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In business, evolution versus free market, why competition matters.

In a recent article the actions of the president to chose a stance that seems anti-environmental has gotten many eye brows to raise. The action involves giving up a little bit on the environmental conservation in hopes of enabling businesses to create more jobs in a particular sector. The nuance of the give and play of politics is only a side actor to the real story driving the debate which to me falls on a simple core difference between the free markets and species in evolution.

A capitalist economy...models in a very similar way, the natural process of survival of the fittest identified by naturalist Charles Dar Though he and Adam Smith weren't contemporaries I am sure they would have seen eye to eye on many ideas and I am sure watching nature inspired Smith. The difference is that in evolution species emerge in environmental niches due to the selection processes produced by the fact that environments shift *under* populations of common ancestry. The similarity of needs of resources in an environment between species that emerge from sources of common ancestry (be it recent common ancestry as Humans are related to Chimpanzees or distal common ancestry as Humans are related to fish) are what breed potential competition between those species when they cross paths. Companies emerge to satisfy demands for product or services, these companies in turn require supplies and services and other companies satisfy those demands.

As multiple players emerge in the same place to satisfy similar demand needs competition also necessarily results. However, unlike in evolution where no single species (as a collective) is able to modify the groups behavior in response to environmental shifts, in capitalism ..corporations have minds, rather a small set of controllers probed on by the relentless "need" for continuous profits on the part of their nameless and faceless "investors". Corporations can be starved into extinction if they fail to execute in their markets of focus in contrast to other competing companies. Note, success in and of itself is not good is important to be the best and some how magically maintain that status indefinitely for a company to gain an increasing valuation.

Being continuously good at a given level is punished by must always be better than one was an arbitrary unit of time before. This is in my view the biggest weakness of capitalism as the need to constantly be better drives corporations to actively go out of their way to consume or destroy other companies as those are means for continuous gains. Why is this bad? It is bad because once sufficient consolidation has occurred and only a few players remain, the corporations can (unlike species) choose to enter cyclical relationships in which they depend on one another in a complex way that forgoes innovation in the effort of extracting greater profit. Collusion as it was termed in the late 19th century led to stagnant markets with increasingly high prices for product and service passed on to the consumers of those products and services with little options available for them to use other companies.

The movements to regulate monopolies in the 1880's and onward were precisely geared toward eliminating high pricing, collusion and anti-competitive practices between large companies that had dominated the competition and then (because the market only rewards continuous growth) continue to raise prices far beyond material and service costs...just to keep investors continuously happy.

In evolution, species never can make an agreement not to compete with one another...crossing into different selection domains does that automatically, thus evolutionary selection is relentless and uncontrolled where as capitalistic selection becomes *more controlled* the more individual companies in segments are eliminated by competition and consolidated into mega-corporations. Also, in natural selection the environment is constantly shifting...also there is natural mutation within individuals which forms the other side of the coin of the evolution process that continues on even if the environment is relatively a result species emerge to expoit minute differences in the environment. The species diversity per unit of square area in a rain forest far exceeds that of the, tundra, northern forests, deserts or grasslands because mutation continues to tweak populations in micro environmental niches that are maintained in forests but transitions between seasons in other other types of biosystems.

Again, in capitalism this mechanism has no analog...companies diversify only so long as they can maintain a profit while providing services and products to a finite demand. When the number of companies are high...there is an incentive to innovate in services or products to gain more of the demand and keep the investors happy...when the number of companies are low, despite demand there is little incentive to innovate as demand is driven not by what people think they need (in the future) in a product or service it is driven by what they know they need (today). Thus under low competition, companies are more likely to choose to simply continue providing present need, rather than *wasting money* on innovation when innovation doesn't serve the aim of EVER increasing fact research&development is a cost center for it's duration until and if it succeeds in creating innovation that can be brought to market to boost sales. Only the competition provides the incentive for the innovation in order to make gains on that competition via product or service delivery costs..eking out more profit...with it gone that urge is non energy conservative so it is removed from the corporations strategy set.

Thus, unlike species which come to natural regulation under selective environments governed only by variations in environmental selection...corporations that dominate service and product markets have intention and can use that to enter completely foreign markets (and thus the mega-conglomerates are born) stifling and killing competition in those areas by leveraging their ownership or control of various supplies or products and again shutting the faucet on innovation. This is why regulation MUST happen at some point in the competitive landscape for every market, making things more difficult is the fact that it is difficult to determine at which point optimal innovation will be generated between competing companies in a given market. The waters are made more muddy when we consider that some companies enter and control multiple markets...consuming former suppliers to gain leverage on providing parts to their own products (and subtly ...denying those same parts to their competitors)...this can't happen in evolution. An invasive species doesn't dominate a niche left open in a new land or an existing species in that land by facilitated does it by pure domination and obliteration. More Mongol Empire than Alexander the Great...innovation (in the form of speciation) is a continuous necessity in a continuously changing environmental domain.

Conversely, in the free market...once corporations have controlled their environment essentially by consuming, neutering or coming to agreement with all potential competitors, innovation the driver of lower prices and better products is superfluous. Thus it is important to regulate the markets to prevent "too much" consolidation retards the advance of innovation while boosting prices to the consumer.

The different political parties and economists only really disagree on one fundamental question. "How much regulation is the right amount for a given market?"


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