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Mark Schwartz and Jason Hoeksema (1998) dusted off an idea that has been around for two centuries in economics: the law of comparative advantage, also known as Ricardo’s law (Ricardo, 1817) . Originally proposed by David Ricardo for trading between nation states and translated by Schwartz and Hoeksema to trading between species, the law of comparative advantage predicts that if two parties can both produce two commodities, but at different costs, each of the parties will specialize in the commodity it can produce cheapest, in a relative rather than absolute sense, and use the surplus produced to trade against the commodity the trading partner can produce cheapest.
Schwartz and Hoeksema used the term ‘biological markets’, even in their title. There is indeed common ground between their work, Ricardo’s ideas and BMT, but both modelling techniques and basic assumptions are rather different (Hammerstein & Noë, 2016). Comparative advantage is macro-economics and best applied to trade at the species level and biological market theory is micro-economics best applied to trade at the individual level. After Schwartz and Hoeksema’s seminal paper the biological version of comparative advantage has been further elaborated in a number of papers, several of which are relevant to BMT too (see references at the bottom).
Photo R. Noë
Ricardo's (1817) theory of 'comparative advantage'
The ‘comparative advantage’ concept seems insidiously simple but is not. Ricardo’s original ideas were about the trade between nations with Portugal and England producing and trading cloth and wine as an example. Initially both nations produce cloth and wine, but Portugal produces both of them cheaper. Relatively speaking, however, England is better in producing cloth than wine, which means that it can generate more value by diverting production power from wine to cloth. Put more formally: it can produce cloth at a lower opportunity cost than wine. When the opposite is true for Portugal, then both countries can specialize in what they do best, and the English cloth can be traded for the Portuguese wine. In this way both countries gain by trading.
Comparative advantage applied to biological trade
The assumption of uniform strategies used by entities, such as nations or species, consisting of uniform individuals contrasts – at first sight at least - with the assumption of selection at the individual level, as generally accepted in behavioural and evolutionary ecology and tacitly assumed in BMT.
Comparative advantage and BMT can be linked in two ways:
(1) Imagine two species that are specialized in the production of complementary commodities. The members of these species can then benefit by trading the two different commodities. This form of specialization has been explained on the basis of Ricardo’s ideas several times (Adkins-Jablonsky et al, 2021; Hoeksema & Schwartz, 2003; Schwartz & Hoeksema, 1998; Tasoff et al, 2015). What is tacitly assumed here is the uniformity of the individual members of each species. Once two species are specialized in the production of two complementary commodities a member of species A can still choose to trade with (a) particular member(s) of species B rather than with other individuals, thus inducing outbidding competition among the members of the same species. Outbidding competition induced by partner choice is an example of an aspect BMT can contribute.
(2) When one uses Ricardo’s ideas to explain the origin of specialization and trade between species, one first needs to explain why individuals in two different species would start to produce complementary commodities that can be traded. Comparative advantage not only applies to nations, but also individuals and firms within nations because the opportunity costs are never the same for all. Likewise, it can be applied at the level of individual members of species. Differentiation due to external causes and specialization create further opportunities for partner choice, outbidding competition, and hence market dynamics as described by BMT within nations and species, respectively.
The snag is that members of species A can only trade their commodity x profitable for commodity y when they find members of species B in their vicinity that have commodity y on offer. The members of neither species have an incentive to produce surplus commodities when this enhances their fitness only after trade has been established. The chance that this happens simultaneously and in the same location by mutation or by accident in members of two different species seems rather remote. At least one of the species therefore has to produce a surplus that is available to members of the other species due to some external cause. This can be either while overproduction is (temporary) unavoidable and the commodity cannot be stored for later use, and/or that leakage of the commodity in the environment is unavoidable (Adkins-Jablonsky et al, 2021). Once some profitable trade is established, further specialization can evolve. The ‘comparative advantage’ concept can be used to predict which of forms specialization and trade are likely to enhance the fitness of the individuals involved.
Adkins-Jablonsky, S. J., Clark, C. M., Papoulis, S. E., Kuhl, M. D. & Morris, J. J. (2021). Market forces determine the distribution of a leaky function in a simple microbial community. Proceedings of the National Academy of Sciences, 118(39), e2109813118
de Mazancourt, C. & Schwartz, M. W. (2010). A resource ratio theory of cooperation. Ecology Letters, 13(3), 349-359
Hammerstein, P. & Noë, R. (2016). Biological trade and markets. Philosophical Transactions of the Royal Society B: Biological Sciences, 371(1687), 20150101
Hoeksema, J. D. & Schwartz, M. W. (2003). Expanding comparative-advantage biological market models: contingency of mutualism on partners’ resource requirements and acquisition trade-offs. Proceedings of the Royal Society B-Biological Sciences, 270, 913-919
Johnson, N. C., Hoeksema, J. D., Bever, J. D., Chaudhary, V. B., Gehring, C., Klironomos, J., . . . Zabinski, C. (2006). From Lilliput to Brobdingnag: extending models of mycorrhizal function across scales. BioScience, 56(11), 889-900
Kummel, M. & Salant, S. W. (2006). The economics of mutualisms: optimal utilization of mycorrhizal mutualistic partners by plants. Ecology, 87(4), 892-902
Ricardo, D. (1817). On the principles of political economy and taxation. London: John Murray.
Schwartz, M. W. & Hoeksema, J. D. (1998). Specialization and resource trade: biological markets as a model of mutualisms. Ecology, 79, 1029-1038
Tasoff, J., Mee, M. T. & Wang, H. H. (2015). An economic framework of microbial trade. PLoS ONE, 10(7), e0132907
Wagner, G. (2020). Mutualism and the Law of Comparative Advantage. ZTS Zeitschrift für Theoretische Soziologie 2, 292 - 305
Wyatt, G. A. K., Kiers, E. T., Gardner, A. & West, S. A. (2014). A biological market analysis of the plant-mycorrhizal symbiosis. Evolution, 68(9), 2603-2618
last update: 30 SEP 2021
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