The Illusion of Eternal Struggle – Cooperation in Nature

For generations, the image of nature was shaped by a grim metaphor: the „survival of the fittest“. In the 19th and 20th centuries, Charles Darwin’s brilliant insight was often reduced to a brutal, purely individualistic elimination race—an eternal struggle in which only the most ruthless egoism survives. However, modern evolutionary biology radically breaks this paradigm. It shows that we owe the most spectacular advances in Earth’s history not to competition, but to cooperation.

A milestone of this realization is the endosymbiotic theory. It describes how, millions of years ago, tiny primitive bacteria did not devour each other but instead entered into a permanent symbiosis. From them emerged complex cells with their own power plants, the mitochondria—the foundation for all plant and animal life.

We humans are not isolated lone fighters either; inside our bodies, trillions of microorganisms cooperate within the microbiome, without which we would not be able to survive.

Beneath the forest floors stretches the „Wood Wide Web,“ a highly efficient network of fungi and tree roots that directs nutrients and information to where they are currently needed.

Nature shows us that cooperation is the more powerful principle because it is creative. It creates collective intelligence and new systemic levels.

Photo: Maria Hahn-Wohlmuth

Yet, it is no naive peace festival. Biological cooperation is highly efficient, but it is vulnerable to exploitation by „free-riders“—cells or individuals that only take without giving. To prevent complex systems from collapsing, elaborate biological support systems had to evolve over time: immune systems that eliminate cancer cells, or social control mechanisms that punish selfishness in bee colonies. Cooperation wins, but it requires a stable architecture.

The Market as an Ecosystem – The Beautiful Theory of Equilibrium

It is no coincidence that 19th-century thinking about nature and thinking about the economy mirrored each other. While biologists attempted to cast evolution into laws, economists looked with envy at the successes of theoretical physics. Their goal was to describe human society like a mechanical clockwork—rational, predictable, and in perfect equilibrium. The founding father of this ambitious project was the french economist Léon Walras. His vision shapes economics to this day: General Equilibrium Theory (GET).

Walras viewed the market as a gigantic, decentralized ecosystem. On one side stand millions of consumers with their individual desires and preferences; on the other side are producers with their scarce resources and technologies. Mediating between them is a single, seemingly magical factor: the price. When a good is scarce, its price rises, which deters buyers and attracts sellers. When there is an abundance, the price falls.

The mathematical crowning of this theory was achieved in the 20th century by Nobel laureates Kenneth Arrow and Gérard Debreu. They provided the formal proof for a fundamental assertion: Under certain ideal conditions—including perfect information, the absence of market-dominating actors, and perfectly divisible goods—at least one state of general equilibrium exists in every economy. It is a state of collective harmony. At the equilibrium point, all markets clear. Every apple, every pear, and every hour of labor finds a buyer at exactly the price that both sides find advantageous. Supply and demand balance each other out perfectly, and no one can improve their situation without making someone else worse off (Pareto efficiency).

One cannot deny a formal-aesthetic elegance to this mathematical certainty. It provided the theoretical foundation for the proverbial trust in the market’s „invisible hand“. The theory states that egoistic individuals do not need to be forced to cooperate at all. If everyone stubbornly maximizes their own utility and uses prices as a guide, the market mechanism leads the system, as if by magic, into the state of highest macroeconomic welfare (meaning the unplanned market mechanism resembles a superior organizing mechanism). Competition, it seemed proven, creates the perfect system. Yet, just like with the biological „survival of the fittest,“ this interpretation turned out to be far too premature since it overlooked the fundamental instability of the process supposed to lead to this equilibrium.

The ‚Invisible Hand‘ Groping in the Dark – The Failure of the Law of Supply and Demand

Mathematically proving that an equilibrium exists is one thing. A completely different question is how this ideal state is reached. Léon Walras invented a hypothetical procedure for this: tâtonnement—a French word for „groping“ or „trial and error“. As a theoretical metaphor, he imagined a fictitious, impartial auctioneer. This auctioneer calls out trial prices to the market. The traders call back how much they want to buy or sell at these prices. If there is excess demand, the auctioneer raises the price; if there is excess supply, he lowers it. Only when the perfect equilibrium is found for every good can actual, real trading take place. Tâtonnement thus simulates the law of supply and demand and step-by-step gropes its way toward general equilibrium.

But here, economics hit a mathematical wall. In the 1970s, economists Hugo Sonnenschein, Rolf Mantel, and Gérard Debreu proved the SMD theorem named after them. Their discovery shook the foundations of neoclassical economics: they proved that tâtonnement generally does not guarantee convergence to equilibrium. The reason for this is as simple as it is devastating: the substitution effect coupled with the wealth effect.

Prices are not just abstract signals telling us whether a good is scarce. They also determine how wealthy we are. If the auctioneer tentatively raises the price of apples because of a small excess demand, two things happen: apples become more expensive for buyers (substitution effect), but all traders who happen to own apples suddenly become wealthier (wealth effect). If these traders now decide, with their higher wealth, to buy even more apples or additional quantities of pears, the system spins out of control.

The SMD theorem shows that the aggregate demand of a society can react completely wildly, chaotically, and unpredictably, even if every single individual acts completely rationally on their own. The price discovery process may begin to oscillate, jump uncontrollably back and forth, or move further and further away from equilibrium.

For the economic sciences, this meant a radical gain in insight: prices do contain information, but they are not sufficient to guide the system to a general equilibrium. When market participants react purely egoistically and in isolation to price signals, the market does not resemble a harmonious ecosystem, but a potentially uncontrolled, chaotic pendulum. In this scenario, the invisible hand gropes into the void; it cannot find its way in the dark solely through the price mechanism.

The Core – Cooperation as the More Powerful Principle

If prices fail as blind signals and the market-based search process ends in chaos, what can prevent collective collapse within the context of GET? The answer lies in a paradigm shift made possible by game theory. Moving away from non-cooperative competition (individual rationality, Nash equilibrium), where isolated actors dully react to price signals, and toward the cooperative logic of networks and coalitions (collective rationality). The powerful concept behind this is called the Core, which essentially goes back to the economist Francis Ysidro Edgeworth.

The Core radically abandons the fiction of an auctioneer and the dictate of prices. It describes the market as a web of relationships in which people directly come together, negotiate, and form coalitions. An allocation of goods—who gets how many apples, pears, or bananas—lies within the Core if it cannot be blocked by any conceivable group of market participants. Cooperation here means collective rationality: if even just two or three actors notice that they would be better off through a decentralized exchange among themselves than under the current agreement, they „block“ the allocation. The Core is the sieve that mercilessly filters out all undesirable and inefficient states.

This astonishing insight is formally and mathematically proven by the Debreu-Scarf theorem: Behind every stable Core solution, exactly one Walrasian equilibrium is ultimately hidden. The cooperative search for contracts finds precisely the goal where competitive tâtonnement fails.

However, this cooperative process depends crucially on how society is structured—and here the circle closes to a fundamental insight encompassing wealth distribution and values.

If we assume a world where market participants are extremely similar—with homogeneous values, the same ranking of relative utility, and a virtually egalitarian distribution of wealth or insignificant initial endowments (GET aficionados know that these assumptions do not correspond to those of the ‚representative agent model‘)—then the Core is a highly efficient, nimble instrument.

Why? Because cooperation here requires almost no coercion or costly monitoring (enforcement). Since no one possesses the economic power to exploit others, and interests run parallel, the Core shrinks extremely quickly and harmoniously. Equilibrium is reached decentralized, almost organically, and without friction.

If, on the other hand, we allow for maximum heterogeneity—a world with completely different preferences and unequally distributed, potentially market-dominating wealth—cooperation on a small scale becomes highly dangerous and intensely dependent on enforcement. When a few, extremely unequal actors forge alliances, the incentive for fraud, exploitation, and hidden contract violations is correspondingly large. Cooperative stability on a small scale requires stringent control systems here.

The formal resolution of this „heterogeneity paradox“ is based on an idea by the American mathematician and Nobel laureate (Economics) Robert Aumann, who introduced the abstract concept of infinitely large markets into GET. Only when the number of diverse participants grows toward infinity—in the mathematical continuum—does the strategic power of heterogeneity collapse. In infinity, even the most greedy sub-coalition loses its blocking weight. The individual becomes insignificant in the noise of the crowd (measure zero). The infinite mass anonymizes the market and forces convergence: the Core becomes exactly identical to the equilibrium. Infinity acts like a cosmic enforcement support system that makes the sabotage of cooperation impossible.

In infinity lies the ultimate solution; the Walrasian vision of GET finally collapses into teleology (theology?).

Conclusion – The Future Belongs to Support Ecosystems

When we weave together the threads of modern evolutionary biology, mathematical economic theory, and game theory, a centuries-old dogma of our worldview shatters. The narrative that egoistic opposition—the ruthless principle of pure price competition or the biological eat-or-be-eaten—is the primary engine of progress proves to be at least incomplete. Both nature and economics show us that cooperation is the fundamentally more powerful, because creative, principle. It is the force that shapes complex molecules out of disconnected atoms, highly developed cells out of bacteria, and functioning societies out of isolated actors.

Yet, the greatest insight of this intellectual journey lies in the (theoretical) disenchantment of the pure price mechanism. Neoclassical economics has long made us believe that prices are perfect information carriers and that the market moves entirely on its own toward general equilibrium via the law of supply and demand (tâtonnement). The Sonnenschein-Mantel-Debreu theorem has formally debunked this myth. Prices are not omniscient navigators. When relative prices change, they shift income, and potentially wealth—and these unpredictable income and wealth effects can plunge the entire system into uncontrollable, oscillating chaos (the very recent experiences regarding war-related energy price shocks are real-world equivalents of this formal-abstract insight). A market that relies purely on competitive price signals is blind to its own stability or existence.

This is where cooperative game theory comes into play, specifically through the concept of the Core. If we perceive the market not as an anonymous arena of combat, but as a space for decentralized contract and coalition formation, actors can find the path to equilibrium. The cooperative search filters out inefficiencies and can thus achieve the harmonious welfare optimum where the competitive groping of prices fails.

This more powerful principle of cooperation is, however, no self-running success. As we have seen, it is deeply demanding and „enforcement-intensive“. It requires highly developed support systems to remain stable (real-world—albeit highly improvable—examples of this are the European Union and rule-based global trade). In an ideal, homogeneous, and egalitarian world—where people share similar values and no one commands market-dominating wealth—this support system is invisible and light. Because interests run parallel and power is distributed symmetrically, cooperation needs barely any coercion. It arises almost organically, and the Core quickly shrinks to equilibrium.

However, if we allow for the reality of vast heterogeneity—a world full of profound differences in preferences and wealth—cooperation on a small scale becomes vulnerable to exploitation, monopolization, and deception by free-riders. Here, Robert Aumann’s continuum shows us the theoretically possible, yet overall rather absurd way out: only in the infinite expansion of the market, in anonymization through sheer mass, does strategic egoism lose its power. Infinity forces heterogeneity to its knees and cleanses the market of the destructive power of individual cartels.

For our modern society and the design of future institutions, this absurd implication of GET contains a pioneering message. If we want to build stable, crisis-proof, and welfare-maximizing systems, we must not rely on blind trust in the „invisible hand“ (order without a plan) of pure competition. We must understand that markets are cooperative institutions that can collapse without a viable legal and social support system.

Just as a biological organism needs an immune system to prevent exploitation by cancer cells, the economy needs robust institutions—transparent rules, antitrust laws, fair wealth structures, fair trading systems, social safety nets, etc.—that protect cooperative exchange from falling back into the destructive chaos of pure egoism.

Evolutionary biology and economics thus speak the same language today more than ever: a desirable future only emerges when support systems foster successful cooperation.

Disclaimer / Caveat
This text was created through an interactive collaboration between the author (concept, structure, and editing) and the Gemini AI (drafting and linguistic refinement).