Insights from ecologists show ways of preventing economic disaster

[CHIMO]

In the eight centuries from 1000-1800 AD the world's fish stocks and species numbers were stable and healthy. In the subsequent 200 years, 40% of the species in coastal waters collapsed, showing falls in their population by 90% or more.

There was a pattern to this story of decline. There was a much-less marked attrition in coastal regions with richly diverse marine ecosystems than in regions exhibiting low levels of diversity.

What does this have to do with economics? Quite a lot, as it happens. In recent years, as the limitations of the rigidly mathematical approach to economics have been exposed, there has been interest in what the dismal science can learn from biologists, ecologists, geneticists, physicists and psychologists.

Two years ago, Andrew Haldane, the Bank of England's executive director for financial stability, published a paper in which he used global fish stocks, the spread of epidemics, and the destruction of the rain forests to explain why the system collapsed so dramatically. The March edition of Central Banking contains a fascinating piece by its editor, Claire Jones, on how the work of the scientist Robert May on the stability and complexity in ecosystems supports the case for deep structural reform of finance.

http://www.guardian.co.uk/business/2011/apr/18/economics-banking-financial-crisis