Twofish's Blog

July 30, 2006

Darwin not Lamarck

Filed under: china, finance, Uncategorized — twofish @ 11:09 am

A lot of my views on Chinese economic reform have to do with the fact that I’ve worked in a private company.  I’ve seen enough incompetence in them that I just can’t take seriously anyone who thinks that “privatizing” a company will make them sudden act rationally.

Market economies are based on Darwin and not Lamarck.  In Lamarckian evolution, a giraffe gets a longer neck because it tries to eat higher and higher branches and any improvements in the giraffe in one generation get passed to the next.  In Darwinian evolution, what happens is the giraffes with short necks die off faster than those with long necks.

The economy seems more like Darwin and less like Lamarck.  There is no internal constraint keeping a private company from doing stupid things, and  private companies do do stupid things.  What keeps things from falling apart is that if you keep doing stupid things, you just run out of money and you can’t do stupid things any more.

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