The Darwin Economy

Robert Frank, New York Times economics columnist and best-selling author of The Economic Naturalist, predicts that within the next century Darwin will unseat Smith as the intellectual founder of economics. The reason, Frank argues, is that Darwin's understanding of competition describes economic reality far more accurately than Smith's.

And the consequences of this fact are profound. Indeed, the failure to recognize that we live in Darwin's world rather than Smith's is putting us all at risk by preventing us from seeing that competition alone will not solve our problems.Smith's theory of the invisible hand, which says that competition channels self-interest for the common good, is probably the most widely cited argument today in favor of unbridled competition--and against regulation, taxation, and even government itself.

But what if Smith's idea was almost an exception to the general rule of competition? That's what Frank argues, resting his case on Darwin's insight that individual and group interests often diverge sharply. Far from creating a perfect world, economic competition often leads to "arms races," encouraging behaviors that not only cause enormous harm to the group but also provide no lasting advantages for individuals, since any gains tend to be relative and mutually offsetting.

Frank argues that the best solution is not to prohibit harmful behaviors but to tax them. By doing so, we could make the economic pie larger, eliminate government debt, and provide better public services, all without requiring painful sacrifices from anyone. That's a bold claim, Frank concedes, but it follows directly from logic and evidence that most people already accept. Frank further explores how the themes of inequality and competition are driving today's public debate on how much government we need.

About Robert Frank: Cornell economist Robert H. Frank is author (with Ben Bernanke) of Principles of Microeconomics and numerous books on economics for the general public, including The Winner Take All Society, Luxury Fever, The Economic Naturalist and his most recent The Darwin Economy: Liberty, Competition, and the Common Good.
____

Robert Frank is also lecturing at the Arne Næss Symposium 2015: Cultural Evolution and the Welfare of Nations: Is it possible to reconcile wealth and welfare in future societies?

Time and place: Oct 1, 2015 05:30 PM - 08:00 PM, Old Festive Hall University of Oslo.