An Evolutionary Theory of Resource Distribution (Part 1)

An Evolutionary Theory of Resource Distribution (Part 1)

February 15, 2020

Originally published on Economics from the Top Down

Blair Fix

The biologist Theodosius Dobzhansky famously wrote that “nothing in biology makes sense except in the light of evolution”. I propose a corollary in economics: nothing in economics makes sense except in the light of human social evolution. [1]

I explore here how the evolution of human sociality can help us understand how we distribute resources. Although economists like to deny it, humans are social animals. And it is our evolved sociality, I argue, that explains how we divide the resource pie.

The asocial primate?

Is it obvious to you that humans are evolved social animals? Is it also obvious that our sociality is central to how we distribute resources? If you think so, you’re probably not an economist.

Through years of schooling, mainstream economists are trained to ignore the obvious facts about human nature. The theories that economists learn make it impossible for them to understand human sociality.

Economists are trained that humans are asocial ‘globules of desire’. This is Thorstein Veblen’s satirical term for ‘homo economicus’, the economic model of man. Here’s Veblen describing homo economicus:

The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-poised in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him, whereupon he follows the line of the resultant. When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before. (Veblen in ‘Why economics is not an evolutionary science’)

As Veblen makes clear, economists’ model of human behavior is bizarre. Indeed, the assumptions are so far-fetched that one wonders how this ‘theory’ ever gained acceptance. I’ve spent years trying to make sense of homo economicus as a scientific theory. I’ve concluded that this is a waste of time. Economists’ selfish model of humanity is best treated not as science, but as ideology.

Unlike scientific theories, ideologies are not about the search for ‘truth’. Instead, they are about rationalizing a certain worldview — usually the worldview of the powerful. Economists’ selfish model of humanity is a textbook example.

The discipline of economics emerged during the transition from feudalism to capitalism. During this period of social upheaval, business owners battled to wrench power from the landed aristocracy. To supplant the aristocracy, business owners needed to frame their power as legitimate (and the power of aristocrats as illegitimate). Their solution was devilishly clever. The new business class appealed to autonomy — the mirror opposite of the ideals of feudalism.

Feudalism was based on ideals of servitude and obligation. Serfs were obligated to perform free work for feudal lords. And these lords, in return, were obligated to protect serfs from outside attackers. This web of obligation was rationalized by religion — it was a natural order ordained by God.

To upend this order, business owners championed the ideals of autonomy and freedom. Business owners claimed to want nothing but to be left alone — to pursue profit unfettered by government or aristocratic power. From this world view, the autonomous model of man was born. It had nothing to do with how humans actually behaved. It was about rationalizing the goals of business owners. They wanted power, but they framed it as the pursuit of freedom and autonomy. “Power in the name of freedom” is how Jonathan Nitzan puts it.

The ideals of autonomy, championed by business owners, became enshrined in the new discipline of economics [2]. Every individual was modeled as a selfish globule of desire — an aspiring capitalist.

Resource distribution explained?

The crowning achievement of the new discipline of economics was its explanation of resource distribution. In a competitive market, economists claimed that the distribution of resources was completely fair. Every autonomous individual got exactly what they produced. Workers got what they produced. And business owners got what their property produced.

First proposed in the 1890s, this ‘marginal productivity’ theory of distribution has weathered the 20th century unchanged. But unlike other static theories (Newtonian physics, for instance), this stasis is not due to overwhelming empirical support. In fact, most critics agree that marginal productivity theory can’t be tested. Its basic ingredients are unmeasurable. When economists claim to test the theory (and find empirical support), they actually resort to circular reasoning. Marginal productivity theory, I’m sad to say, does not persist because of its scientific merit. It persists because it is an ideology that justifies the prevailing social order.

Economists, of course, will never admit that their theory is an ideology. Even many non-economists can’t see marginal productivity theory for what it is. Why? Because we are steeped in our own culture, blind to the ideologies that surround us. This is a problem universal to all societies.

Ancient Hawaiians, for instance, had an ideology very similar to marginal productivity theory. But to Hawaiians, their beliefs were not an ‘ideology’. Their beliefs were the sacred truth. Here’s how Peter Turchin describes Hawaiian beliefs:

The Hawaiian chiefly elite were different from commoners … because they were the vessels of mana—spiritual energy flowing from the gods that was necessary for the wellbeing of the overall society. The higher the rank of a chief, the more mana was concentrated in him, with the king as the central node in the “mana distribution network.” (Peter Turchin in Ultrasociety)

To the modern observer, these ancient Hawaiian beliefs are easily recognizable for what they are — an ideology that justifies the social order. But before we (modern observers) become too smug, let’s turn the camera on ourselves. Our own ideology of marginal productivity is virtually the same as this Hawaiian superstition. Replace ‘mana’ with ‘productivity’, ‘chiefly elite’ with ‘business leaders’, and you get the following:

Business leaders are different from workers because they own productive property, and this property is necessary for the wellbeing of the overall society. The more property a business leader owns, the more productivity is concentrated in him. (paraphrasing Turchin’s description of Hawaiian mana)

Hopefully scientists of the future will look at marginal productivity theory the same way we look at the Hawaiian ‘mana’. Both are ideologies that justify the social order. And both hamper the scientific study of resource distribution.

Economics awaits a Darwinian revolution

Modern economics, I’ve come to believe, resembles pre-Darwinian biology. By this, I mean that economics is captivated by an ideology that is stopping scientific progress. Let’s look at the parallels.

Before Darwin, biologists believed that life on Earth was created by God. This seductive idea stunted scientific progress for centuries. Much of the evidence for evolution — the fossil record, the similar anatomy of different species — was staring scientists in the face long before Darwin proposed his theory of evolution. But because life was viewed as God’s eternal creation, this evidence was mostly ignored.

Darwin’s ‘dangerous idea’ [3] — evolution by natural selection — gave meaning to this evidence. Life was not an eternal order, Darwin proposed. Instead, it was an evolving system, driven by differential reproduction. The plethora of evidence for evolution suddenly made sense.

In hindsight, Darwin’s idea seems obvious, almost trivial. But it was not at the time. Most scientists were simply unable to imagine alternatives to their ideology of an unchanging cosmos. The situation is much the same in economics today.

Like biologists before Darwin, economists are captivated by an ideology that envisions a static cosmos. According to economic ideology, humans are selfish utility maximizers. In a perfectly competitive market, it follows from ‘natural law’ that each person receives exactly what they produce. This is the eternal order.

Except it’s not.

Sitting before economists is a wealth of evidence for our evolved (and evolving) sociality. No more than 400 generations ago, humans lived in small tribes of a few dozen people. The first states formed 200 generations ago. The first empires appeared 120 generations ago. Nation states appeared a mere 10 generations ago. Now we live in states with millions (sometimes billions) of people.

Like pre-Darwinian biologists who ignored the evidence for evolution, economists mostly ignore the evidence for the evolution of human culture. It simply does not fit with their static worldview. Economics awaits its Darwinian revolution.

What’s needed is a theory that gives meaning to the evidence for human cultural evolution, and applies this evidence to the study of resource distribution. Fortunately, evolutionary-minded economists don’t have to start from scratch. Sociobiologists have done most of the work already.

What puzzles sociobiologists is the capability of some animals (like humans) to behave both selfishly and cooperatively. This dual nature needs an evolutionary explanation. Sociobiologists think they have one. They call it group selection (or multilevel selection).

I propose we use this theory of group selection to create an evolutionary theory of resource distribution.

The duality of human nature

Humans can behave both selfishly and altruistically — a duality that has escaped no one. (OK, it’s escaped many economists). This duality fills our daily lives and our imaginations. It’s what makes fictional characters believable. Characters that are too selfish feel like cartoon villains (sorry Mr. Burns). Characters that are too altruistic feel like superheros (sorry Superman).

This selfish/altruistic duality should be at the center of an evolutionary theory of income distribution. So what explains our tendency to be both selfish and selfless?

Economists have one idea. Altruism, they say, is just masked selfishness. When I help my wife, for instance, this just appears altruistic from the outside. On the inside, I’m still acting selfishly. I help my wife, economists say, because it maximizes my utility. The logic here is that because altruism is pleasurable, there’s really no such thing as a selfless act. Every good Samaritan is just a masked hedonist — a utility maximizer in disguise.

On first pass, this seems like a clever argument. But after further thought, it misses something important. It doesn’t tell us why altruism is pleasurable. Economists take the emotion of pleasure for granted. They simply assume that we seek it. But this is like a biologist saying that animals eat because they are hungry. Of course they do! The more important question is — why do animals get hungry?

Biologists realize that hunger is just a proximate explanation for why animals eat. To find the ultimate cause of a behavior, we must explain why it has been selected by evolution. Hunger is a mechanism that prevents animals from voluntarily starving to death. Since you can’t reproduce when you’re dead, it’s not hard to see how hunger would evolve.

So here’s the question that economists don’t ask — why do humans find both selfish and altruistic behavior pleasurable? The answer, presumably, is that both behaviors can lead to reproductive success.

Like hunger, the pleasure of acting selfishly is easy to understand. If acting selfishly increases your chance to reproduce, it will be selected over time. Unsurprisingly, selfishness is hardwired into most animals — a byproduct of individual competition and survival of the fittest. Think of the female spider that eats its mate. Or the spider offspring that eat their own mother. Nature, as Tennyson said, is red in tooth and claw.

But in some animals (like humans), this selfish instinct is accompanied by a social instinct — a tendency to cooperate in groups. How did this social instinct evolve? The evolutionary biologist E.O. Wilson thinks it came from group selection (see his book The Social Conquest of Earth).

The idea behind ‘group selection’ is that when organisms live in groups, the benefit of selfish behavior is sometimes trumped by the benefit of altruistic behavior. If groups compete with each other, there can be strong selective pressure for sociality. Wilson thinks this is how humans became eusocial (ultra-social) animals. We competed with each other in groups.

The paradox here — explored further by Peter Turchin in his book Ultrasociety — is that the evolution of our altruistic tendencies may have been driven by our most violent impulses. Warfare, Turchin argues, is what drove group selection among humans.

Let’s think about how this could happen. In warfare, altruism is extremely advantageous. Imagine that an altruistic group battles a selfish group. The altruistic group charges boldly as a cohesive whole. Faced with this onslaught, the selfish group collapses as individuals flee their posts. The altruistic group triumphs and exterminates the selfish group. (Yes, human history is that violent). Altruistic genes get propagated. Selfish genes die out. That’s group selection in action.

If altruistic groups beat selfish groups, we might naively think that humans should be purely altruistic. But we are not. The catch is that within groups, individuals can still benefit from being selfish. Here’s how. Imagine that you belong to an altruistic group that charges boldly into battle. It’s in your interest to shirk your duty and run from the fight. The group is no less likely to win, but you’re far less likely to die. If your strategy works, then selfishness gets selected.

E.O. Wilson thinks this tension between group benefit and individual benefit is what explains the duality of human nature. Altruism benefits groups. Selfishness benefits individuals within groups. In motto form, E.O. Wilson and David Sloan Wilson state this tension as:

Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary. (Source)

I find this a persuasive explanation of our dual instincts as humans. I propose we use it to build an evolutionary theory of resource distribution.

A war of all against all?

In Leviathan, Thomas Hobbes argued that humanity’s natural state was a “war of all against all”. The subtext to Hobbe’s argument is that humans are asocial. Rather than cooperate, our natural state is to compete with all fellow humans.

To explain how humans distribute resources, economists have adopted Hobbes’ vision. But instead of calling this a ‘war of all against all’, economists use the Orwellian term ‘perfect competition’. In a perfectly competitive economy, every individual battles every other individual (through the market) to maximize their consumption of resources. The result, economists propose, is that every individual gets what they produce.

Tidy as it appears, this theory leads to some paradoxes. First, if humans compete in a war of all against all (perfect competition), why do we have institutions? Why do firms, governments and nation-states exist? Second, why is our war of all against all limited to the market? Why don’t we just take the resources we want from our competitors?

These paradoxes arise because economists treat humans as asocial. But we are not. We are social animals whose instinct is to organize in groups. Our natural state is not, as Hobbes thought, a war of all against all. Instead, our natural state is a war of group against group. This is the central insight of group selection theory. Humans form groups that compete with each other, often violently.

The existence of groups, so paradoxical in economic theory, should be our default hypothesis in an evolutionary theory of resource distribution. In every human society, we expect to find groups that violently compete with one another — be they tribes, fiefdoms, or states. In other words, theft and plunder between groups is the default way that humans distribute resources.

To remind us of our violent past, Peter Turchin quotes the sordid texts left by ancient kings. Here, for instance, is an ancient Assyrian ruler boasting of his conquest of neighbouring states:

Then I went into the country of Comukha, which was disobedient and withheld the tribute and offerings due to Ashur my Lord: I conquered the whole country of Comukha. I plundered their movables, their wealth, and their valuables. Their cities I burnt with fire, I destroyed and ruined. . . . I crossed the Tigris and took the city of Sherisha their stronghold. Their fighting men, in the middle of the forests, like wild beasts, I smote. Their carcasses filled the Tigris, and the tops of the mountains …

The ranks of their fighting men I levelled like grass. I bore away their gods; their movables, their wealth, and their valuables I carried off. Their cities I burnt with fire, I destroyed and overthrew, and converted into heaps and mounds. The heavy yoke of my empire I imposed on them. (quoted in Peter Turchin’s Ultrasociety)

This level of violence, Turchin thinks, is typical of archaic rulers. Other ancient texts, like the Old Testament, give similar accounts of violent conquests. With this in mind, we should treat violent conflict between groups as the default mode of human competition. It’s how we distribute resources in the absence of other mechanisms.

Markets suppress competition

Our thesis is that between human groups there is a war of all against all. But within groups, things are different. To be stable, groups must foster cooperation among members. Put another way, stable groups must suppress competition.

Markets, I propose, are a cultural tool for suppressing competition within groups. When they function well, markets restrict competition to the rules of private property. Resources can’t be taken by force. They must be bought and sold. In other words, markets suppress outright theft and plunder. (I say ‘outright’, because I still have Pierre-Joseph Proudhon’s slogan “Property is theft!” ringing in my ear).

The main insight from group selection theory is that this suppression of competition must occur within a group. In other words, property rights don’t just come from nowhere (although it appears that way in economic theory). Instead, property rights are culturally evolved. They developed within groups as a way to suppress competition.

It is nation-states, for instance, that enforce modern property rights regimes. And when these regimes break down (when states ‘fail’), competition doesn’t disappear. Instead, it takes a more severe form. Think civil war. Think roaming bands of mercenaries. Think warlords. Think terrorism. Think outright war. Markets maintain the stability of a group by suppressing violent competition within it. When markets fail, groups fail.

As an example of this process, think of Europe. Two centuries ago, European states were almost constantly at war with one another. This group conflict culminated in two world wars — the most violent events in human history. After World War II, European states finally managed to integrate into a larger group. The Eurozone market was born, and peace prevailed. Violent competition was suppressed, and war gave way to market competition.

Markets are, of course, one of many cultural tools for suppressing competition. But within modern states, they are probably the most important.

Firms suppress the market

Markets suppress violent competition within states. But this is just the first of a series of tools for limiting competition. Within states, there are subgroups we call ‘firms’. Their main role is to suppress the market.

This is, of course, not how economists treat firms. In fact, the existence of firms comes as a shock to economic theory. This is because economists assume that ‘perfect competition’ (a market war of all against all) is the optimal way to organize society. To explain why firms exist, economists have to add auxiliary assumptions. The most popular auxiliary assumption was proposed by Ronald Coase. He argued that firms minimize ‘transaction costs’ — the cost of organizing using the market. But much like marginal productivity, transaction costs are (conveniently) unobservable.

In contrast, an evolutionary theory doesn’t need auxiliary assumptions to explain why firms exist. Our hypothesis is that humans are social animals who compete as groups. To be stable, these groups suppress internal competition. Firms, then, are subnational groups that compete within the confines of the market. And just as expected, firms suppress market competition internally.

How do firms suppress the market? They use hierarchy.

Inside firms, there is no bartering, no bidding, and no auctioning. Instead, firms have a chain of command. Superiors command subordinates, who command their own subordinates, and so on. Like property rights, this chain of command is a set of rules that limit competition. Employees, for instance, can compete for promotions within the corporate hierarchy. But once the position is filled, the competition is over. If the chain of command works well, subordinates will obey the newly promoted person. No such rule exists on the open market.

I’ll discuss resource distribution within firms in more detail in Part 2 of this series. For now, just realize that firms are unexpected in mainstream economics. But in an evolutionary theory, firms are just another group. And groups are the expected way that we, as social animals, organize. Like all groups, firms compete with one another, but suppress competition internally.

To each according to …

Ever since Marx, economists have put theories of distribution in ethos form. I’ll join the bandwagon here. In our evolutionary theory, resource distribution is marked by a tension between two ethoses:

The red-claw ethos: “To each according to his ability to take.” [4]

The communist ethos: “To each according to his needs”

The red-claw ethos is the ethos of selfish competition. It is survival of the fittest — nature, red in tooth and claw. For most organisms, this is the ethos that dominates. Individuals compete for resources with little or no regard for others.

The communist ethos is Marx’s famous slogan for the ideals of a communist society. In evolutionary language, it is the ethos of altruism. If humans were completely altruistic, we’d divide the resource pie with perfect equity. We’d give every person what they need. Obviously, we fall short of this ideal.

Among animals, the social insects like ants and bees probably come closest to the communist ethos. To find pure altruism, however, we need to look inside animals. The human body, for instance, is a marvel of cooperation. It’s an amalgamation of trillions of cells that function together. If your body is healthy, each cell gets exactly the resources it needs. No more, no less. The cells of the body are a purely altruistic group.

In human societies, resource distribution lies between the extremes of both the red-claw and communist ethos. We form groups that compete with each other, and this competition leans towards the red-claw ethos. Groups take what they can from other groups. At the largest level of organization, theft and plunder (from other groups) rule the day.

But within groups, the red-claw ethos gets suppressed. Inside our group, we have an instinct to cooperate, and share resources equitably. We also have cultural tools that amplify this altruistic instinct. These tools suppress competition, and bring us closer to the communist ethos.

To understand resource distribution, we must understand this balance between the red-claw and communist ethos — selfishness and altruism. It’s no small task. As cultural evolution makes clear, humans can live in many different types of societies. The task for an evolutionary theory is to understand how these differences came to be. We need to study how existing groups beat those that went extinct.

Resource distribution in an evolutionary context

Darwin’s theory of evolution put humans in our place. Humans are not, as religion suggested, chosen beings set apart from the rest of creation. Instead, humans are a twig on the tree of life.

The rest of science took note of Darwin’s discovery. But economists missed the memo. As practised today, economics is an isolated discipline — an island of anthropocentrism. Economists devise models and theories with no regard for how they fit with the rest of science.

Case in point is economists’ theory of resource distribution. It proposes that in a competitive economy, each individual receives what they produce. How bizarre this theory looks when compared to the rest of science. Natural scientists understand that organisms don’t produce resources. Organisms capture and transform resources. To say that an organism gets what it produces is nonsensical — meaningless even.

Our evolutionary theory attempts to bring economics back into the scientific fold. Our theory takes Darwin’s memo, and applies it to economics. It puts humans into the grander scheme of life on Earth.

What is this scheme?

The physicist Ludwig Boltzmann once said that life is a “struggle for free energy”. But this is not entirely true. Life is both a struggle and a collaboration for free energy. It’s a tapestry of competition and cooperation.

Let’s look at this tapestry as a whole.

Life, we presume, began as a struggle between replicating molecules. But soon, some of these molecules banded together. Although the steps remain murky, groups of cooperating molecules somehow formed cells. These cells then competed with each other for resources, but cooperated internally.

After billions of years of single-celled life, another collaboration occurred. A bacterium merged with an archaeon (another single-celled organism), eventually forming the eukaryotic cell. In this symbiosis, the bacterium became the mitochondria — the energy workhorse of the cell. The archaeon became the cytoplasm and nucleus. This new collaborative cell competed with other cells, and suppressed competition internally.

Millions of years later, eukaryotic cells began to band together in groups, forming multicellular organisms. So advantageous was this symbiosis that it appears to have happened multiple times. These multicellular organisms then competed with each other and suppressed competition internally. (We have a name for the failure to suppress competition within multicellular organisms. It’s called cancer.)

The trend towards collaboration didn’t stop there. Eventually social organisms evolved that organized in groups. These groups competed for resources, and suppressed competition internally. Some social animals, like ants and bees, are so collaborative that scientists call them ‘superoganisms’.

Humans have continued this evolutionary story. But instead of genetic evolution, most changes in human society occur through cultural evolution. In other words, it’s our ideas that evolve, not our genes.

In our ancestral state, humans were probably much like other primates. We organized in small troups of related individuals. We shared resources within this group, and battled other groups for food and territory. Gradually troups gave way to organizing in tribes. After many millennia, these tribes began to merge into larger chiefdoms. Chiefdoms eventually merged into states. And states merged into empires. At every stage, competition raged between groups and was suppressed within groups.

Humans are part of a grand pattern of life on earth — a struggle and collaboration for resources. Our evolutionary theory embraces this duality. It gives a framework for studying the richness, diversity, and contradictions of how humans distribute resources.

What our evolutionary theory does not do is give simple answers. It does not say exactly how resources are distributed at any point in time. In fact, the theory makes clear why such exact answers (like the ones economists give) are foolhardy.

Human society is part of a much larger tapestry of life on earth — a tapestry of struggle and collaboration. The whole point of an evolutionary theory is to admit that this tapestry changes with time. The way resources are distributed in an apex forest, for instance, is completely different than how they were distributed in primordial soup. And so too with humans. Resource distribution in industrial societies is nothing like it was among hunter gatherers. Only when economists start thinking about resource distribution in this grand context will economics be an evolutionary science.


[1] We needn’t restrict ourselves to economics. More broadly, nothing in the social sciences makes sense except in the light of human social evolution.

[2] Were economists aware that they were serving the interests of business owners? Some definitely were. Others were probably not. My guess is that progenitors of ideologies are often unaware of what they are doing. Church clergy, for instance, were probably not aware that their faith justified the power of feudal lords. For the clergy, their faith was simply the way the world worked. And so it is with many economists. The world “is” how their theory imagines it. That their ideas justify the power of business owners is not on (most) economists’ radar.

[3] Darwin’s Dangerous Idea is the title of a book by philosopher Daniel Dennett. I recommend reading it.

[4] Yes, the pronoun ‘his’ is awkward here. Substitute the word ‘its’ if you like: “To each according to its ability to take”. I’ve kept the word ‘his’ to mirror Marx’s language.


An earlier version of this post misquoted Jonathan Nitzan as saying “freedom in the name of power”. The correct quote is “power in the name of freedom”.