Capitalism and Evolution: Alike? (Part 1)

Charles Darwin realized over 150 years ago that competition is the driving force behind evolution: similar species compete for limited resources and will duke it out until the “fittest” begins to dominate, while the less-fit may eventually become extinct. The process usually occurs when one species is better able to adapt to a particular environmental niche than another. The more-adaptable species will be more successful at reproduction and its offspring will dominate.

Most people in the business world see a similar situation playing out in a capitalist economy: competition between organizations or corporations winnows out the less-well functioning ones, leaving the successful ones to dominate. Similar to critters, corporations also compete for limited resources, with the “fittest” surviving, while the less-fit ones die off (or are bought up... a form of consumption?). In each case the argument is often made: leave the market or the natural world alone; this allows the competitive process to create an efficient and well-oiled world. The markets and nature will become well-tuned and balanced, if we don't mess with them. Just look at how splendidly nature has evolved! Capitalism, it is argued, is simply using the same principles as nature to become the most successful economic system, to the benefit of all.

So both nature and the marketplace operate in an atmosphere of competition, wherein limited resources promote rivalry. Here's another similarity: from time to time there is a variation introduced into the situation by one of the competitors—maybe a new marketing idea in a corporation or a genetic mutation in a plant or animal. If the idea or mutation is more suitable to the existing environment, those who posses it will do better. The modified corporation or critter can more effectively fill a niche. A similar situation occurs if the environment should change and one corporation or species is better able to adapt to that change.

I think we might take a closer look at the comparison between capitalism and evolution, however. How similar are they, really? Is the argument that capitalism is best—because it resembles evolution—a good argument? The resemblances described above may indeed seem to provide for some people a good argument to conclude that capitalism is the best economic system; and it indeed is the dominant one today. Mother Nature has done very well for billions of years with evolution, so maybe humans have come upon a similarly excellent system to govern their economy? There are a few significant differences to consider, however, before concluding that capitalism is so ideal. Let's look at some of them next time...