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Evolutionary Economics

June 5, 2008

Here’s an excellent article from the most recent issue of Fast Company. Author Michael Shermer discusses how a new concept – called evolutionary economics shows how businesses aren’t controlled from the top.

Shermer writes, “Just as the naturalist Charles Darwin showed how complex design and ecological balance are unintended consequences of competition among organisms, the economist Adam Smith demonstrated how national wealth and social harmony are unintended consequences of competition among people.”

…and Shermer relates it back to business in saying, “At those moments when we believe in top-down solutions for bottom-up problems, remember the bedrock of Adam Smith’s economic theory: “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” Government bailouts and handouts are both forms of appeasing producers. If we focus on solving problems for customers instead — encouraging the creation of can’t-live-without products — we will have an easier time riding out the natural storm of a down cycle.