I really enjoyed Robert Frank’s The Darwin Economy. What can this tell us about competition, marketing, and the common good?
No Cash On The Table
Frank 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 opportunities will have been quickly seized. I think this is a little too strong. It takes time for someone to come along and find the cash sitting on the table. This means at any given time there will still be cash on some table somewhere. Indeed marketing could be described as the pursuit of cash left on the table. Marketing can be thought of as 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 forever. I agree, but that is because of the actions of marketers. (I’m including entrepreneurs in marketing because I’m a marketing professor). It is marketers taking the cash off the table and we can’t just ignore that is what is happening. Many interesting things occur in the time between now and the long run. Yes, eventually, the opportunity will go away but if you act now you might have an excellent run before the inevitable happens. (As an aside 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.)
Strong Assumptions In Economic Orthodoxy
To be fair I think Frank stresses economic orthodoxy so he can be a little more radical later. He notes that the idea of markets delivering superior outcomes for all relies on strong assumptions. Sometimes these hold — which is 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. In such arms races, 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.
Competition, Marketing, and the Common Good
Hopefully Frank can help elevate the public debate about markets. “Whether markets promote the common good” is not a great question. “Whether this specific market promotes the common good” is a much better question.
For more on competition and evolutionary thinking see here, here, and here.
Read: Robert Frank,2011, The Darwin Economy: Liberty, Competition and the Common Good, Princeton University Press
