In his new book, The Darwin Economy: Liberty, Competition, and the Common Good, Robert Frank argues that within the next century, Charles Darwin will become known as the intellectual founder of economics, displacing Adam Smith from that role (my book review here). Frank’s prediction rests on the contrasting perspectives on competition provided by the two. Smith had the counterintuitive insight that selfish actions could increase the common good, while Darwin recognised that competition could be wasteful as individuals compete for survival and mates. Frank argues that the Darwinian picture is a better representation of the economy.
Having approached the book more than ready to be convinced by Frank, I actually ended it with a reinforced appreciation of Smith. Smith might not have given as clear perspective on the conflict between group and individual interests as did Darwin, but his insights about specialisation, trade and the benefit to others in the absence of benevolent intentions remain among the core understandings of economics. One look around us shows that competition in the developed world has delivered enormous wealth. That this benefit to the group occurred despite the selfish actions of individuals shows us that Smith’s ideas have been the dominant force. We should not ignore the negative consequences of competition, and policy decisions should acknowledge them, but the dominant trend is increased group welfare.
Frank might argue in response that it is the constraint and institutions provided by government that has allowed this wealth to be created, and on that point, he would be right (although precisely which constraints and institutions is debatable). But it is the understanding of Smith that shows us what can happen within the right institutional framework. If people can reap the benefits of their own efforts, they will specialise, trade, and take advantage of the growing size of the market, which on average will benefit others too.
As for Darwin, he deserves a central role in economics, but largely through the fact that humans evolved through natural selection. This could considerably change economics, but it does not displace Smith’s core insights. My hope is that instead of Charles Darwin being understood as the founder of economics, economics is considered as a branch of ecology. It is from that perspective that Charles Darwin can rightfully stand at the top.