The Economy as Fitness Landscape

Published 2015-02-25T01:49:24+01:00

The Economy as Fitness Landscape

It is useful to consider the economy as a “fitness landscape”. It is a far from neutral environment on which there are some highly advantageous positions and some highly disadvantageous positions. If you happen to be capable of climbing an advantageous hill, then you will be a “winner” in the economic fitness landscape. If you are consigned to a disadvantageous valley, then not.

A substantial portion of the shape of any given economic fitness landscape is effectively “objective” in the sense that it is outside of the creative control of human agents. The distribution of natural resources, the laws of physics, etc. However, human agency can and does play a very important role.

Our contemporary economic landscape is still largely the result of the major “landscaping” work that was done after World War II. Arguably, this was a well intentioned and “best efforts” design given the circumstances and context.

It has, however, by now been hopelessly gamed. All of the “peak predator” niches have bene long past occupied and niche construction has made high hills higher and increasingly extractive.

So, if I had to frame it as “who does the current economy serve?”, I’d say that it serves those who figured out how to win the finite game that it presented to the latter half of the 20th Century. [Although, to be sure, precisely because winners of finite games are often most challenged in escaping from those games, I agree with Seb Paquet’s point that it no-longer “serves” anyone.]

* Fiat money created a profound local optima. Since money could be created at will by banks and money was/is a primary resource of the economy, “effective proximity” to bank-produced-money was one of the highest hills in the legacy economy. This led to, among other things, the substantial rise of the FIRE economy precisely because these sectors were able to get very close to bank-created money.

* The post war economy was highly regulated by “operational management” bueraucracies. The ability to capture regulations and regulators and to use them in niche-construction was another major hill in the legacy economy. This led to, among other things, the rise of regulatory-concentrated oligopolies (telecom, pharma, copyright, energy, etc.)

* Up until the late 70's the key technical advantages to the post war economy were the ability to deploy operational management techniques (nee six sigma) against mass production, mass transportation and mass media. This led to high hills around organizations that could effectively deploy against one or more of these “massification” technologies at scale.

* After the late 70's the logic of innovation began to take over (the seeds of abundance). This has led to the disruption of the prior strategy in favor of a strategy that takes advantage of the various “increasing returns to scale” technologies (e.g., moores law, metcalfs law, etc.).