26 November 2011


Here's a conceptual twist for you, not unlike driving your car onto black ice and losing all control over steering and braking. The standard narrative would have it that Adam Smith is the father of economics ~ Smith, who proposed that rational self-interest and competition can lead to economic prosperity. We've seen over the past several decades, particularly during the presidencies of Ronald Reagan, George H.W. Bush, and George W. Bush, that the fatal flaw in this view is that unless individuals and corporations are regulated by government (representing the interests of the people), rational self-interest morphs into irrational greed, and competition is distorted or erased.

Is there an alternative model for viewing economics? Why yes, now that you ask, there is. In a PBS Newshour interview, Robert H. Frank suggests that Charles Darwin has much to say about the world of finance. " .... generation by generation, small mutations contribute to the extra speed of an individual animal. That animal is less likely to be caught and eaten by predators, and so it left copies of that mutation in the next generation, and then it spread generation by generation .... Thus, the invisible hand of natural selection promotes the survival of the individual and the prosperity of the species. In economic terms, this is the greatest good for the greatest number .... made possible by competitive individuals like Thomas Edison, Henry Ford, or Steve Jobs.

But there is also a dark potential to the competitive evolution story ~ "individuals vying in ways that stultify the species," creating conflict between individual and group. Just as (over evolutionary time) larger and larger antlers on bull elk are a temporary boon during mating competition but become a hindrance when escaping predators, so amassing greater and greater wealth is a temporary boon to the 0.01 percent of the population who control most of the nation's assets, but ultimately is harmful to the society as a whole. "There's no question that we're in the midst of another Guilded Age. The robber barons have accumulated great wealth, and they spent it in very visible ways .... and that's the downside of conspicuous consumption. With humans, as with other animals, the survival of the so-called fittest may come at a cost to the species as a whole.

"Success is a balance between the urge to cooperate and the impulse to compete, a balance in the origin of our species and in its continuing evolution."

You can view the entire interview, or read the transcript, here.

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