Who was the greater economist - Adam Smith or Charles
Darwin? The question seems absurd. Darwin, after all,
was a naturalist, not an economist. But 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. The good news is that we have the ability to
tame the Darwin economy. 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. |
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