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Introduction

Like wines that improve with age, there are ideas that never stop being relevant for cultivating human flourishing. Like wines that worsen with age, there are ideas that may have once been helpful but no longer are. When all humans lived in small groups, for example, robust central planning was necessary, just as it continues to be within families and firms for the reasons laid out almost a century ago by Ronald Coase (1937). But when applied across the large societies we now live in, the more centrally planned economic activity is, the worse the outcome.

Our distant ancestors were excellent central planners because in the small groups within which they lived it improved group fitness. It is therefore now a part of the genetic recipe we all share. But recently in our evolutionary history, groups began to compete on the margin of size because, in addition to the obvious martial advantages, Adam Smith (1981 [1776]) was right about the economic power of scale. Market pricing came to effectuate socially efficient decision-making in contexts for which central planning could not for the reasons laid out by Friedrich Hayek (1945, 2002 [1968]). Unfortunately, our small group genes do not equip us to readily appreciate the social benefits of market pricing.

Few economists have enjoyed the level of public policy influence that Marianna Mazzucato has enjoyed in the last decade, but her work is unconcerned with this harsh reality. She came to prominence by arguing that innovation is often driven by government involvement. But despite providing numerous examples, she does not provide an explanation for why such efforts were necessary. Saying they were too risky to have happened otherwise is an assertion, not a fact, since no one can know the counterfactual outcome.

She doesn’t call for destroying the price system, but she and her co-authors do seek to reshape it significantly.Footnote 1 To what ends and why? Her calls for using government power to better achieve social objectives provide no economic rationale for why such objectives (e.g., development of green technologies) are in the right proportion relative to other social objectives.

I submit that she and her growing number of followers are mostly responding to genetic predispositions we all share, predispositions that make us favor controlling how the economy evolves. More to the point, I shall argue that her calls for having an entrepreneurial state or a mission-based (moonshot) economy (Mazzucato 2015, 2021) amount to little more than new justifications for greater central planning, a case of old wine in new bottles.

Mazzucato and those who share her views would not agree, perhaps because they think of central planning as the polar opposite of market pricing, and they are clear about not being against market pricing. But Hayek’s demonstration of how value is created by markets in contradistinction to central planning does not imply that if markets exist then central planning does not exist, either. Few would quibble with the observation that perfectly centralized and perfectly decentralized planning are on opposite ends of a broad continuous spectrum. Mazzucato’s calls for “market shaping” obviously don’t call for the end of market pricing, but they also don’t imply that her views are closer to comporting with decentralized planning than central planning.Footnote 2

There is already ample criticism of central planning in general and these new versions of it in particular. I will neither add to, review, nor synthesize this important work. Instead, I will attempt to address the following puzzle: Why is the pull of central planning so powerful? The short answer is that the genes that served us so well for so long make us desire control. This gene-based conception of control, however, is not the kind of control that best supports flourishing in the kinds of societies we have built for ourselves.

In what follows, I offer an explanation for why our desire for control and our failure to appreciate that how it is effectuated makes all the difference has led to a greater fear in market evolution than is warranted. I then argue that certain kinds of moral beliefs shape thinking in a way that makes us more likely to overcome this bias, allowing us to have more faith in the free market system than otherwise. In the West, the evolution of such moral beliefs helped inoculate democracy from providing political support for central planning to produce specific moral outcomes. The waning of these beliefs opens the door for a resurgence of support for central planning in the very societies that have already benefitted greatly from decentralized planning.

The Siren Song of Control

Until very recently in the story of humans, a matriarch, patriarch, or small group of elders was in charge of making decisions that affected the welfare of the group. Examples of such decisions would be where to move the tribe if area resources had become depleted or whether to make friends with a neighboring tribe or destroy it. In the small groups within which we lived, such top-down control was very efficient.Footnote 3 The spontaneous order of the market didn’t even rise to the level of a foolish fantasy because it was as unfathomable as it was impertinent.

Rising intelligence led humans to become increasingly forward looking over time rather than merely reactive to immediate circumstances. So they increasingly went beyond adapting to the local environment to proactively trying to shape it, both physically and socially. Human genes therefore now produce feelings of anxiety when things seem out of control to induce us to bring them under control. Just letting things happen seems foolish and irresponsible.

In most circumstances humans therefore favor someone or something being in control. This control bias makes us suspicious of letting anything run on autopilot, let alone letting things evolve over time without attempting to exert some measure of control over the path of change. The problem is that some of the mechanisms that produce efficient control in small group settings fall apart outside of the milieu within which they evolved.

A small group’s central planning leader can directly control who does what under varying circumstances, but to do this efficiently, he or she must account for all of the costs and benefits involved. This requires an acute sense of empathy. It would be inefficient, for example, to put someone who is afraid of heights in charge of climbing trees to gather coconuts for the group. At the same time, our capacity for empathy helps keep opportunism in check. Even if we know we can get away with it, if we are opportunistic at the expense of a small group, we know we will empathize with the harm done to individuals in the group, so we will expect to feel guilty. This internalizes the cost of such actions and thereby discourages them.

But in a large society, the harm caused by opportunism is often spread over so many people that there is no actual person with whom to empathize. This removes the trigger that normally actuates guilt that thwarts opportunism. This hardwired capacity for harm-based restraint therefore doesn’t scale up. So opportunism was not nearly as big a problem for our distant ancestors as, say, cheating the IRS is in America today (Rose 2011).

A better-known problem is the effect of group size on the localization of knowledge (Hayek 1945). Larger groups are far more productive because they enable greater specialization that increases productivity (Smith 1981 [1776]). The more specialized economic activity is, the truer it is that most people will know a great deal about what they do and the ever-changing details of time and place that affect how they do it, while knowing nothing about what everyone else does. In very small groups, this is never a problem, so our small group genes are ill-equipped to deal with this problem.

In his Nobel acceptance lecture, Hayek explained why, in large societies especially, we should not infer from improved scientific and theoretical understanding of the broad causal relationships in economies that we therefore know enough to engage in efficient central planning.Footnote 4 Every bit as important is localized knowledge about the details of time and place. This distributed knowledge requires a mechanism, such as is provided by the price system, if it is to be fully put to socially beneficial use.

In large groups the localization of knowledge makes efficient direct management of what people do impossible. By explaining how this problem grows exponentially with group size, Hayek (1945) was able to explain how the price system creates value for society. With market pricing, no one needs to know what others are doing, how they do it, or how relevant conditions have changed because market prices force everyone to bear the social opportunity cost of using any resource they might use. This implicitly assumes that any market failure problem that might drive a wedge between the market price of a resource and the true social opportunity cost of using it has been addressed.

This means that as individual persons or firms do their best with the local knowledge they possess, society doesn’t suffer from resources failing to be used where they will create the greatest social value. If there is another more highly valued use, that would drive up demand, which would drive up price, which would induce those using the resource who valued it less than this new, higher price to look for alternatives. This is exactly what a central planner who was trying to best promote the common good would do if he could do it.

Hayek’s insight is one of the most important ideas in economics. But it does not comport with our hardwired intuitions. It suggests that society works best when we don’t try to control the flow of economic activity, when we instead let those with local knowledge act on it as they see fit as long as they pay market prices for the resources they use and play by the rules of civil society. Unfortunately, most people simply cannot believe that it is possible for society to do well if no one is in direct control of all but the least consequential of economic activities.

Because we evolved in very small groups, faith in the free market system working us to better outcomes is not something that our innate scientific intuitions prepare us to believe. Quite the opposite is true since for most people the proposition that we don’t try to centrally plan economic activity seems ridiculous on its face. So just as gravity never stops pulling on Newton’s apple, we never stop hearing the siren song of our small group genes calling for someone or something to be in control to avoid disaster.

I suspect that so many economists today have so little faith in the free market system because of their own control bias about which they are unaware. To my knowledge this problem has never been carefully studied. But it seems unlikely that this bias does not exist, and it seems rather likely that it explains why most people – especially very responsible people – are instinctively incredulous about the desirability of decentralized planning.

The Power of Evolution

Before the neoclassical revolution economists had a more organic view of the economy and economic behavior than they do today (Rose 2019b; Smith and Wilson 2017). With the rise of neoclassical economics near the end of the nineteenth century came an increasing preoccupation with precise mathematical modeling of nearly all economic phenomena. This naturally led to a more mechanistic way of thinking of the economy and economic behavior (Mirowski 1988).

This ushered in the rise of Keynesianism, which envisioned a more activist role for government based on the presumption that economists now had a sufficiently clear understanding of how the economy worked to make such intervention fruitful. Before long an unwillingness to intervene came to be viewed as foolish, even immoral. Interventionism began with discretionary fiscal and monetary policy aimed at smoothing business cycles. It became fashionable to believe that through scientific reductionism the economy could be effectively disassembled, reverse engineered, and improved upon through policy. This led to broader regulation of economic activity to effectuate various forms of social engineering. We now live in the age of the economic policy wonk.

Unfortunately, market economies are much more like constantly evolving biomes than toasters. Just as biological evolution has produced an incredible variety of life, the evolution of market societies has produced an incredible variety of goods, services, technologies, and institutions. Until very recently, little of this was centrally planned. The pace of change often led to great disruptions (e.g., the migration of labor from the agricultural economy to the industrial economy), but the rate of economic growth was so great that the word “progress” was viewed by most as inherently positive.

Near the end of the nineteenth century, there were growing concerns about the social cost of industrialization, which undermined the presumption that progress is inherently good. Then came spectacular successes of central planning to achieve victory in two world wars and a series of successes in the space program. Far too many economists failed to recognize that central planning in exceptional circumstances atop economies that are already well developed because of decentralized planning is hardly evidence of the general efficaciousness of central planning.

An increasing proportion of economists began wondering if unbridled capitalism was such a good idea after all. Marx had little influence initially, but his work began to find purchase with the intelligentsia and in the academy. The idea that some form of central planning would be wiser than pure capitalism gained momentum in part because our innate control bias made our minds receptive to such arguments.

None of this was news to economists who understood the theory of market failure.Footnote 5 There are circumstances for which flourishing will almost certainly fall short of what is possible without government intervention. No one who understands the theory of market failure believes that unfettered capitalism is a good idea. Over the second half of the twentieth century, central planning advocates increasingly invoked the theory of market failure to justify intervention.

Recently, however, a growing number of central planning advocates believe that rectifying market failures but otherwise having faith in the evolution of society is foolish. The presumption is that with more proactive planning to guide the course of economic change, governments could do much more good. Increasingly, rectifying market failures came to be viewed as necessary but far from sufficient for sustainably maximizing social welfare over time. For an extended counterargument to this position, see Rose (2024).

If there are compelling theoretical reasons for this shift, members of this post-market failure movement have not spelled them out. Simply arguing that active intervention in the past produced success and asserting that we can do better by putting more effort into overt central planning are not compelling arguments for supplanting market evolution with central planning. They simply express incredulity about putting faith in the free market system. Neither demonstrates how we can know central planning will do better than the counterfactual outcomes that would have otherwise arisen from evolution amidst appropriately addressed market failure problems. This is remarkable given ample evidence of social progress that came on the heels of market evolution arising through decentralized planning in the private sector over the previous three centuries in the West.

Guided Versus Girded Control and Evolution

Control is normally thought of as the direct regulation of something like setting the water temperature for a shower or driving a car in a precise path down a road. But control can also be effectuated indirectly. It can take the form girding, for example, like having an anti-scald valve on the shower’s water supply or having guardrails to keep the car on the road.

Whereas guided control charts a specific path forward through time, girded control simply puts constraints on where that path can go. Unless it is so suffocating that it creates de facto guiding, girding is a lower level of control.Footnote 6 But that does not mean it is less important. Girding allows for the elimination of actions that cause problems for society while not otherwise removing discretion from private actors. It therefore leaves the lion’s share of control in the hands of individual persons or organizations which, in turn, gives behavior room to evolve in a multitude of ways.

When government power is used to effectuate precise control to directly guide the path of change, this has the effect of forbidding all other ways forward. It therefore forecloses a great deal of potential future directions of progress that might have been taken if evolution had been allowed to proceed within the limits of girded control. There are profound benefits to having systems in place that allow evolution to produce a variety of possible avenues of change that can allow those who possess local knowledge to use it to adapt and create. Such efforts often lead to the serendipitous discovery of new knowledge. Thinking of competition as a discovery procedure through the price system (Hayek 2002 [1968]) helps prepare the mind to be receptive to the idea of thinking of girded evolution as fostering its own kind of knowledge discovery procedure.

When evolution is girded but not guided, only specific actions are redacted from what individual persons or firms can choose (Rose 2011, 2019a). It is natural to view the complement of this redacted set as an equally well-defined and bounded set. But in reality, this set cannot be fully known and is constantly changing, so it is effectively unbounded. Most importantly, when evolution is only girded, this ever-changing and growing complementary set of actions automatically falls under the discretion of private actors.

In contrast, the truer it is that evolution is precisely guided by government, the smaller is the set of actions that fall under the discretion of private actors. This forecloses the use of the distributed local knowledge possessed by individual persons and firms for adapting and creating. By the very definition of local knowledge, using this knowledge cannot be replicated by the central planner. This produces many fewer lines of evolution that reach into the future, thereby reducing a society’s ability to benefit from evolving knowledge.

Girded market evolution is not evolution that is solely driven by random mutations as it is in biology because those who possess local knowledge are not merely making random guesses about how to use it. They are positing educated conjectures in light of what they already know, much of which central planners cannot possibly know. So the problem isn’t just fewer experiments going forward through time; it is also that the presumed best approach chosen by central planners could not have been conceived through consideration of all the possible ways forward arising from the variety of perspectives that localized knowledge affords.

Guided evolution is not much of a problem in a very small group. But the larger a society is and therefore the more dispersed and varied local knowledge is, the greater is the cost of guiding change to take one particular course forward. As our society gets larger and more specialized, it produces more lines of evolution at any point in time which causes cross-fertilization of knowledge to expand exponentially through time.

Those who possess local knowledge do not know which way forward is best, either. But unlike the central planner, they don’t have to. With girded evolution decision-makers simply adapt and create the best they can with the local knowledge they possess, knowing that foolish efforts might produce bankruptcy, while brilliant ones might produce spectacular riches.

We do not know that this process will result in discovering specific knowledge. This fact about the nature of evolution produces angst among some people, and I suspect this helps explain the allure of meticulous central planning over evolution. But it is fallacious to look to the past and point to discoveries that were made under central planning that might not have been made without it and then to worry what the world would look like without such control. This is because such discoveries, no matter how remarkable, cannot be compared to counterfactual outcomes that could never see the light of day from having resources driven to the efforts determined by the central planner.

All parents know this feeling. They cannot imagine a world with different children than the ones they have. But most are able to understand that this feeling arises from temporal confusion as is evidenced when they urge their children not to have children until after turning 30, even though their first two children were born to them when they were in their 20s.

Employing knowledge fuels the discovery and creation of new knowledge. The greater the scale and scope of knowledge, the greater the rate of creation. Knowledge – specifically durable scientific ideas – is a perfect form of social capital. The essence of this type of capital is that it is used but not used up in the process. Whereas all other inputs are either used up (like flour when making cakes) or disappears (like the baker’s time) or wears out (like the batter mixer), knowledge has the peculiar property of not being subject to any of these effects. If anything, it gets stronger with use. But the adjective social is also meaningful since knowledge tends to produce spillovers.

Paul Romer (1986, 1990) was awarded the Nobel Prize in economics for introducing endogenous growth theory to economics. His work stresses that knowledge tends to build on itself, to compound over time, to grow exponentially. From existing knowledge, with effort we can create new knowledge and that new knowledge can create yet more new knowledge. Political economic systems that recognize the power of knowledge are therefore systems that can produce an astonishing rate of intensive economic growth that is the only path to improving the quality of life over time for everyone.

One reason why not guiding evolution is so important is that evolution serves as a mechanism for discovering knowledge we might not otherwise acquire, at least not as quickly. It therefore helps increase not just the volume of knowledge, but its diversity. The more diverse the set of ideas over which competition is unleashed, the better the best we end up with will be. But greater diversity also increases the rate of compounding by providing new starting points for subsequent knowledge creation. The compounding nature of economic growth ensures that static efficiency gains from not having multiple efforts, most of which will fail, will be more than offset by the gains resulting from the largest possible set of competing approaches rolling forward through time with compounding returns.

Even when new things are tried that fail, often something is still learned that produces benefits to others. But such knowledge would not have been discovered without having tried the failed approach. Genuine entrepreneurs who understand the value of quick and creative action have every incentive to pounce on such knowledge. But the more that government guides evolution through central planning, the fewer experiments there will be and therefore the fewer serendipitous knowledge discoveries there will be that no one could have ever imagined ex ante.

With girded evolution decision-making by individual persons and firms is guided primarily by economic forces. But the more government attempts to guide evolution through central planning, the more the course of change will be determined by political forces. This means that political agendas will sometimes dictate the direction of change over value creation. This is how we can end up with giant white elephants from managed industrial development schemes for which failure produces a doubling down, rather than a termination, of the flow of resources.Footnote 7

Although it is foolish to demand guided evolution – in the extreme, an oxymoron – it is not foolish to be skeptical of ungirded evolution. As freer societies became the norm in the West, private sector-driven evolution produced a roller coaster ride of change. Part of the thrill of riding a roller coaster is not knowing what’s coming next, and so it is with social, political, and economic progress. But even the staunchest thrill seeker wants to be assured that any given roller coaster is reasonably safe.

Imagine a world in which this assurance was derived by a particular “best” design for all roller coasters rather than by boundary conditions that constrain how roller coasters can be built and operated. There would be very few roller coasters indeed, for who wants to ride the same roller coaster over and over? The way to have lots of different roller coasters while knowing they are all reasonably safe is to understand the need to gird the evolution of roller coaster design, construction, and operation. Only a fool advocates for completely ungirded evolution of society. But girded how?

What should and should not be on the list of things that should gird social, political, and economic evolution is too large of a question to be addressed here. The point here is not to debate the appropriate set of constraints to effectuate girding; it is to draw attention to the need to distinguish between girded control and guided control so it is easier to see that when central planning moves us increasingly into the realm of precisely guiding how the economy evolves over time, it is destroying benefits that only the girded market evolution process can provide.

Utopianism

What can explain this preoccupation with controlling the flow of resources into the future? I submit it is, most likely, that there is a primal fear of heading into the unknown. Unless one has already learned a great deal about how evolution and free market societies work, having “faith in the system” to produce “progress” that is presumed to best promote the common good is impossible. All of this messiness can be avoided by defining a destination ex ante and then working to ensure that social, political, and economic change heads inexorably toward it.

Shades of utopianism can be found in all human societies. The ubiquity of utopianism is hardly surprising when we recognize how closely related it is to control bias arising from genes that we all share. For the most part, humans try to make sure things head in the direction they want most, the direction required by their definition of utopia. But there are at least two problems with this.

As Robert Nozick (1974) explained many years ago, if you want a society that maximizes liberty you can have that, but you’ll have to give up on utopia. This is because millions of cats going off in their own directions will not support the execution of any particular plan. And if you want a utopia you can have that, too, but then you’ll have to give up on liberty. This is because all action will have to be subordinated to making progress toward the plan. Those who are preoccupied with utopianism need to understand that the price tag of any utopia is the loss of liberty unless one’s definition of utopia is the free society.

The second problem is that utopianism is antithetical to evolution. This is devastating when one tries to imagine an alternative mechanism through which to produce the array of life we now have on our planet. We live the good life now in large part because systems evolved that allowed us to have our cake and eat it, too. They did this by girding evolution to limit the downside risk, but by not guiding it, they left evolution’s substantial upside. Utopianism is based on the naïve and arrogant presumption that we already know what is best given our known resource constraints, so knowledge discovery processes are both superfluous and wasteful.

With the knowledge discovery process made possible by girded but not guided evolution, the more diverse knowledge is, the more rapidly the stock of total knowledge grows and, with it, a society’s ability to support mass flourishing. Such knowledge can be subject to a kind of infinitely repeating feedback loop that, unlike anything else, has no particular reason to be subject to diminishing returns. It never stops compounding. In most cases this new knowledge produces spillover benefits since knowledge is famously hard to make fully excludable.

This process creates unimaginable treasures along the way. But we don’t know what exactly will be in each new treasure chest we discover. We only know from experience that in the past those societies that let the knowledge genie of girded but not guided evolution out of the bottle enjoyed rapid progress toward mass flourishing. But this story never gets off the ground if the path going forward is forced back to a predetermined plan to achieve a particular view of utopia.

Market Failure

When government addresses market failure problems as narrowly and unobtrusively as possible, the problem is normally rectified while not impeding the efficient function and subsequent evolution of society. This is most obvious with subsidizing basic research.

It is well-known that basic scientific research has the potential to produce tremendous positive spillovers. Since no one can know what all of those spillovers might be, and therefore the extent to which they might be adequately captured to assure a socially optimal level of investment, the expected benefit to society can be high, while the expected gain to any individual person or firm is only modest. This is because social benefits sum all distributed benefits no matter where they land. Private incentives for funding basic research are therefore too weak for the private sector to invest as much as would best promote the common good.

Members of the post-market failure movement view policies designed to address market failures as necessary but not sufficient for best promoting the common good. They attempt to demonstrate this by showing that economies like the United States have already done well with de facto state entrepreneurship efforts in the past. What is required is more of both, which begins with not letting the private sector take all of the credit for what the government has already made possible.

But their examples of these prior successes are, in fact, rather poor examples of state entrepreneurship. These examples include but are not limited to the discoveries that made possible new drugs, the Internet, smart phones, ancillary smart phone technologies like SIRI and GPS devices, and so forth (Mazzucato 2015, 2021). These are poor examples of the earlier success of state entrepreneurship because the entrepreneurial part of the exercise had nothing to do with the state part (Yerger 2024).

The state’s role was to fund basic research. The entrepreneurial part of the story was individual persons and firms later taking these findings, whatever they might end up being, and applying them in practical ways to create value. In other words,  the truer it is that what we are considering is genuine basic research, the less likely that such work was undertaken by entrepreneurs or even promoted by entrepreneurs. Contrary to the suggestion of those who favor state entrepreneurship, evidence of technological advance driven by basic research paid for by government is not evidence of the virtues of state entrepreneurship (Holcombe 2024).

These are actually good examples of the social benefits of enlightened American application of the theory of market failure through its funding of basic research that would have otherwise been underfunded in the private sector. They are also good examples of how well creative entrepreneurs have put new knowledge to work in ways no one could have imagined possible, in ways that had nothing to do with achieving a particular plan for society in the future. Basic research has been frequently justified by the theory of market failure precisely because the ultimate ends to which such research might be put are known to be unknown.

So what can possibly explain all of this effort to garner support for state entrepreneurship given the success of truly private entrepreneurship fueled by state subsidized basic research that was justified through the theory of market failure? Perhaps their real concern is not the failure of the theory of market failure, but it is success through the unguided evolution of economic activity. Such an explanation makes sense if what is really driving the movement is having control over the direction in which the economy evolves.

How Moral Beliefs Can Defeat the Siren Song of Control

My purpose has not been to argue that members of the post-market failure movement are advocating central planning in a deceptive way. But the practical effect of doing what they recommend nevertheless pushes our society in the direction of greater central planning. They can resist that label, but there is no denying that if we do as they suggest, much more control will be exerted over how future economic activity unfolds.

My purpose has been, instead, to offer an explanation for why we are so willing to accept policies that result in greater central planning. In short, our genes lead us to think that someone or something needs to be in control of society, not just in terms of day-to-day operation but also in terms of how it evolves. Our genes are right about this for societies that are not much larger than the groups within which they evolved.Footnote 8 But now that we live in very large societies, using central planning to efficiently control society is a pipe dream. Understanding why this is true should be a lesson taught to all future voters.

I will now argue that when moral beliefs have a certain kind of logical structure, they frame moral thinking in a way that makes it more likely citizens will be willing to accept the unpredictability of change that goes with evolution and therefore not be so susceptible to policies that promise to alleviate such fears by more directly managing the economy. This may have helped some societies evolve in directions that led to an increasing level of decentralized planning and therefore rising general prosperity.Footnote 9

I submit that this new logical structure took the form of a wall in the mind with the moral don’ts on one side and the moral dos on the other. Not doing the don’ts became increasingly treated as an absolute moral duty. Doing the dos became increasingly treated as merely being something to be valued but not compelled (Rose 2011).

This duty-based moral restraint arises from moral beliefs that attach guilt directly to negative moral actions rather than their effects on others. This allowed us to overcome the problem of waning harm-based moral restraint with increasing group size. The stronger the expectation of guilt from taking any negative moral action, the more that moral restraint takes on the quality of a moral duty and vice versa. Finally, since duty-based moral restraint calls for inaction, it does not run up against resource constraints so all can be expected to obey it.

But duty-based moral restraint alone is not enough. Doing the moral dos must also not be viewed as a duty. Positive moral actions normally require resources. So if duty-based moral advocacy exists, it might very well involve having to do a set of dos that cannot be done without violating duty-based moral restraint. This will produce conflicting duties. If, for example, you believe it is your moral duty to give at least USD 10 to all homeless persons you see, then unless you are very rich you will need to steal some money, which would violate duty-based moral restraint, or else fail to fulfill your positive moral duty. The only way to avoid the erosion of duty-based moral restraint is to not have duty-based moral advocacy.

This means that moral restraint, without which a large high trust and therefore low transaction cost society is impossible, must take precedence over moral advocacy, lest being required to do the moral dos undermine the duty-based moral restraint. This does not mean we should reject moral advocacy. It only means that positive moral acts must ultimately be left to the judgment of the individual who can weigh the relevant costs and benefits.Footnote 10

This was increasingly echoed in and reinforced by other ideas that were shaped by this new way of thinking about morality. These other ideas induced us to construct new frameworks for government such as the US constitution.Footnote 11 In America this moral foundation took hold most fully, so institutions began to echo it in a vision of the rule of law that was not undermined by the legacy of monarchical discretion, but was instead reinforced by a constitutionally limited government and a Tocquevillian preference for cultural regulation of behavior over government power.

But what does all this have to do with evolution?

Utopian plans share a deep problem with duty-based moral advocacy. Unless explicitly built in, utopian plans also have no particular reason to be feasible within existing resource, legal, and moral constraints. Because of this, they often create pressure to rationalize the violation of these constraints. In contrast, economic evolution that is only girded can commence and continue to abide constraints.

A utopian plan – the very antithesis of evolution – is like a young adult who first says to himself that not having a new sports car is unacceptable, so he buys one he can’t really afford. It is easy to see how this leads to ruin. In contrast, girded evolution is like a person thinking about buying a house by first saying to himself that, given his financial circumstances, he cannot spend more than USD 1500 a month on a mortgage. He does not begin with “I will not settle for anything less than a 2500-square-foot home in Malibu.” He begins with what he can afford. Because of that, he chooses among alternatives that won’t require that he spend more than he can afford.

No one can possibly know which house he will ultimately choose. It’s unlikely, of course, that a single 2500-square-foot home in Malibu will exist within the constraint of USD 1500 a month, so such a dream never sees the light of day. So while the “utopia first” approach will start with a clear vision of the final outcome that may very well be impossible or unsustainable, the “constraint first” approach seeks to discover that which is best within the set of what is possible and sustainable.

In societies we live with others, and if those others also start with constraints, as all genuine adults should do, none of them will be able to predict what their final decision will be, and no one will be able to predict the final outcome for society that will arise from the combination of these unknown choices. But we can predict that they will not be on an unsustainable path.

Central planning driven by any kind of idealized plan in the context of the large societies we live in today therefore virtually guarantees disaster even if we set aside Hayek’s argument that we need a price system for the efficient use of local knowledge. When citizens don’t understand the dangers of utopia-driven central planning, political competition inevitably unleashes a utopian arms race whereby votes are garnered with ever more grandiose conceptions of utopia.

It is instructive to consider how these arguments might be interpreted over an individual’s life cycle. Children have genes that predispose them to expect to be taken care of by their parents while also being willing to accept a high level of control. All human children expect to be taken care of and not through a vague faith in the system. They expect that very specific things will happen, every day, like having milk with cereal, heated air in the winter, and protection from dangerous people. This will happen because it is driven by the power of love that their genes have also prepared them to believe that their parents and other close kin have for them.

Such love carries the same force as inviolate duty. So parents provide, no matter what. But love evolved alongside the practical realities of the day-to-day life of our species in the small group milieu within which we lived. This means love for children closely related to us asks for no more than we can usually provide.

Just because our genes prepare us as children to expect to be taken care of does not mean we always are. A staggering proportion of children died over the last million years, sometimes from insufficient resources and sometimes from inadequate parenting, but none of those children were able to reproduce. There is no reason for the genes we possess to prepare us for an outcome that is only relevant if our genes become irrelevant. So we, as children, expected to be taken care of as will all of our descendants.

Political competition in a democracy can induce the state to make unilateral commitments to undertake positive moral actions that will result in our being taken care of as adults as part of a promised utopia. All of us “childhood survivors” are inclined to see the benefit of that. This is effectively living in a world in which prevailing moral beliefs include duty-based moral advocacy made possible by the exercise of power by the state. The ordinal nature of political competition suggests that this will often result in the state eventually needing to undertake negative moral acts as a means to that end.

Moreover, Robert Nozick has not stopped being right about utopia necessarily coming at the cost of liberty. But we are enchanted by utopia and therefore accept the central planning needed to effectuate it, because we don’t understand how costly it is. I have argued above that one cost that too few economists recognize is the throttling of the process of knowledge discovery through evolution that is only girded to stay within the guardrails of civil society (e.g., no genocide, ever).

Even within free societies today, echoes of Nozick’s thesis can be seen over the life cycle of individuals. Children expect and indeed are provided for in very specific ways, and they presume this will happen in their little utopia they take for granted without question so much so that if this ends up not being true, they are scarred for life. But these children are most definitely not free.

As adults they become free, but this is only a sustainable condition in societies where they understand that the unilateral commitments that their parents made to them do not transmute into an equal level of assurance from the state. If they cannot accept this or they have been convinced by moral narratives that infantilize them enough to reject this, then they will expect to be taken care of by the state. The result is a state through which adults are increasingly infantilized to be willing to be less free, little by little, over successive generations.

When we don’t understand these harsh realities, and the role played by modern, Western, moral beliefs in framing adult expectations about what can and cannot be expected of the state under the condition of liberty, democracy will inevitably produce policies that are not time consistent. Democracy is as dependent upon culture, through moral beliefs, as it is dependent on institutions.

So what seems to be a purely economic issue about development is also a moral one both in terms of cause and effect. Moral beliefs that produce an ethic of duty-based moral restraint without duty-based moral advocacy make the high trust society possible and, by managing expectations, make the unpredictability of evolution tolerable. As for effect, such moral beliefs avoid impoverishing future generations through profligatory actions in the present by putting constraints first. This moral outcome is a good trade for those who understand Nozick’s tradeoff and the ever-growing power of ever-growing knowledge made possible by girded evolution.

Minds that are already accustomed to viewing moral constraints as duties while treating positive moral action as only legitimately undertaken within those constraints are minds that are better prepared to accept the roller coaster ride of girded but not guided evolution as simply a part of the inevitable drama of living in a flourishing society. Such minds are also less likely to endorse the level of management of economic development envisioned by Mazzucato and others in the post-market failure movement. Such minds are, therefore, less likely to fall for old wine in new bottles that will inevitably make them less prosperous and less free.