the visible hand

it is the theory which decides what can be observed – einstein

competition vs cooperation: in search of something upbeat

Posted by ecoshift on October 18, 2007

It’s true, I’ve been busy and out of town for a while. But the suggestion from gulo gordo that I needed to post “something upbeat” also slowed me down. I’ve spent a bit of time mulling it over.

Recent rising markets climbing walls of worry seem irrational, fundamentally unstable and unlikely to provide long-term benefits for the broad majority of citizens. And, of course unending economic growth creates it’s own environmental problems even when it’s achievable. So, I’m not really upbeat about economic growth for it’s own sake. I do seem to have my own irrational hope that falling markets will provide the motivation and the opportunity for us to rethink our economic strategies and build more effective policy. But, neither of these points of view could be called upbeat by any stretch.

I’ve heard quite a few people over the years opine that rising energy costs will give US producers a competitive advantage over imports in domestic markets — and encourage locally based economies. Here we go: 90 bucks a barrel today. T Boone Pickens says 100 bucks a barrel is coming, maybe by the end of the 4th quarter. But, domestic markets are weak. How ironic that this advantage comes at a moment when what we really need is the ability to sell into global markets while US domestic consumption takes a breather and tries to get handle on it’s mortgage payments and credit card debt. So maybe, at least for the time being, rising transportation costs won’t be much of an advantage until we see stronger growth in domestic consumption. Not too upbeat here either.

So now, the declining dollar is supposed to help US manufacturers compete in global markets. And I suppose if it falls far enough (how far?) US labor costs will achieve parity with emerging markets. Sounds good, even fair on a global scale. Though if you work for wages it’s hard to really be upbeat about it. It’s also worth noting that a falling dollar has other impacts on US competitiveness. Some analysts observe that the rapid increases in oil prices pointed out above are partly a function of the declining dollar. Measured in euros oil prices look much more rational — hardly parabolic at all. So the rest of the world can still afford it. That means that oil and gas prices won’t necessarily go down as much as we might hope when the US finally has to cut back on it’s energy bill. And oil isn’t the only imported material necessary for US to produce into export markets that other countries will be able to better afford. Many nominally US products contain multiple inputs from overseas — from electric motors, to electronic chips, to basic commodities and raw materials. So the advantages bestowed on US competitiveness by the declining purchasing power of American wages against a trade weighted basket foreign currencies may be significantly mitigated as well. Guess I’m not too upbeat here either.

So, um. Upbeat… well… still thinking.

All of these efforts — the good news and the bad — are based on economic theory over two hundred years old. Sure, it’s been refined… and refined some more. But the basic concept, as it’s used in the business and political vernacular remains substantially intact: markets are wiser than individuals and have an almost magical ability to transmogrify individual striving, ambition, and even greed into a strangely altruistic endeavor that produces the most good for the most people.

To accomplish this magic capitalist markets are linked to Darwinian concepts of unforgiving competition and harsh environmental judgment that lead to the strengthening and evolution of species and increasing complexity and stability in systems. Individual economic striving, economic competition and harsh market corrections similarly strengthen and build complexity and capacity for survival in human societies — at least for society as a whole — at least in theory.

But, there is this: there is a missing link. Families care for each other without economic compensation. Parents care for children, children care for parents. People volunteer for community groups. People donate to charity. Our heroes sacrifice for their ideals, not for pots of mercenary cash. People, together, do what individuals cannot accomplish on their own. Caring for the old, the young, the infirm, the disadvantaged are touchstones in our political debates. People don’t only compete. People also cooperate.

These traits appear universal. At least some of us hope so:

We share the same biology
Regardless of ideology
Believe me when I say to you
I hope the Russians love their children too

— Sting

It may be reasonable to suggest that in the natural Darwinian order cooperation and individual sacrifice have some survival value for the species or the system as a whole. That is, as long as you are not an economist.

I’m in my fifties. I’m not expecting the world to suddenly reach enlightenment or to end all war. People compete. No doubt about it. No one can deny it. Given much of what we see in the world today calling what people are willing to do to each other competition is clearly an understatement. And, the ability of market economics to harness individual desires for success to serve broader social goals is not to be discarded.

But, just suppose the discipline of economics made some room for the concept of cooperation as well as competition.  I view the following snippets from several articles as positive developments. I don’t know that they have enough momentum… or enough definition… to truly qualify as upbeat… but here they are. See what you think:

In Economics Departments, a Growing Will to Debate Fundamental Assumptions – New York Times

For many economists, questioning free-market orthodoxy is akin to expressing a belief in intelligent design at a Darwin convention: Those who doubt the naturally beneficial workings of the market are considered either deluded or crazy.

But in recent months, economists have engaged in an impassioned debate over the way their specialty is taught in universities around the country, and practiced in Washington, questioning the profession’s most cherished ideas about not interfering in the economy.

“There is much too much ideology,” said Alan S. Blinder, a professor at Princeton and a former vice chairman of the Federal Reserve Board. Economics, he added, is “often a triumph of theory over fact.” Mr. Blinder helped kindle the discussion by publicly warning in speeches and articles this year that as many as 30 million to 40 million Americans could lose their jobs to lower-paid workers abroad. Just by raising doubts about the unmitigated benefits of free trade, he made headlines and had colleagues rubbing their eyes in astonishment.

“What I’ve learned is anyone who says anything even obliquely that sounds hostile to free trade is treated as an apostate,” Mr. Blinder said.

Nowak – In Games, an Insight Into the Rules of Evolution – New York Times

When Martin Nowak was in high school, his parents thought he would be a nice boy and become a doctor. But when he left for the University of Vienna, he abandoned medicine for something called biochemistry. As far as his parents could tell, it had something to do with yeast and fermenting. They became a little worried. When their son entered graduate school, they became even more worried. He announced that he was now studying games.

In the end, Dr. Nowak turned out all right. He is now the director of the Program for Evolutionary Dynamics at Harvard. The games were actually versatile mathematical models that Dr. Nowak could use to make important discoveries in fields as varied as economics and cancer biology.

“Martin has a passion for taking informal ideas that people like me find theoretically important and framing them as mathematical models,” said Steven Pinker, a Harvard linguist who is collaborating with Dr. Nowak to study the evolution of language. “He allows our intuitions about what leads to what to be put to a test.”

On the surface, Dr. Nowak’s many projects may seem randomly scattered across the sciences. But there is an underlying theme to his work. He wants to understand one of the most puzzling yet fundamental features of life: cooperation.

Is ‘Do Unto Others’ Written Into Our Genes? – New York Times
Published: September 18, 2007

Many people will say it is morally acceptable to pull a switch that diverts a train, killing just one person instead of the five on the other track. But if asked to save the same five lives by throwing a person in the train’s path, people will say the action is wrong. This may be evidence for an ancient subconscious morality that deters causing direct physical harm to someone else. An equally strong moral sanction has not yet evolved for harming someone indirectly.

Where do moral rules come from? From reason, some philosophers say. From God, say believers. Seldom considered is a source now being advocated by some biologists, that of evolution.

At first glance, natural selection and the survival of the fittest may seem to reward only the most selfish values. But for animals that live in groups, selfishness must be strictly curbed or there will be no advantage to social living. Could the behaviors evolved by social animals to make societies work be the foundation from which human morality evolved?


2 Responses to “competition vs cooperation: in search of something upbeat”

  1. gulo gordo said

    Wow. Thanks! While I’m digesting:

    Obituary: Conservative Economic Policy
    Zombie Government

    …in which you could tweak a few phrases, switch in some key concepts, and be talking about environmental policy with pretty much the same basic political analysis: Republicans and the corporations are running full steam ahead on completely bankrupt ideas. And yet tremendous uncertainty whether we’ll be able to finally stake the zombies.

  2. …transmogrify individual striving, ambition, and even greed into a strangely altruistic endeavor…

    Strange minds must think alike. I used the transmogrify term myself today.

    Glad to see you are posting again. :)

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