industries and goods while pushing against competition from outsiders. The seeds of xenophobia and tribalism are still present in economic policy and global markets.

Bandwagon Effects, Network Effects, and Market Equilibria
In production and consumption, economies of scale (spreading fixed costs over more units) can drive prices down and expand market share. This in turn creates a bandwagon effect: most consumers choose popular products for convenience and familiarity. Simultaneously, producers anticipate this demand and scale up supply, further reinforcing the popularity of dominant brands or technologies. As a result, markets can “lock in” consumers—even when a better, cheaper product emerges, switching costs or incompatibility can keep everyone using the same old platform (as was the case with Microsoft’s dominance in operating systems).

The QWERTY Keyboard: Path Dependency in Technology
The story of the QWERTY keyboard illustrates these dynamics. Contrary to the myth that its layout was designed to slow typists, it was actually designed to prevent key jams by separating frequently paired letters. Yet, once QWERTY became widely adopted, it became almost impossible for newer, possibly more efficient keyboards to gain market share. The entire network—manufacturers, schools, typists—became locked-in to this single technological path, illustrating how early decisions constrain future development.

Biological vs. Cultural Evolution: Why We Invent
The analogy between biological evolution and cultural/technological change is striking, but not perfect. Biological change is Darwinian—genes are passed down generationally, and species are constrained by their genetic histories. Culture is different: technologies and ideas “interbreed” across boundaries, and the adoption of new traits can occur rapidly within a single generation (Lamarckian). Cultural systems are shaped by fluid programs and human aspiration rather than rigid genetic inheritance.

Needs vs. Wants: The Real Drivers of Innovation
While biological needs (food, water, shelter) drive survival, the desire for a richer, more meaningful life drives cultural and technological evolution. Most inventions—typewriters, bicycles, airplanes, computers—did not arise out of necessity, but from human wants. In both evolution and economics, selection occurs: genetic diversity faces the sieve of natural selection, while artificial diversity (new products, new ideas) faces the judgment of the market. The products that survive are not necessarily those that address basic needs, but those that fulfill deeper psychological and spiritual aspirations. This relentless drive for fulfillment is what makes us human—and pushes our cultures and economies to ever greater complexity.

Understanding economic systems through the lens of emergence and complex adaptive systems demystifies why governments and central authorities often play a smaller actual role in “designing” economies than most people suppose. Like life itself, economies adapt and evolve from the bottom up—shaped by millions of decisions, ambitions, and, ultimately, the insatiable human thirst not just to survive, but to want more.

Source – The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics by Michael Shermer

Goodreads – https://www.goodreads.com/book/show/1960096.The_Mind_of_the_Market

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