Emergence of Organization and Markets

Lloyd Demetrius

June 2014

ClaimThe Origin and Evolution of Organizational

StructuresCan be analytically explained in terms of a theory

of autocatalytic networks.

Classes of Networks(1) Social Networks: cooperation between

individuals in a community

(2) Economic Networks: transformation and production of economic commodities

(3) Linguistic Networks: production and generation of symbols

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3

Autocatalytic NetworksChemical Reaction Networks

Biochemical Examples

1) Glycolysis: 2 ATP

2) Oxidative Phosphorylation 36 ATP

Product C catalyses ist own synthesis from precursors A and B

A + C D

D + B E

E 2C

4

5

6

Problem

To what extent is the conceptual

framework of autocatalytic networks

an appropriate model for the analytic

study of the origin and evolution of

socio-economic networks?

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Origin and Evolution in Three Classes of Networks

(1) Metabolic Networks: Energy production

(2) Social Networks: Evolution of cooperation

(3) Demographic Networks: Evolution of life

history

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Metabolic NetworksOrigin and Evolution of Energy Production in Cells

Glycolytic Networks Oxidative Phosphorylation

Cancer cells: Predominantly Glycolysis

Normal cells: Predominantly Ocidative Phosphorylation

Problem

The Evolutionary Basis for Glycolysis and Ocidative Phosphorylation

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Social NetworksOrigin and Evolution of Cooperation

2 3

1

2 3

1

Random Interaction

Stratified Network Egalitarian Network

1 2

3

1 2

3

Structured Interaction

Origin

Evolution

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Aggregates of Interacting Molecules

Solid

Liquid

Gas

Problem

Explain the stability of these states

Non-Autocatalytic Networks

11111111

Thermodynamic EntropyMeasure of Complexity in Material Aggregates

Solid: low entropy

WkS logW = number of ways that the molecules of a system can be arranged to achieve the same total energy

Gas: high entropy

Second Law of Thermodynamics:

Thermodynamic entropy increases

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Demographic NetworksOrigin and Evolution of Iteroparity

Annual Plants Perennial Plants

Problem: The evolutionary rationale for the diversity in life history

b1 b2 b3 bd-11 2 3 d

m2m3

md

b1 b2 b3 bd-11 2 3 d

md

1 2 3 d

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Organismic Evolution(1) Variation: individuals within a species vary in

terms of their physiology and behavior

(2) Heredity: there exists a positive correlation between the behavioral and physiological traits of parents and their offspring

(3) Selection: individuals differ in their capacity to appropriate resources from the external environment and to convert their resources into offspring

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Prerequisites for an Analytical Model of Network Evolution

(1) A mathematical description of network complexity

(2) A formal description of the network-environment interaction

(3) An analytic description of natural selection

(4) A description of the rules of inheritance

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Demographic NetworksNetwork Complexity

Annual PlantsW=1, S=0

Perennial PlantsW>1, S>0

Network-Environment

Resource abundance, resource composition

Laws of Inheritance

Mendelian

b1 b2 b3 bd-11 2 3 d

m2m3

md

b1 b2 b3 bd-11 2 3 d

md

EntropyryEvolutionaWkS logW = number of distinct pathways of energy flow in the network

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Evolution of Demographic NetworksEvolutionary Changes in Network Complexity

Variation: Changes in the topology and interaction intensity of the network – changes in life history

Selection: Competition between variant and ancestral network for the resources

X = ancestral typeX* = variant type

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Principles of Demographic EvolutionThe outcome of selection is predicted by evolutionary entropy and is contingent on the external resource constraints:

(I) Resources constant in abundance anddiverse in compositionEvolutionary entropy increases (selection for iteroparity)

(II) Resources variable in abundance,singular in compositionEvolutionary entropy decreases (selection for semelparity)

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From Demographic Networks to Social Networks

Properties Demographic Networks

SocialNetworks

Unit Life Cycle Cooperative and Selfish Transactions

Target of Selection Phenotypic Traits Behavioral Traits

Laws of Inheritance Mendelian Cultural

Environmental Constraints

Energy: Foodstuffs Energy: Foodstuffs, Information

Measure of FitnessNetwork Complexity

Degree of Iteroparity

Degree of Cooperation

191919

Evolutionary EntropyMeasure of Network Complexity

Few pathways = low entropy

WkS logW = number of distinct pathways of energy flow within a network

1 2 31 2 3

Several distinct pathways = high entropy

Network Low Entropy High Entropy

Demographic Annual Plants Perennial Plant

Metabolic Glycolysis Oxidative Phosphorylation

Social Selfishness Cooperative

Political Stratified Egalitarian

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Applications of the Entropic Principles of Network Evolution

Resource constraints

Metabolic networks

Social networks

Economic networks

constant abundance -diverse composition

oxidative phosphorylation

cooperation economic equality

variable abundance -singular composition

glycolysis selfishness economic inequality