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Is Capitalism a Game of the Survival of the Fittest?

By Dale B. Halling

December 1, 2015

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Is Social Darwinism, especially as portrayed by the image of gladiators slugging it out, good biology or good economics? If evolution were a process in which the ‘goal’ was to destroy other species and then destroy all competitors within the species, life would have burned out long ago.

It is quite common to be in a discussion about economics and proposing a capitalist solution when someone pipes-in “that’s just survival of the fittest.” What they are talking about is “Social Darwinism” and the image they mean to conjure up is that capitalism is like a bunch of gladiators fighting it out to the death until there is just one winner. Unfortunately, this tends to trip many of us because we often say that capitalism is about competition and that competition is what makes America great. In fact some mainstream economists (e.g. University of Chicago– see Pure and Perfection Competition: By What Standard?) have gone so far as to say the very definition of capitalism is ‘perfect competition.’ Conversely, George Reisman has shown that ‘perfect competition’ is really collectivism in the article Platonic Competition. The lack of competition conjures up images of people living under socialism waiting in a line to buy one-size-fits-all black boots.

Social Darwinism refers to a group of ideas that relate to sociology, economics, and eugenics that are supposedly extensions of Charles Darwin’s ideas on evolution. Herbert Spencer is considered the father of Social Darwinism and he was the one, not Darwin, who coined the term ‘survival of the fittest.’ Spencer defended capitalism based on Social Darwinism. However, plenty of socialists including the National Socialist Party in Germany also used the ideas of Social Darwinism to support their version of eugenics.

Is Social Darwinism, especially as portrayed by the image of gladiators slugging it out, good biology or good economics? If evolution were a process in which the ‘goal’ was to destroy other species and then destroy all competitors within the species, life would have burned out long ago. The ‘goal’ of life and evolution is to convert as much energy into life as possible. By ‘goal’ here I mean the logical end result of the natural process of evolution, not that there is a conscious objective of individuals. Evolution is an optimizing system that selects those life forms that are best at converting energy in life in a variety of different environments. This results in a variety of different life forms. Even within a relatively uniform environment, the way to optimize the total amount of life is to have a variety of organisms that can exploit different sources of energy.

In economics the goal is not to have 500 firms creating model Ts, it is to have 500 firms all creating unique high value items (If everyone produced the same thing, what would be the point of trade?).  Human life, and then wealth, as we escape the Malthusian Trap, increases as we create more inventions that allow us to live in different climates for instance, or exploit new resources, just as different species maximize the amount of life. I do not want to make the same thing as my neighbor. I want him to make something that is of incredibly high value to me and I want to make something that is of incredibly high value to him.  We want competition to flourish because we don’t want to allow someone to become lazy (rent seeking), and freeride on the efforts of others. But competition is not what makes us wealthy.

I think the 100 meter dash is a good example of what competition (pure competition or competition for the same product) can accomplish. In 1891 the world record was 10.8 seconds. Today it is 9.57 or about a 13% gain. This kind of gain would not support the quadrupling of human population over the same period of time.

A person’s wealth is not increased by destroying other people’s productive capacity. Social Darwinism as encapsulated in the statement ‘survival of the fittest’ is bad biology and bad economics; it’s even a poor gaming strategy in competitive games.

The goal of an economy is to increase the total wealth. A person’s wealth is not increased by destroying other people’s productive capacity. In fact, the wealthiest countries are those in which people are engaged in a wide variety of high-value activities and the poorest countries are those in which people are competing in a small number of industries. The way these high-value positions are created is by inventions that create whole new industries.

Interestingly, the online site, Avid Gamer Rants Dot Com, has shown that a number of games that appear to be setup with a ‘winner take all’ goal can often be ‘won’ most successfully, by rational cooperation rather than by eliminating other players. Game Theory seems to support this as this essay, “New take on game theory offers clues on why we cooperate,” explains. For instance, in both Minecraft and Monopoly your chances of being successful increase, if instead of trying to kill off your fellow players, you collaborate with other players.

Social Darwinism as encapsulated in the statement ‘survival of the fittest’ is bad biology and bad economics; it’s even a poor gaming strategy in competitive games.

 

 

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