vol. 55, no. 3 (January), 1989, pp. 789-790           


Evolutionary Macroeconomics
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. 141].
        Evolutionary macroeconomists 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.
        Neoclassical economists 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
    Auburn University