The financial crisis and the inefficacy of conventional monetary tools in the West has sharply highlighted the weaknesses of our current economic models. But even as the left and right wing are locked in a seemingly insurmountable ideological debate about the nature of markets and the government, it is time we looked past traditional economic arguments and questioned our fundamental assumptions about the ‘the invisible hand’ of the free market.
Evolutionary economics is already part of mainstream economics, but Robert Frank, an economist at Cornell, boldly argues that perhaps economists have traditionally read Darwin’s theory wrong. In the study of both evolution and economics, competition is seen as key to natural selection and free markets; it is taken for granted that the ‘survival of the fittest’ leads to the greatest common good. However, Frank argues that in both cases, competition can also allow certain individuals to gain traits that are harmful to the group as a whole. Even more interestingly, Frank notes that evolution actually favors group selection in the long-term, and that examples of cooperation and altruism are repeatedly seen in nature as cooperative groups outlive selfish ones.
We are now witnessing the detrimental effects of the reckless pursuit of self-interest in the midst of protests about the increasingly dangerous divide between the rich and poor. The ‘winners’ of the current system are separating from the rest, as the super-rich seem locked in a conspicuous consumption contest even in times of recession, and bankers compete for bonuses that seem ludicrous to the rest of the population.
In the face of rising inequality, unsustainable consumption and impending resource scarcity, we must pay closer attention to the lessons of nature; we can evolve as a group to survive. Hearteningly, a global movement that promotes social good is growing increasingly visible. Technology and peer-to-peer (P2P) communities are propagating collaborative consumption on an unprecedented level. The concept of the ‘sharing economy’ is growing increasingly popular as people choose to share, swap, rent and trade products instead of owning them. The rise of social networks is facilitating the greater sharing of ideas and resources, as a growing focus on reputational capital gains momentum.
We need to re-asses our assumptions about the nature of competition and altruism to consider the common good. There’s clearly more than one ‘invisible’ hand at work here.