Survival of the Richest
Is economic behavior best understood in Darwinian terms? Actually, no.
In the polarized debate over government’s proper role in the economy, Robert H. Frank wants to rally American citizens to one important home truth: that all patterns of consumption and taxation are relative. The way that we dispose of our incomes and nourish collective social goods is not the fixed zero-sum proposition that partisans of the libertarian right imagine such choices to be. Rather, Frank—a Cornell University professor of economics who also writes the “Economic View” column for The New York Times—argues in The Darwin Economy that all perceived economic gains and losses are relative to each individual’s comparative standing amid equivalently consuming peers. It thus stands to reason that the pains and gains we typically assign to decisions such as taxing a given socially harmful behavior, or permitting the Bush-era tax cuts on the highest class of earners to expire, are also relative deliberative propositions, and not the confiscatory government boondoggles of libertarian fancy. After all, as Frank explained in a 2010 Times piece outlining the irrational character of anti-tax rhetoric when it’s laid alongside the actual behavior of high-earning Americans springing for top-of-the-line sports cars or potlatch-style coming-out parties for their offspring, “When others in your circle spend a lot, you must spend accordingly or else live with the disappointment that results from unmet expectations.”
This might strike most readers as homiletic common sense—on the order of the childhood reminders from your parents that children are starving in Africa as you let leftovers languish on your own dinner plate. But Frank contends that the foundational appeal of what are known as “positional goods”—products defined principally by their broader social worth rather than their narrow rational utility—accounts for a good deal of the high-octane obfuscation in American economic debate. Indeed, he argues in The Darwin Economy, the battle for the optimal hoard of positional goods is at bottom a reflection of how economic behavior is principally shaped by the laws of natural selection, rather than by the suprational “invisible hand” hymned by Adam Smith’s libertarian faithful.
What’s ultimately most revealing about Frank’s monograph though, is not so much the particular case he makes against the austerity-addled libertarian consensus now taking shape in these United States; that is, alas, a weak and unconvincing brief. Rather, The Darwin Economy is noteworthy for its very acrobatic devotion to some—any—model that would seem well positioned to supplant the invisible hand as the prime mover of economic life in market societies. Instead of simply noting the abundant empirical failures of free-market theorizing for what they are—and thereby placing the burden of accountability on the small-government apostles of deregulation—Frank opts for the centrist dodge of trimming the differences between the excesses of libertarian dogma on the one hand and the reflexes of an allegedly Naderite, intervention-happy left cadre of government bureaucrats on the other.
In rhetorical terms, in other words, the book’s main event is a battle royale between a well-funded, intellectually ascendant ideological vanguard, and a pitiful battery of straw-man statist opponents who probably saw their pinnacle of influence in the last days of the Carter Administration. But even that isn’t the crowning irony of Frank’s curious tract; no, that laurel would have to go to the notion that Charles Darwin, of all people, is properly cast as the agent of a Hegelian synthesis, leading honest interlocutors out of the slogan-infested thickets of merely partisan disputations about America’s productive future.
Isay all this, believe me, more in sorrow than in anger. It’s painfully clear that the goal of drastically revising free-market fundamentalism is a sorely overdue project in the American economic academy. And as he warms to his subject, Frank supplies a suggestive initial contrast between the hard-won lessons of evolution and the resolutely “context free” platitudes of neoclassical economics:
When the ability to achieve certain goals depends on relative consumption, as it clearly does in a host of domains, all bets regarding the efficacy of Adam Smith’s invisible hand are off…. [U]nbridled market forces often fail to channel the behavior of self-interested individuals for the common good. On the contrary, as the pioneering naturalist Charles Darwin saw clearly, individual incentives often lead to wasteful arms races.
Darwin’s observation, Frank argues, allows us to grasp more clearly the situations where untrammeled competition generates social harm—or adverse externalities, as economists would put it. The bull elk, for instance, has, for the purpose of gaining a competitive advantage over other males, evolved an impressively ornate set of antlers to enhance his appeal to prospective mates. But those same antlers can entangle the bull elk as it seeks to navigate wooded areas, and make it fatally vulnerable to predators—a clear loss for the species’ overall chance of survival.
Similar trade-offs characterize human behavior in the economy and other competitive spheres, Frank notes. For instance, workers seeking to maximize their earning power may abjure workplace safety measures because, to pay for them, employers would have to reduce individual salaries. Such workers might prefer bigger paychecks and the various social emollients arising from them, such as the ability to buy a home in a desirable school district, over the more immediate but potentially costly benefit of a safer workplace.
Frank, who principally analyzes consumption markets, sees in such calculations the critical context—the woodland habitat, as it were—that drives real-world economic choices. He counterposes this to free-market doctrine, which holds that each individual worker has the unassailable right to choose better pay in conditions of higher risk, and seek out an employer who delivers the optimal terms of the trade-off. Far better, Frank suggests, to accept that decisions about social goods such as workplace safety “are perhaps better made collectively.”
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