The Jungle Economy
Nov. 9, 2003
I attended several lectures at an economics conference this weekend. One lecture, entitled "Equilibrium in the Jungle," developed a new theory based not on the market, but rather the jungle. In traditional market economics, every person is assumed to have some initial allocation of goods which they bring to the market. Then, through free exchange, seek to improve the total value of their items. In the jungle, on the other hand, there are some initial resources which are not allocated to anyone. Each of the actors in the jungle attempts to maximize the total value of his items, not through free exchange, but rather through power and coercion. As long as we assume some limit to how much an actor can consume or defend, the paper shows that the jungle economy still supports unique efficient equilibria. That is, the jungle will stabilize to a feasible allocation of the goods in which no one person can be better off without making someone else worse off.
The point the author was trying to make with this exercise is that many of the properties which politicians point to in support of free market economics are not unique to the free market, and in fact, exist just as much in other systems, even ones which are based on an intuitively abhorent means of distribution. While the free market has many virtues, it is important to find the ones which are truly unique and also realize the hidden value assumptions one makes in support of it.