The Darwin Economy: Liberty, Competition, and the Common Good

Rate this book

Clear rating

1 of 5 stars 2 of 5 stars 3 of 5 stars 4 of 5 stars 5 of 5 stars

The Darwin Economy: Liberty, Competition, and the Common Good

3.61 of 5 stars 3.61 · rating details · 114 ratings · 21 reviews

Who was the greater economist--Adam Smith or Charles Darwin? The question seems absurd. Darwin, after all, was a naturalist, not an economist. But Robert Frank, "New York Times" economics columnist and best-selling author of "The Economic Naturalist," predicts that within the next century Darwin will unseat Smith as the intellectual founder of economics. The reason, Frank...more

Hardcover, 256 pages

Published August 15th 2011 by Princeton University Press (first published August 11th 2011)

more details... edit details

Get a copy:

More…

Friend Reviews

To see what your friends thought of this book, please sign up.

Lists with This Book

This book is not yet featured on Listopia. Add this book to your favorite list »

Community Reviews

(showing 1-30 of 422)

filter | sort: default (?) | rating details

Apr 02, 2012 Greg Linster rated it 5 of 5 stars

Shelves: all-time-favorites, recommended-reading

A key insight from the work of Adam Smith is that specialization in an economy makes us all better off in absolute terms. While this is undoubtedly true in material terms, it ignores the psychological costs that can come from hyper-specialization. And Smith himself was well aware of these psychological costs. In fact, he believed that the division of labor taken to an extreme can turn people into savage creatures “as stupid and ignorant as it is possible for a human being to be”.

Read the rest of...more

like 1 like · see review

Apr 10, 2013 Alex rated it 5 of 5 stars

The Darwin Economy is an intellectual page-turner. It is one of the few thoughtful challenges to libertarian ideas I have read. The book is structured as a logical argument about positional goods--those things that are only beneficial relative to what others have. For example, running a fast time in a race is only important in relation to the other runners--were you the fastest? Did you win the race? Similarly, many things related to status and power that humans pursue are only valued relative t...more

like · see review

Sep 19, 2012 Jerry rated it 3 of 5 stars

Shelves: economics

The author writes this book to refute libertarian ideas. Since I am partial to libertarian ideas, I did not enjoy this author's bias. However, I did find some arguments I could agree with.

Frank claims that Charles Darwin's understanding of competition is more applicable to economics than Adam Smith's. Darwin understood that some adaptations that are good for the individual are bad for the species or society. E.g. the arms race resulting in large antlers on bull elk. This helps win a battle for...more The author writes this book to refute libertarian ideas. Since I am partial to libertarian ideas, I did not enjoy this author's bias. However, I did find some arguments I could agree with.

Frank claims that Charles Darwin's understanding of competition is more applicable to economics than Adam Smith's. Darwin understood that some adaptations that are good for the individual are bad for the species or society. E.g. the arms race resulting in large antlers on bull elk. This helps win a battle for a mate but is a handicap against predators.

“The link between reward and relative performance underlies the divergence between Adam Smith's view of the competitive process and Charles Darwin's... The former believe that competitive forces channel greedy individuals to behave in ways that produce maximum advantage for society as a whole. Darwin, in contrast, understood that competition molded behavior in ways that benefit the individual. Such behaviors sometimes benefit society as a whole, but not always... In arenas in which reward depends on relative performance, we invariably see positional arms races. And almost without exception, participants adopt positional arms control agreements that limit what would otherwise be mutually offsetting expenditures.”

In our world today a 1% difference in talent or work can translate into a hundred or thousand-fold difference in income. “And since even differences in talent and effort stem in part from chance events over which we have little control, the upshot is that the relationship between luck and success is substantially stronger now than at any point in human history.”

An argument in favor of progressive taxation is that rank is relative. In order for someone to have high rank, someone else must have low rank. People occupying the low rank should be compensated. We see an example of this in work groups where the most productive members are paid less that they are worth and the less productive are paid more than they are worth. This is like a form of progressive taxation compensating the low rank members.

Ronald Coase argued that the cost of externalities should be borne by the party which would have the lowest cost to remedy the damage. “Ronald Coase is the free-market conservative's reigning authority on all questions regarding activities that cause harm to others. His central insight was not that government has no role to play in helping curb the damage from behavior that causes harm to others. Rather, it was that when transaction costs make it impractical for people to negotiate solutions to such problems on their own, government should create laws and define property rights to encourage behaviors that mimic what people would have agreed to if negotiation had been practical.”

“My claim is that tax systems that transfer income from rich to poor are a case in point. They mimic the implicit transfers we observe in virtually every private labor contract, transfers that reflect the costs and benefits of different rungs on the social ladder. Such tax systems facilitate the formation of more stable and diverse societies... Since high social rank imposes costs on others, why should it be free?”

“If a rational libertarian wants to form a society with less productive others, thereby to gain advantage in the bidding for positional goods, those others might respond by demanding compensation through the tax system... But income prospects in competitive markets are inherently uncertain. Minuscule differences in talent or performance and seemingly unimportant random events often give rise to enormous differences in market rewards. Reflecting on that fact, even rational libertarians might wish to consider supplementing market incomes with some form of safety net.”

Hedge fund managers benefit from favorable tax treatment. “Even though 'carried interest' – mainly their 20% commission on portfolio gains – has the look and feel of ordinary income, it's taxed at the 15% capital gains rate rather than the 35% top rate for ordinary income.”

“Economic analysis suggests that higher taxes on hedge fund managers would actually boost production in other sectors of the economy by alleviating wasteful overcrowding in the market for aspiring portfolio managers... Potential contestants in winner-take-all markets tend to overestimate their odds of success and ignore the fact that their entry into one of these contests would make each existing contestant less likely to succeed. If after-tax incomes in winner-take-all markets were lower, fewer contestants would compete for positions in them. The resulting gains from having more and better engineers, medical researchers, teachers, and family physicians would more than compensate for any lost value from fewer contestants in winner-take-all markets.”

(less)

like · see review

Jun 14, 2012 Craig rated it 4 of 5 stars

I heartily recommend this book to my politically inclined friends--on all ends of the spectrum. I would love to give it five stars, because of he insightful ideas it espouses, but I found it a bit repetitious, so I had to back off.

Essentially, the author uses arguments of economic efficiency to show that a true libertarian society is NOT the one that the rich should prefer. On the contrary, societies that allow for some measure of wealth redistribution are those that everyone would choose, given...more

like · see review

Apr 29, 2012 Georges rated it 4 of 5 stars

Shelves: economia

Robert H. Frank é professor de economia em Yale com diversos livros publicados. Nesse ensaio ele compara as descobertas de Darwin sobre seleção natural com as teorias de livre mercado. É sabido que Darwin leu Adam Smith e que foi influenciado pelas ideias de livre mercado, e, como o próprio autor comenta, incluir Darwin no modelo econômico é também incluir Adam Smith. O que poderia ser uma apologia ao livre mercado e a desregulamentação, o livro busca outro caminho quase oposto. Darwin percebeu...more Robert H. Frank é professor de economia em Yale com diversos livros publicados. Nesse ensaio ele compara as descobertas de Darwin sobre seleção natural com as teorias de livre mercado. É sabido que Darwin leu Adam Smith e que foi influenciado pelas ideias de livre mercado, e, como o próprio autor comenta, incluir Darwin no modelo econômico é também incluir Adam Smith. O que poderia ser uma apologia ao livre mercado e a desregulamentação, o livro busca outro caminho quase oposto. Darwin percebeu que em diversas situações uma espécie se estabelece com características não ótimas. Os cervos (que estão na capa do livro) são um exemplo, pois desenvolvem chifres que muitas vezes são um problema no dia a dia desses animais, pelo peso, dificuldade de locomoção dentro de matas mais fechadas, e desequilíbrio na corrida. Os pavões são outro exemplo com seu rabo imenso que prejudica a agilidade dessas aves. Ambos são fruto de um processo de seletividade baseado na posição relativa de um indivíduo da espécie com relação aos demais para aumentar suas chances de conquistar uma parceira. Essa característica é muito efetiva para perpetuar seu padrão genético. O autor propõe que seria mais efetivo para todos da espécie se os pavões ou os cervos tivessem suas caudas ou galhadas, respectivamente, reduzidas à metade. Pois se manteriam as posições relativas dos indivíduos e portanto suas chances de acasalamento, porém melhorando a mobilidade e agilidade de todos. No mundo humano o exemplo é dado com o uso do capacete pelos jogadores de hóquei. Nesse esporte o uso de capacete diminui a visão periférica do atleta dando uma vantagem àqueles que não usam, porém também, aumentando o risco de uma lesão. Alguns atletas aceitam correr o risco, e isso força os demais a também terem que não usar capacete para se manterem competitivos. No final, se ninguém usar capacete a vantagem comparativa do não uso é elimidada enquanto o risco permanece. Por isso a liga de hóquei obriga o uso de capacete, igualando os atletas numa situação de menos risco. Analogamente as regras de segurança aplicadas pelas associações de corridas de carros trazem o mesmo princípio. Esses acordos que evitam uma corrida de exposição crescente ao risco é trazido para o mundo da economia, mostrando que as regulamentações e os impostos podem ser usados da mesma forma. O autor é especialmente a favor de impostos progressivos ponderando que eles são mais efetivos que regulamentações. Nesse ponto o livro toma um rumo um pouco diferente onde divaga sobre modelos de arbitragem quando há conflito de interesses entre as partes. E mostra, baseado num artigo de Coase, que teoricamente se poderia chegar a acordos baseado nos valores que cada parte atribui ao seu lado da causa. O autor discorre também sobre poder aquisitivo e capacidade de pagar por algo que pode causar um problema (externalidade negativa) ao resto da sociedade e como se pode usar os impostos para desestimular esses comportamentos. Apesar de algumas falácias (principalmente no início do livro) por conta de generalizações erradas, o texto traz novas perspectivas sobre um tema que é praticamente um tabú para economistas Liberais, mostrando o papel importante do governo em diversas situações. O livro todo por sinal é um diálogo com os liberais, comparando onde diferem as posições do autor em relação aos seguidores de Adam Smith e Von Mises. Recomendo a leitura por proporcionar uma visão menos maniqueísta do sistema de livre mercado, e tentar discutir em termos práticos e objetivos formas de resolver os problemas que esse sistema pode trazer. Para os liberais que vão provavelmente rebater os pontos apresentados, serve pelo menos para trazer novos argumentos e novas discussões para a mesa. (less)

like · see review

Nov 11, 2011 Converse rated it 2 of 5 stars

Shelves: economics, non-fiction

I found it difficult to determine what point the author, a Cornell University economist, was trying to make. I listened to an audio version from Audible.com, which may have added to difficulty, but I doubt the format had much to do with the difficulty. Some major themes have stuck in my mind, however. First, the idea that the best outcome for an individual is not necessarily the best for the group or society. This idea is the one that Frank ascribes to Charles Darwin, as it is an idea that has c...more I found it difficult to determine what point the author, a Cornell University economist, was trying to make. I listened to an audio version from Audible.com, which may have added to difficulty, but I doubt the format had much to do with the difficulty. Some major themes have stuck in my mind, however. First, the idea that the best outcome for an individual is not necessarily the best for the group or society. This idea is the one that Frank ascribes to Charles Darwin, as it is an idea that has come up repeatly in thinking about biological evolution, especially in the context of sexual selection - natural selection in the context of mate selection. Its not obvious to me that he needed to bring up evolution in this context, he seems to have purely economic examples adequate to the point he is trying to make. His second, related idea, is that competition is often for what he calls positional goods - goods whose quality is not ranked on some absolute scale, but relative to the quality of other, similar goods posessed by someone else. Frank uses the example of parents choosing between different school districts; only half of the school districts can be in the top half if the districts are ranked on some measure of quality. In competition for such goods, only some consumers can be in the top half by definition, no matter what every competitor gives up in an attempt to obtain relative advantage. The author then makes a link between competition in one arena, say for a job, in order to obtain a superior positional good, such as owning a home in a better school district. I think what he saying here is that there can be a race to the bottom in one arena, such as giving up safety on the job in order to get more take home pay (no matter how much increased safety might be worth to everyone competing for the job) in order to increase ones chances of obtaining the better positional good. This link was extremely confusing to me.

Frank then goes on to discuss extenalities and the Coase theorm. Externalities are costs (or benefits) that are not borne or captured by those taking part in a transaction, but which third parties have to put up with or benefit from. Usually bad (negative) externalities are what one discusses. Air pollution is an example of a negative externality. The Coase theorm, named after economist Ronald Coase, indicates 1) that in some limited cases problems with externalities can be resolved by direct negotiations, 2) public policy should seek to mimic the results that would come from direct negotiations when these are not possible, and most importantly 3) that the costs of removing the externality ought to be borne by the party for whom an adjustment in behavior costs the least amount of money. The third point means that the framework of victims and perpetrators should be thrown out. Frank's points in bringing this up seems to be that 1) those who lose out in as a result of competition for positional goods are suffering real losses, 2) they should be compensated for such loses, and 3) a monetary payment to compensate the losers(as opposed to, say, regulation forbidding a particular activity)is usually the most economically efficient procedure. Frank then indulges in some thought experiments which he says should lead any "rational libertarians" to conclude that a welfare state is the best way to further their goals! Obviously, I didn't get it. Aside from who defines who is a rational libertarian, Frank seems to be assuming that the losers are going to be compensated one way or another in a democratic society, so libertarians should go for the solution which costs them the least money. I lack confidence in this reassuring belief.

Oddly, Frank's economic views seem in most respects to be rather orthodox; he seems to be trying to show what adding a couple apparently minor changes, such as the idea of positional goods and that the best result for individual is not necessarily the best for society, changes the results.(less)

like · see review

May 14, 2012 Angie rated it 2 of 5 stars

This COULD have been a really good book, because the basic ideas are very interesting, but the writing was so biassed that I kept getting completely turned off and non-receptive. For example, Frank repeatedly criticizes libertarians, Republicans, and other conservatives for their rhetoric (and I must agree with such valid criticisms) as well as their ideas, but then he says, "The logic they offer in support of their position would be comical if the stakes were not so high." I happen to agree wit...more

like · see review

Jan 30, 2012 Zachary Zhao rated it 4 of 5 stars

Shelves: nonfiction-economics-finance

A very intellectual book with some truly original and thought-provoking ideas about how individual interests and collective interests sometimes diverge and how such divergence could lead to wasteful outcomes especially in a competitive environment. It is definitely interesting to see the author pitting Adam Smith against Darwin Charles and arguing that Adam Smith's Invisible Hand Principle could be viewed as a special case of Darwin Charles more general Natural Selection/Sexual Selection hypothe...more

like · see review

Oct 27, 2011 Terry Earley marked it as to-read

Library does not have it yet, but his interview on Diane Rehm this morning interested my in reading this one.

http://thedianerehmshow.org/shows/201...

A point he makes: He does not agree with the knee-jerk reactionaries who refuse to accept any additional tax revenue, or government spending to stimulate the economy. His example: a stretch of interstate 80 in Nevada is well beyond the time it must be repaired. If it is repaired now, at government expense, people, equipment and businesses will be e...more

like · see review

Oct 12, 2012 Clarence Cromwell rated it 5 of 5 stars

This is a brilliant book.

Robert Frank is an economist who explains that individual interests and group interests are often different; Unlike followers of Adam Smith, Frank argues that competition is often harmful, because it results in a kind of one-upmanship where everyone loses.

Example: Hockey players will take off their helmets so that they can see and hear better, and when one player removes a helmet, everyone else must. But if you give players a chance to pass a rule requiring helmets, t...more

like · see review

May 09, 2012 Paola rated it 3 of 5 stars

Shelves: 2012, pop-economics

There are some aspects of this book I really did not like: most notably, the insistence on the "silver bullet" insight that ranking are what matters most to economic agents. While of course I do agree that this is the case in many instances, in many others which are economically relevant the absolute distance in the ranking does matter (which may work either reinforcing or weakening Frank's line of argument, depending on context). More in general, the fervour with which Frank insists on the prim...more

like · see review

Apr 14, 2012 Paul McNeil rated it 3 of 5 stars

Shelves: nonfiction

What I liked best about this book was its central idea- it mixes Darwinian insights with economics in its observation of those situations where the invisible hand doesn't quite get it done. Frank compares these situation to evolutionary arms races, where, for example, male peacocks would be a lot better off, individually and as a species, if all of their tails were half their current size. However, since getting a mate is based on having a bigger tail than your rivals, no one bird would be bette...more

like · see review

Apr 27, 2013 Fred Kohn rated it 4 of 5 stars

Shelves: economics

This book refutes key ideas of libertarian thought. What I found quite refreshing is that it doesn't do so through the usual method of citing statistics or studies (which authors carefully weed to make their points), but through a series of intriguing thought experiments. Frank's key insight is that even perfectly competitive markets can lead to very undesirable outcomes because what benefits the individual is often detrimental to the group, just as in biology runaway sexual selection has give p...more

like · see review

Dec 04, 2011 Skip rated it 4 of 5 stars

Shelves: nonfiction

A well-written and persuasive argument for more rational thought in how society approaches the question of free markets vs regulation. The author's recommendation falls squarely on the side of more regulation, based on the concept of maximizing total benefit across all members of society. Too bad no one that makes US policy is likely to read it and take it seriously, since there's no incentive in our political system to actually maximize the total benefit to society over the narrow interests of...more

like 1 like · see review

Mar 27, 2013 Jamie rated it 4 of 5 stars

Shelves: 2013, author-is-a-dork, economics, psychology, american-culture

I think the moment when I started thinking about feeling bad for the libertarians who might read this book is when the author used two citizens, "Rand" and "Paul," in a thought experiment illustrating the efficient provision of public goods.

But then I remembered that if it weren't for the majority of the Republicans and libertarians on Capitol Hill being a bunch of assholes the whole American democratic process would run a lot smoother and I wouldn't have heard the words "climate change" and "my...more

like · see review

Oct 01, 2011 Mike Murray marked it as to-read

Shelves: economics

This review has been hidden because it contains spoilers. To view it, click here.

like · see review

Dec 18, 2011 Mauimom rated it 2 of 5 stars

Meh. Some interesting ideas, but too bogged down in jargon

like · see review

Apr 23, 2012 Jim rated it 5 of 5 stars

A great read-I must say it is very thought provoking!

like · see review

May 29, 2012 Padraic rated it 2 of 5 stars

Shelves: america, economics, society, psychology

A late-career repetition of previous academic work, combined with a grab bag of grievances with the cartoonish American right (right down to critiquing comments on conservative blogs). I find Frank's economic centrism very attractive, and I'm intrigued enough to dig into his back catalogue, but I felt like this book was pretty shallow on the whole and didn't really hang together in a coherent way.

like · see review

Mar 04, 2013 Joe Leigh rated it 2 of 5 stars

It has some very interesting ideas--I find myself referencing the key concepts from time to time. With this said, the book is way too politically charged. I think it would be better if the author let the readers draw their own parallels to government etc based on the core arguments. Overall not a really bad book, just not in line with some of my political views.

like · see review

Feb 11, 2012 Sarah rated it 4 of 5 stars

His arguments are compelling. They're also redundant. This book could have been written in half the space.

like · see review

Dec 02, 2012 Zeromind rated it 5 of 5 stars

Excellent book with good arguments and easy to read. Good introduction to some elements of economics. I highly recommend it for anyone interested in tax policy in the modern American economy.

like · see review

May 17, 2013 Neil Cotter added it

May 15, 2013 Nathalie Ouchi marked it as to-read

May 13, 2013 Hutchinson Hatch marked it as to-read

May 11, 2013 Roger Wang marked it as to-read

Shelves: economics

May 10, 2013 Bersecul marked it as to-read

May 06, 2013 Stephanie marked it as to-read

May 05, 2013 Jack Lewis marked it as to-read

May 05, 2013 Jesse Price is currently reading it

« previous 1 2 3 4 5 6 7 8 9 … 14 15 next »

new topic
Discuss This Book

There are no discussion topics on this book yet. Be the first to start one »

Recommend it | Stats | Recent status updates

combine
Other Editions (5)

More editions...

Genres

Economics

29 users

Non Fiction

8 users

Biology > Evolution

2 users

Psychology

2 users

Philosophy

2 users

See top shelves...

About Robert H. Frank

Robert H. Frank is the Henrietta Johnson Louis Professor of Management and a Professor of Economics at Cornell University's S.C. Johnson Graduate School of Management. He contributes to the "Economic View" column, which appears every fifth Sunday in The New York Times.

More about Robert H. Frank...

Books by Robert H. Frank

The Economic Naturalist: In Search of Explanations for Everyday Enigmas

Falling Behind: How Rising Inequality Harms the Middle Class

The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us

Luxury Fever: Money and Happiness in an Era of Excess

The Return of The Economic Naturalist: How Economics Helps Make Sense of Your World

More…

Share This Book

Facebook Twitter Your website

Trivia About The Darwin Econom...

No trivia or quizzes yet. Add some now »

title link	preview: The Darwin Economy: Liberty, Competition, and the Common Good
avg rating	preview: The Darwin Economy: Liberty, Competition, and the Common Good Goodreads rating: 3.61 (114 ratings)
small image	preview: click here [close]
med image	preview: click here [close]
BBCode	[url=https://www.goodreads.com/book/show/12035503-the-darwin-economy?utm_medium=api&utm_source=blog_book][img]https://d202m5krfqbpi5.cloudfront.net/books/1347906559l/12035503.jpg[/img][/url] [url=https://www.goodreads.com/book/show/12035503-the-darwin-economy?utm_medium=api&utm_source=blog_book]The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank[/url]

The Darwin Economy: Liberty, Competition, and the Common Good

Friend Reviews

Lists with This Book

Community Reviews

new topicDiscuss This Book

combineOther Editions (5)

Genres

About Robert H. Frank

Books by Robert H. Frank

Share This Book

Share This Book on Your Website

Trivia About The Darwin Econom...

new topic
Discuss This Book

combine
Other Editions (5)