Diversity-Sustaining Mechanisms in Biology, Ecology, and Economics

Various mechanisms sustain both the diversity of living organisms (biodiversity) and the diversity of production in a market economy. Here I’ll summarize some of the known mechanisms and draw parallels between how diversity is maintained in nature and in economies.

Biodiversity-sustaining mechanisms

Biodiversity-sustaining mechanisms include the biological (inherent to species) and the ecological (depending on the interactions between organisms).

Biological mechanisms

• Sexual Reproduction
  The reshuffling of genes to produce diverse offspring is thought to be a major reason for the evolution of sexual reproduction. This reshuffling is quite elaborate, which suggests that there was a worthwhile advantage to ensuring diverse offspring, despite the costs (in time and resources) of sexual reproduction. In what’s called ‘Crossing over’, individual strands of DNA are cut and pasted at somewhat random locations and then combined to form gametes (sperm and egg), each having unique DNA. Further randomization occurs during fertilization. This is why a couple can have many genetically distinct children, each one unique.
  

Epigenetic Inheritance
There is now evidence that Lamarck was in some sense correct. We inherit not only genes (DNA), but also regulatory effects that determine how our genes are expressed. This seems particularly relevant to animal behavior. For example, severe stress for parents can thereby affect their children. So, parents having different life experiences can produce different offspring.

Mutation
Mutations are changes in the genetic code (DNA), which can result from chemical interactions and from exposure to electromagnetic radiation, including ultraviolet light, cosmic rays, and nuclear radiation. This is an important source of genetic variation, particularly for prokaryotes, organisms whose cells lack nuclear membranes so that their DNA floats around freely within the cell. This decades-long experiment has observed how mutations changed the traits of bacteria cultured in the laboratory. This constitutes a source of biodiversity.

Ecological mechanisms

• Kill-the-Winner Effect
  As I described in my previous post, this effect can result from predator-prey interactions, when the predators concentrate their effort on the more abundant, or more appealing, prey. It can also occur when viruses preferentially (or more successfully) attack the more numerous (or more vulnerable) of their potential hosts, leaving the less numerous unharmed. This can happen because a critical threshold of the host population is required for the virus to be successful, and also because there is sometimes a trade-off between fast growth and effective defense against either predation or viral attack.
  

• Gene-swapping by bacteria
  The DNA floats around more or less freely the cells of bacteria and other ‘prokaryotes’, because they lack cell nuclei, which in the cells of ‘eukaryotes’ (including humans) are surrounded by membranes in order to separate the genetic material from the cytoplasm (fluid inside the cell). This makes prokaryotes much more vulnerable to viral attack (bacteriophages), but also allows them to easily swap genetic material. This is why different bacteria are now classified as ‘strains’ rather than distinct species.

• Viral infection
  Viral infection can change the fitness of organisms, and even introduce new genetic material (endogenous retroviruses) into their genomes, as is known to have happened to humans and our ancestors. Some 8% of the human genome is thought to be of viral origin. It can even have beneficial effects to individuals, such as suppressing and even curing cancer.

Economic diversity-sustaining mechanisms

As biodiversity is essential to ensuring the robust, and even Anti-Fragile functioning of ecosystems, specialization and the division of labor are essential to our modern industrial economy. For more on that, please see my previous post on Competition, Cooperation, and Complementarity. The following are some mechanisms that sustain this vital diversity of productive activities. I welcome any suggestions for more that I should add to the list.

Creative Destruction

Just as evolution driven by natural selection can only occur if individuals are fragile, so that some perish without reproducing, a healthy economy requires continual re-organization and re-allocation of resources. This is just one of the ways in which “The Market is a Process”, as the economist Ludwig von Mises said. I like the term creative destruction, because it emphasizes that the positive thing about some businesses shutting down, so that others can start up to better serve the needs of the customers.

Success attracts competitors, and other Kill-the-Winner effects

Despite what government-run schools teach, it is in fact very difficult to maintain anything close to a monopoly in a free market. Nature does just fine without ‘Anti-trust’ laws, which in economies have in fact been worse than ineffective at their stated goals because they have resulted in sub-optimal resource allocation and therefore higher prices for consumers.

In any case, seeing great success tends to give potential competitors ideas about producing the same goods or services that the led to that success. I know of no better explanation, with ample historical documentation, than that provided by Thomas J. DiLorenzo:

Another well-known example of a KTW effect is the targeting of the predominant computer OS (operating system), Microsoft Windows, by the authors of computer viruses and malware. This is one reason why those using Apple’s Mac OS, or other even smaller-niche OS’s tend to have fewer problems with viruses. (This outcome would be expected even if the vulnerability to attack were the same for each OS.)

Successful entrepreneurs start more and different businesses

Those who are quite successful at one business sometimes go on to use the capital so gained to start other business, supplying different goods and services. For example, Elon Musk did well with PayPal, and later went into the business of producing electric cars and rockets. Steve Jobs, after succeeding at producing Apple computers, went on to even greater success producing iPods and iPhones.

This increases the supply, and decreases the cost, of new technologies, enabling more people to specialize further. In ecological terms, I see this as the Selection Effect (success of entrepreneurs) enhancing Complementarity (whereby a diverse community is more productive than the sum of its members in isolation).

Further reading

My previous post explains more about Trade-offs and the Kill-the-Winner effect.

S. Lan Smith

Kamakura, Japan

August 31, 2016