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Bionomics: Economy As Ecosystem (by Michael L. Rothschild)
Introduction: This is downright one of the best, compelling, intellectually most stimulating, and entertaining books that I have ever read. I came across it while browsing the list of participants at the upcoming Future in Review conference, and I have just finished reading it.
Content: "Bionomics" uses concepts of biology to explain the inner workings of the economy, both in the past and in the present, as well as to offer some glimpses into how the future will look. Starting out in explaining both the history of mankind with landmark events in technological history (most importantly writing, printing, the steam machine, and the microprocessor), it establishes the thesis that the system of technological information mankind has built up is the only coherent information system parallel to genetic information. It introduces the concepts of Darwinian selection in nature and shows its analogies in the economy. From there, the book branches out into explaining how organisms and organizations are alike, how profits and surplus in nature are alike. It shows how learning leads to ever-sinking costs, and how the concept of learning is the ultimate driver of progress in our economy; it also criticizes how our current understanding of economics (drawn from the equilibrium theories) does not take that most important factor into account. In the last third of the book, the previously established principles are applied to practical matters such as how free markets work, how prices are flexible and rules not, how bureaucracy runs amok with these principles, and why socialism must have failed. It closes with the logical conclusion that capitalism is not just one system in the evolution of economical systems, but how it is the one system underlying all human economies. Working against capitalism is both futile and counterproductive.
Well, that's my summary of the content. Given the intellectual rigor this book offers, my summary can't do justice: There is so much more in there and there are many perspectives one can take on the content. Here or here are good summaries by other people, as well as an informative outline here (courtesy of the institute which was spawned by the book).
Sidenote: There seem to have been several editions to this book, in which the book's byline changed from "The Inevitability of Capitalism" to "Economy as Ecosystem". For the record: I have read the 1992 edition printed in the UK with the first byline.
My opinion: My mind is still buzzing from this book, and I will certainly re-read it in a few months. I was most-impressed by the intellectual level of analysis that is coherently displayed throughout the book, piecing together argument by argument and finally coming out with the one and only conclusion. Yet, despite of that high level, Michael Rothschild writes in a way that is utterly entertaining and very simple to understand -- I don't know how he does this, but I understood things afterwards that I know I would have never understood from another book or article. And I was entertained all the way through; some evenings I couldn't put the book down and only had to because so many new thoughts needed to be processed in my overstretched brain.
Furthermore, besides the main argument, "Bionomics" teaches so many more things: Chapter 8, e.g., explains in roughly ten pages how cells and DNA work together. Nothing more, nothing less. Ten entertaining pages is all it takes, and I have become interested in biology: I had always hated biology in school, and I cancelled it as soon as I could. From this book I know that it was not the content, but the presentation that I hated ... One more area I need to gain some more knowledge.
If I have to point out one negative thing: With the book being written around 1990, the perspective of Japan dominating the US and the US falling behind in technological development, which is frequently used as both an example and argument in the book, has been proven wrong by history. But that doesn't matter much as this is nowhere near a central argument in the book. Furthermore, I should have really read the new edition, but my library only carried the 1992 version. Never mind.
Everybody should read this book: If you are interested in politics, this is a must-read: You will learn how capitalism actually works, and you will -- even if you disagree -- find a coherent picture of why socialism cannot work [hmm, that last sentence doesn't make sense in a way, but you get my point]. If you are interested in economics, this is a must-read: It will actually show you something your professors haven't told you, and which you had always felt deep inside was missing; it's all explained in "Bionomics". If you are a business person, this is a must-read: It will explain how your employees work together, how your company is embedded in its ecosystem, and most importantly what levers will actually work the way they are supposed to when you pull them. If you are a person generally interested in your education, this is a must-read: Beyond economics, you will learn the basics of biology incl. Darwin's theories and genetics 101, the main steps in human history from the point of technology, various arguments and counterarguments for issues that routinely come up in any discussion. If you want to be entertained and intellectually stimulated, this is a must-read: Seldomly will you find a book that presents such a wide array of knowledge in a coherent context which is actually done in an entertaining, almost thrilling way. If you have children, this is a must-read: For yourself to explain to your children how the world really works without boring them to death, and for your children themselves (once they are, let's say, in their high-school senior year).
If you believe capitalism is evil, it would - I hope - convince you that actually you are on the dark side of the Force, and more frustratingly, on the futile side of it. At the very least, it will leave you thinking. And if you believe in capitalism, it will give you more ammunition for discussion than you will ever need.
Summary, quoting from the book inlet: "One of the most fascinating books about business that I have ever read." [Bruce Henderson, BCG founder]; "Bionomics will change the way you think about your everyday life." [Esther Dyson]; "... its freshness and intellectual chutzpah make it impossible to ignore." [Joel Mokyr, professor].
- Book Title: Bionomics: The Inevitability of Capitalism, or Economy As Ecosystem
- Book Author: Michael L. Rothschild
- Buy the book at Amazon.com.
- My rating:
Read all of my book reviews here.