Humans, companies and trees race to the top - with some unintended consequences

CorporateNature No 152

By George ELIOT

1. COMPETITION LEADS TO A "RACE TO THE TOP"

Free market competition in capitalism creates a "race to the top" just like trees in a forest race to outgrow their neighbours and reach the top of the canopy, in order to maximise each individual tree's access to sunlight. This is clearly a very resource-intensive and energy-intensive process: 

- humans have to constantly develop new skills;

- companies have to innovate and iterate their products and services;

- and trees need to grow heavy trunks to reach higher and higher.

2. CARTELS CAN LIMIT COMPETITION TEMPORARILY

Trees are unable to strike a deal to limit the height of every tree in the forest, thus leaving everything to natural competition. While humans and companies could agree such a deal amongst themselves but it would result in a temporary and unstable equilibrium (as the video below about baggage carousel crowds and competing trees shows): everybody would have a strong incentive to break the pact. Furthermore, anti-monopoly laws forbid such cartel agreements in the corporate world.

3. GOVERNMENTS CAN LIMIT COMPETITION PERMANENTLY

One key stakeholder that can actually impose such levelling rules is the government. For example, the Chinese Government banned private for-profit tutoring of school subjects for school-age children in July 2021, thus putting a cap on the competitive pressure on parents (and students) to constantly upskill their children.

4. HOW "RACE TO THE TOP" BECOMES "RACE TO THE BOTTOM"

Why do we often see unbridled capitalism as a "race to the bottom" when it should in principle be a "race to the top"? Most human and natural systems function as a "winner-takes-all" game in the immediate enviroment of the winning person, company or tree. So while the successful individuals race to the top, they cast a shadow on those left behind, thus relegating them to the second or third division - which can be seen as pushing them towards the bottom. As a result, in the perception of an external observer, the big pool of players who are "pushed to the bottom" cannot outweigh the smaller pool of winning players who race to the top.

Why Trees Are Taller Than They Need To Be

Dog domestication resulted from "free market style" diet adaptations, not from "central planning style" capture and taming

Dogs volunteered for domestication by adapting themselves to eat starchy food
George ILIEV

The dominant theory about the domestication of dogs has so far postulated that humans caught wolf pups to use for hunting and gradually tamed them into dogs through selective breeding. However, new DNA research at the University of Uppsala published in Nature shows that it was probably the wolves who volunteered for domestication by developing mutations that allowed them to digest starchy foods - found in the rubbish tips of early agricultural human settlements.

The wolf ancestors of modern dogs must have stumbled upon this unoccupied ecological niche - just like companies find lucrative underexploited niches in a free market and adapt to exploit them accordingly. This possibly disproves the earlier hypothesis that the domestication of dogs came about as a result of the "central planning" of humans, intervening by capturing and taming wolf pups.

A somewhat similar starch-focused digestive mechanism may have been at play in the domestication of the cat. Cats have not developed special mutations to break down starch but instead have longer digestive tracts compared with their wild ancestors. This allows them to better absorb nutrients from starchy leftovers.

(Photo: Patches & Lamb, domestic dogs, Atlanta, 2010)