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17 September 2011

Fighting with Invisible Hands

I'm feeling a little ambivalent having just read about a new book that trades Charles Darwin for Adam Smith to make sense of the economy. Here is what Jeff Sommer had to say over at Economix:
The fundamental mechanism underlying world markets is the focus of Robert Frank’s new book, “The Darwin Economy,” an adaptation of which appears in Sunday Business. In a podcast conversation, he argues that Charles Darwin, the naturalist, was a greater economist than Adam Smith. Darwin’s theory of evolution explains why markets sometimes produce socially unacceptable results — and the reason, Professor Frank says, is intrinsic to competition. Unlike Smith’s “invisible hand” theory, Darwin’s theory says that group and individual interests sometimes conflict, in which case, individual interests win. Government sometimes needs to step in to correct matters, he says.
On the one hand, I basically agree and am excited that people are starting to realize that, as I like to put it, there is no invisible brain controlling that invisible hand. Economies rarely have rational outcomes, ceteris paribus. On the other hand, I am disappointed to read what is essentially a very old sociological claim being repackaged and passed off as an innovation. Moreover, I'm worried about the association with social Darwinism. I haven't read the book, yet, but typically when one invokes Darwin to explain a social institution, it usually means something Spencerian is lurking in the corner. The implications, then, are potentially racist and ethnocentric, and ultimately, wandering down that path is unnecessary. We don't need a "survival of the fittest" doctrine to make sense of macro-level social behavior.

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