There's not much doubt any longer: With Friday's announcement of a plunge in the leading economy indicators, the fifth decline in a row, the United States is in the recession we've been waiting for since the mid-1980s.
What a curious word "recession" is. Especially when it's used to mean the kind of widespread, mutually reinforcing decline in expectations and results that we associate with the business downturn.
Recession of what? Of the division of labor, presumably, to recall an old-fashioned name given to the phenomenon that today we denote by the catch phrase "the economy." In the course of a normal business cycle, we say that the economy recedes a little after a period of growth, cutting here, crooning there, before expanding to some greater, more complex articulation of the possibilities.
Cutting? Crooning? It is not surprising that when the talk turns to economic growth and decline, the metaphors turn biological. Philosophers at least since St. Paul have compared the organization of the world of work to the organization of the human body -- some members of the church are active as its head, said Paul, others are its hands and feet. And Alfred Marshall, the great Victorian codifier of economics, yearned for the day when its analogies would be borrowed from biology instead of physics.
A century after Marshall expressed that wish, it's finally coming true.
In this attempt to link economic and biological ideas, there's the usual dispersion of points of view. There are outsiders eager to make their marks on professional economics. And there are insiders meeting with varying degrees of success and pursuing their intuitions.
Take Michael Rothschild, for example, a one-time trouble-shooter for the Boston Consulting Group. This writer's economics-as-evolutionary-biology theories are arguably inspired from Bruce Henderson himself.
The business world remembers BCG founder Henderson as the man who gave it cash cows, dogs and stars as symbols of types of companies -- a typology Henderson devised in the process of fanning the flames of the 1970s mania for conglomerates.
But Henderson, now at Vanderbilt University, would rather be remembered as a thinker who called attention to the similarities between business and biological competition. "Evolution determines who survives and who is crowded out -- in business just as surely as in the jungle," he wrote in a Harvard Business Review article a year ago that was presumably a preview of a long-awaited book.
Now Rothschild has beaten his teacher to the punch. In "Bionomics: The Inevitability of Capitalism" (Henry Holt), Rothschild has spun a fascinating mixture of war stories from corporate battles, biology and anecdotes from the history of technology. It's not economics exactly; it aims more to be engaging reading than to alter reproduceable results. Nor does it represent economics itself altogether dependably; Rothschild believes that economists have ignored the famous "learning curve," when what they have really done is to file it under the heading of "convexities," after the way that increasing returns to scale look when graphed.
And in trying to answer all the Big Questions -- "How did Japan grab world leadership from the United States?" and "Why did America lose the War on Poverty?" -- it dissipates its force. But Rothschild's book is still probably the best case yet made for the biological analogy, what the author calls "the bionomic perspective." It is, he says, an infinitely adjustable macroscope, "an instrument for the mind's eye, able to scan the panorama of the global economy or zoom in on its finest details."
A somewhat less ambitious attempt to deal with the history of technology as an evolutionary process is to be found in the last chapter of Joel Mokyr's book "The Lever of Riches: Technological Creativity and Economic Progress" (Oxford). Noting that Richard Nelson and Sydney Winter were in 1982 the first economists to adopt evolutionary models to adopt economic change, Mokyr makes a strategic modification: Instead of letting firms be the unit of analysis, as Nelson and Winter did, why not let specific techniques be the "species." Square-rigged sailing vessels, movable type and the Newcomen engine are the real mutations, Mokyr argues, and much can be gained from differentiating between macro-inventions, which change the way work itself is organized, and micro-inventions that marginally improve products and processes, he says.
As usual, however, it is deep inside the discipline that the real inroads are being made. At various interdisciplinary think tanks, such as the Center for the Advanced Study of Behavioral Science at Stanford University and at the Sante Fe Institute, economists are chowing down with biologists with some regularity -- and the results are as esoteric as they are interesting.
The Hoover Institution's Thomas Sargent, for example, is using genetic algorithms to impose some texture on the concept of rational expectations. And, in a new little book of lectures, "Game Theory and Economic Modeling" (Oxford), David Kreps of Stanford University reports that theorists have become very interested in modeling learning processes, as a means of talking about "the rules of the game."
It will be years -- decades, most likely -- before these new beginnings in borrowing from biology come together to give a better understanding of the overarching processes of economic growth. The current recession will be a distant memory. But with profits plunging and unemployment rising, it's somehow comforting to know that there is still plenty of progress in economic understanding to be made.
David Warsh is a columnist for the Boston Globe.