catallaxy files

catallaxy in technical exile

Competition and productivity in biology and commerce

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Darwinian evolution is sometimes depicted as a brutal and bloody process of “tooth and claw” competition between species for survival. The same language has been imported into political economy to describe the situation under “laissez faire capitalism”. This is a case of piling error and confusion on top of confusion and error to produce a general lack of understanding of the processes that are actually at work in each case.

First of all, I suggest that the key factor for success in both biology and commerce is PRODUCTIVITY.

Competition in evolutionary theory is more about leaving offspring than killing competitors. Predators kill to eat, and the key to their success in hunting is to be clever as well as fast and strong. Cleverness plus speed and strength add up to productivity. Predators may fight over a particular prey but that is unusual. Males fight for superiority in the group and that can be fatal but it is mostly ritualistic.

In a free market firms compete to satisfy the needs and wants of consumers. Survival depends on providing stuff that people want at a price that they can afford to pay. Success in competition with other firms depends a great deal on the productivity of the workforce, along with other things like smart decisions about products and marketing. So where is the redness of tooth and claw in that process?

Good things tend to happen for everyone when productivity increases, whether from increased skill and efffort, from advances in technology, from capital investment in better plant, but a great deal of effort has been misplaced in the effort to get more for the workers without any increase in productivity.

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Written by Admin

November 25, 2005 at 3:31 pm

Posted in Uncategorized

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