Nature: An Economic History

Published by EH.NET (April 2005)

Geerat J. Vermeij, Nature: An Economic History. Princeton, NJ: Princeton University Press, 2004. xiii + 445 pp. $35 (cloth), ISBN: 0-691-11527-3.

Reviewed for EH.NET by Philip R. P. Coelho, Department of Economics, Ball State University.

The learning and scholarship evident in this book are extraordinary; it has flaws but even though this review concentrates on the flaws, these should not obscure Geerat Vermeij’s achievements. The author uses basic principles of economics (scarcity, competition, choice) to understand biology and evolution. Thus Vermeij’s economic history is a biological history of the evolution of life, and not the stuff that most economists and historians teach and research. Nor does the author make concessions to readers who do not have a solid grounding in the various aspects of biology that comprise his work: marine biology, paleo-biology, and evolutionary biology.

The first chapter (out of eleven) is an introduction and outline. The premise is that “… to understand the past and future, we must discover how the link between life and its context changed in history, to what extent economic change is predictable, and how the principles governing competition-driven demand and resource-driven supply intersect to yield laws of history” (p.1). Part of the argument is that competition between predators and prey creates feed-back effects that result in continuous adaptations of prey and predator.(p.5). Competition between prey and predator reflects the underlying scarcity of energy (the wherewithal) necessary for the continuation of life.

Vermeij divides life forms into producers and consumers (he recognizes that this is a simplification) where the producers take energy (from the sun) and process it along with other inputs (carbon, nitrogen, phosphorus, etc.) to live and reproduce. He argues that disruptions to elemental producers are much more destructive to ecosystems than disruptions to top (uppermost in the food chain) “consumers” (p. 9). Vermeij does let his enthusiasm carry him too far at times; an example is in his discussion of consumers creating resources for other organisms. He states that predators that eat snails without damage to the snails’ shells, create resources for hermit crabs which use the empty shells as mobile homes. So far so good, but he goes on to add “… in the absence of [shells], such consumers would be at the mercy of rare storms or other unpredictable events to make empty shells available” (p. 5). Vermeij knows this is inconsistent with evolution; without a supply of shells hermit crabs could not have evolved as they did.

Chapter two, “The Evolving Economy,” outlines the integration of economics into biology. Here he references his sources for economic knowledge; and herein lies weakness. His statement that to economists of “… yesteryear, the economics of nature seemed irrelevant to the markets and people who produce trade and consume in those markets” (p.14). Vermeij is unaware of Alfred Marshall and, more importantly, many contemporary economists who have written on the intersections of nature and economics. Gordon Tullock, Armen Alchain, Jack Hirshleifer, Raymond Batallio, H. Scott Gordon, James Crutchfield, and Vernon Smith are prominent by their absence from his bibliography. This lack of a sustained exposure to economists’ thinking about biology and economic thinking in general shows when he makes elementary errors in exposition. For example, he argues that “a good candidate for one of the simplest yet most far-reaching principles in the realm of economics is that when two parties interact, one almost always gains more or loses fewer resources than the other”(p. 34),. Comparative advantage and the positive-sum nature of trade are not subjects that he knows well. The author believes (pp. 5, 17, 93, and 118-20) that a “surplus” is required for trade to take place. Why a rational person would create a “surplus” is not explained. Elementary errors in economics are scattered throughout the book. Despite these, there are profound insights that can be gained from Vermeij. Examples are his recognition that competition between organisms is local and that abundance cannot be inferred from global surveys (p.18); the analogy between animal species and human vocations (p. 44); and the importance of empirical work in biology, and by inference, economics (p. 29).

Chapter 3, “Human and Non-Human Economies Compared,” argues that the two are fundamentally the same; they differ only in scale, “not in kind” (p.39). Vermeij believes that the scientific culture has been fundamentally wrong in eschewing observations for controlled experiments and “… to consider history as simple narrative, untestable and without principle, full of particulars but empty of generalities” (p.42); I would only add the “economic” culture to this statement. Vermeij observes that diversity in both economics and nature creates specialization and mutualism; it is unimportant that human organizations are formed by individual choices, and biological ones by evolutionary selection. What matters is that relationships are formed and tasks are done. The “trade” between non-human organisms is analogous to human trade; plants provide nutrition to animals, and get protection or pollination services in return. The difference between human exchange and non-human exchange is that the former is intentional, the latter relies on evolutionary selection. There are other insights marred by statements such as “… [that because of cheap transportation] … efficient high-wage farm production in developed countries cannot compete with lower-cost production based on rock-bottom wages … in less developed countries” (p. 52). This is incorrect both theoretically and empirically. Offsetting these are some very interesting observations on ethics and morality (pp. 55-58).

Chapters 4 and 5 deal with “The Economics of Everyday” — the former concentrates on consumption (and enemies), the latter on production and resources. Vermeij examines the cost-benefit ratios of predator-prey relationships. An organism does not have to be the “best,” just sufficiently good enough to escape/capture adversaries. This casts economics in an extraordinary novel ways: density, information, reciprocity, feed-back effects are all given new meaning. But there are failings: strangely enough for a biologist he is strongly anthropocentric: “… there can be little doubt that the domesticators [human farmers] gain a competitive advantage, and that the evolutionary arrangement [human farming] involves unmitigated exploitation” (p. 85). This is a very human viewpoint. Evolutionary success is measured by survival and reproduction; domesticated species have spread throughout the world because of their association with humanity. From an evolutionary perspective domestic chickens have been wildly more successful than hosts of undomesticated species. Is this not a mitigating circumstance?

“Production” (Chapter 5) emphasizes the rule of competition in the allocation of energy, how market size (in terms of available energy) affects markets and specialization (Adam Smith’s observations coincide with nature’s practice), and the role of resources in human development. On this last point we part company. Vermeij embraces Kenneth Pomeranz’s thesis that the West grew rich because it had colonies and abundant natural resources. There is no clear consensus for this thesis. Current events suggest the relative unimportance of resources for development: some countries with abundant “natural” resources per person are certainly less developed than other countries with far fewer “natural” resources per person. What is a “natural” resource also is questionable. Most of the fertile farm land of England and the Netherlands were materially improved if not made by humans. Similarly, the colonial connection appears to be more likely a route to impoverishment than riches.

Chapters 6 through 10 expand upon the integration of economic concepts into biology and evolutionary biology. Most of these chapters are not directly relevant to human economic history; yet Vermeij does have interesting insights/intuition into economics and the human economy. There is a trove of information here. His knowledge of biology and evolution is formidable. However his observations on economics and history are schizophrenic; he is either very acute or very wrong. Again, his sources for economics and historical knowledge are few and suspect. Using John Kenneth Galbraith (p. 122) as the basis for economic knowledge is akin to a claiming expertise in biology on the basis of having read Rachel Carson. Vermeij is a far superior intellect than the sources from which he derives economic knowledge. His intuition is generally correct, where he goes afoul is accepting conventional wisdom; viz. in the eighteenth century Europe: 1) the “… free-market economy is free [read benefits] mainly to those in power;” 2) the East India company wielded monopolistic power in the colonies; and 3) the economy “… depended in large measure on the toil of slaves in the New World” (p. 304). Rebutting them sequentially, 1) the market economy of the eighteenth century reduced the prices of food stuffs, clothing, and house wares. These were overwhelmingly consumed by non-elites whose absolute living standards probably improved. 2) The British East India Company exploited its home market (the United Kingdom and Ireland) during the eighteenth century. The only colonies it attempted to exploit were the British North American Colonies and that was one of the reasons for the American Revolution. The Company bought goods in India at the prevailing market prices there. 3) To say that eighteenth-century Europe depended “in large measure” on New World slavery is not supported by the data. Sugar was the major New World slave crop, so in arguing that slavery was necessary to eighteenth century Europe, he is espousing a carbohydrate theory of development, certainly original, but in all probability incorrect.

Chapter 11, “The Future of Growth and Power,” is severely bifurcated; it has some valuable insights, and other statements that are unworthy of him. He lists seven problems: 1) finite resources, 2) pollution, 3) degrading ecosystems, 4) military annihilation, 5) inequality, 6) boom/bust business cycles, and 7) monopoly. The first three can be combined with inequality and monopoly to produce one, scarcity. Further the level of analysis is neither informed nor nuanced. For example, his citation of John Perlin’s argument that the cultures of the ancient Mediterranean and southwestern Asia were adversely affected by deforestation may very well be true. But it is not true that deforestation was or is a result of economic growth. Deforestation is a result of the lack of enforceable property rights to forests. Currently North American forests are expanding because property rights to trees are rigorously enforced. Similarly, pollution is not a result of capitalism; it is a result of its absence. Because no one owns the air or oceans, people feel free to use these resources as dumping grounds. Perhaps we can not have private property rights to the atmosphere and oceans, but we can have laws and regulations that mimic efficient economic outcomes. I disagree with almost all his policy prescriptions, depictions of human economic history, and economic analysis that appear in this chapter. Yet it is still a pleasure to read him; he writes clearly and well; intellect (even if uninformed) is present as it is throughout this volume.

This is a fine book. It is not an easy read, but it is well written. It is an adventure. If you are intellectually curious and wish to explore biological venues for economic and historical analyses, this book will reward you. There are flaws, but the book’s benefits substantially outweigh its costs.

Philip R. P. Coelho has written on and is continuing his study of long-run economic growth and the impact of biology upon economic growth and development. His articles have been published in the Journal of Economic History, the American Economic Review, Explorations in Economic History, Economic Inquiry, Southern Economic Journal, and other journals.