Megan McArdle, over at Bloomberg, has an article up regarding corporate natural selection: The Church of Wal-Mart
I got a lot of responses to my post last week on Wal-Mart’s decision to raise the minimum wage many of its employees earn to $10 an hour next year. One variety of response stood out: the folks who said “Wal-Mart is doing this because it’s good for its business.”
It stood out because it is almost right, but not quite. The correct statement is that “Wal-Mart is doing this because it thinks it’s good for its business.” Never ignore the possibility that Wal-Mart could be completely wrong.
I remark on this because some of the arguments I saw verged upon what I’ve come to think of as “corporation theology”: the belief that if a corporation is doing something, that thing must be incredibly profitable. This is no less of a faith-based statement than the Immaculate Conception of Mary. Yet it is surprisingly popular among commentators, not just on the right, but also on the left.
What this does is confuse the ideas of intentionality and natural selection. Selection doesn’t really work on intentions, it works on things. No matter your best intentions, if you try to make a car with square wheels it’s not going to work very well (in most contexts). But as humans we like to think of ourselves as problem solvers — “necessity being the mother of invention” and all that — but all that really is, is a way of producing variation that natural selection can work on. It doesn’t matter, from selection’s perspective (to anthropomorphize a little), where the variation comes from, be it random mutation or intentional alteration. It just acts on the results.
But she makes an important point:
Corporations, like all human institutions, are great engines for making mistakes. The only reason they seem so competent is that companies who make too many mistakes go out of business, and we don’t have them around for comparison.
Which links to the above rather nicely: We see as end results those intentional things that worked and so assume the inventor had some kind of foresight that it would work (which may well be the case sometimes), but we forget all the myriad other attempts that never got anywhere. But let’s also remind ourselves that this isn’t an optimality game either, as the QWERTY keyboard makes clear.