Imaginary Concepts: Economic Equilibrium and the Balance of Nature

Economies don’t equilibrate and nature doesn’t balance. Both are concepts imposed on natural systems that are in reality constantly pushed around by climate and entrepreneurial activity. This matters for speech and debate students because much economic and environmental legislation is based on outdated concepts of economic and ecological equilibria or balance.

The “balance of nature” that much U.S. and E.U. environmental legislation tries to achieve by restricting human influence on ecosystems–including marine ecosystems–is more a pre-Christian pagan concept that returned to capture the imagination of early ecologists and then environmentalists of the 1960s and 70s.

Economic and natural systems don’t balance because some in society and some plants and animals in the environment alter their behavior in various ways to take advantage of opportunities. Individual action by entrepreneurs knock economic systems one way and another, and everyone else adjusts as they can. Similar entrepreneurial behavior by plants and animals allow individuals and species to take advantage of ecosystem opportunities. (In the Seattle area, crows might be an example. They are smart and entrepreneurial in competing with robins, seagulls and other birds.) And in marine ecosystems, similar population shifts disrupt the ideal of “nature’s balance” that regulators still believe in.

In economics, equilibrium analysis starts with are assumptions of perfect information and perfect competition that allow mathematical formulas to apply. Israel Kirzner’s essay, “Equilibrium versus the Market Process” on the Library of Economics and Liberty website (econlib.org), explains why the:

“Austrian tradition [displays] a characteristic disenchantment with the orthodox emphasis on both equilibrium and perfect competition.”

And F.A. Hayek explains in “The Use of Knowledge in Society” why assumptions needed for equilibrium analysis abstract away from the core economic processes of dealing with limited knowledge and information.

Both economists and ecologists have pointed out that economics and ecology share similar Greek roots. Both deal with relationships between individuals and their surroundings:

 ecology is “the branch of biology that deals with the relations of organisms to one another and to their physical surroundings…. ORIGIN:  “late 19th cent. (originally as oecology): from Greek oikos ‘house’ + -logy.” 

economics ORIGIN: “…from Greek oikonomia ‘household management,’ based on oikos ‘house’ + nemein ‘manage.’ Current senses date from the 17th cent.”  (Apple Dictionary Version 2.2.3 (118.5))

Not surprisingly, when environmentalists comment on economic matters they usually wish that economies could be reformed to be more in accord with natural ecosystems. But the popular understanding of natural systems being in harmony or balance is out of date and not supported by modern ecological science.

The theory that nature is permanently in balance has been largely discredited…

The “balance of nature” concept once ruled ecological research, as well as once governing the management of natural resources. This led to a doctrine popular among some conservationists that nature was best left to its own devices, and that human intervention into it was by definition unacceptable. …

Despite being discredited among ecologists, the theory is widely held to be true in the wider population: a report written by psychologist Corinne Zimmerman of Illinois State University and ecologist Kim Cuddington of Ohio University demonstrated that at least in Midwestern America, the “balance of nature” idea is widely held among both science majors and the general student population. (Footnotes in source)

These themes are central to Daniel Botkin’s The Moon in the Nautilus Shell (which you can “Look Inside” here on Amazon). Botkin explains that climate change models are wrong or misleading because they assume the environment is in a steady-state balance, except for man’s intervention or climate changes. Botkin writes:

None of these steady-state assumptions are true. Species do not come into instant equilibrium with a new climate; they are always in the process of responding to previous environmental change. (Introduction, page xiv)

I’ve not yet read much of The Moon in the Nautilus Shell, but did read most of Botkin’s earlier book, Discordant Harmonies: A New Ecology for the Twenty-first Century. I don’t claim to be an expert in this field (of course), but note that for debate students, understanding that the latest scientific research in ecology undermine the foundations of most U.S. environment legislation is valuable when making the case for reforming marine natural resource policies.

This Daniel Botkin post from May 2013 explains how “balance of nature” models still influence government fisheries management (in this case the European Union):

I have written for more than 20 years that we need to move away from the ancient myth of the balance of nature—the idea that nature, undisturbed by people, is constant. This idea has formed the premises

for many environmental  laws and policies. Recently, some of the major U.S. Environmental organizations have expressed the need to move away from this ancient myth, a very positive, constructive move. But  the balance of nature is still a powerful idea.  Here’s an example that shows that the idea is still in use, in the quotation from the European Unions’ Commission on Fisheries.

Botkin notes that the E.U. Commission uses a fixed mathematical “logistic curve” model to gauge whether annual fisheries catches are too much, too little or just right

As applied in standard fisheries management models, the only variable is the amount of human harvest. The logistic curve is therefore a mathematically explicit statement of the ancient balance of nature idea, which goes back to the ancient Greek philosophers, that nature undisturbed achieves a constancy.  As I show in The Moon in the Nautilus Shell and showed 23 years ago in Discordant Harmonies, no data about any aspect of the environment follows the logistic curve.  Nature in all its characteristics — climate, oceans, ecosystems, species, populations, is always changing. 

 Botkin concludes:

We can do a lot to save the world’s fisheries. One of the first steps is to begin to use realistic forecasting methods.

PERC’s Terry Anderson discusses economics and ecology with Daniel Botkin here.