vol. 55, no. 3 (January), 1989,
by John Foster
London: Allen and Urwin, 1987,.pp. vi, 315
The business of reconstructing macroeconomics so as to feature evolutionary
considerations is not business as usual. Almost every aspect of this book
has the earmark of "extraordinary science." The writing style and the organization
of ideas as well as the use of unconventional graphics and symbology are
intended, or so the reader suspects, to force modern macroeconomists out
of their habitual modes of thought. Even those aspects of evolutionary
macroeconomics that could be discussed in familiar terms are discussed
instead in an alternative language. Like Keynes, whose General Theory
provides the launching pad for Evolutionary Macroeconomics, Foster
seeks to change the way that economists think about their discipline.
The first several chapters
provide an extended commentary on mainstream macroeconomics. Many readers
will agree with much of Foster's critical assessment. There are difficulties
in dealing with dynamic problems in a static framework; with stock/flow
relationships in terms of period equilibrium; with supply-side considerations
in Keynesian income-expenditure analysis; with expectations in a deterministic
model. But finding cause for dissatisfaction in old ways of thinking is
easier than suggesting new ways that are more appealing.
The middle chapters establish
and build upon the "bio-philosophical" foundations of evolutionary macroeconomics.
Under attack here are the use of abstract time (as opposed to historical
time) in conventional economic theory and the pervasive space/time dichotomy,
which allows economists to construct separate static and dynamic theories.
Foster draws on the writings
of popular philosophers, such as Herbert Marcuse, Robert Pirsig and Erich
Fromm, to help make the transition to an alternative way of thinking. After
philosophizing about space, time, and motion, he distills the essence of
his bio-philosophical thoughts by comparing the structured motion of humans
to that of minerals, plants and animals. The forces that shape human structure
are those associated with entropy and development, maintenance and reproduction,
perception and imagination—as summarized by the author in a flow chart.
The analysis of these forces
and of the interaction among them is based upon six postulates. Each postulate,
from P1 through P6, is titled in the form of "The X Postulate," where X
is Consciousness, Co-ordination, Inertia, Sequential, Intensity, and Power.
The latter four could have been expressed and explained in more conventional
terms. "Inertia" can be understood in terms of sunk costs and intertemporal
complementarity of capital; "Sequential" in terms of capital specificity;
"Intensity" in terms of roundaboutness; "Power" in terms of resource endowments.
The first two postulates,
Consciousness and Co-ordination, are the more fundamental to Foster's evolutionary
way of thinking—and, undoubtedly, the most difficult for economists to
assimilate. Large collections of individuals are identified as "consciousness
units." "Macro-consciousness," for instance, is imputed to the macroeconomy
[p. 152]. Communities and corporations can constitute consciousness units
as well. And according to the Co-ordination Postulate, consciousness units
continuously attempt to maximize the degree of motional co-ordination [p.
are not bound by the tenets of methodological individualism. Foster is
explicit about his goal of rebuilding economic theory from the top down
rather than from the bottom up. Alternatively stated, the objective is
to establish a macroeconomic foundation for microeconomics.
are bound to be critical of, if not wholly unreceptive to, the postulates
relating consciousness to co-ordination. At best, to account for the economy's
structure in terms of macro-consciousness is to restate the central question
that economists have been addressing for more than two hundred years. How
is it that economic systems behave as if they know what they are
doing? How is it that co-ordination emerges out of the actions of individuals,
each having his own goals, none having the intent or ability to create
a co-ordinated system?
Had Adam Smith been an evolutionary
macroeconomist, he might have put forth his "invisible hand" not as a metaphor
but as a postulate. Co-ordination actually attributed to such handiwork,
however, would be on a methodological par with co-ordination actually attributed
to macro-consciousness. A satisfactory answer to the central question—satisfactory
in the eyes of a neoclassical economist observing the tenets of methodological
individualism—is one that explains the co-ordination of the system, or
the seeming macro-consciousness, in terms of actual micro-consciousness.
In the last few chapters
Foster sets out his macroeconomic framework in terms that downplay his
bio-philosophical thoughts. The similarity to the Keynesian framework is
apparent. The summation of the standard Keynesian components of total expenditures,
E = C + I + G, is replaced by an alternative summation: E = P + M + C,
where P is production flowing from the existing structure of the economy,
M is the maintenance of that structure, and C is creative activity which
alters the structure. The Keynesian formulation, which is based on an assumed
structural fixity, unduly focuses attention on M at the expense of C. Keynesian
demand-management policies, according to Foster, may create a crisis by
promoting the maintenance of a structure beyond the point where a structural
change is warranted.
Foster's own policy proposal,
spelled out in the penultimate chapter, is certain to disappoint the expectations
of most readers. After all the discussion of bio-philosophical foundations
and of human structure and macro-consciousness, Foster recommends a tax-based
incomes policy (TIP), modified to take into account changes in productivity.
Although several alternatives
are discussed for making the scheme operational (alternatives to accommodate
different ideological attitudes towards, e.g., budget imbalances and monetary
growth), there is no recognition of the fundamental problems with this
sort of social engineering—such as those highlighted decades ago during
the socialist-calculation debates or those identified in more recent years
by Public Choice theorists.
When social thinkers try
to rise above the bounded science of economics to construct their grand
visions of social co-operation, they tend to sink beneath it in prescribing
policy. Or, at least, so it is with John Foster. If the reader has an interest
in the question: What is Evolutionary Macroeconomics?, he may be satisfied
with this book. But he is not likely to be persuaded by Foster's presentation
that we need a revolution in our way of thinking (plus a TIP) in order
to catch up with the evolution of our macroeconomy.
Roger W. Garrison