I really enjoyed Robert Frank’s The Darwin Economy.
He emphasizes that “No Cash is On the Table” (Frank 2011, page 35) and “Markets Don’t Ignore Profitable Opportunities for Long” (page 35). Traditional economic theory suggests all profitable opporunities will have been quickly seized. I think this is too strong. It takes time for someone to come along and find the cash sitting on the table so at any given time there will still be cash on the table. Indeed marketing could be described as the pursuit of cash left on the table — finding ways to do things that no one else has thought to do profitably. Of course an economist would say that these opportunities won’t last for ever. I agree, but that is because of marketers (including entrepreneurs). It is marketers taking the cash off the table and we can’t just ignore that happening. Many interesting things occur in the time between now and the long run. Eventually the opportunity will go away but if you act now you might have an excellent run before the inevitable happens. (Marketing seems more fun — economics seems like a depressing teenager taking a first philosophy class and pondering the futility of action given the transience of existence.)
To be fair I think Frank stresses economic orthodoxy so he can be a little more radical later. His notes that the idea of markets delivering superior outcomes for all relies on strong assumptions. Sometimes these hold — great — but often they don’t. A key assumption he addresses is that all must evaluate success in absolute terms. When success is evaluated relatively — my success depends upon your failure — competition won’t necessarily improve the common good. To illustrate this Frank turns to Darwinian thinking. He discusses evolutionary arms races, where we are all worse off because we have to compete. If we could all agree not to compete everyone would be better off. Given a lack of trust, however, everyone wastes resources on fighting for their slice of the pie rather than making the pie bigger. (This clearly has a connection to the problem of using market share as a target and competitor orientation). Competition may often promote the common good but it won’t always.
Hopefully Frank can help elevate the public debate about markets. “Whether markets promote the common good” is a poor question. “Whether this specific market promotes the common good” is much better.
Read: Robert Frank,2011, The Darwin Economy: Liberty, Competition and the Common Good, Princeton University Press