The goal of public policy, at least idealistically, is to benefit the common good. Way back in the 1700’s, Adam Smith made the observation that economies have a way of running themselves without their members having the common good in mind. Their narrow concerns are guided, as if by an invisible hand, to regulate the economy at a larger scale. Ever since, the metaphor of the invisible hand has represented the idea that unrestrained self-interest automatically enhances the common good, which is the foundation of laissez-faire economic philosophy.
Evolutionary theory provides a very different starting point for thinking about the relationship between self-interest and the common good. To function adaptively as a unit, members of a group must behave in ways that benefit other members or the group as a whole at their private expense. These “for the good of the group” behaviors are usually not locally advantageous. The solid citizen is usually less fit than the slacker or exploiter within the same group. Lest you think that rewards and punishments can save the day, if you cause others to do the right thing by rewarding and punishing them, then you are providing a public good at your own expense, recreating the original dilemma. The conclusion is inescapable: natural selection operating within a group favors traits that are more likely to undermine than enhance the public good. This is the polar opposite of the invisible hand metaphor.
How do groups evolve to function as adaptive units if most solid citizen behaviors are locally disadvantageous? Only by a process of group-level selection, which opposes the process of within-group selection. Darwin saw this conclusion with crystal clarity, it was affirmed by George C. Williams and others in the 1960’s, and remains a robust conclusion, despite a turbulent history recounted for an academic audience in my review article with E.O. Wilson and for the general public in my “Truth and Reconciliation for Group Selection” series.
Multilevel selection provides a new interpretation of the invisible hand metaphor with profound consequences for economic theory and public policy. Consider some of the biological entities that function well as adaptive units, such as multicellular organisms and social insect colonies. A single cell or a single social insect does not have the common good in mind. They don’t even have minds, at least in the same sense that humans do. They simply respond to their environment in ways that end up benefiting the common good, as if guided by an invisible hand. Adam Smith’s observation about human economies applies even more impressively to bodies and beehives.
An example will bring this abstract idea to life. When a honeybee colony runs low on honey, it behaves as if it is hungry, sending more workers to the fields to look for flowers. Yet, no individual bee is hungry. Instead, colony hunger is orchestrated by a social interaction between two work forces. When a foraging bee returns to the hive with her load of nectar, she waits until she can regurgitate it to another bee that will store it. The amount of time that she must wait provides an accurate index of the colony’s food supply. If not much food is coming in and most cells of the honeycomb are empty, then the storers are lined up at the hive entrance like taxicabs outside an airport and foragers can unload their nectar immediately. If lots of food is coming in and storers must search a long time to find an empty cell, then it is the returning foragers who must wait in line. Honeybees have been programmed by natural selection to follow a particular rule that causes foragers to remain foraging and to recruit more workers to forage whenever their waiting time is short. Brilliant!
Other rules cause honeybees to act as if guided by an invisible hand for other aspects of their lives, as recounted by Tom Seeley in The Wisdom of the Hive: The Social Physiology of Honeybee Colonies and for other social insects by Bert Holldobler and Ed Wilson in their book The Superorganism. Similarly, the cells within our bodies follow rules than enable us to be miracles of collective action. In both cases, the rules that contribute to the common good are a tiny fraction of the set of all possible rules. A worker honeybee could use a longer waiting time, the time of day, the amount of cloud cover, or innumerable other environmental stimuli as a cue to forage more. Those rules would not contribute to the common good. The reason that real foraging bees employ just the right rule, of course, is due to the winnowing action of natural selection, which discovers rules that work as needles among the haystack of rules that don’t work.
This is so basic, at least in retrospect, that it can’t be wrong, but it has profound consequences for the invisible hand metaphor in relation to human economies. The invisible hand is not axiomatically true. It is not the case that individuals following any rule automatically contribute to the common good. Moreover, the right rules must be tailored to particular contexts. In honeybee colonies, what works for hunger won’t work for defending the colony from predators, colony hygiene, or a swarm finding a new home. If the invisible hand operates in human society, it will be through rules such as these, not some generic concept of individual self-interest imagined by contemporary economists. The right rules will reflect a winnowing process–whether genetic evolution, cultural evolution, individual learning, or deliberate decision-making–to find the needles among the haystack of rules that don’t work. Theory and policy based on these considerations will look very different than policies based on current economic theory.
The only reason that the invisible hand operates in human society is because group selection was a strong force in human evolution, starting with genetic evolution and continuing with cultural evolution, or rather gene-culture evolution, because the two are thoroughly entwined. Just like bodies and beehives, many of our psychological traits evolved by virtue of causing groups to survive and reproduce better than other groups, not by causing individuals to best members of their own groups. We are genetically adapted to suppress unfair fitness differences within groups, accounting for our moral psychology, as outlined by Jonathan Haidt among others. Cultural group selection has gradually increased the scale of human society throughout human history, as outlined by Peter Turchin among others. Any particular human group evolves particular rules appropriate to its local circumstances, as outlined by Elinor Ostrom among others. In most cases, the rules that work are vulnerable to exploitation by behaviors that are called selfish in everyday moral terms.
Ironically, this conception of the invisible hand accords well with the full body of Adam Smith’s work, as outlined in his Theory of Moral Sentiments. Smith had a nuanced conception of human nature, replete with other-oriented emotions and norms enforced by rewards and punishment. Laissez-faire economics bears little resemblance to its own patron saint.