Evolutionary Theory of Resource Distribution

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* Article: An evolutionary theory of resource distribution. By Blair Fix. real-world economics review, issue no. 90

URL = http://www.paecon.net/PAEReview/issue90/whole90.pdf

On the tension between two levels of natural selection.

  • At the group level, selfless behavior is advantageous.
  • But at the individual level, selfish behavior is advantageous

Abstract

"This paper explores how the evolution of human sociality can help us understand how we distribute resources. Using ideas from sociobiology, I argue that resource distribution is marked by a tension between two levels of natural selection. At the group level, selfless behavior is advantageous. But at the individual level, selfish behavior is advantageous. I explore how this tension affects the distribution of resources."

Contents

Blair Fix:

"This paper offers a sketch of what an evolutionary theory of resource distribution might look like, and what its basic principles should be.

In Part I, I discuss how the evolution of human sociality relates to resource distribution. I argue that resource distribution is marked by a tension between two levels of natural selection. At the group level, selfless behavior is advantageous. But at the individual level, selfish behavior is advantageous. Resource distribution, then, is driven by a tension between competition and cooperation. Groups compete for resources with each other (often violently), but suppress competition internally.

In Part II, I look at the building block of groups – the human relation. To cooperate, humans form bonds with each other. Often, these bonds are asymmetric, meaning one person has more power than the other. When this happens, the person with more power can use their influence to get a bigger share of the resource pie. The result, I argue, is that when groups use power relations to organize, the “power ethos” will prevail: to each according to their social influence.

In Part III, I look for evidence for the power ethos inside modern firms. I show that the income of US CEOs tends to increase with “hierarchical power” (control over subordinates within the firm). Case-study evidence suggests that the same is true for all employees within firms. Given these results, I argue that it is time to treat income as a social phenomenon, and to ground the study of income distribution in an evolutionary framework." (http://www.paecon.net/PAEReview/issue90/Fix90.pdf)

Discussion

Markets Suppress Competition

Blair Fix:

"Our thesis is that between human groups there is a war of all against all. But within groups, things are different. To be stable, groups must foster cooperation among members. Put another way, stable groups must suppress competition.

Markets, I propose, are a cultural tool for suppressing competition within groups. When they function well, markets restrict competition to the rules of private property. Resources can’t be taken by force. They must be bought and sold. In other words, markets suppress outright theft and plunder. (I say “outright”, because I still have Pierre-Joseph Proudhon’s slogan “Property is theft!” ringing in my ear).

The main insight from group selection theory is that this suppression of competition must occur within a group. In other words, property rights do not just come from nowhere (although it appears that way in economic theory). Instead, property rights are culturally evolved. They developed within groups as a way to suppress competition.

It is nation-states, for instance, that enforce modern property rights regimes. And when these regimes break down (when states “fail”), competition doesn’t disappear. Instead, it takes a more severe form. Think civil war. Think roaming bands of mercenaries. Think warlords. Think terrorism. Think outright war. Markets maintain the stability of a group by suppressing violent competition within it. When markets fail, groups fail.

As an example of this process, think of Europe. Two centuries ago, European states were almost constantly at war with one another. This group conflict culminated in two world wars – the most violent events in human history. After World War II, European states finally managed to integrate into a larger group. The Eurozone market was born, and peace prevailed. Violent competition was suppressed, and war gave way to market competition.

Markets are, of course, one of many cultural tools for suppressing competition. But within modern states, they are probably the most important.

Firms suppress the market

Markets suppress violent competition within states. But this is just the first of a series of tools for limiting competition. Within states, there are subgroups we call “firms”. Their main role is to suppress the market.

This is, of course, not how economists treat firms. In fact, the existence of firms comes as a shock to economic theory. This is because economists assume that “perfect competition” (a market war of all against all) is the optimal way to organize society. To explain why firms exist, economists have to add auxiliary assumptions. The most popular auxiliary assumption was proposed by Ronald Coase (1937). He argued that firms minimize “transaction costs” – the cost of organizing using the market. But much like marginal productivity, transaction costs are unobservable (Nitzan and Bichler, 2009).

In contrast, an evolutionary theory does not need auxiliary assumptions to explain why firms exist. Our hypothesis is that humans are social animals who compete as groups. To be stable, these groups suppress internal competition. Firms, then, are subnational groups that compete within the confines of the market. And just as expected, firms suppress market competition internally.

How do firms suppress the market? They use hierarchy.

Inside firms, there is no bartering, no bidding, and no auctioning. Instead, firms have a chain of command. Superiors command subordinates, who command their own subordinates, and so on. Like property rights, this chain of command is a set of rules that limit competition. Employees, for instance, can compete for promotions within the corporate hierarchy. But once the position is filled, the competition is over. If the chain of command works well, subordinates will obey the newly promoted person. No such rule exists on the open market."


Excerpts

From the highlighted reading notes by Michel Bauwens:

Blair Fix:

"Nothing in economics makes sense except in the light of human social evolution.

The theories that economists learn make it impossible for them to understand human sociality.

Economists’ selfish model of humanity is best treated not as science, but as ideology.

The crowning achievement of the new discipline of economics was its explanation of resource distribution.

First proposed in the 1890s, this “marginal productivity” theory of distribution has weathered the 20th century unchanged. .. In fact, most critics agree that marginal productivity theory can’t be tested. .. Marginal productivity theory does not persist because of its scientific merit. It persists because it is an ideology that justifies the prevailing social order.

Modern economics, I have come to believe, resembles pre-Darwinian biology.

No more than 400 generations ago, humans lived in small tribes of a few dozen people. The first states formed 200 generations ago. The first empires appeared 120 generations ago. Nation states appeared a mere 10 generations ago. Now we live in states with millions (sometimes billions) of people.

Economics awaits its Darwinian revolution.

What puzzles sociobiologists is the capability of some animals (like humans) to behave both selfishly and cooperatively. This dual nature needs an evolutionary explanation. Sociobiologists think they have one. They call it group selection (or multilevel selection). I propose we use this theory of group selection to create an evolutionary theory of resource distribution.

Humans can behave both selfishly and altruistically .. This selfish/altruistic duality should be at the center of an evolutionary theory of income distribution. So what explains our tendency to be both selfish and selfless?

In some animals (like humans), this selfish instinct is accompanied by a social instinct – a tendency to cooperate in groups. How did this social instinct evolve? The evolutionary biologist E.O. Wilson (2012) thinks it came from group selection.

The idea behind “group selection” is that when organisms live in groups, the benefit of selfish behavior is sometimes trumped by the benefit of altruistic behavior. If groups compete with each other, there can be strong selective pressure for sociality. Wilson thinks this is how humans became eusocial (ultra-social) animals. We competed with each other in groups. The paradox here – explored further by Peter Turchin in his book Ultrasociety – is that the evolution of our altruistic tendencies may have been driven by our most violent impulses. Warfare, Turchin argues, is what drove group selection among humans. Let’s think about how this could happen. In warfare, altruism is extremely advantageous. Imagine that an altruistic group battles a selfish group. The altruistic group charges boldly as a cohesive whole. Faced with this onslaught, the selfish group collapses as individuals flee their posts. The altruistic group triumphs and exterminates the selfish group.

If altruistic groups beat selfish groups, we might naively think that humans should be purely altruistic. But we are not. The catch is that within groups, individuals can still benefit from being selfish. Here’s how. Imagine that you belong to an altruistic group that charges boldly into battle. It’s in your interest to shirk your duty and run from the fight. The group is no less likely to win, but you’re far less likely to die. If your strategy works, then selfishness gets selected.

E.O. Wilson thinks this tension between group benefit and individual benefit is what explains the duality of human nature. Altruism benefits groups. Selfishness benefits individuals within groups.

I find this a persuasive explanation of our dual instincts as humans. I propose we use it to build an evolutionary theory of resource distribution.

Our natural state is a war of group against group. This is the central insight of group selection theory. Humans form groups that compete with each other, often violently.

The existence of groups, so paradoxical in economic theory, should be our default hypothesis in an evolutionary theory of resource distribution. In every human society, we expect to find groups that violently compete with one another – be they tribes, fiefdoms, or states. In other words, theft and plunder between groups is the default way that humans distribute resources.

This level of violence, Turchin thinks, is typical of archaic rulers. Other ancient texts, like the Old Testament, give similar accounts of violent conquests. With this in mind, we should treat violent conflict between groups as the default mode of human competition. It is how we distribute resources in the absence of other mechanisms.


In our evolutionary theory, resource distribution is marked by a tension between two ethoses:

  • The red-claw ethos: “To each according to his ability to take.”
  • The communist ethos: “To each according to his needs”


The red-claw ethos is the ethos of selfish competition.

The communist ethos is Marx’s famous slogan for the ideals of a communist society. In evolutionary language, it is the ethos of altruism. If humans were completely altruistic, we would divide the resource pie with perfect equity. We would give every person what they need. Obviously, we fall short of this ideal.

To find pure altruism, however, we need to look inside animals. The human body, for instance, is a marvel of cooperation. It is an amalgamation of trillions of cells that function together.

In human societies, resource distribution lies between the extremes of both the red-claw and communist ethos. We form groups that compete with each other, and this competition leans towards the red-claw ethos.

Organisms capture and transform resources. To say that an organism gets what it produces is nonsensical – meaningless even.

Life, we presume, began as a struggle between replicating molecules. But soon, some of these molecules banded together. Although the steps remain murky, groups of cooperating molecules somehow formed cells. These cells then competed with each other for resources, but cooperated internally. After billions of years of single-celled life, another collaboration occurred. A bacterium merged with an archaeon (another single-celled organism), eventually forming the eukaryotic cell (Lane, 2015).

Millions of years later, eukaryotic cells began to band together in groups, forming multicellular organisms.

Eventually social organisms evolved that organized in groups. These groups competed for resources, and suppressed competition internally.

Humans have continued this evolutionary story. But instead of genetic evolution, most changes in human society occur through cultural evolution. In other words, it is our ideas that evolve, not our genes.

In Part 1, I explored this tension by looking at how groups compete with each other and suppress competition internally. Here, I look at the same tension from the opposite angle. I discuss how individuals cooperate to build groups, and how this cooperation gets used by individuals for selfish gain.

In the late 1950s and early 1960s, theorists like Jacob Mincer (1958) and Gary Becker (1962) proposed that workers’ income was proportional to their “human capital”.

Economists have built a towering theoretical edifice on the idea that there is no such thing as society.


Evolutionary microfoundations

To build a more realistic theory of resource distribution, we need a new “microfoundation” for economics. This is the term economists use to describe their assumptions about human behavior. Most economists assume that humans are purely selfish. But this idea has outlived its usefulness.

A better approach, I believe, is to assume that humans are both selfish and selfless. And we should take a hint from biologists and ground this duality in an evolutionary framework. I argue that the principles of evolutionary biology should form the microfoundation of economics.

I have based my approach on a theory called group selection (sometimes called multilevel selection). According to this theory, the duality of human nature stems from an evolutionary conflict between two “levels” of natural selection. Selfishness stems from selection at the individual level. Altruism stems from selection at the group level.

“Selfishness beats altruism within groups. Altruistic groups beat selfish

groups. Everything else is commentary” (Wilson and Wilson, 2007).

I propose that we use this principle as the “microfoundation” of economics. Out with the old assumption that individuals are selfish utility maximizers. In with the evolutionary hypothesis that humans are both selfish and selfless – a duality shaped by the tension between individual versus group benefit.