The Darwin Economy: A book review by Bob Morris

Posted on: October 17th, 2011 by bobmorris

The Darwin Economy: Liberty, Competition, and the Common Good
Robert H. Frank
Princeton University Press (2011)

How and why “departures from rational choice” (with and without regret) have occurred and what to do about them

Frankly, I expected this book to be about (for me, at least) incomprehensible economics and dull. Wrong on both counts, although thoughtful consideration of conflicting economic principles and contentious issues is included. In fact, Robert Frank’s purpose is to explain how and why “departures from rational choice” (with and without regret) have occurred and what to do about them. He does so with a rare combination of erudition, rigor, eloquence, and wit. As he explains, “From the beginning, most of the work in behavioral economics has focused on departures with regret – those caused by cognitive errors…From the beginning, however, I’ve believed that much bigger losses result from departures from ration choice without regret. That’s because people generally have both the desire and the ability to remedy cognitive errors unilaterally once they become aware of them [and then, hopefully, not repeat them]. In contrast, we typically lack both the means and the motive to alter behaviors we don’t regret, even when those behaviors generate large social costs.” That, in the proverbial nutshell, is the focus of this lively and entertaining book: An explanation of how to accommodate the wishes and behavior of self-interested individuals with the wishes and behavior of self-interested groups.

Here are three of Frank’s observations that caught my eye:

“Charles Darwin was among the first to perceive the underlying problem clearly [i.e. equating Adam Smith’s concept of `the invisible hand’ to competition]. One of his central insights was that natural selection favors traits and behaviors primarily according to their effect on individual organisms, not larger groups. Sometimes individual and group interests coincide, he recognized, and in such cases we often get invisible hand-like results.” (Page 7)

“John Stuart Mill’s harm principle must be understood as saying that the only legitimate reason for government to limit someone’s freedom is to prevent [begin italics] undue [end italics] to others…For the harm principle to make any sense at all, it must be understood to mean that the legitimacy of a restriction must be decided by weighing its cost to those being restricted against the harm others would suffer if the behavior weren’t restricted.” (Page 85)

“The bottom line is that if society’s rules don’t make the total economic pie as large as possible, they squander an opportunity to enhance the personal autonomy of every citizen. Again, when the economic pie is larger, it’s always possible for everyone to have a larger slice than before, and that means having an option to do mire things.” (Pages 209-210)

Frank does not cite nor even imply the relevance of Abraham Maslow’s concept of a “hierarchy of human needs” but I think there is relevance nonetheless because people struggling to survive are wholly preoccupied with that; only when they are secure and confident they will remain so can they consider what Maslow characterizes as self-actualization. Sometimes an individual can fulfill all three needs; in other circumstances, these needs can only be achieved in collaboration with others in a society, with groups that range in size from a family or community to a city or state…or perhaps even to an entire nation.

If I understand Frank’s ultimate objectives in this book (and I may not), he attempts to introduce more light and less heat to our understanding of the admittedly complicated relationships between a government and those governed, and, between an individual’s rights and that individual’s obligation to respect (and when necessary, protect) others’ individual rights. I carefully selected the title of this review because I think he has much of great value to say about how and why “departures from rational choice” (with and without regret) have occurred and what to do about them. He comes across to me as a pragmatic idealist, calling upon “a new generation of libertarians who are willing to accept legitimate restraints on their own behavior, while continuing to battle ferociously to prevent government from intruding any more than necessary.”

It is especially appropriate that Robert Frank concludes his book with this quotation from Miguel Cervantes, in words expressed by Don Quixote: “Too much sanity may be madness – and the maddest of all – to see life as it is, and not as it ought to be.”

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