Are There Logical Limits to Self-Maximization?
Both biology and economics are in the “productivity selection” business. Comparing them yields lessons.
1. Economics and evolution have always exchanged ideas. Natural selection crystallized for Charles Darwin because of an essay on economics (Thomas Robert Malthus). More recently Richard Dawkins bolstered a “naturally” selfish economics via his (fallacy of composition committing) claim that everything that evolves “should be selfish.“
2. Conventional economics presumes a) we’re rational and unlimitedly selfish, and b) those traits in markets create beneficial or optimal outcomes. Those are all testable and often false. Daniel Kahneman says it’s “self evident that people are neither fully rational nor completely selfish.” His colleague Richard Thaler says economists model a “different species.”
3. Kahneman and Thaler’s great work creating behavioral economics hasn’t asked the next big question. What sort of outcomes arise when markets aggregate “cognitively biased” and commonly imprudent decisions?
4. Robert Frank’s The Darwin Economy notes markets also suffer a composition fallacy, locally “rational” decisions don’t always aggregate to good outcomes, e.g. in situations with “Darwin’s Wedge dynamics” (see also spontaneous disorders). Others looking at such issues include complexity economics and evonomics.
5. Self-interest in evolution differs greatly from self-interest in economics. Comparing their limits and logical dependencies can reduce unnaturally selective thinking.
6. Appetites and capacities throughout biology are physiologically limited. Beyond some satiety level, more isn’t better — it’s often unhealthy, counterproductive and even toxic. By contrast, self-interest in economics is considered limitless. Every extra dollar is deemed better (a numerical illusion buried in the math). Unlimitedness is unnatural; it ignores reality’s limits and the foreseeable capacities of systems we depend on.
7. Evolutionary self-interest is mostly dumb. It leads predators to overhunt prey, destroying themselves, and their dumb self-maximizing genes. Somehow economic self-interest has become as dumb, often promoting systemically self-undermining “rationality” (e.g. Prisoner’s Dilemmas, “tragedy of the commons”).
8. Despite evolution being dumb and blind, we’ve evolved some degree of intelligent foresight — and should see the logic of an as yet unnamed universal principle: Nature and logic ultimately eliminate that which damages what it depends on.
9. Dawkins’s replicator vs. vehicle distinction — genes vs. bodies — can illuminate. Despite his view that genes (and all they build) are “selfish,” every “selfish” gene must also cooperate well with every other gene in the vehicle/body it depends on, or it harms its own survival chances.
10. That logic applies widely. We’ve been team hunters for 10,000 generations, ever since group hunting out-produced going solo. That higher productivity required being “ruthlessly cooperative” — punishing excessive self-interest that threatened group survival (see also “Golden Punishment Rule”). Likewise excessive self-maximization is a systemic risk to communities, cities (see Pericles), markets, economies, nations, the planet).
11. We’re the first species to know this. And to unwisely ignore it. Limits, foresight, self-deficiency, interdependent coordination, resource justice, and relational rationality are in all our nature. They should all be in our economics and our politics. And in our rational interests, rightly understood.
Economics need not be as dumb as trees. Nor as self-harming as over-hunters. Nor “cognitively unnatural.”
Illustration by Julia Suits, The New Yorker Cartoonist & author of The Extraordinary Catalog of Peculiar Inventions.