I would like to present a very simplified explanation of exactly what Darwinian Economics is all about. As this site grows, these ideas will be fleshed out and as arguments are offered the result will be a more solidified and detailed understanding of this overlooked approach to modern economic thinking.
Charles Darwin was a British scientist who laid the foundations of the modern theory of evolution which transformed the way we think about the natural world. Darwinian Economics is an application of Darwin’s evolutionary approach to the study of economics based upon the theory that the economy can surely be seen as being organic in nature, that is, it is constantly breathing, growing and expanding and as certain parts of it are born other parts wither away and die, just like in a metaphorical garden.
The practice of wide scale interference by individuals, big business or governments trying to control the economy is comparable to trying to dictate how a tree grows and one of the basic tenets of Darwinian Economics is that you can never really control it. Not to any significant degree. You might be able to influence it in one direction or another in the short-term but you have no idea what the long-term results of that push are going to be. Therefore, Darwinian Economics basically suggests that there should be as little interference as possible, so that any given economy can naturally grow and flourish and will be strong as a result.
In “The Origin of Species” Charles Darwin discussed how the strongest species have always endured, the survival of the fittest, while the weaker ones have always died and were naturally replaced by stronger ones. This is true with the economy as well. Strong businesses which are fundamentally solid will stay strong and will be able to withstand whatever comes their way and weather any storm. On the other hand, if their foundations are weak or if there is a weakness in them, or a chink in their armor, their competitors will find that weakness and invariably exploit it to the detriment of that business.
In the case of a fundamentally weak company, they should be allowed to die. Weak companies will be replaced by stronger ones that are more streamlined, have a greater degree of functionality and are more conducive to the current business climate and environment. When governments or big business tries to interfere with this process of natural selection by injecting funds into a fundamentally weak company and that company continues to do business that thwarting of the natural process will ultimately do more harm than good.
Any interference by attempting to support or bolster a dying company, for example the recent injection of funds into Japan Air Lines (JAL) by the Japanese government and the bank bail outs in America, cause an inability for nature to run its course, and those ’superior’ businesses which might have grown out of the ashes of those inferior companies never get the opportunity to do so, not to mention the public discord and cries of ‘foul’ that arise as a result. This is comparable to keeping a big dead tree in the middle of a garden in which the powers that be decide to keep keep watering it and pruning the dead branches and not allowing for a a stronger and more beneficial tree to grow in its place.
The idea of Adam Smith’s invisible hand controlling supply and demand in an economy while was said to fly in the face of previous interpretations of Darwinian Economics, is, rather an important idea in that there is an invisible force that will balance things out and if man or government try to manipulate that hand the results will, in all likelihood, not be what is anticipated.
In conclusion, Darwinian Economics is based on a very natural evolutionary approach that differs from Evolutionary Economics in the sense that the word ‘evolutionary’ can refer to a host of different things. Darwin’s theory of evolution is one specific theory of evolution, so Darwinian Economics is a version of Evolutionary Economics based on the principles that Charles Darwin applied in his Origin of Species. Further discussion will broach the subject of general Evolutionary Economics a bit more as opposed to Darwinian Economics and also as opposed to Revolutionary Economics which will also be compared to Economic Revolution. So, please, stay tuned…
