In school, we were taught that there was balance in nature. But disrupting any part of the ecology could upset this equilibrium and have far reaching effects across the biome.
It was therefore a considerable surprise for me when in high school, I read in a science magazine that the idea of balance was one that had been rejected by biologists years ago. Instead ecologies were dynamic and evolving systems where creatures co-evolved to exploit opportunities in nature and against each other.
For example, foxes will eat slow rabbits. If only the fastest rabbits are left to breed, their offspring will on average be faster than the previous generation. These will be able to outrun slower foxes. Thus only the fastest foxes will be able to get enough food to breed. Thus over time both foxes and rabbits get faster.
Now in this over-simplified scheme, the overall populations of foxes and rabbits may not change too much after a few generations, but both species have become faster. There is sort of equilibrium, but not a sort of balanced static one. Instead, the food chain is not a delicate balance, but a robust and evolving thing which is able to adapt to changes.
Balance and static equilibrium does not exist in the natural world. Species are constantly adapting, evolving and invading. When Charles Darwin for trying to decipher the laws of biology, he took inspiration from economics. It is strange therefore that today, the only place where the idea of static equilibria exists is in orthodox economics.
This was not always the case. Adam Smith spoke of the invisible hand of the markets arising from the actions of individual butcher, bakers etc. But during Victorian times, as more mathematics was brought into economics, it was found necessary to make several simplifying assumptions. Such as treating real people as rational actors with perfect information. From this was developed equilibria between supply and demand, wages and employment and so on. It has been apparent for some time that this sort of thinking didn’t model several real world phenomenon very well, such as business cycles. But orthodoxy prevailed, even when the advent of computers and large databases obviated the need for some of the old simplifying assumptions.
The standard model of economics suffered a tremendous shock after the 2008 recession. Economists were forced to re-look at the world. Banking systems were remodelled as sophisticated networks with propagating risks. This new way of thinking is often being championed by the young professors and students who see an opportunity to reshape their field.