Sailboat Diaries

In artificial intelligence, an evolutionary algorithm is a type of optimization algorithm (a process that tries to find the best solution to a problem) that uses some mechanisms inspired by natural evolution: reproduction, mutation, recombination, and selection. Just like biological evolution, the algorithm creates a bunch of possible solutions and lets the environment kill off the ones that don’t work. The best solutions survive, grow and reproduce, mix with other possible solutions, change a little by chance, then are tested by the environment and the worst die again.

If you understand evolution, you can see how effective this type of algorithm is. Using a single self-replicating molecule as a starting point, this evolutionary search has found roughly 10 million different patterns that are currently capable of self-replication on Earth. The same process occurs in our brains, only the search isn’t for optimal neurons but optimal neural connections. The brain searches for patterns of connecting neurons that makes the system better as whole. It does this in a distributed (bottom-up, grassroots. not top-down, hierarchical) way, allowing neurons to test potential connections and letting the most useful survive and grow.

When you look at the free market as an evolutionary algorithm, the possible solutions aren’t individual people (or their genetic codes) like in biological evolution. The free market (or voluntary market) is searching for patterns of specialization and trade that fulfill people’s desires. It’s looking for the best connections between people, the best patterns of interaction like businesses or charities to make people happy. It uses arbitrary tokens (like money or social “brownie points”) to measure how much a potential pattern of specialization or trade is desired, and when that value reaches the threshold of opportunity cost the pattern is formed. Like a new neural connection forming in the brain, or a new mutation in a species, this pattern will be tested by the environment and either survive or perish.

When enough people want apples so that the market price will exceed the cost of production, a new pattern of specialization and trade will emerge: growing and selling apples. This apple growing business will probably draw on previous methods of growing apples, but it could invent some of its own or create an improvement. As long as the pattern is profitable (enough people desire it to outweight its costs), the pattern will continue. It could grow, produce dependent patterns (like an apple transportation company), produce copies or change slightly, all guided by the desires of individuals subject to opportunity cost. If the pattern is unprofitable (not enough people want it to to outweight its costs), it will wither and die just like an unused neural connection or a bad genetic code.

If the voluntary market is an evolutionary search algorithm, we can exploit it to try to meet as many human desires as possible as efficiently as possible. To do this, we need to recognize that this distributed algorithm running on our collective brains is a lot better at allocating resources than any of us individually. People know what they want better than Ben Bernanke, and the free market will get it to them. We have to let the search run freely, uninhibited by threats of violence.

Coercion (forcing someone to act involuntarily through the use of threats or violence) is like sludge in the engine of the free market. It prevents (heavily discourages) people from testing certain patterns of specialization and trade. It’s like a Alzheimer’s disease: stopping us from finding new neural connections that could benefit the system as a whole. Granted, coercion could also stop us from testing “bad” patterns of interaction, but those would fail anyway. Only the connections that society values will survive and prosper.

So if we want people to be happy, we need to stop pointing guns at them and let them test their own patterns of interacting with others. The most succesful patterns of specialization and trade will survive and prosper, and humanity will start to approach the optimal network configuration. The only thing guaranteed to fail is trying to maintain the status quo with threats of violence.