Darwin's invisible hand: Market competition, evolution and the firm
Dominic D.P. Johnson,
Michael E. Price and
Mark Van Vugt
Journal of Economic Behavior & Organization, 2013, vol. 90, issue S, S128-S140
Abstract:
Competition among firms has been suggested to reflect the ruthless logic of Darwinian selection: a free market is a struggle for survival, in which successful firms survive and unsuccessful ones die. This view appears to bolster three pillars of neoclassical economics: (1) that economic actors are self-interested; (2) that self-interest leads to public goods (Adam Smith's “invisible hand”); and (3) that together these lead to market optimization. However, this chain of reasoning leads to a paradox. We show that the application of Darwinian selection to competition among firms (as opposed to among individuals) invokes group selection, which leads to exactly the opposite predictions: notably altruism and the suppression of individual self-interest. We apply an alternative evolutionary model of economic competition, multi-level selection (MLS) theory, which integrates the effects of selection at both individual and group levels. This approach reveals that, while individuals may generally pursue their own self-interest (as in the standard evolutionary account), humans also have evolved traits that—as if led by an invisible hand—steer our self-interest to align with the good of the firm or wider society as well. But it is the hand of Darwin, not Smith.
Keywords: Evolution; Competition; Cooperation; Darwin; Human nature; Firms (search for similar items in EconPapers)
JEL-codes: A12 B25 B52 D03 D21 Y80 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:90:y:2013:i:s:p:s128-s140
DOI: 10.1016/j.jebo.2012.12.016
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