Estudios de la Economía

[Estimados amigos/as: lo que sigue es la base de un ensayo en inglés en el que estoy trabajando. Cualquier comentario en español, portugues o inglés es sumamente bienvenido. Abrazos.]

Two months ago, I had the rare opportunity to speak to an audience that is foreign to (most of) us: a room full of natural scientists. The conference that I addressed, BioBricks Foundation 6.0, met at Imperial College, London, to discuss the most recent developments in synthetic biology. The panel in which I participated provided a space to introduce ‘recent’ new developments in science and technology studies to synthetic biologists. I read it as an occasion to talk about the now canonical bread-and-butter of social studies of finance—that is, how economics performs the economy. (I wholeheartedly thank Pablo Schyfter and Jane Calvert for the invitation).

While the contents of my talk were nothing new for the readers of this blog, the experience was particularly stirring in other ways, not the least because of the reactions of the audience to the concept of performativity (in their questions, those who remained in the room to listen to the social scientist sought clarification on how to model and predict what they saw as no more than noisy feedback loops between the abstract descriptions of economics and a detached, yet largely objective real world). Indeed, the greatest reward from participating of the conference came from having been exposed to, even if for a few hours, the awesome metaphors of synthetic biology.

For those who have not followed synthetic biology in recent years, an introduction is warranted. Synthetic biology as we know it today is a bold quest to create an “engineering technology based on living systems” through which it would be possible to construct biological setups designed to solve concrete real-world problems. Synthetic biology, in this sense, amounts to hacking the biological parts found in nature into new forms and configurations: sifting and reassembling genes, proteins, and other macromolecular components as if they were pieces in a minute meccano set. Synthetic biology is the production of designer nature at a sub-cellular level. As one of the key figures of the field argues, whereas most of the developments in biotechnology over the twentieth century resulted from an “expensive, unreliable and ad hoc research process” (Endy 2005), synthetic biology seeks to make the production of new biological forms commonplace, to give

undergraduates and high school students, without prior training in biology or biological engineering, [the ability to] to design synthetic biological systems of their own invention comprised of several dozen pre-existing standard biological parts, order and receive the DNA encoding the system, and show it to work” (Endy 2005).

A bold vision, indeed.

The quotations from the previous paragraph come from an essay that has become a kind of manifesto for synthetic biologists: Drew Endy’s ‘Foundations for Engineering Biology’, published in Nature in 2005. And, bringing the discussion closer to the sociology of economic life, perhaps the single closest development in economics to Endy’s vision is found in the contributions of Paul Milgrom and Nobel laureate Alvin Roth—credited as founders of what we now call ‘market design’. In a nutshell, market design utilizes “laboratory research, game theory, algorithms, simulations” (Milgrom 2008) and a host of other resources to “bear on practical questions of microeconomic engineering” (Roth 2007). Much like Endy’s vision, market design seeks to build novel objects in the world, by furthering “the design and maintenance of markets and other economic institutions” (Roth 2002).

Unlike Endy and other synthetic biologists, however, market designers stress the scientific character of their nascent sub-discipline. As Roth wrote, the relationship between economics and market design should be the same as that between physics and the construction of a suspended bridge. “As marketplaces proliferate on the web”, he argued,

a great deal of market design is going to be done by computer programmers, among others, since they possess some of the essential expertise. Economists will have an opportunity to learn a lot from the markets that result, just as we will learn from our own work designing unusual markets. But if we want this knowledge to accumulate, if we want market design to be better informed and more reliable in the future, we need to promote a scientific literature of design economics. Today this literature is in its infancy. My guess is that if we nurture it to maturity, its relation with current economics will be something like the relationship of engineering and physics, or of medicine and biology (Roth 2002).

And it is here, I argue, that the engineering metaphors of market design simply fall short of what they ought to do, particularly if contrasted to the bolder agendas of synthetic biology. Whereas synthetic biologists focus on making, on creating tools, standards and components that will allow twelfth-graders to design entirely new biological systems in their garages, market designers seeks to maintain the status of markets and their relation to economists and economics. True: synthetic biologists need science—indeed, much of the conversation at BioBricks Foundation 6.0 had to do with identifying the limits of the state of the art and how these translated into limits on biological design. Yet the ultimate objective of synthetic biologists is to empower individuals to remake nature themselves, not the production of knowledge itself. The difference is one between nineteenth century engineering—which was often presented as a combination of craft and science—and engineering as the constant manufacture of a built reality. Market designers have perhaps not been ambitious enough. They should, perhaps, rephrase their engineering metaphors, to imagine a world where high school students without prior knowledge will be able to design markets and show them to work.

What could be gained by a stronger vision of market design, one that, like synthetic biology, sought to identify, standardize and build components of markets which users could refashion for specific ends? Indeed, embracing a stronger, less scientized metaphor of engineering would perhaps permit imagining a more complex and elegant uses of markets in modern societies. And to illustrate this point, I offer the following example: how expanding the repertoire of market design to emulate the vision of synthetic biology may permit the construction of self-imploding markets.

In nature, cells can die through what is known as apoptosis—a form of endogenously controlled biochemical events whereby cells cease to work, degrade and die. A recent development in synthetic biology has been to control and program apoptosis, in order to deactivate certain cells exposed to specific external stimuli. The utility of this process is clear: understanding how to trigger apoptosis, for instance, may lead to better cancer treatments; but it may, too, allow engineering cells that are capable of being deployed to control environmental contamination only to then be disabled from a distance. Self-imploding life, designed for single use.

If we were to make the engineering metaphor of market design closer to that of synthetic biology, could we not also move beyond the creation of ad hoc auctions, to envisage the programming of market apoptosis, the creation of markets designed to self-implode? How might these markets bear upon real-world problems? Consider the illegal global trade in Rhinoceros horns.  In the 1970s, there were roughly 60,000 white rhinos in the southern horn of Africa. In 2012, and despite an important growth in the expenditure on preservation efforts, the population had reduced to around 20,000. A decisive factor in the reduction has been poaching: in 2011 alone, conservative figures estimate that around 300 rhinos were poached in South Africa, with some 560 poached globally.

The key driver in rhinos hunting is the procurement of their horns. In today’s black market, a kilogram of rhino horn can sell for about $40,000 USD, with demand driven primarily by China, Yemen and Vietnam. In practical terms, this means that rhino poaching can be a rather sophisticated operation involving helicopters, automatic weapons, and night-vision devices whilst remaining profitable. Given current international restrictions, the trade in rhino horns is entirely illegal, and all major actors in the market are known: most of the rhino horn is distributed through middle-sized pharmaceutical companies that sell horn powder as an alternative medicinal remedy. The high demand of rhino horns, in addition to the high costs of wildlife conservation, are coalescing in an unsustainable situation which, if continued, may lead to a depletion of the stock and the eventual extinction of wild rhinos.

In response to this, the Endangered Wildlife Trust of South Africa suggested introducing a regulated market of rhino horns. This is a solution that has worked elsewhere with much success, but generally in cases where preserved species were very local and hunting permits were very scarce. The market for rhinos, in particular, would imply the creation of a central selling organization—much like De Beers in diamonds—who would distribute horns to a handful of recognized partners. Profits would then be used to fund conservation efforts which would increase the risks for illegal poachers and disincentive illegal trade.

As a colleague from the International Union for Conservation of Nature pointed out, though, the problem with this solution is that it, first, assumes that horns are well-behaved goods (that higher prices will translate into lower demand), second, underestimates the regulatory costs associated to maintaining a complex international market, and third, by creating a legal channel of distribution the market provides an mechanism for laundering illegally poached horns. Indeed, the market does little to reduce demand and, if failed and ill-designed, may provide a system that will only increase poaching and the depletion of the species.

The question is thus the following: could we not imagine a market that, along with the design of its auction mechanisms and clearinghouses, includes a system for the abatement of demand? That is, can we imagine a market designed as a stopgap of poaching in the short term (one that makes use of all the ‘traditional’ advantages of a market solution) but that, by construction, will also erode demand in the long run? Can we build a market designed to fail? So, where is the Drew Endy of market design? The question is clearly pertinent beyond rhinos and their horns (think, for instance, on the recent discussions on the legalization of some classes of drugs and their introduction to the market). Thinking of solutions such as self-imploding markets has clear benefits, beyond the academic exercise.

The challenge here, however, is not only one of shifting metaphors but, more fundamentally, of thinking about the type of knowledge and expertises needed to engineer novel market solutions. Demand, like any other form of consumption, is a product of cultural frameworks mediated and maintained by specific institutional arrangements. Studied alike by economists and sociologists, market failure is, similarly, a complex situation in which institutions, cognition and culture play a fundamental role. And so, there is, perhaps, an interesting opportunity for new disciplinary conversations—for exploring a form of market design 2.0 which seeks to better understand the frictions, path-dependencies and constraints of markets as socio-political realizations. Indeed, perhaps, just perhaps, we should imagine of the future in bolder terms, a bit more like the engineers who today work away in their labs redesigning the fundamental building blocks of nature.

Juan Pablo Pardo-Guerra

References

Endy, Drew. “Foundations for Engineering Biology,” Nature 438 (2005): 449-453

Milgrom, Paul. “The Promise and Problems of (Auction) Market Design,” Nemmers Prize Lecture (2009)

Roth, Alvin. “The economist as engineer: game theory, experimentation and computation as tools for design economics,” Econometrica, 70 (2002): 1341–1378

Roth, Alvin. “What Have We Learned from Market Design?,” NBER (2007)