Darwin Economy Research Articles

Smith"s Wedge: The Invisible Mishandling of Context in Robert Frank"s The Darwin Economy

In <italic>The Darwin Economy</italic> a distinguished behavioral economist, Robert Frank, promises to put Adam Smith’s “invisible hand narrative” into “context.” Neglecting history, empirical evidence, original sources, and a voluminous secondary literature, he fails to deliver. Frank predicts that one hundred years from now professional economists will name not Adam Smith but Charles Darwin as the intellectual founder of their discipline. The reason he gives is “Darwin’s wedge” – a term he coins to emphasize a divergence between individual and group interests which in turn causes wasteful competition and collective loss. He credits Darwin for the insight. We find the very same “wedge” and insight in a book wholly neglected by Frank and most economists after Stigler, namely, Smith’s <italic>The Theory of Moral Sentiments.</italic> Working with original sources we show that Frank’s view of the invisible hand – and thus of modern economics – is not sustainable. Contextual economics after Schmoller is of course voluminous but the literature is hardly known by Frank, who is wedded to the axiomatic approach and “no cash on the table” conjecture favored by most neoclassicals. We highlight the problem with evidence on the economics of labor-managed firms and with a revival of a once-famous study by Carleton Parker on large scale farming, unregulated migrant labor, and the Wheatland Hop Field riot of 1913. <italic>JEL Codes: B3, N3, J6, B41, Q10</italic>

"The Darwin Economy: Liberty, Competition, and the Common Good," by Robert H. Frank

"The Darwin Economy: Liberty, Competition, and the Common Good," by Robert H. Frank

Robert H. Frank: The Darwin Economy: Liberty, Competition, and the Common Good

article reviews the book The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank.

The Darwin Economy: Liberty, Competition, and the Common GoodThe Darwin Economy: Liberty, Competition, and the Common Good, by FrankRobert H. 2011, 240 pp., hardcover, Princeton, NJ: Princeton University Press.

The Darwin Economy: Liberty, Competition, and the Common GoodThe Darwin Economy: Liberty, Competition, and the Common Good, by FrankRobert H. 2011, 240 pp., hardcover, Princeton, NJ: Princeton University Press.

Дарвиновская экономика. Свобода, конкуренция и общее благо (перевод Николая Эдельмана)

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, «The 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.The journal publishes preface and chapter 1 «Paralysis», in which Robert Frank discusses reasons why the US political system seems to be paralyzed, even in the face of urgent economic problems. According to the author, this paralysis mainly stems from the existing ignorance of the basic facts and logic that govern human behavior.

Book Review of The Darwin Economy. Liberty, Competition and the Common Good

Book Review of The Darwin Economy. Liberty, Competition and the Common Good

The Libertarian Welfare State

This review essay, occasioned by Robert Frank's new book titled The Darwin Economy, elaborates and celebrates the author's unique, positional-externality-informed blend of Millian libertarianism, Coasian bargaining, and modern social contract theory. The essay begins by first noting that Americans' cherished value of liberty is a multidimensionally relational concept, such that your being free - as against me or others - to do this or that always entails both (a) your not being free, once you have done this or that, to do what this or that physically forecloses, and (b) our not being free - as against you - to impede your doing it. Liberty thus always comes at the expense of liberty. But this means that optimizing the quantum of liberty in a life or in a society always involves working tradeoffs of liberty for liberty, meaning in turn that appeal must be had to some normative principle additional to liberty if we would determine which liberties 'outweigh' which in working to 'maximize' liberty. Mill's 'harm principle,' the essay continues, constitutes an early and incomplete attempt to articulate such a principle for the case of a society, while Coasian bargaining - much like early renditions of the normative 'economic analysis of law' that Coase inadvertently inspired - affords some, if but incremental, additional guidance. Ultimately what is required for the social case is an account of distributive justice such as can give content to the notion of Millian 'harm' or Coasean-inspired 'welfare' or 'wealth,' as this author has argued many times elsewhere - and as Frank implicitly acknowledges in arguing from a rendition of the Rawlsian 'original position,' the normative appeal of which lies precisely in its modeling a form of impartiality, when elaborating on what libertarian principles yield by way of a political society. Incorporating, as he does, a keen appreciation of positional externalities and other collective action problems into the picture as only he could, however, Frank also significantly enriches both the Coasian bargaining scenario and the venerable 'veiled choice' social contracting scenario familiar to readers of Harsanyi, Rawls, Dworkin, and other theorists. In so doing he plausibly arrives at some very surprising results, not least of which is the likelihood that libertarians contracting to build a political society from scratch would be apt to adopt taxation and social welfare policies much more redistributive than those that today's vulgar libertarians appear to realize. They would contract, in short, for a 'libertarian welfare state.'

Robert H. Frank, The Darwin Economy: Liberty, Competition, and the Common Good

In The Darwin Economy: Liberty, Competition, and the Common Good Robert H. Frank practices what he preaches. Starting with just a handful of simple basic principles, he is not only able to shed an interesting new light on some of society’s most pressing problems, but also to propose (at least to some) contrarian solutions for them. Frank arrives at his analyses and his solutions not by exploring the properties of mathematical models but by cogent informal reasoning. This approach is exactly ...

Book Reviews

Ted Bergstrom of University of California, Santa Barbara reviews “The Darwin Economy: Liberty, Competition, and the Common Good” by Robert H. Frank. The EconLit abstract of the reviewed work begins: Explores the importance of Charles Darwin's theories on the development of economics. Discusses paralysis; Darwin's wedge; no cash on the table; starving the beast -- but which one; putting the positional consumption beast on a diet; perpetrators and victims; efficiency rules; ownership of money; success and luck; the great trade-off; taxing harmful activities; and the libertarian's objections reconsidered. Frank is an economics professor with the Johnson Graduate School of Management at Cornell University. Index.

BOOK REVIEWS

Books reviewed in this issue.Making the Market Behave COLIN CROUCHThe Darwin Economy: Liberty, Competition and the Common Good, by Robert H. Frank.The Oil‐rich Revolutionary Maurice WalshHugo Chavez and the Bolivarian Revolution, by Richard Gott.Demonising Muslims Victoria BrittainPointing The Finger: Islam and Muslims in the British Media, edited by Julian Petley and Robin Richardson.The Strange Non‐death of Multiculturalism Karim MurjiMulticulturalism: A Very Short Introduction, by Ali Rattansi.What did Atatürk Read? Rifat KandiyotiAtatürk: An Intellectual Biography, by M. Sükrü Hanioglu.Muddling through the Constitution (Again) Ben Yong The Coalition and the Constitution, by Vernon BogdanorLefty Brits on a Visit to China in 1954 Matthew GrantPassport to Peking: A Very British Mission to Mao's China, by Patrick Wright.American Republicans may Harm Your Health Gianfranco PasquinoWhy Some Politicians are More Dangerous than Others, by James Gilligan.The Possible Death of American Imperialism Vassilis K. FouskasRethinking Imperialism, by Ray Kiely.Neoliberalism Lives On Michael RustinThe Strange Non‐death of Neoliberalism, by Colin Crouch.

The Darwin economy: liberty, competition, and the common good

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.

Economic Behaviour in Adversity.

disaster, and destruction—despite their historical and current significance—have not yet been adequately studied from the economic point of view. Economic Behaviour in Adversity brings together ten important essays, several previously unpublished, dealing with the choices people make in times of disaster and conflict. These essays help explain the possibilities and limits of human cooperation under severe environmental pressure. Part I, Disaster and Recovery, contains previously unpublished studies of major historical catastrophes, among them the Black Death of the fourteenth century, the Civil War in Russia that followed the Bolshevik revolution, and the mass bombing of Germany and of Japan during World War II. Accompanying the historical studies are several analytical papers that interpret the disaster experience. The essays in Part II, Cooperation and Conflict, represent innovative theoretical analyses based on a common theme—that cooperation and conflict are alternative strategies whereby individuals, groups, and different forms of social organization struggle with one another for evolutionary survival. Ultimately, these essays indicate, the political of the human species is an instance of Darwin's economy of nature.