Darwin and the Invisible Hand
Since its beginning, Darwinism and economic theory have been closely linked. Darwins revolutionary ideas themselves were in large part indebted to his readings of Malthus, a contemporary mathematician/clergyman/economist. Malthus argued that populations would always grow to the maximum that resources could bare. He focused on the fact that, because of the tendency of organisms to procreate as fully as possible, scarcity of resources would always follow a surplus, and competition for resources will always cause famine, misery, and want.
Darwin gained two things from Malthus. Firstly, it was Malthus theory that helped him realize that members of a species are in constant competition with each other. Malthusian population growth insures that there will always be competition amongst a species for resources. The second thing Malthus gave him was inherent in the source of the Malthusian dilemma. The notion that organisms will multiply to fully utilize the resources available surely helped Darwin to take the next logical step and concluded that differential rates of this Malthusian reproduction, under the stress of the competition it itself creates, could lead to the quick multiplication of beneficial traits.
The revolutionary aspect of Darwins ideas as far as biology is concerned is that it provided a method of self-organization. The divine hand of God was no longer necessary to explain the complexity and organization of life; instead of simple set of natural processes left on their own became an increasingly more probable cause than a celestial engineer. It became clear that the complex systems of organs, nerves, and muscles seen in living systems can come into being through the differential reproduction of beneficial traits. Entire ecosystems regulate themselves through competition and natural selection.
The imagination doesnt have to stretch very far to see why the idea of natural selection would be snatched up by free-market advocates and embraced as support for an ideology that was, until then, on shaky ground. If God isnt needed to engineer the integrated and interdependent organs in an animals body, then certainly the intervention of man isnt needed to engineer an economy. In a time when large segments of the population were angrily rallying for greater property rights and a free market economy, Darwins ideas were absolutely explosive.
An economical environment is very intricate and complex, but certainly it is far less so than even a simple ecosystem--yet, if Darwins ideas were correct, ecosystems had managed to survive for millions of years without any help thank you very much. Man himself had, without any outside aid, evolved from the humblest of beginnings. It seems reasonable, then, that a free market could fare just as well. In fact, if the progress and direction that was perceived in Darwinism also applied to the marketplace, then one would expect things to only get better as a free market economy evolved.
The analogy between natural selection and capitalistic free enterprise is a strong one. For one thing the organization that takes place is the result of competition in both. In the biological world, the competition is for food, mates, and space. Those animals with the most "innovative" adaptations that allow them to make most efficient use of food or more readily escape predators will pass along their traits to the next generation, insuring, it seemed, continuous progress towards more efficient and effective organisms. Evolution was seen as a natural law that not only governed change, but one which almost guaranteed the rise of intelligent, tool-making, organisms such as human beings.
In the economic world, businesses compete with each other for consumers. Those businesses that are able to make most efficient use of their resources, it is argued, will be able to produce the cheapest products, and therefore receive the most income from consumer profits. Those businesses with the most innovative technologies and products will rake in the most cash; and, while businesses dont procreate in the same way biological organisms do, successful economic strategies do proliferate both because profitable small businesses become profitable big businesses, and because success breeds imitation.
This parallel between economic systems and biological systems, allowed capitalist economists and philosophers to argue that free-market competition causes an inevitable rise in the standard of living in the same way that evolution will lead to progressively "better" animals. This has, by far, been the dominant argument for a free market. True, there have been some arguments, such as those given by Robert Nozick, from the idea that property rights are so sacred as to be inviolable, but the overwhelming support that there is for free-market economies comes from the presumption that competition inevitably causes products of increasing quality and decreasing cost.
Of course, the reason why I decided to write this article is because it is one of the great misunderstandings of Darwinism to think that natural selection implies steady progress. Indeed, it wasnt until the 20th century that non-directed mechanistic natural selection was taken seriously by the majority of the scientific community. The harshness of the fact that blind, pointless, often savage, natural selection was responsible for the diversification of life was just too hard for many people to swallow, especially coming out of a time where theological explanations for nature had always been the norm; but it became increasingly clear that, while organisms are indeed much more complex now than they where when life first arose on the planet, evolution doesnt always make progress towards greater and more complex beings. Snakes came from ancestral lizards that lost their legs. Many varieties of fish have lost use of their eyes as a result of generations enclosed in caves. Devolution is as common in nature as evolution.
While this misnomer of necessary progress sadly still prevails in popular understanding of evolution, it has been largely, though not completely, excised from the modern biological community. Further, most atheists assertive enough to "come out" possess this understanding as well, and seldom make such a pedestrian error. It is for this reason that I find it both baffling and depressing that this more refined understanding of natural selection has not come to equal dominance within the economic ideology of atheist circles in the US, though it certainly thrives more there than in the mainstream.
There is indeed a strong parallel between the evolution of an economy and that of an ecology, and it is because that parallel is such a powerful one that careful heed must be taken so as no longer to repeat analogous mistakes made by early Darwinians in modern economic models. Failure to do so could have disastrous effects.
To drive some parts of this economy/ecology analogy home, let us take a moment and look at some of the things evolution has produced.
Liars abound in nature. Mimicry is an adaptation of primary importance to many animals. Some insects look deceptively like twigs, leaves, or bark, a lie which serves them well as a defense against predators. The flower of the orchid Ophrys Speculum looks so much like a female wasp that males will copulate with it, acting as an unknowing courier of pollen between widely separated plants. A praying mantis lurking patiently in the grass is hardly distinguishable from its surroundings, and deadly is the mistake of any insect that crosses a hungry mantis mistaking it for a blade of grass. Venus flytraps emit an odor that lures prey into its jaws with the promise of sweet nectar, trapping them and dissolving their bodies for nutrients. Some of natures lies are quite amazing. The anglerfish actually uses its uniquely shaped horn to "fish" for its prey. The horn is tipped with what resembles a morsel of food, and the unsuspecting victim is lured in with the promise of an easy meal. Once the prey close enough to the anglerfishs jaws someone indeed has an easy meal, but it is the angler fish that swims away satisfied.
Thieves are even more common in the animal world than are lairs. Every predator is a thief, even a murderer, stealing the very life from other organisms to benefit themselves. Even herbivores mercilessly munch up leaves and grass, stealing the fuel laboriously manufactured by the plants themselves from sunlight. And plants are not blameless either. Over evolutionary time, plants wage grim wars to push competitors out of choice locations, fighting over patches of sunlight and supplies of water as remorselessly as animals vie for hunting grounds and mating rights.
The lesson?
If we model an economy to be driven by natural selection we shouldnt expect only positive resemblances to the biological world to emerge. The liars in nature will be paralleled by the liars in business. What percentage of advertisements can truly be called anything but misleading? Bright colored labels are designed as to catch the consumers eye, promising good things within. Food, drink, and cars are linked with youth, beauty, and sexuality in billboards and television ads. Mattress springs are called "coiled sense and respond devices," medicated shampoos are sold because they "tingle, " and whenever Im looking over isles of packaging constructed from deliberately feminine curves, I cant help but think of the Ophrys Speculum orchid, and its mislead suitor.
Thieves also abound in the corporate world. Businesses are caught in illegal transactions all the time. Companies abuse the tax code to withhold profit from the government, and even manipulate that government by cashing in money for political leverage and to shape laws to their advantage. Insurance companies do their best to avoid paying out claims that they owe. Thieves abound--indeed, what is profit but the difference between what a product is worth and what it is sold for?
If the analogy between the two different arenas of natural selection is a good one, we should expect a whole plethora of similarities between a free market and a naturally evolved ecosystem; and were not disappointed. There are thousands of species of parasites in the natural world; breeds of leaches, mites, and fungus, make a living at the detriment of other animals. Likewise, there are thousands of companies that make money simply by moving money around, producing nothing. There are even companies that exist for no other purpose than to patent items and then wait for a violation so that they can sue for damages. Nature is also rife with cannibals, and likewise companies routinely gobble up like companies, eliminating competition and increasing profit.
Modern day ghost towns caused by corporations uprooting and moving plants out of the country where they can pay cheaper wages are an eerie echo of the mass extinctions evidenced in the fossil record.
No doubt selection in a free market generates a great deal of organization--much of it is even positive. But with all the optimistic talk about the invisible hand of capitalism, free market economists fail to realize that that hand is often all thumbs. If natural selection provides us with an analogy by which to predict the outcome of economic selection, we should expect not only positives in similarly modeled economic systems, but many negatives as well. It is simply not true that competition always leads to what is best for the consumer. Indeed, the very Malthusian assertion that sparked off the Darwinian revolution was the notion that population growth means that there will always be competition and strife.
What biologists overlooked for almost a century is the fact that evolution is totally anti-teleological. It is literally void of any purpose. What economists are overlooking is that a totally free marketplace is equally directionless. For this reason, if there is to be a goal to economic policy, some degree of economic intervention must be embraced. A garden in which plants are left to grow mostly on their own, but where weeds are pulled, fertilizer is sown, and plants are pruned, will be a greater source of produce and beauty than an overgrown yard.