The big idea behind Bowles’s recent research is that some of the fundamental laws of economics – notably Adam Smith’s invisible hand, may not work in the “weightless economy – the economy that can’t be weighed, fenced, or conveniently contracted for.” Rather than being based on material wealth, knowledge-based economies are based on embodied and relational wealth. In these economies, individual-posession based property rights are difficult to enforce, and socially harmful to enforce.
Bowles suggests that we may gain some insight about the evolution of institutions under these conditions by studying the reverse transition: by studying the transition from the late Plioscene forager economy, where weath was difficult to own, to agrarian and industrial economies, based on ownership. We can study this by “running history backwards” with an agent-based model of the weightless economy. We understand the forager economy fairly well due to ethnographic research, and we might gain insights about the governance of this emergent weightless economy from studying governance dynamics in forager economies.
Bowles offers a model of wealth where the wealth of a person is the sum of network wealth, embodied wealth and material wealth. He puts exponential weights on these types of wealth in a Cobb-Douglas production function. He plots different types of economies in a triangular graph, showing their wealth in terms of these three different dynamics – material, network and embodied wealth. Recent economies based on the domestication of plants and animals concentrate in the material corner, while older economies cluster around the network wealth – embodied wealth axis.
Network wealth is the contribution made by your social connections to your well-being. This could be measured by your number of connections, or by your centrality in different networks. A simple way to think about this is the number of people who will share food with you. Embodied wealth is a combination of what you know and how strong you are. It measures factors like hunting prowess and grip strength. Bowles asserts that we’re moving from a history where network and embodied wealth mattered more that material wealth – we briefly (for about eight thousand years) moved into a world of embodied wealth, and now we’re moving back.
Friday 4 December 2009
Samuel Bowles introduces Kudunomics ☀
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