Tag Archives: Greed

The Ideology of Self-interest Caused the Financial Crash. We Need a New Economic Paradigm

By Mark van Vugt and Michael E. Price – We are still feeling the effects of the global financial crisis, which started in the US in 2008, and that has now spread to every corner of the world.

The financial crisis should teach us some important lessons about the way economies work and the way we design our organizations. In essence, we have simply made the wrong assumptions about human nature. The leading model in economic theory is that of Homo economicus, a person who makes decisions based on their rational self-interest. Led by an invisible hand, that of the market, the pursuit of self-interest automatically produces the best outcomes for everyone. Looking at the financial crisis today this idea is no longer tenable. When individual greed dominates, everyone suffers. We could have known this all along had we looked more closely at human evolution.

Economic scientists often portray competition between firms as a Darwinian struggle where firms compete and only the fittest ones survive. The British financial historian Niall Ferguson wrote “Left to itself, natural selection should work fast to eliminate the weakest institutions in the market, which typically are gobbled up by the successful.”

This may be true but it is not the outcome of individual greed and competition.

Competition between firms presupposes that individuals cooperate well with each other, and the most cooperative organizations survive, and the least cooperative organizations go extinct. This is group selection, selection operating at the level of groups, where the best groups survive.

This is a far more accurate model of how economies and business operate, and it offers a totally new way of thinking about the design of organizations and ways to avert global financial crises.

A team of evolutionary minded psychologists, biologists and economists led by biologist David Sloan Wilson have come together over the past few years to come up with a more accurate model for how businesses and economies operate. It is based on Homo sapiens rather than Homo economicus. Their efforts are put together in an Evolution Institute report on socially responsible businesses “Doing Well By Doing Good.” more>

“My Nation First!” is No Better than “Me First!”


Complexity and Evolution: Toward a New Synthesis for Economics, Editors: David S. Wilson, Alan Kirman.

By David Sloan Wilson – What is the difference between the blatant expression of individual selfishness and the blatant expression of national selfishness?

If we focus on the consequences of blatant selfishness, then the answer is “no difference.” Left unchecked, a disease organism disrupts the host organism, often killing both in the process. Left unchecked, a “Me First!” person would disrupt the town and everyone behaving that way would result in total chaos. Left unchecked, a “My Nation First!” politician would …

You get the point. Blatant selfishness is toxic, regardless of the scale that it occurs.

In a sense, the point is so obvious that it shouldn’t have to be pointed out. Why, then, is national selfishness at full volume while individual selfishness is on mute? Two major reasons can be identified.

During the last half century “Greed is Good” has been seriously proposed and put into action as sound economic and national policy, with predictable results.

Few outsiders realize the scope of the crisis that is taking place within the economic profession at this moment of history. The mathematical edifice that seemed to give economics such authority over other branches of the social sciences has collapsed. more> http://goo.gl/fxt2qd