Economic Darwinism

social darwinism

The 19th Century’s Gilded Age of the Robber Barons came hot on the heels of The Origin of the Species. Little wonder that…

 “Soon, some sociologists and others were taking up words and ideas which Darwin had used to describe the biological world, and they were adopting them to their own ideas and theories about the human social world. In the late nineteenth and early twentieth centuries, these Social Darwinists took up the language of evolution to frame an understanding of the growing gulf between the rich and the poor as well as the many differences between cultures all over the world.

“The explanation they arrived at was that businessmen and others who were economically and socially successful were so because they were biologically and socially “naturally” the fittest. Conversely, they reasoned that the poor were “naturally” weak and unfit and it would be an error to allow the weak of the species to continue to breed. They believed that the dictum “survival of the fittest” (a term coined not by Charles Darwin but by sociologist Herbert Spencer) meant that only the fittest should survive.”

Social Darwinism in the Gilded Age, Kahn Academy

The result was Social Darwinism:

“The term ‘social Darwinism’ refers to the deterministic philosophy of Englishman Herbert Spencer that applied, to humans and markets, Darwinian biological and evolutionary concepts of natural selection.

“Spencer offered his philosophical defense of individualism and laissez faire in Social Statics (1851). He coined the term “survival of the fittest” in Principles of Biology (1867), arguing that human progress resulted from the triumph of superior individuals and cultures over their inferior competitors; poverty was evidence of inferiority.

“Anything that interfered with the self-improvement of superior individuals or markets was to be resisted. What came to be called “social Darwinism” was used to argue for unrestrained economic competition and against aid to the unfit poor. The state was not to hinder the strong or assist the weak, interceding only to protect individual freedom and rights. “

Capitalism and Western Civilization: Social Darwinism, National Association of Scholars

Social Darwinism has since been widely discredited in academia, but Pulitzer-prize winning economics columnist and professor of public affairs Steven Pearlstein was dismayed to find it alive and well in current hyper-competitive, zero-sum economic policy, as revealed in numerous studies showing that certain genetically inherited traits play “an outsized role in determining economic success.” The list includes intelligence, personality, height, and good lucks, all of which statistically affect income and likelihood of being favorably judged on leadership qualities. Add parental nurturing practices — such as those of the new “Meritocrat” economic class we’ve been looking at — and “whether it’s by way of the genes we inherit or the circumstances in which we are raised, the parental lottery is more important than ever in determining economic outcomes.” It’s Time To Abandon The Cruelty Of Meritocracy, The Guardian (Oct. 13, 2018).

Pearlstein concludes that the luck of the genetic and nurturing draw “must always play a significant role in who achieves economic success” and that “we must also acknowledge that there is a point beyond which the consequences of the parental lottery can never be overcome.” Disconcerted by his own findings, Pearlstein calls for remedial action:

“No matter how hard we might try to make it otherwise, there is a fundamental and irreducible level of unfairness to market competition, one that undermines the moral legitimacy of market outcomes and provides a justification for taking reasonable steps to make them more equal.

“Because of heritability and upbringing, there can never be genuine equality of opportunity. More socialist countries in Europe and Asia have gone a long way toward equalizing access to healthcare, education, nutrition, childcare and even disposable income, and yet they have not come close to eliminating the transmission of family advantage or disadvantage. Surely we should do more along those lines to equalize opportunity in the United States?”

It’s Time to Abandon the Cruelty of Meritocracy

Economics Nobel laureate Joseph E. Stiglitz offers an alternative to economic Darwinism which he calls “progressive capitalism.”

“Despite the lowest unemployment rates since the late 1960s, the American economy is failing its citizens. Some 90 percent have seen their incomes stagnate or decline in the past 30 years. This is not surprising, given that the United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

“But things don’t have to be that way. There is an alternative: progressive capitalism. Progressive capitalism is not an oxymoron; we can indeed channel the power of the market to serve society.”

Progressive Capitalism Is Not an Oxymoron: We can save our broken economic system from itself, New York Times (April 19, 2019)

More next time.

Homo Economicus [4]: Enlightened Self-Interest

homo economicus

The concept of “homo economicus” captures the belief that the rigorous pursuit of self-interest in a free market improves things for everyone. This belief powered Milton Friedman’s famous dictum that “the social responsibility of business is to increase profits,” and finds a philosophical ally in Ayn Rand’s “objectivism”:

“The core of Rand’s philosophy… is that unfettered self-interest is good and altruism is destructive. [The pursuit of self-interest], she believed, is the ultimate expression of human nature, the guiding principle by which one ought to live one’s life. In “Capitalism: The Unknown Ideal,” Rand put it this way:

‘Collectivism is the tribal premise of primordial savages who, unable to conceive of individual rights, believed that the tribe is a supreme, omnipotent ruler, that it owns the lives of its members and may sacrifice them whenever it pleases.’

“By this logic, religious and political controls that hinder individuals from pursuing self-interest should be removed.”

What Happens When You Believe in Ayn Rand and Modern Economic Theory, Evonomics (Feb. 17, 2016)

Thus Ayn Rand became the patron saint of American capitalism in its current iteration. This is from a 2017 Atlantic article:

“’I grew up reading Ayn Rand,’ … Paul Ryan has said, ‘and it taught me quite a bit about who I am and what my value systems are, and what my beliefs are.’ It was that fiction that allowed him and so many other higher-IQ Americans to see modern America as a dystopia in which selfishness is righteous and they are the last heroes. ‘I think a lot of people,’ Ryan said in 2009, ‘would observe that we are right now living in an Ayn Rand novel.’”

Critics point out that there is no such thing as a free market or objectively rational self-interest, arguing instead that the market is inescapably skewed toward policy-makers’  beliefs and values — i.e., their particular interpretations of what “self-interested” behavior looks like.[1] As a result, economic policy always comes laden with ethical and moral beliefs about “good” vs. “bad” outcomes, which the not-so-free market then dutifully delivers:

“Milton Friedman argued that competition between big businesses suffices to safeguard the public interest, but in practice it is almost always insufficient, especially where there is collusion among the players to safeguard their market dominance – and their political influence.

“Free-market economists have an unwarranted faith in the capacity of price adjustments to produce technological changes in production and patterns of consumer demand. Their theories imply that the price system has infinite capacity to shape sustainable outcomes.

“But if the self-interested market behaviours continue to seek an unchanged goal – more personal incomes with which to purchase more material goods – ultimately they cannot be fulfilled.

 “Ultimately, the short-term self-interested economic arrangements are not sustainable anyway. As the US economist Kenneth Boulding once said: “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist”.

“Economic inequalities also predictably widen where self-interested market behaviours dominate. Capital makes capital, while those without capital often remain consigned to poverty. Certainly, the very rich have become notably much wealthier during the last three decades while neoliberal ideologies and policies have been dominant. In the absence of strong unions and governments committed to some degree of egalitarian redistribution, the unequalising tendency is inexorable. The result is predictably unhappier societies that experience a higher incidence of social problems, as empirical research complied by Richard Wilkinson and Kate Pickett clearly demonstrates.

“Something has to give. An economic system that rewards amoral self-interest creates economic instability, fractures economic insecurity, fosters concentrations of economic power, exacerbates economic inequality and violates ecological sustainability. So much for the self-regulating market economy!

“There is currently much talk of ‘social responsibility’ in business and of ‘triple bottom line accounting’ that emphasises the use of social and environmental criteria, as well as a financial criterion, in assessing business performance… Indeed, businesses developing reputations for responsible behaviours may reap benefits in the form of worker and customer loyalty. But unless and until ethical behaviours become integral to how markets function – by directly affecting ‘shareholder value’, for example – it is hard to see the overall effect as much more than window dressing for ‘business as usual’.”

Oh, The Morality: Why Ethics Matters In Economics, The Conversation (in partnership with the University of Sydney) (March 22, 2012)

More on ethics and economics next time.

[1] For more on whether the market is truly “free,” see this article and this one. Or if you prefer, here’s a short video and here’s a TEDX talk.