Tuesday, October 27, 2009

No Professor Roberts, I won't Marvel!

I've got bad news.

The economy is so easy, even a caveman could do it.

To hear where I’m coming from, listen to the planet money podcast for October 21st. Here's the link: http://www.npr.org/blogs/money/2009/10/podcast_economics_for_monkeys.html

“Human beings aren't the only creatures who make economic decisions. It turns out that monkeys do it, too. Scientists have observed our primate kin exchanging goods and services and adjusting prices.

Ronald Noe, a professor of primate ethology at the University of Strasbourg, says the vervet monkey of southern and eastern Africa uses grooming as a kind of currency. They determine the value of food providers and divide their attention according to the law of supply and demand.”

The price system is most likely an emergent property of various social behaviors in the primate brain. Most of them are hard wired. Concepts like fairness, equity and for lack of a better phrase ‘monetary value’ seem to be built right into not only us but our primate cousins as well. In my opinion, based on the architecture of our brains, it would be more amazing if this price system didn’t exist in human society.

I feel like I’ve been getting a lot of traction by disagreeing with Professor Roberts, so I’m not going to stop now. To quote his last paragraph:

The price system, along with the profit we allow producers to earn for responding effectively to prices, keeps our economic lives orderly in the face of those changes. Teachers of economics, this one included, should be looking for ways to illuminate the unseen workings of that incredible system. It is a system that is often described as competitive. Yet it is ultimately a system of cooperation. No one designed the system. It works without anyone being in charge. Marvel at it.

The price system scales nicely upward from our ancient beginnings in small groups on the African savanna. I refuse to marvel at it, any more than I would marvel at a chimpanzee who grooms his cellmate at the zoo and expects to be groomed in return. Our price system is just six and a half billion shaved apes with cell phones ‘grooming’ each other.

Don’t get me wrong, I want to grovel in amazement at this apparently un-designed wonder of the universe. I remember the first time I went to Niagara Falls. I really did marvel at the size, power and sheer scale of that waterfall. I marveled all the way home. I was still marveling when I accidentally spilled a glass of water on the kitchen counter. When I watched the water pour across the tile and onto the floor, it hit me. Niagara Falls was just a solar powered kitchen spill writ large.

Nice try Professor Roberts:

I’ll see you next week.


  1. Sigh. UDO, your cynicism is appalling.

    First off let's go to the end of your post and look at Niagara Falls. Your amazement at Niagara Falls was nulled by the fact that you spilled water in your kitchen? It's the "writ large" part that makes it impressive. And the fact that it lasts longer than 10 seconds. And that it functions without human intervention.

    Less than a minute after your water spill your wife is yelling at you to wipe it up with the kitchen towel. In a week you'll have forgotten there ever was a waterfall cascading down your counter onto the floor. Niagra Falls has been around a long, long time and is going to remain for the foreseeable future. It's a wonder of nature.

    And as for free markets, sure primates engage in basic supply and demand exchanges. Maybe it is something hardwired into the primate brain. How does that make it any less amazing? Besides, numerous animals share some kind of basic behavior with humans.

    What they lack is the complexity and higher level of our social, economic, entertainment, etc. functions. They're trading grooming for food while we're trading iPods for Nissans. So the only difference is in complexity, right? But isn't complexity enough of a difference?? Let's see the apes figure out how to manufacture integrated chips with millions of transistors on them, turn them into computers and then transport them to all corners of the globe.

    Sure, you can choose to blunt your mind to all the wonders of the universe, the stars, the galaxies, the billions of cells that make up a single leaf, the complexities of the eco-system, Niagara Falls, and yes, even the wonder of the free market. You can say everything is grey if you want. It's your perspective and no one can force you to change it. And I wish I could argue better for my case (though it probably wouldn't persuade you) but in the end life is what you make of it.

    I'm sure we'll discuss this to death on Thursday. Respects and see you then.

  2. Actually the economy is so easy, even a rat could do it. Check out Battalio and Kagel's experiments on rats in the 1970s and 80s. Even vermin have a way of conceptualizing relative price systems. So not only is it amazing that humans and other primates share similar concepts of "price" but also, as Sam mentioned, that many other animals do too.