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Smith’s Hand
Searching for the Code of Nature

If in the seventeenth century natural philosophers borrowed notions of law in human affairs and applied them to the study of physical nature, in the eighteenth century it was the turn of the laws of physical nature to suggest ways forward for knowledge about human life.

—Roger Smith, The Norton History of the Human Sciences

Colin Camerer was a child prodigy, one of those kids who skipped several grades of school and enrolled in a special program for the gifted. By age 5, he was reading Time magazine (even though no one had taught him to read), and at 14 he entered Johns Hopkins University. He graduated in three years, then went to the University of Chicago to earn an M.B.A. and, for good measure, a Ph.D. He joined the faculty at Northwestern University’s graduate school of management by the age of 22.

Today, he’s a full-fledged adult on the faculty at Caltech, where he likes to play games. Or more accurately, he likes to analyze the behavior of other people during various game-playing experiments. Camerer is one of the nation’s premier behavioral game theorists. He studies how game theory reveals the realities of human economic behavior, how people in real life depart from the purely rational choices assumed by traditional economic theory.



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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature 1 Smith’s Hand Searching for the Code of Nature If in the seventeenth century natural philosophers borrowed notions of law in human affairs and applied them to the study of physical nature, in the eighteenth century it was the turn of the laws of physical nature to suggest ways forward for knowledge about human life. —Roger Smith, The Norton History of the Human Sciences Colin Camerer was a child prodigy, one of those kids who skipped several grades of school and enrolled in a special program for the gifted. By age 5, he was reading Time magazine (even though no one had taught him to read), and at 14 he entered Johns Hopkins University. He graduated in three years, then went to the University of Chicago to earn an M.B.A. and, for good measure, a Ph.D. He joined the faculty at Northwestern University’s graduate school of management by the age of 22. Today, he’s a full-fledged adult on the faculty at Caltech, where he likes to play games. Or more accurately, he likes to analyze the behavior of other people during various game-playing experiments. Camerer is one of the nation’s premier behavioral game theorists. He studies how game theory reveals the realities of human economic behavior, how people in real life depart from the purely rational choices assumed by traditional economic theory.

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature Though unquestionably brilliant, Camerer communicates as conversationally as a cab driver. Even in his prodigy days, he was a wrestler and a golfer, so he has a broader view of the world than some of the intellectually exalted scholars who live their lives on such a higher mental level. And he has a broader view of economics than you’ll find in the old-school textbooks. But in a sense, Camerer’s views on economic behavior are not so revolutionary. In fact, in some ways they were anticipated by the father of traditional economics, Adam Smith. Smith’s “invisible hand” is probably the most famous metaphor in all of economics, and his equally famous book, Wealth of Nations, remains revered by today’s advocates of free-market economies more than two centuries after its publication. But Smith was not a one-dimensional thinker, and he understood a lot more about human behavior than many of his present-day disciples do. His insights foreshadowed much in current attempts to decipher the code of human conduct, in economics and other social arenas. He was not a game theorist, but his theories illuminate the links between games, economics, biology, physics, and society—which is what the book you’re reading now is all about. The way I see it, Adam Smith was the premier player in the origins of this story, as he inspired belief in the merit of melding the Newtonian physics of the material world with the science of human behavior. THE ECONOMICS OF INVISIBILITY Adam Smith had a lot in common with Isaac Newton. Both were lifelong bachelors. Both became professors at the university they had attended (and both had reputations for being absentminded professors as well). Both were born after their fathers had died. And both became fathers themselves of a new scientific discipline. Newton built the foundation of physics; Smith authored the bible of economics. Both men literally rewrote the book of their science, transforming the somewhat inchoate insights of their predecessors into treatises that guided modern thought. Just as modern physics de-

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature scended from Newton’s codification of what was then known as natural philosophy, modern economics is the offspring of Adam Smith’s treatise on political economy. And though their major works were separated by nearly a century, the philosophies they articulated merged to forge a new worldview coloring virtually every aspect of European culture in the centuries that followed. While Newton established the notion of natural law in the physical world, Smith tried to do the same in the social world of economic intercourse. Newton’s unexplained law of gravity reached across space to guide the motion of planets; Smith’s “invisible hand” guided individual laborers and businessmen to produce the wealth of nations. Together, Newton’s and Smith’s works inspired great thinkers to believe that all aspects of the world—physical and social—could be understood, and explained, by science. When Smith’s Wealth of Nations was published in 1776, the Age of Reason reached its pinnacle. Nowadays, of course, physics has moved beyond Newton, and most economists would say that their science has moved far beyond Adam Smith. But Smith’s imprint on modern culture persists, and his impact on economic science remains substantial. If you look closely, you can even find echoes of Smith’s ideas in various aspects of game theory. For one thing, Smith ingrained the idea that pursuing self-interest drives economic prosperity. And it is pursuit of self-interest that game theory, at its most basic level, attempts to quantify. At a deeper level, Smith sought a system that captured the essence of human nature and behavior, a motivation shared by many modern game theorists. Game theory tries to delimit what rational behavior is; Smith helped deposit the idea in the modern mind that minds operate in a rational way. It was one thing for Newton to assert that rational laws governed the motions of the planets or falling apples. It was much more ambitious for Smith to ascribe similar orderliness to the social behavior of humans engaging in economic activity. As Jacob Bronowski and Bruce Mazlish observed in a now old, but still insightful, book on Western thought, Smith took a bit of an intel-

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature lectual leap to make his system fly. “In order to discover such a science as economics,” they wrote, “Smith had to posit a faith in the orderly structure of nature, underlying appearances and accessible to man’s reason.”1 Viewed in these terms, Smith’s book was an important thread in a fabric of thought seeking a Code of Nature, a system of rules that explained human behavior (economic and otherwise) in much the same way that Newton had explained the cosmos. First philosophers, and then later sociologists and psychologists, tried to articulate a science of human behavior based on principles “underlying appearances” but “accessible to man’s reason.” Smith’s efforts reflected the influence of his friend and fellow Scotsman David Hume, the historian-philosopher who regarded a “science of man” as the ultimate goal of the scientific enterprise. “There is no question of importance, whose decision is not comprised in the science of man,” Hume wrote, “and there is none, which can be decided with any certainty, before we become acquainted with that science.”2 In the attempt “to explain the principles of human nature, we in effect propose a compleat system of the sciences.” Today, game theory’s ubiquitous role in the human sciences suggests that its ambitions are woven from that same fabric. Game theory may, someday, turn out to be the foundation of a new and improved 21st-century version of the Code of Nature, fulfilling the dreams of Hume, Smith, and many others in centuries past. That claim is enhanced, I think, with the realization that threads of Smith’s thought are entangled not only in physical and social science, but biological science as well. Smith’s ideas exerted a profound influence on Charles Darwin. Principles describing competition in the economic world, Darwin realized, made equal sense when applied to the battle for survival in the biological arena. And the benefits of the division of labor among workers that Smith extolled meshed nicely with the appearance of new species in nature. So it is surely no accident that, today, applying economic game theory to the study of evolution is a major intellectual industry.

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature LOGIC AND MORALS All in all, Smith’s economics provides a critical backdrop for understanding the economic world that game theory conquered in the 20th century. His influence on today’s world stemmed from a life spent gathering unusual insights into his own world. Born in Scotland in 1723, Smith was a sickly weakling as a child (today we’d probably call him athletically challenged). At the age of 3, he was kidnapped from his uncle’s front porch by some gypsylike vagrants known as tinkers. Apparently the uncle rescued the toddler shortly thereafter. Growing up, Adam was a bright kid, earning a reputation as a bookworm with a spectacular memory. At 14 he entered the University of Glasgow (in those days, that was not unusually young). At 17 he went to Oxford, at first with the intention of entering the clergy. But after seven years there he returned to Scotland in search of a different kind of life. His interests destined him to the academic world, as he had no acumen for business and, as one biographer noted, “a strong preference for the life of learning and literature over the professional or political life.”3 After a time, Smith got the job that fit his interests and talents—professor of logic at the University of Glasgow. Soon he was also appointed to a professorship in “moral philosophy,” providing a fitting combination of duties for someone planning to forge a rational understanding of human behavior. It was, in fact, moral philosophy that Smith seized on for his first significant treatise. And in it he outlined a very different view of life and government than what he is generally known for today. His book on morals won him the confidence of Charles Townsend, who employed Smith to tutor his stepson, the young Duke of Buccleuch. Smith left Glasgow for London in 1764 to assume his tutorial task. He and the duke traveled much during this tutorship, spending a lot of time in France, where Smith familiarized himself with the new economic ideas of a group known as the physiocrats. Smith was especially taken with one François Quesnay, a fascinating character who deserves to be much better known than he is.

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature Orphaned from working-class parents (some sources say farmers) at 13, Quesnay taught himself to read using a medical book, and so decided he might as well become a doctor. He established himself as a physician and became an early advocate for surgery as an important part of medical practice—not such a popular position among doctors of his day. Quesnay played a part, though, in getting the King of France to separate surgeons from barbers, surely a benefit for both professions. Quesnay’s even stronger influence with King Louis XV was later secured when he attained an appointment as personal physician to Madame de Pampadour, the king’s mistress. Quesnay must have possessed an unusually fine mind; he impressed his patients dramatically, generating the word of mouth that led to such connections in high places. Once established among the aristocracy, Quesnay’s brilliance attracted the other leading intellects of his age, so much so that he was invited to write articles on agriculture for the famous French Encyclopédie. Somewhere along the way his agricultural interest led to an interest in economic theory, and Quesnay founded the new school of economists whose practitioners came to be called the physiocrats, out of their affinity for the methods of physics. In those days, conventional wisdom conceived of a nation’s economic strength in terms of trade; favorable trade balances, therefore, supposedly brought wealth to a nation. But Quesnay argued that the true source of wealth was agriculture—the productivity of the land. He further argued that governments imposed a human-designed impairment to the “natural order” of economic and social interaction. A “laissez-faire” or “hands-off” policy should be preferred, he believed, to allow the natural flow to occur. Encountering Quesnay while in Paris, Smith was also entranced and began to merge the physiocratic philosophy with his own. Upon his return to England in 1766, Smith embarked on the decade-long task of compiling his insights into human nature and the production of prosperity, ending with the famous tome titled An Inquiry into the Nature and Causes of the Wealth of Nations, mercifully shortened in casual usage to simply Wealth of Nations.

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature THE INVISIBLE HAND Smith’s views differed from Quesnay’s in one major respect: The source of wealth, Smith argued, was not the land, but labor. “The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life,” Smith declared in his book’s Introduction. And the production of wealth was enhanced by dividing the labor into subtasks that could be performed more efficiently using specialized skills. “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour,” Smith pronounced at the beginning of Chapter 1.4 Modern caricatures of Wealth of Nations do not do it justice. It is usually summed up with a reference to the “invisible hand” that makes capitalism work just fine as long as government doesn’t get involved. There is no need for any planning or external economic controls—if everyone simply pursues profits without restraint, the system as a whole will be most efficient at distributing goods and services. With his “invisible hand” analogy, Smith seems to assert that pure selfishness serves the world well: “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest,” Smith wrote. “By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”5 In fact, Smith’s ideas about a free-market economy were subtle and sophisticated, much more thoughtful than the knee-jerk free-market-to-the-max mantra that people promote, invoking his name, today. (Among other things, he noted that the invisible hand worked effectively only if the people doing business weren’t crooks cooking the books.) He did believe that government interference in business—either to assist or restrain—subverted the benefits of natural and free enterprise. By eliminating both preferences (or “encouragements”) and restraints, “the obvious and simple system

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature of natural liberty establishes itself of its own accord.” But even then he restricted his concern to “extraordinary encouragements” or “extraordinary restraints.” And he cited three specific roles that government ought to fulfill: defending the country from invasion, enforcing the laws so as to protect individuals from injustice, and providing for the public works and institutions that private individuals would not find profitable (like protecting New Orleans from hurricanes). Modern economists have noted that Smith’s devotion to the invisible hand was expressed in rather qualified language. “There can be little doubt that Smith’s faith in the power of an invisible hand has been exaggerated by modern commentators,” Princeton economist Alan Krueger wrote in an introduction to a recent reprinting of Wealth of Nations.6 Besides, Krueger added, “most of postwar economics can be thought of as an effort to determine theoretically and empirically when, and under what conditions, Adam Smith’s invisible hand turns out to be all thumbs.”7 All this is not to say that Smith’s support for free enterprise is entirely a misreading. (Nor am I saying that free enterprise is exactly a bad idea.) But as economists who followed Smith often observed, his invisible hand does not always guarantee efficient markets or fairness. A critique by Thomas Edward Cliffe Leslie, an economic historian in Belfast, about a century after Wealth of Nations appeared, noted that Smith wrote in a preindustrial age. However deep his insights into the world he lived in, Smith was nevertheless incapable of escaping his own time. Some of Smith’s followers, Cliffe Leslie wrote, considered Wealth of Nations not just an “inquiry,” as Smith’s full title suggested, but “a final answer to the inquiry—a body of necessary and universal truth, founded on invariable laws of nature, and deduced from the constitution of the human mind.” Cliffe Leslie demurred: “I venture to maintain, to the contrary, that political economy is not a body of natural laws in the true sense, but an assemblage of speculations and doctrines … colored even by the history and character of its chief writers.”8 Cliff Leslie’s account, published in 1870, dismissed the idea—

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature promoted by many of Smith’s disciples—that Smith had revealed “a natural order of things,” an “offshoot of the ancient fiction of a Code of Nature.” This idea of a “code of natural law” had been around since Roman times, with possible Greek antecedents. The Roman legal system recognized not only Roman civil law (Jus Civile), the specific legal codes of the Romans, but a more general law (Jus Gentium), consisting of laws arising “by natural reason” that are “common to all mankind,” as described by Gaius, a Roman jurist of the second century A.D. Apparently some Roman legal philosophers regarded Jus Gentium as the offspring of a forgotten “natural law” (Jus Naturale) or “Code of Nature”—an assumed primordial “government-free” legal code shared by all nations and peoples. Human political institutions, in this view, disturb “a beneficial and harmonious natural order of things.” So as near as I can tell, “Code of Nature” is what people commonly refer to today as the law of the jungle.9 (Perhaps the FOX network will develop it as the next new reality-TV series.) “The belief gradually prevailed among the Roman lawyers that the old Jus Gentium was in fact the lost code of Nature,” English legal scholar Henry Maine wrote in an 1861 treatise titled Ancient Law. “Framing … jurisprudence on the principles of the Jus Gentium was gradually restoring a type from which law had only departed to deteriorate.”10 In any event, as Cliffe Leslie recounted, the “Code of Nature” idea was, in Smith’s day, one of two approaches to grasping “the fundamental laws of human society.” The Code of Nature method sought to reason out the laws of society by deducing the natural order of things from innate features of the human mind. The other approach “induced” societal laws by examining history and features of real life to find out how things actually are, rather than some idealized notion of how human nature should be. In fact, Smith’s work did express sentiments favorable to the Code of Nature view; his statement that eliminating governmental preferences and restraints allows “the obvious and simple system of natural liberty” to establish itself clearly resonates with the con-

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature cept of such a code. And Dugald Stewart, in a biographical memoir of Smith, asserted that Smith’s “speculations” attempted “to illustrate the provisions made by Nature in the principles of the human mind” for gradual augmentation of national wealth and “to demonstrate that the most effectual means of advancing a people to greatness is to maintain that order of things which Nature has pointed out.”11 Cliffe Leslie maintained, on the other hand, that Smith actually pursued both methods—some deductive reasoning, to be sure, but also thorough observations of actual economic conditions of his day. While Smith might have believed himself to be articulating the natural laws of human economic behavior—a Code of Nature—in fact he just developed another human-invented system colored by culture and history, Cliffe Leslie declared. “What he did not see was, that his own system … was the product of a particular history; that what he regarded as the System of Nature was a descendant of the System of Nature as conceived by the ancients, in a form fashioned by the ideas and circumstances of his own time,” Cliffe Leslie wrote of Smith. “Had he lived even two generations later, his general theory of the organization of the economic world … would have been cast in a very different mould.”12 If Smith’s Code of Nature was tainted by his times, it was nevertheless in tune with many similar efforts by others, before him and after. Various versions of such an idea—the existence of a “natural order” of human behavior and interaction—influenced all manner of philosophers and scientists and political revolutionaries seeking to understand society, everybody from the monarchist philosopher Thomas Hobbes to the science-fan and journalist Karl Marx. Smith’s two great works, on moral philosophy and the laws of wealth, were really part of one grander intellectual enterprise that ultimately produced both economics and the “human sciences” of sociology and psychology. As science historian Roger Smith has pointed out, the 18th century—Adam Smith’s century—was a time of profound intellectual mergers, with the physical sciences and

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature the social world, economic interaction and human nature, all mutually inspiring new views of understanding and explaining life, the universe, and everything. “In the eighteenth century,” Roger Smith writes, “pleasure and confidence in the design of the created physical world played an important part in the search for the design of the human world.” Just as Newton discovered the “natural order” of the physical universe, thinkers who followed pursued the principles behind the “natural order” of society. In fact, the forerunner of economics, political economy, emerged in the last half of the 18th century as “the study of the link between the natural order and material prosperity,” investigating “the laws, physical and social, that underlie wealth.”13 And of course, precisely the same sort of merger fever afflicts scientists today. The mix of math and physics with biology, sociology, and economics is (to use economic terminology) a growth industry, and game theory is becoming the catalyst accelerating the trend. RATIONAL ISN’T NATURAL There’s an additional subtle point about all this that’s essential for understanding the relationship between Smith’s ideas and modern notions of human nature and game theory. The cartoon view of Smith’s story is that human nature is selfish, and that economic behavior is rooted in that “truth.” And game theory seems to incorporate that belief. In its original form, game theory math describes “rational” behavior in a way that essentially synonymizes “rational” with “selfish.” But as it is interpreted today, game theory does not actually assume that people always behave selfishly—or rationally. Game theory tells you what will happen if people do behave selfishly and rationally. Besides, Adam Smith did not believe that humans are universally selfish (and he was right, as game theory experiments have recently rediscovered). In fact, Smith glimpsed many findings of

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature today’s experimental economic science. Modern commentators often don’t realize that, though, because they neglect to consider that Wealth of Nations was not Smith’s only book. When writing Wealth of Nations, Smith assumed (as do all authors) that its readers would have also read his first book: the Theory of Moral Sentiments, published in 1759. So he did not think it necessary to revisit the much different picture of human nature he had previously presented. Read together, Smith’s two books show that he had a kinder and gentler view of human nature than today’s economics textbooks indicate. This point was made to me by Colin Camerer, whose research is at the forefront of understanding the connections between game theory and human behavior. Camerer’s specialty, “behavioral game theory,” is a subdivision of the field generally described as “behavioral economics.” By the 1980s, when game theory began to infiltrate the economics mainstream, various economists had become disenchanted with the old notion, descended with mutations from Adam Smith, that humans were merely rational actors pursuing profits. Some even hit on the bright idea of testing economic theory by doing experiments, with actual people (and sometimes even real money). Not surprisingly, experiments showed that people often act “irrationally”—that is, their choices do not always maximize their profits. Pursuing such experiments led to some Nobel prizes and some new insights into the mathematics underlying economic activity. Game theory played a central role in those developments, as it quantified the profit maximization, or “utility,” that people in experiments were supposed to be pursuing. In a complicated experiment, it’s not always obvious what the utility-maximizing strategy really is. Game theory can tell you. In any event, Camerer finds it fascinating that game theory shows, in so many ways, that humans defy traditional economic ideas. But those experimental results, he told me, don’t really defy Adam Smith. During one of our conversations, at a coffee shop on the Caltech campus, Camerer stressed that Smith never contended that

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature all people are inherently selfish, out for themselves with no concern for anyone else. Smith merely pointed out that even if people operated totally out of selfishness, the economic system could still function efficiently for the good of all. “The idea was, if people want to make a lot of dough, the way to do it is by giving you what you want, and they don’t care about you per se. And that doesn’t logically imply that people don’t care about others; it just means that even if they didn’t, you could have an effective capitalist economy and produce what people most want,” Camerer said. “I think Adam Smith has been kind of misread. People say, ‘Gee, Adam Smith proved that people don’t care about each other.’ What he conjectured, and later was proved mathematically, was that even if people didn’t care about each other, markets could do a pretty good job of producing the right goods. But logically that doesn’t imply that people don’t care.”14 So human nature is not necessarily as adamantly self-serving as some people would like to believe. Some people are selfish, of course, but others are not. In fact, in Smith’s treatise on moral sentiments, he identified sympathy as one of the most important of human feelings. And he described the conflict between the person’s “impartial spectator”—a sort of long-term planner or “conscience”—and the passions, including hunger, fear, anger, and other drives and emotions. The brain’s impartial spectator weighs the costs and consequences of actions, encouraging rational choices that should control the reactions of the passions. While economists have traditionally assumed that people make rational economic choices, Smith knew that in real life the passions often prevailed. “Smith recognized … that the impartial spectator could be led astray or rendered impotent by sufficiently intense passions,” Camerer and two colleagues wrote in a 2005 paper.15 Nevertheless, the notion of self-interest and utility was dramatized by Smith in such a way that it formed a central core of subsequent economic philosophy. And not only economics was shaped by Smith’s ideas. His books also contributed in a significant way to the birth of modern biology.

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature ORIGIN OF DARWINISM I’m not sure whether Charles Darwin ever read Wealth of Nations. But he certainly read accounts of it, including Dugald Stewart’s eulogy-biography of Adam Smith. And Darwin was familiar with Smith’s Moral Sentiments, citing its “striking” first chapter in a passage in Descent of Man. And while Darwin’s Origin of Species does not mention Smith, its notion of natural selection and survival of the fittest appears to be intellectually descended from Smith’s ideas of economic competition. Smith’s influence on Darwin was pointed out more than two decades ago by the science historian Silvan Schweber. I first encountered the connection, though, in the late Stephen Jay Gould’s massive tome on evolutionary biology. Gould examined Darwin’s writings inside and out and traced all sorts of historical, philosophical, scientific, and literary influences on the origin of Darwin’s views on origins. Among the most intriguing of those influences was the work of William Paley, the theologian often cited today by supporters of creationism and intelligent (sic) design. Paley is most famous for his watchmaker analogy. If you find a watch on the ground, Paley wrote in 1802, you can see that it’s nothing like a rock. The watch’s parts are clearly “put together for a purpose,” adjusted to produce “motion so regulated as to point out the hour of the day.” The inevitable inference, Paley concluded, was “the watch must have a maker … who comprehended its construction, and designed its use.” Paley’s point was that the biological world was so full of orderly complexity, exquisite adaptation to the needs of efficient living, that it must have been the product of an exquisite design, and hence, a designer. To arrive at his own evolutionary theory, Darwin required an alternative logic to explain the efficiency of life. Adam Smith, Gould concluded, supplied that logic. “In fact, I would advance the even stronger claim that the theory of natural selection is, in essence, Adam Smith’s economics transferred to nature,” Gould wrote. “Individual organisms engaged

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature in the ‘struggle for existence’ act as the analog of firms in competition. Reproductive success becomes the analog of profit.”16 In other words, as Smith argued, there is no need to design an efficient economy (and in fact, a designer would be a bad idea). The economy designs itself quite well if left alone, so that the individuals within that economy are free to pursue their self-interest. Darwin saw a similar picture in biology: Organisms pursuing their own interest (survival and reproduction) can create, over time, complexities of life that mirror the complexities of an economy. In one passage, Darwin refers specifically to the concept of “division of labor,” a favorite topic of Smith’s. In his famous example of the pin factory, Smith described how specialization breeds efficiency. It seemed to Darwin quite analogous to the origin of new species in nature. “No naturalist doubts the advantage of what has been called the ‘physiological division of labour’; hence we may believe that it would be advantageous to a plant to produce stamens alone in one flower or on one whole plant, and pistils alone in another flower or on another plant,” Darwin wrote in Origin of Species. Similar advantages of such specialization, he noted, apply to diversity among organisms. “We may, I think, assume that the modified descendants of any one species will succeed by so much the better as they become more diversified in structure, and are thus enabled to encroach on places occupied by other beings,” Darwin commented. “So in the general economy of any land, the more widely and perfectly the animals and plants are diversified for different habits of life, so will a greater number of individuals be capable of there supporting themselves.”17 Clearly Darwin’s “general economy” of life reflected sentiments similar to those expressed in the “political economy” described by Adam Smith. As Gould summed it up, Smith’s ideas may not work so well in economics, but they are perfect for biology. And via Smith’s insights, Paley’s argument for the necessity of a creator is refuted.18 “The very phenomena that Paley had revered as the most glori-

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A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature ous handiwork of God … ‘just happen’ as a consequence of causes operating at a lower level among struggling individuals,” Gould asserted.19 THE GAME’S AFOOT In a way, Darwin’s Origin of Species represents the third work in a trilogy summarizing the scientific understanding of the world at the end of the 19th century. Just as Newton had tamed the physical world in the 17th century, and Smith had codified economics in the 18th, Charles Darwin in the 19th century added life to the list. Where Smith followed in Newton’s footsteps, Darwin followed in Smith’s. So by the end of the 19th century, the groundwork was laid for a comprehensive rational understanding of just about everything. Oddly, it seems, the 20th century produced no such book of similar impact and fame.20 No volume arrived, for instance, to articulate the long-sought Code of Nature. But one book that appeared in midcentury may someday be remembered as the first significant step toward such a comprehensive handbook of human social behavior: Theory of Games and Economic Behavior, by John von Neumann and Oskar Morgenstern.