Unregulated Systems are rarely Sustainable: A Critique of the Invisible Hand as a Metaphor

Adam Smith postulated that in society individual self interest- not benevolence- combined to make all of society better and this thought became immortalised by the invisible hand magically guiding the market economy. It was an adequate metaphor for human conduct and together with the ideas of Thomas Malthus it influenced Charles Darwin and Alfred Russel Wallace in their development of the theory of natural selection. The Austrian school of economics referred to a kind of spontaneous order  and modern biologists  use concepts such as emergence and self organisation in trying to describe this phenomenon. Honeybees -actual ones and not from the fable of Bernard Mandeville – don’t have a kind of welfare colony in mind and are simply responding to environmental stimuli. In sum, however,  the honeybees’ actions serve the colony. It is natural selection that has favoured the behaviour at the colony level. Similarly, body cells work in accordance in order for the whole- the human body- to function. As we go back in time we see life itself emerging from the very first cooperating prokaryotes making a single eukaryote. At an infinitely higher level of complexity, we find the human species’ intense pro-social behaviour where the common good is often protected by sacrificing one’s own life. In one of the earliest arguments for simultaneous, multilevel selection, Charles Darwin  speculated how morality could lead to a positive natural selection:

“There can be no doubt that a tribe including many members who, from possessing in a high degree the spirit of patriotism, fidelity, obedience, courage, and sympathy, were always ready to give aid to each other and to sacrifice themselves for the common good, would be victorious over most other tribes; and this would be natural selection.”

Sustainability as Freedom and Business opurtunity

The circular economy is based on more freedom for all stakeholders in an economic system and less meddling from the government into markets. Entering a circular stage of economics is desperately needed  because of a notable decline in the quality of the natural and social environment. In the current economic system Homo sapiens is not only allowed but encouraged to produce, consume and dispose of commodities unregulated. Switching to circular business models, could actually preserve end consumers desire to consume while reducing greenhouse emissions, increasing resource security and driving innovation.