The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics

by Michael Shermer

Book Overview

" A] captivating raconteur of all the greatest hits of behavioral, evolutionary and neuropsychology . . . Fascinating."--Los Angeles Times Book Review How did we make the leap from ancient... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 0805078320
• ISBN13: 9780805078329
• Release Date: December 2007
• Publisher: Times Books
• Length: 308 Pages
• Weight: 1.28 lbs.
• Dimensions: 1.0" x 6.5" x 9.5"

Customer Reviews

Why Evolution Is Sound Economics

Michael Shermer's "The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics" is yet another insightful, and provocative book from him, making the best, most persuasive case why accepting evolutionary theory ought to be sound economics for my fellow conservatives. Shermer persuasively argues that Charles Darwin and Adam Smith were essentially looking at the same phenomena, observing that evolution via natural selection is basically nature's "marketplace" operating under laissez-faire principles as expressed in Smith's concept of the "Invisible Hand". Shermer makes his arguments primarily from biology and psychology, without relying much on economics, and yet they are quite convincing. Indeed conservatives ought to be delighted with his cogently argued reasons why government intervention into national economies is often doomed to failure, arguing instead that natural processes inherent in the marketplace are often the only - and best - remedy for economic malaise. He also explains why "Social Darwinism" is a gross distortion of Darwin's thought, misapplied to social engineering and economics, and that both Earth's biosphere and the market are highly organized complex systems that have arisen from simpler ones, giving the false illusion of "being designed" by some external, omnipresent "Intelligent Designer". Without question, "The Mind of the Market" is a most remarkable book which deserves ample readership from the broad body politic, from both liberals and conservatives.

A Scientific Foundation for Economics

Michael Shermer provides Free Market Economics with a scientific foundation grounded in psychology and evolution. Shermer, an adjunct economics professor at Claremont University and the founder of Skeptic Society, explores the evolutionary roots of our sense of fairness and justice, and shows how this rationale extends to the market. Drawing upon his expertise as a scientist and noted economists, Shermer argues humans are not self-centered. The market itself is moral. Modern economies are founded on our nature. Drawing on neuroeconomic, behavioral and evolutionary biology studies, Shermer discusses what brain scans reveal about decision-making processes and negotiating. Using studies I was unfamiliar with, he builds on Eric Beinhocker's comprehensive study of complexity economics, Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics Shermer argues economics is far from "dismal." 1. It is undergoing its most dynamic revolution since Adam Smith penned The Wealth of Nations. Evolutionary, complexity and neuro economics are adding richness and understanding to it. 2. People are passionate about their personal economics and finances. Far being a science of mind-boggling mathematical models, these new sciences add richness and predictability to its study. Shermer is one of those rare writers with the ability to weave insights from science into economics. His insights bring new understanding to how our human minds create the human markets.

Great intro to evolutionary economics

Michael Shermer has focused his career on differentiating between myths and science. His related books I have read are excellent, including: Why Darwin Matters: The Case Against Intelligent Design, Why People Believe Weird Things: Pseudoscience, Superstition, and Other Confusions of Our Time, and The Borderlands of Science: Where Sense Meets Nonsense. In this book, he advances a unifying theory of evolutionary biology and modern economics that leads to a new discipline: evolutionary economics. Evolutionary economists knew that Charles Darwin had studied Adam Smith as he modeled his theory of natural selection after Smith invisible hand. Quoting one such evolutionary economist, Thomas Sowell: "Life, like the economy, is about the efficient allocation of scarce resources." This unifying theory entails that nature and the marketplace evolve over time following similar mechanisms. He calls nature and the market place complex adaptative systems (CAS). Those CAS learn as they evolve from simple to complex. They are autocatalytic, meaning they contain self-driving feedback loops. For nature, the driving feedback loop is natural selection underlying evolution. For the marketplace, the equivalent driving feedback loop is the "invisible hand" or the law of supply and demand. Per Shermer, the geniuses of Charles Darwin and Adam Smith were in uncovering a simple process to explain an incredibly complex outcome (diversity of nature and economies). Shermer rebuts two concepts: The first one is that the theory of evolution has no place in the social science. Social scientists have fought Darwin (under the misunderstood caption of social Darwinism) with as much energy as creationists. Yet, Shermer shows the multiple connections between natural selection and the law of supply and demand. The second one is the concept of "Homo Economicus" that human beings are strictly rational. There he cites behavioral economists showing the myriad of ways in which our brains are wired to make irrational choices. For further studies I recommend the excellent books The Psychology of Judgment and Decision Making and Inefficient Markets: An Introduction to Behavioral Finance (Clarendon Lectures in Economics). He is addressing three problems related to "The Mind of the Market": The first one is how the market has a mind of its own. As mentioned, the law of supply and demand is a driving self-organizing force within the market. One byproduct of Shermer's theory is that the markets are pretty efficient. He mentions that many studies show that professional investors don't perform better than index funds. Market efficiency extends way beyond stocks. And, is applicable to nearly everything as prediction markets have shown recently (betting on sports, politics, and entertainment outcomes). For an excellent treaty on the subject, I recommend The Wisdom of Crowds. The second one is how minds operate in markets. That's where he rebutts "Home Economicus

A splendidly multi-disciplinary book

The Mind of the Market is tour de force. One of its ideas is the similarity between the complexity that develops naturally both in the biological sphere and in the economic sphere, one the result of evolution, the other of Adam Smith's invisible hand. Another strand in this splendidly multidisciplinary book is the role of cognitive illusions and psychological foibles and the role they play in finance and everyday economics. Yet another trope is that Darwinian "survival of the fittest" does not mean the nastiest and most cut-throat survive, but often the eusocial and most reciprocating. These and other great ideas expertly woven together!

A New Take on Economics

Anyone who knows who Michael Shermer is knows that he is anything but a neoconservative. He created The Skeptics Society, a non-profit, focused on replacing pseudoscience with good science. He's written extensively on the problems with Intelligent Design, and he acknowledges the existence of man-made global warming. Needless to say, he's no Rush Limbaugh. Bearing these facts in mind, Shermer's book may come as a surprise to some. The primary points I've seen in his latest work are: 1.) Natrual Selection and The Invisible Hand describe essentially the same phenomena. 2.) Evolution and Economics are both Complex Adaptive Systems that rose from simpler systems. 3.) Too much government intervention into the economy is inefficient, misguided, and immoral. 4.) Adam Smith's and Charles Darwin's ideas weren't so different. 5.) It's ok to be a libertarian. With all of these comparisons between Capitalism and Evolution, one might think Shermer supports the idea of Social Darwinism. This, of course, would be wrong. Shermer denounces Social Darwinism. He says that "survival of the fittest" is a misleading term that most biologists don't believe in. Later on, he says that corporate culture is overall a good thing. Enron's corrupt model is the exception, and Google's "Don't be Evil" model is the rule. He doesn't rely on many mainstream economists to support his thesis. Instead he turns to psychologists, biologists, etc. Overall, this book was a GREAT read. Anyone who likes any of Shermer's previous books will probably enjoy this one. You will get to see more of Shermer's political side and the evidence he used to arrive at his ideas. If a fraction of the ideas presented in this book are incorporated into mainstream economics, it will probably change the field forever.