The politician wants to stay in power and the corporation wants to keep making money. So what's the incentive to change the status quo?

Why is some regulation good? Nature is self regulating. There's no hierarchy telling fish they can't evolve to breathe air. Does the economy just differ from nature on only this point?

Isn't the government a product of economic adaptation? Business needs to be protected from thieves and conquerors. Or from competitors and failing. So isn't stifling competition or receiving bailouts in the best interest of existing businesses, just like the police and the army are?

If one looks at the whole system then one can see that it is a product of natural selection. But if one focuses on one aspect of the system then it will look artificial.

Evolutionary theory describes how species arise and change through adaptation. It explains, among a myriad of things, why animals seem optimized for their surrounding.

It is NOT a theory of how to engineer the best species. Therefore, accepting evolution does not mean one advocates the mechanism of evolution to be applied in other fields. I'm sure similar dynamics exist in economy, but the claim made in the title of this article is simply wrong.

This piece is so fundamentally naive that it's really not worth considering. The author clearly does not understand evolution, or the nature in which humans participate in evolutionary, or economic systems (i know, the author is in neuroeconomics. I'm surprised too).

First, humans manipulate evolutionary systems for our benefit. Livestock and plant husbandry have served us well over several thousand years, and are really quite integral to individual survival and our survival as a species. Additionally there are a number of animals which have co-evolved with us, and have influenced and been influenced by our evolutionary trajectory (dogs, cats, mosquitoes, etc).

Second, economic systems are not like evolutionary systems, in that we have goals and objectives that our economic systems are supposed to meet. Survival of the fittest business is inappropriate if the fittest do it by turning people into soylent green.

Third, the premise that regulation can only stifle fitness in an economic system is simply and grossly incorrect. If you wish to preserve diversity in an economy then you want regulations that break up monopolies. You want regulations that tell telecom companies that they must lease their phone lines to competitors.

Fourth, there are cases where we simply must demand for the bar for economic fitness to be raised. It is in our collective best interest to ensure that banks are properly capitalized and are able to pay their debts. In fact, it's of vital interest to the entire economic system, as the past year has demonstrated.

This article is frustrating/misleading/incorrect, and frankly i expected better, both out of a neuroeconomist, and a magazine called Psychology Today.

Accepting that evolution happens doesn't automatically mean _liking_ that it happens.

It's easy to draw an analogy between the evolution of biological organisms and the way companies evolve in the corporate world. In fact, this line of thinking seems rather popular among some economists... but it's plain wrong.
Even though both behave similarly on the surface, you don't have to push the analogy too far for it to break down. Example? Well, one of the key points of the theory of evolution is reproduction; I don't see how this happens in the corporate world. Also, in the corporate world, the one company that has adapted when all of its competitors have not will find itself in a situation of monopoly; I can't see how monopoles would look like in nature.
So, yes, I can 'believe' in evolution, and still be for some regulation of the economy (by the way, when does 'regulating' becomes 'over-regulating' exactly?)

Not sure what more to say, except that the naivety of the author is stunning.

1. The capitalist system, for good or ill, is only made possible by highly organized systems of property rights and sanctions -- aka "regulation". To throw a thief in jail is "regulation" just the same as instituting an FDA vetting process for a drug or accounting standards.

2. Most trite neoliberal crap like this is really just about maintaining the status quo, paid for (handsomely) by those who benefit by deregulation when it comes to consumer protection or monopoly.

3. To argue that there is a direct and simple analogy between biological processes and economics is silly. Really silly. (What exactly is the analogue of DNA? etc.)

4. I am embarrassed for the publishers of this crap.

Dr. Zak,

your analogy between natural selection and the invisible hand of the market is a good one. However, your analysis is oversimplified because, as David Hume would say, you have tried to derive an 'ought' from an 'is'.

Yes, in the case of biological evolution, there is no god directing the process. But that does not mean that the world wouldn't be better off if there were an active god.

There are two broad reasons why a species will go extinct. The first reason would be if the species is not well adapted to its niche. Another, better adapted species will fill the niche. This is microevolution, and if companies are like this, then you are right--it is a bad idea to prevent poorly adapted companies from failing. But another possibility, which is more analogous to our present situation, is that the environment can change rapidly do to a natural disaster. The credit crunch and falling housing prices of today are like a massive meteorite strike in the Cretaceous. Yes, species will go extinct, but not because they are inefficient--they go extinct because the environment changes. If the environmental change is permanent, then clearing the old niches makes sense to allow species to adapt to new niches. But if the disaster is temporary, losing all of the dinosaurs and starting over will be incredibly painful, and we may end up no better than when we started.

Bailing out companies that are failures because they are poorly run and inefficient is no good, but that does not mean we must let every company fail, just because the size of the economic pie has shrunk temporarily. How you distinguish between companies that deserve bailouts and those that don't is a question I am not qualified to answer, and I suspect the political process is going to have far too much to do with it. However, bailouts may save good companies that would not have failed in the absence of a major shock. While we might not want god to take over the work of evolution, once in a while it would be nice, so we don't have to start over from scratch.

i could use the same arguments to write and article called " If you accept evolution, you must oppose laws" i always thought regulation of the economy was to stop bad/short sighted practices not prohibit new processes. i live in Australia where we have this great regulation on the banking system where banks are not allowed to give loans to people who cannot afford them. guess what happened to house prices last month... they went up!

"Raising incomes gives us greater ability to reduce hunger, disease, infant mortality, and improve education. Higher incomes also increase trust in other people, and raise our happiness."

Say what? Have world hunger and infant mortality gone down while education, trust, and "happiness" (whatever that is) gone up due to the bounty of unregulated capitalism?

Hardly. That they have is a fallacy that only lasts as long as you don't look at it.

This post is full of so many basic, basic intellectual errors, starting with the complete non sequitur in its title, that I don't really know where to begin with it.

For starters, the author doesn't have a *clue* about evolutionary theory, which, as people have already pointed out, doesn't have *anything* to say about economics or economic policy. There's simply no correspondence between the two.

Then the piece sets up a number of false equivalents among the teaching of evolution and the size of the welfare state, and implies that we're ignorant of their commonalities. Sorry, but I pity this guy's students. He's filling their heads with total hogwash.

First, let me say I am neither a psychologist or economist. However, when I read this article, I found it intriguing to say the least. I think most of the comments are harping on the title of the article and not the content. The title is misleading in its use of regulation, but the content of the article seems to discredit the notion of "bailing out" failing companies. I didn't see much else to it.

I also agree with letting failing companies fail regardless of the circumstances. If a company is not prepared for hard times like GM and Chrysler to name a few, then it should not be bailed out in these hard times. If they are allowed to fail, and there is still a demand for the products/services they were providing, then a new companies will fill the void. They will probably fill it more efficiently and effectively than the companies they are replacing.

That sounds a bit like evolution to me.

The assumption that businesses and the economy are self-organizing "creatures" is only true if all businesses were relatively small in comparison to the size of the economy. This is not true, given that some of the largest corporations in the world are bigger than the national economies of all countries except for the 10 largest. Without regulations these businesses would most likely only grow bigger and the resulting oligarchy would form the Pantheon of Economy.

Capitalism is no doubt more "natural" if we are looking at a natural selection analogy, however, the government has been playing a role in capital regulation since day one, so in a sense, regulation is part of the natural progression of the economy. The government overstepped it's bounds, however, when it demanded Chrysler and GM produce inefficent cars that met environmental standards we simply can not afford yet. As a natural progression we will see more and more environmentally freindly cars but they must evolve in harmony with the economic climate. Of coarse the companies failed. I live in Detroit and I know many past GM employees who saw thier unemployment coming the day the new standards were passed with no room for profit planning. If the government wants to demand eco-evolution, they should pay for the inevitable failure of capital evolution.

I think you can make a reasonable analogy between biological evolutionary systems and economic ones, and I understand -- and generally agree with -- the author's point that offering excessive 'life-support' to failing businesses is not the best way to encourage businesses to grow strong, healthy, and independent, but there is another side to the coin, and a place where government regulation is necessary: evolutionary systems tend to self-optimize for the benefit of the actors in the system, not 'the world at large.'

If we let busineses evolve unfettered (i.e. through largely unregulated capitalism,) we get companies that do very well for themselves, and for their stockholders, but not necessarily for their employees, or for the members of their local community. Wal-Mart is, in fact, an excellent example of this. Wal-Mart does great things - for Wal-Mart. But their pay is lousy, their benefits suck, and their 'greater efficiency' comes at the cost of sucking more money and jobs to china while they sell least-common-denominator junk with barely tolerable quality at a price point few local manufacturers can match.

I have no doubt that less regulation can generate more "successful" companies like Wal-Mart. The question we should be asking is: do we want to live in a Wal-Mart world? For me, that answer is a resounding no.

Evolution, Genetics And Culture
There is no Science except for the Establishment's alone, and Peer Approved is the Establishment's only apostle?

A. From "Adaptation and the evolution of parasite virulence in a connected world"

http://www.nature.com/nature/journal/vaop/ncurrent/full/nature08071.html
Adaptation is conventionally regarded as occurring at the level of the individual organism, even if some posit the idea of adaptation at the group level.

This from Nature advance online publication 27 May 2009, Received 13 January 2009, Accepted 9 April 2009, Published online 27 May 2009. Nature is a member of the Science Guild Establishment, of course.

B. There is no Science except for the Establishment's alone, and Peer Approved is the Establishment's only apostle

The Science Guild Establishments, since its Mount Sinai Revelation as AAAS, has been prostituting all aspects of science, including the meanings of the terms science, scientists and research. It monopolized all terminology and publications of information, blocking insights and evolution of science. It turned the organization and activities of science into a ludicrous caricature of a corrupt trade union. This is the origin and explanation of the circa 100 years old black hole in science and of the zero effect of science on societal evolution during the still ongoing 20th century technology culture.

C. Culture, and, yes, intelligence, are ubiquitous traits of ALL matter, not just of life but including life

Adaptation is culture. And culture is the driver of Universal Evolution, of all evolutions.
"Rethink Unified Field Theory And Evolution"
http://www.the-scientist.com/community/posts/list/60/122.page#982

Animate and inanimate materials differ from each other in the capability of responding (intelligence) and in the mode and speed of responding (culture) to circumstances. These differences are due to the energetic constructs differences between animate and inanimate materials.

D. Yes, there is Science outside the Establishment's, and Peer Approved is not its only apostle,

Suggesting,

Dov Henis
(Comments From The 22nd Century)
Updated Life's Manifest May 2009
http://www.physforum.com/index.php?showtopic=14988&st=495&#entry412704
http://www.the-scientist.com/community/posts/list/140/122.page#2321
EVOLUTION Beyond Darwin 200
http://www.physforum.com/index.php?showtopic=14988&st=405&#entry396201
http://www.the-scientist.com/community/posts/list/100/122.page#1407

From an evolutionary reasoning, bail out plans will push strategies to get as much money as you can from the goverment. So for a company is better to invest in its own loby, than to be market oriented, innovative, more efficient and so on. What I mean is that in an economy with a about the half of GDP managed by politicians, bussines is not only a matter of adaptation to consumer needs, but of competition for the benefit of political decisions.

I agree that there is competition & evolution in corporations. But unregulated, they would evolve exploitation, externalization of costs (at the expense of society & environment), monopolies with no competition, stagnation.

The reason we have a state with a government is so that we, the citizens, would prosper. Prosperity of the corporations is secondary, and does not always imply prosperity of the citizens. Unregulated rich corporations would definitely cause poverty of citizens.

At least that is how governments should work...

Who else but an economist could could write such stupid crap. While I have no objection at all to letting the greedy money lenders sink in their own mire, in fact allowing them to commit suicide is quite a good idea, the reason offered is totally rediculous - equating biological evolution with social development. They are clearly not the same. If the hypothesis were true, anarchy would be the most appropriate form of governance.

It is such a stupid idea it really does not deserve any sort of significant response

Who else but an economist could could write such stupid nonsense? While I have no objection at all to letting the greedy money lenders sink in their own mire, in fact allowing them to commit suicide is quite a good idea, the reason offered is totally rediculous - equating biological evolution with social development. They are clearly not the same. If the hypothesis were true, anarchy would be the most appropriate form of governance.

It is such a stupid idea it really does not deserve any sort of significant response. I thought people had long ago seen the inadequacy of social Darwinism