Evolution can be a gradual process, in which ideas build upon ideas. This is what most of us think of if the word evolution is mentioned.
It is like that with the economy, too.

But sometimes evolution can take us down a blind alley. We can progress so far, and then stop. It is as if we run into a kind of equilibrium.

Evolution is like Homer Simpson. The famous TV cartoon character displays a personality which seems preoccupied with the present. There seems to be no memory, and absolutely no vision.

Evolution can only deal with the here and now. It has proven to be an extraordinary mechanism, and has thrown up adaptations that are the wonder of science, and yet always it is limited to finding the best adaptations for the current circumstances. As such it is not perfect.
See it like a chess player. The grand master may plan several moves ahead; evolution can only make a move which optimizes immediate benefit. Evolution has no way of noticing that if it moves a pawn to take the opposing side’s queen, the result may be checkmate for its own king three moves down the line.

Consider the account of Danny Hillis and the local maxima. Hillis investigated whether he could generate a number-sorting program through imitating the mechanism of natural selection. He programmed his computer to generate a large variety of mini-programs by random. They were all hopeless for the task he had in mind, but a handful were less inadequate than the rest. Hillis introduced certain parameters. The ones that were most able to sort numbers survived, crossbred and mutated. The rest were deleted. After a few thousand cycles, the computer created a number-sorting program that was actually quite effective. The program had evolved.7

But alas, the program which resulted was only quite good. It was inferior to code that could be produced by a competent programmer. Hillis repeated the experiment several times and always came up with similar results.

His solution was ingenious. Hillis programmed a predator into the system which could destroy code that had stopped evolving. This forced the code to evolve in more radical ways, and ultimately led to a much superior number-sorting program.

In other words, the predator forced the evolution process to go down paths it might otherwise have rejected, and some of these alternative routes threw up an even better adaptation down the line.

In short, sometimes we have to make something worse before we can improve it. Evolution is not good at allowing for this.

As a result, catastrophes can prove to be essential tools for creating new adaptations. Extinctions can be essential building blocks in evolutionary history.

Frequently, a major shock is the catalyst for change.

It may follow, then, that economic evolution is powered by two forces. The slow, dead slow and stop kind of force that Richard Dawkins referred to, and then sudden change that may occur as if the torch has been passed on.

This shock can be in the form of a new disruptive technology, a change in global order, or merely the coming together of two different cultures that were formerly isolated. The result can be a puncture in the equilibrium we had appeared to settle into.

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© Investment & Business News 2013

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