Evolutionary Theorizing in Economics

Abstract

Modern economic analysis, oriented toward understanding the workings of economies that make extensive use of markets, came into existence with three guiding questions, all central in Adam Smith's (1776Smith's ( [1937) The Wealth of Nations. One question concerned order. Without any central authority guiding and commanding action, how is economic activity coordinated? The second question was the challenge of explaining the prevailing constellation of prices, inputs and outputs. What explains the price of labor and the rent of land? The third question addressed the processes of economic progress, or development. Smith and other early economists clearly were impressed by the inventiveness, the energy and the growing productivity generated by the evolving market economy. How to understand its dynamics?The first two questions have defined continuing central concerns of the discipline of economics since they first were posed over two centuries ago. When not posed in the context of an economy that is understood as in the process of developing, they seem to pull the focus of theorizing toward equilibrium conditions. The third question, concerned with the processes driving economic progress, pulls the theorizing toward an evolutionary orientation. The question of economic development has waxed and waned in centrality to the discipline, as has the importance of evolutionary theorizing.During the first several decades of the twentieth century, evolutionary thinking and

A critical realist interpretation of evolutionary growth theorising

“…This is what argued, in somewhat different forms, by most of the recent critical surveys of the field, such as the ones by Hodgson (1993), Andersen (1994), Nelson (1995), Nelson and Winter (2002, Fagerberg (2003), andVerspagen (2005). According to these contributions, there is a common core linking together the different streams of evolutionary growth theorising.…”

“…The view that there is a theoretical common foundation at the basis of the evolutionary paradigm is now increasingly shared by most evolutionary scholars (e.g. Hodgson, 1993;Nelson and Winter, 2002;Fagerberg, 2003).…”

Innovation: an emerging focus from cells to societies

“…Whereas the basis of evolution and its importance in biology can be traced back more than 150 years [1], foundations in culture [83,84], economics [85] and technological change [48,86,87] are much more recent. Although there is a discipline-specific, historical component to the integration of evolutionary thought in studying innovations, we claim that our limited understanding of innovation ultimately derives from the complexity of the underlying processes (figure 1).…”

The McDonald?s Equilibrium. Advertising, empty calories, and the endogenous determination of dietary preferences

“…The next section will conclude with a comparison and consideration of the implications of 34 See, for example, the recent survey of Nelson and Winter (2002).…”