Robert Frank's effort to explain the lessons of evolution without offending libertarian sensibilities
The Darwin Economy: Liberty, Competition, and the Common Good
by Robert H. Frank
Princeton University Press, 256 pp.
In today’s economics department the libertarian holds a place comparable to that of Maoists among antiwar protestors back in the 1970s: a fringe group, yet admired (by some) for dedication and clarity—the purs et durs, in the French phrase. Libertarians take individualism to its limits, they count on markets to set prices generating actions that lead to happiness, they would drown government in a bathtub, and they do not care if some people are homeless. Theirs is the appeal, in one word, of the fanatic.
Cornell economics professor and New York Times columnist Robert Frank, on the other hand, is a moderate. He favors law and regulation, and he believes that government must play an important role in building and maintaining infrastructure and social insurance. He believes that once upon a time there was wide agreement on these points, and he regrets that America has decayed as this agreement fractured. Frank is also the most distinguished scholar of rank and hierarchy in academic economics; he takes the libertarians seriously, and The Darwin Economy is his extended conversation with the libertarian mind.
What’s the matter with the libertarian view? Frank thinks that Charles Darwin came up with the first and best answer: what is good for the individual is often bad for the group. Overweight elephant seals and over-antlered bull elk gain preferential sexual access and pass on their genes, but this comes at the cost of being less able to escape predators. Natural selection works against the wider propagation of the species. In hockey, players gain a small advantage from not using helmets, but if no one uses one, the advantages cancel and all are worse off. Given a vote, therefore, rational hockey players favor a helmet requirement. In economic life, myriad taxes and regulations work the same way: it may benefit a single business to break the rules, but if the rules are removed no one is better off and if they are respected no one is hurt.
To Frank the force of this insight is such that he favors Darwin over Adam Smith’s “invisible hand,” taking that notion to be the core of libertarian belief. The invisible hand is widely thought to be Smith’s apotheosis of free markets, which posits that unfettered markets are capable of being inherently fair. Although this is a considerable overstatement and Frank is careful to distinguish the actual Adam Smith—a skeptical realist about human nature whose less-known work is called The Theory of Moral Sentiments—from the familiar Ayn-Randian greed-is-always-good caricature, he associates the latter with “movement libertarianism.”
Against the fanatical absolutist free-marketeer that movement libertarians see in Smith, Frank offers up a one-dimensional Darwin; there is nothing about common descent, evolutionary dynamics, or the role of chance in this book. The insight that sexual selection does not maximize group population is practically the whole of Frank’s take from The Origin of Species. But why this should matter to the species is not clear. Almost all species have limited numbers and range—and predators are always intrinsically less numerous than prey—and yet have survived the ages. What difference does it make whether there are few or many? Maximizing group size is a human preoccupation—related to nations and armies and representation in Congress. Biology differs from economics and politics, in that animals don’t care.
The economist’s style consists mainly of thought experiments, which are then linked to policy implications. This is the method here; Frank’s question is usually, What should a logical libertarian think about situation X? He delights in making out puzzles. Setting up one such, he notes that many libertarians (especially the “serious” ones at the University of Chicago) embraced the “consequentialist” reasoning of Ronald Coase, according to which the law should assign the burden of adjustment for conflicts and disagreements on those for whom it is less costly. Then he imagines for us a 1960s Atlanta where 100 interracial couples would like to hold hands in public while a million white citizens would prefer that they didn’t. According to Frank, the Coasian libertarian would agree to an ordinance forbidding interracial hand-holding so long as the million who preferred this outcome compensated the hundred for the inconvenience. (That would make everyone “better off,” you see.) And Frank, who is a practicing liberal (in the American sense), then tries to show why this is wrong—mainly by arguing that preferences can change, as they clearly have.
It’s an odd and provocative line of argument, and it’s not quite clear whether the target of criticism is the “movement libertarian” who would presumably object to all such laws simply because they are laws, the “serious libertarian” who would go along with Coase, or Coase himself. Anyone who is none of these things is likely to be repelled. The thought experiment contains no reference to slavery, to lynching, and to all the ritual violent humiliations that defined life in the American South for centuries and that place the issue far outside the pecuniary realm. The money numbers are made up on the assumption that you can assign a price to basic rights. There is no actual measurement of anything, nor any discussion of how people outside Frank’s imaginary Atlanta might feel. To the economist, evidently, these matters of history and fact and context and morals don’t matter—they are water under the bridge; de gustibus non est disputandum; stuff for “sociology professors” to worry about. Making the noneconomist uncomfortable, without quite saying so, appears to be part of the point.
Frank believes (with most liberals but against the evidence of history) that governments must have tax revenues in order to spend. A major thesis of his book is that logical libertarians should favor the progressive income tax. In a thought experiment aimed at this issue, he writes,
In an environment constructed for the specific purpose of shielding libertarian sensibilities from any possibility of coercion, the voluntary societies that formed would all feature progressive income taxation. The degree of progressivity that would emerge … would depend on how much some were willing to pay for positions of high social rank and on how much others were willing to accept for agreeing to occupy positions of low social rank.
It’s clever (that’s the economist’s highest compliment), but what exactly is the point of constructing a rationale for progressive taxation on this basis? Any evolutionist knows that all societies feature predators and prey, with hierarchies maintained and enforced by intimidation and violence. (“Wealth is power, as Mr. Hobbes says”— so wrote Adam Smith, no less.) In the real world progressive taxation exists to tame this violence by limiting the acquisition of power. Why must this basic fact be ignored in favor of an artificial world, just for the sake of libertarian sensibilities?
Equally baffling are Frank’s insouciant remarks on corporate executive pay. He writes, “[A]buses occur. But they’re no worse now than they’ve always been.” This claim is followed by digressions about classical music, sports teams, and an admired university president (Frank’s own), before concluding on no further evidence that “the argument that skyrocketing executive pay is evidence of a breakdown of competitive forces does not withstand scrutiny.” And then … oops, he does concede: “a conspicuous exception is the financial services industry.”
Well, yes—and let’s not forget that the financial services industry earned 40 percent of all profits in the run-up to the great crisis, and possibly more afterward.
In recent years, numerous economists have found fame by advancing a “new idea” that is in fact a reductive imitation of a rich earlier tradition that the author ignores. The Darwin Economy, though gracefully written and often entertaining, is a fairly flagrant case. Notably, the great American economist Thorstein Veblen is not mentioned, even though Veblen practically drilled scientific Darwinism into economics with an 1898 essay in the Quarterly Journal of Economics entitled “Why Is Economics Not an Evolutionary Science?” Veblen followed that still-important work with his classic treatment of predator-prey economics in The Theory of the Leisure Class, an incisive book with a deep impact on the culture and politics that gave us the progressive movement, the income tax, the estate tax, and, ultimately, the New Deal.
These are matters that those who favor social regulation and restraint on the depredations of the rich and powerful should discuss, not merely with libertarians and not merely on their terms. Some economists do so: Veblen’s heirs have a vibrant professional society, which meets every year, right alongside the American Economic Association. It is called, of all things, the Association for Evolutionary Economics.
Professor Frank is not a member, but he’d be welcome to join.
If you are interested in purchasing this book, we have included a link for your convenience:
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