The Economics of Nature: Constrained Dynamic Optimization and Efficient Decentralized Decision Making in Nature

Abstract

The paper suggests that the study of economics as being practised in the economics profession today is needlessly human centered. Evidence is presented that the driving force behind activities of all living organisms including humans is economic in nature. Their behaviors are driven by the objective of constrained dynamic optimization, i.e., that they behave rationally. Further, whenever large-scale groups are formed such as colonies of ants and bees, and trees of the forest, they resort to decentralized decision making to obtain efficiency. The evidence for this proposition is rooted in a wide range of observations on the behaviors of many plants and animals and indeed in how their genome is organized and functions. Recent research suggests that the origin of life itself had the underlying motive that was economic in nature, i.e., that life was not a chance occurrence but an inevitable outcome of energy-dissipation-driven organization of the matters behaving so as to maximize the economic efficiency along the evolutionary path of increasing entropy production. Further, observations on a wide range of natural phenomena, including straight-line path of sunlight, symmetry of snowflakes and crystals, lead us to believe that it is not just living organisms that behave rationally but inorganic matters as well rationally in the sense that they behave with the objective of constrained dynamic optimization that produces efficient outcome.