Orgel's Rules and The Micawber Principle...

Something will turn up.

     ~ Mr Micaeber's endearing self-deceiving refrain in David Copperfield




Orgel's Rules:

 Rule #1 - "Whenever a spontaneous process is too slow or too inefficient, a protein will evolve  to speed it up or make it more efficient"

Rule #2 - "Evolution is cleverer than you are"



"One condition, however, must be satisfied to "turn up" new solutions, whether for stabilizing financial markets and managing the economy or for eliminating global pollutants and curing diseases: Capitalism and democracy must themselves survive. That is why sacrifices to protect democracy and private enterprise against the military challenges of communism, fascism, and religious fundamentalism are rational and morally admirable, while sacrifices on behalf of our grand children's purely economic prosperity are not ( at least at the level of society as a whole).

But capitalism's survival depends on more than military protection. Modern capitalism is a complex social system that has been incredibly successful in expanding the wealth, technologies, and the life span of every generation since the late eighteenth century, but like every complex system, it is delicate. Many self-organizing complex systems operate on what evolutionary biologists and mathematicians call the "edge of chaos." a constantly shifting line of balance between potentially disruptive forces that the system itself creates. Karl Marx was right that capitalism, by its very nature, creates internal contradictions that inevitably lead to crises threatening its survival. What Karl Marx and his followers missed, however, was the capacity of politics, especially democratic politics, to resolve these contradictions, overcome the crisis, and enable capitalism to survive.

     What, then, does democratic capitalism require for its survival? The lesson from history, evolutionary biology, and everyday common sense is one condition has to be satisfied for any complex system to survive in an unpredictable and constantly changing world: The system itself must be adaptable, that is, it must have internal mechanisms allowing it to undergo radical change.

     The crisis of 2007 - 09 marked the fourth time in the history of democratic capitalism that the system faced the challenge of comprehensive change. The question is whether it will again adapt, as it did at the turn of the nineteenth century, the 1930's and the 1970's. Experience suggests that it will - and that the main mechanism for this survival will be the Micawber Principle: the seemly improvident assumption that a problem postponed long enough is, effectively, a problem solved.

Hoping that " something will turn up" may sound like deluded wishful thinking, but it is really just an extension into politics and macroeconomics of Adam Smith's arguments about the self-organizing dynamics of the capitalist economy. Smith showed how the "invisible hand" of competitive markets automatically coordinates the actions of millions of individuals pursuing their own self-interest so that they satisfy each other's needs, despite the fact that no one is thinking consciously about the common good.

     This same invisible hand steers individual initiative and creativity toward solutions of society's collective problems, provided two conditions are satisfied. First, the process of spontaneous self- organization must be given enough time to produce new adaptations after each of capitalism's periodic crisis. Second, the right incentives must exist for business competition and human creativity to address society's common problems, as well as meeting individual material desires. as Joseph Stiglitz, the Nobel Laureate economist, has repeatedly argued, private markets cannot be relied on "to align private incentives with social returns" - and this is particularly true during dramatic technological or political change."

Hat tip ~ Anatole Kaletsky, CAPITALISM 4.0