the invisible hand

1. THE INVISIBLE WAND
Adaptive Co-Management
as an Emergent Strategy
in Complex Bio-Economic Systems
A 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

2. History: From Invisible Hand to Invisible Wand

Thomas 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

3. 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
 History: From Invisible Hand to Invisible Wand

4. 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 happen
if individuals were free to pursue their
self-interest, unfettered by governments
Adam Smith believed that –
 History: From Invisible Hand to Invisible Wand

5. 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 the
myriad of interactions in
panarchical complex systems
They grow in abilities and capacity,
accumulating information and resources along the way
 History: From Invisible Hand to Invisible Wand

6. 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 promoting
the laissez-faire strategy. . . for the common good,
believing that it was better than the alternative – feudal servitude
Feudal
servitude
Laissez-faire
In complex systems, the common good
is an emergent property of the panarchy
 History: From Invisible Hand to Invisible Wand

7. Since Hardin articulated ‘the tragedy of the commons’,
the best strategies for common pool resources
have been seen as state or private management
BUT
Because 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

 History: From Invisible Hand to Invisible Wand

8. 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
 History: From Invisible Hand to Invisible Wand

9. however, this presupposes
Homo 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 –
 History: From Invisible Hand to Invisible Wand

10. 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
 History: From Invisible Hand to Invisible Wand

11. The Invisible Wand – Altruistic Common Interest
Combining 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
 History: From Invisible Hand to Invisible Wand

12. 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
 History: From Invisible Hand to Invisible Wand

13. Earlier we complained that
if 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
 History: From Invisible Hand to Invisible Wand