Adam Smith famously observed that people neither intend to promote the public good nor know how much they are promoting it. Nevertheless, in pursuing their own selfish goals, they are led, as if by an invisible hand, to promote an end that was no part of their intention. Smith’s observation stands for one of the most fundamental questions in economics—the degree to which economies can run themselves without government intervention.
The two tenets of the invisible hand metaphor are (1) a society automatically functions well (2) without members of the society having its welfare directly in mind. These two tenets can be evaluated for any society, including the thousands of animal societies that have evolved by natural selection. The study of animal societies might seem far afield from the study of human economic systems, but a strong argument can be made for a new concept of the invisible hand that applies to both.
For any group (animal or human) to function well as a society, members must perform activities that typically do not maximize their relative advantage within the group. Natural selection within groups therefore tends to undermine the performance of the group. Whenever this happens, the society does not function well as a unit and the first tenet of the invisible hand metaphor does not apply. This is in contrast to the received economic version of the invisible hand metaphor, which assumes that the pursuit of individual self-interest robustly benefits the common good.
The evolution of group-beneficial traits requires a process of group-level selection. In a multi-tier hierarchy of social units, the general rule is “adaptations at level X require a process of natural selection at the same level and tend to be undermined by selection at lower levels.” What’s good for me can be bad for my family. What’s good for my family can be bad for the clan. What’s good for the clan can be bad for the nation. What’s good for the nation can be bad for the global village.
When natural selection operates at the group level, it selects behaviors in individuals that cause the group to function well as a unit, satisfying the first tenet of the invisible hand metaphor. In a sense, group-level selection is the invisible hand that winnows the tiny fraction of behaviors that work at the group level from the much larger set of behaviors that don’t work.
The individual-level behaviors favored by group-level selection do not require having the welfare of the group directly in mind, thereby satisfying the second tenet of the invisible hand metaphor. For example, individual organisms can be regarded as groups of genes that have evolved by individual-level selection to function well—so well that we use the term “organism” to describe them. The genes don’t have minds in the human sense of the word. They merely respond to local environmental cues to turn on and off in ways that benefit the organism. Natural selection operating at the individual level has winnowed these genes and their interactions from a much larger set of genes, most of which would cause the individual to function more poorly. A similar story can be told for social insect colonies such as ants, bees, wasps, and termites, which have been so strongly molded by colony-level selection that they deserve the term “superorganism.”
The evolution of human sociality is also a matter of multi-level selection. Human behaviors and their underlying psychological mechanisms can evolve by virtue of benefiting individuals compared to other members of their group, or by benefiting the group compared to other groups. Our ancestors became different from other primate species because mechanisms evolved that suppressed disruptive forms of within-group selection, causing between-group selection to become the dominant evolutionary force. Examples include group-beneficial norms enforced by punishment and social status that is based on reputation rather than coercive power.
One product of genetic evolution in our species was a capacity to transmit learned information (culture) that became an inheritance system in its own right. Human history provides a detailed fossil record of multilevel cultural evolution, resulting in the large-scale societies of today, with many reversals and collapses along the way.
The human behaviors, psychological mechanisms, and cultural mechanisms that cause human societies to function well do not necessarily require having the welfare of the society directly in mind, but neither do they resemble received economic view of individual utility maximization, which is usually conceptualized as monetary gain. In fact, the received economic view doesn’t even resemble that of Adam Smith, who invoked the metaphor of the invisible hand sparingly and outlined a more nuanced view of human sociality in his Theory of Moral Sentiments. Smith clearly understood the need for strong social institutions and “moral sentiments” to check the abuses of unregulated and purely self-interested social interactions, economic or otherwise. The modern economic concept of the invisible hand bears little resemblance to the full corpus of Smith’s thought.
In short, evolutionary science provides a legitimate concept of the invisible hand, but one that is very different from the received version. Neoclassical economics was originally inspired by the ideal of Newtonian physics, as if there can be a complete mathematical description of human economies. It’s easy to understand the allure of this ideal, but it doesn’t even hold true for complex physical systems, not to speak of complex human social systems. Economists are very smart people, but when smart people take off in the wrong direction, they go a very long way. Evolutionary science provides a new starting point for the study of complex human social systems. Economists, politicians, and policy analysts of all stripes should take note, because Mother Nature alters the rules of multilevel selection for no one.
Read more in this debate: Robert Kappel, Russ Roberts, Mary Kaldor.
