The Darwin Economy: Liberty, Competition, and the Common Good

 It was an interesting coincidence, that 3 days before my deer-photo-outing, attended an event @LSE, (part of  'LSE IDEAS series- Ideas that can change the world!')  where economist Robert Frank, talked about his new book The Darwin Economy: Liberty, Competition, and the Common Good  (He is Cornell University professor of economics and management, Author of  'The Economic Naturalist', and a text book 'Principles of Economics' co-authored with Fed Reserve chairman Ben Bernanke. His text books are followed at LSE as well. The other books include Winner-Take-All Society, Luxury Fever, What Price the Moral High Ground?. He is also New York Times economics columnist. His books have been translated into 22 languages). It was a BBC Radio4 interview & public conversation hosted by LSE Dept of Management, conducted by BBC economics editor Paul Mason.. There was full audience of around 800 @LSE.

I attended the event as I quite liked his other book,  'The Economic Naturalist' (2008), a different approach to economics; His radical/refreshing approach to teaching economics to his students, starting from simple questions of the everyday things that can be linked to economic justification, as mentioned in that book. I was more drawn to his linking of 2 topics-- finding simple analogies in nature, for economic theories!. Also, felt he has a certain humbleness about him, and as The Guardian noted in its review of his book 'The Winner-Take-All Society', "he has lucid writing style and a willingness NOT TO TAKE HIMSELF TOO SERIOUSLY"
The media intro's to this new book The Darwin Economy said, it looks more extensively  into Economics and Natural History!- 2 subjects that fascinate me, as they surround us in our daily lives, with so many mysteries to unravel! ;), esp in Natural History.

The new book also tells about the parallels in economics and evolution- about competition and consequences of risk-taking behaviour, which are so central to econimics today. The book sets out to answer a strange-sounding question: ‘Who was the greater economist--Adam Smith or Charles Darwin?!’ Frank 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. 
It is said, 'To be an economist without having read The Wealth of Nations by Adam Smith, is like being a priest without having read the Bible.'

The talk starts by asking Frank, "We've built 200years of economic theories based on the achievements of Adam Smith. What did we do 'wrong' ?".
He replies: "I am not against Adam Smith--rather, a huge admirer of Smith myself, but against the Modern caricature of Adam Smith as put forward by the free market enthusiasts, esp in the US, and American Right wing, who are Smith's biggest disciples.. They have a wrong notion of what Adam Smith wrote (in The Wealth of Nations)".. Frank says about the de facto bible of economics and the libertarians who interpret it wrongly;  Their notion, for instance, like that of a typical invesment banker, is  that in pursuing self-interest, they are pursuing the good of all.. and in free markets, whatever survives and prospers is to be morally celebrated.. while also wanting competition without regulation. This, Frank argues, is NOT for the common good.

 Darwin has more general view of the competitive process-  he says, Darwin's GREAT INSIGHT was that sometimes individual gains/interests coincide with group interest, but OFTEN they DON'T-- Whenever there is such a conflict, it's often the individual interest that triumph, often to the great cost to the group.
Much of the competition in the business world, is against its own kind.

But according to Darwin, whatever survives in Nature is not always of the kind to be 'morally celebrated'.
 Competitive imperatives led animals to do things that were brutal in terms of the well-being of other members of the group- like killing the offsprings of other dominant males, as in lions.
Sometimes, what benefits the individual, puts so much more risks on the the group-- nowhere more than the Financial insdustry! (And that eventually led to economic catastrophy, global recession)

In the opening stages of the conversation, he is also asked an interesting question: "It is rare to read an economics book and come away with such a startling image, as one comes away with from the beginning of your book, of an elk (the large deer, called moose in the US) with giant antlers. Explain to us, what you mean by that metaphor/analogy", and Frank goes on to talk about antlers in elk  : About balancing evolutionary advantage and disadvantage of having bigger and bigger antlers as the species evolved. The advantage of bigger antlers, is the reproductive advantage of getting to mate with as many females as it can get, by fighting off those with smaller antlers; disadvantage of it being the bigger risk of getting easily hunted down by wolves. The antlers grew bigger and reached an equilibrium [This equilibrium may not be good for 'the elk males as a group': Having to carry antlers weighing upto 40pounds]. The point being, individual gains/interests does not coincide with group interest in this case.

Another interesting point he raises towards the end, is that Modern Economics so much ignores "context" in the models, and focuses too much on mathematics.

[The Audio podcast of the event is available here on BBC Radio 4: Edited version, fitted into 30min for the radio. http://www.bbc.co.uk/iplayer/episode/b0174f06/Analysis_The_Darwin_Economy/  ]

The full event video @LSE, ~1hr:






More about the book here:  http://press.princeton.edu/titles/9509.html

Here is also a 7min video highlight, of Rober Frank talking about the themes in the book



Other full length video of talks available..
from Princeton University Press: [ At the start of this talk, he also tells what propelled him to write this book- Fed-up and frustrated by hearing all the rhetoric of the libertarian American right wing, he sat and started typing his response, whic over a period of time evolved into this book! ]
http://www.youtube.com/embed/HJUoHkGYsOA

and talk at New America Foundation:
http://www.youtube.com/watch?v=o6dpdITsPOg
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