Adam Smith

THE INVISIBLE WAND

Adaptive Co-Management

as an Emergent Strategy

in Complex Bio-Economic SystemsA Paper written by

Jack Ruitenbeek and Cynthia Cartier

Centre for International Forestry Research (CIFOR) Occasional Paper No. 34, October 2001

Presentation by Rowan B. Martin

History: From Invisible Hand to Invisible Wand

illustrated with René Magritte’s paintings

History: From Invisible Hand to Invisible WandThomas Carlyle (1795-1881) observed that “economics is the dismal science”

In the 19th century, economists predicted that the world population would grow faster

than food production

Since humans appeared to have no self-control in limiting numbers, a bleak future loomed

Adam Smith had a different viewpoint

Thomas Carlyle regarded Adam Smith as an optimist

In the 18th century, Newton and other scientists viewed the world as a

harmoniously ordered mechanism

When Adam Smith wrote the Wealth of Nations in 1776, he was seeking the harmony of nature in social systems

He conceived “the invisible hand” –

. . . the myopic pursuit of individual economic self-interest

turns out to be of economic benefit to society as a whole


Wanting to better their condition, self-interested individuals unwittingly and collectively cause the emergence of the

common good . . . and hence the wealth of nations

However, this could only happenif individuals were free to pursue theirself-interest, unfettered by governments

Adam Smith believed that –


This concept of Homo economicus can be cast in terms of complex adaptive systems

Individuals follow economic strategies based on available information and resources

They adjust or abandon strategies throughout their economic lives

as they adapt to themyriad of interactions in

panarchical complex systems

They grow in abilities and capacity,accumulating information and resources along the way


The Moral Factor

Smith believed that ethical behaviour was innate in humans. . . we give sympathy in order to be worthy of the same

Later Smith became less convinced that mankind would unfailingly act decently and was scathingly critical of

corrupt governments and unethical commerce

However he never waivered in promotingthe laissez-faire strategy. . . for the common good,

believing that it was better than the alternative – feudal servitudeFeudal

servitudeLaissez-faire

In complex systems, the common goodis an emergent property of the panarchy


Since Hardin articulated ‘the tragedy of the commons’,

the best strategies for common pool resources

have been seen as state or private management

BUTBecause the complex panarchical system

of resource management was not understood,

successful adaptation to system-wide changes was not achieved

After innumerable government failures to implement management plans, policy analysts are back at the village level


The strategy emerging now is one of collective management by users – it is believed that they are best equipped to adapt

to system changes through adaptive management


however, this presupposesHomo economicus

. . . rational economic man

There is much evidence to

show that economic man is not

so rational and that social

factors are vital in decisions

It would seem in the best economic interest of villagers to manage their resources wisely –


People in traditional societies are almost certainly not Homo economicus . . . but H. economicus is

a narrow description of what humans are

The individual best suited for achieving sustainability is Homo sustinens who is

endowed with social, emotional and nature-related skills

H. sustinens is not ruled solely by economic reason but is known to act altruistically

– pursuing the common good


The Invisible Wand – Altruistic Common InterestCombining a move towards laissez-faire management . . .

Laissez-faire

and recognising there is more to human behaviour than the narrow concept of H. economicus . . .

We can imagine an invisible wand analogous to the invisible hand

Unfettered by government in matters of management,the altruistic pursuit of the common interest leads

to the emergence of the common good

In this case the common good is sustainability – as opposed to efficient prices


If laissez-faire is applied to adaptive management, there are likely to be scenarios where the emergence of common good is thwarted because of management and institutional barriers

The rôle of government will be to remove these barriers –

● improper design of institutions

● policies which ignore moral & social dimensions of humans

● plans insensitive to the social capital of the people involved

● over-ambitious time frames for programme objectives


Earlier we complained thatif ACM was emergent, there would be no rôle for policy

Here we have tried to draw some parallels between the

invisible hand and the invisible wand

There is a rôle for policy –to protect the

conditions for emergence


Technology

Adam Smith