Evolutionary Economics: Program and Scope (review)

Modern evolutionary economics has been one of the most impressive developments in the social sciences in the last twenty years. Although there are precedents in the works of Alfred Marshall, Thorstein Veblen, and others dating back more than a century, evolutionary economics returned in the 1980s, seemingly from nowhere, to emerge rapidly as one of the most dynamic and creative research programs in theoretical and applied economics. The leaders of this new wave include Kenneth Boulding, Richard Nelson, and Sidney Winter. Evolutionary economics has had a major impact on, among others, studies of firms, industries, and technical change.

Economics has seen fads and fashions before, coming from within both orthodoxy and heterodoxy. In some respects, however, the new wave of evolutionary economics is quite different. For example, it represents a direct challenge to the rational maximizer at the foundation of mainstream microeconomics. Second, it has relatively strong connections with other disciplines and subdisciplines, notably philosophy, psychology, biology, organizational behavior, technology studies, computational economics, and evolutionary anthropology. Third, it has a quite well established base in some leading business schools, providing it with an institutional home in academia while many departments of economics have become narrow and insular. In these respects this challenge to mainstream economics is very different from those of the past.

The volume under review is a very welcome collection of essays by leading researchers in the field, namely Paul Dale Bush, Richard Day, Kurt Dopfer, Nicolai Foss, Carsten Herrmann-Pillath, Richard Langlois, Jacques Lesourne, Brian Loasby, J. Stanley Metcalfe, Richard Nelson, Müfit Sabooglu, Marc Tool, and Ulrich Witt. One of the positive features of this volume is that it provides an excellent overview of many of the key issues, from several different points of view.

In a lengthy introductory essay, Dopfer brings most of these different threads together. He shows how they relate to each other and offers multiple insights of his own. In chapter 2, Witt surveys much of the recent literature and raises a number of important questions for future research. In the next chapter Herrmann-Pillath provides a fascinating discussion of the ontological foundations of evolutionary economics. The two chapters that follow address the problem of explaining economic growth. In these two lucid essays, Nelson and Metcalfe emphasize such factors as microeconomic diversity and the role of knowledge in generating growth.

In chapter 6, Bush and Tool place normative issues of evaluation at the center, proposing “instrumental” valuation principles owing much to the work of John Dewey. In the following chapter Langlois and Sabooglu discuss whether Friedrich Hayek's stance is consistent with Karl Popper's idea of “piecemeal social engineering.” Both these essays are highly relevant for the development of any policy recommendations for an evolutionary approach.

The next four chapters return to core theoretical issues. Loasby offers a very useful discussion of the concept of selection in an economic context, arguing that it is more complex and nuanced than some simplistic accounts suggest. Day focuses on learning and error-correction. Using a simple but highly illustrative framework, he contends that learning is typically slow and imperfect, thus undermining rational expectations and other equilibrium approaches. Lesourne examines processes of self-organization and argues that these and other related theoretical developments foreshadow a revolution in both microeconomics and the social sciences as a whole. Finally, Foss compares evolutionary and contractarian views of the firm, stressing their complementarities and weaknesses, and urging that evolutionary economists should devote more attention to the evolution of firm structures and boundaries.

From even this brief and rudimentary sketch of the contents of this volume it will be evident that there is much of interest here. Collections of essays often suffer from lack of sufficient coherence and unevenness of quality. Strictly, the volume under review is not an exception. But it is much closer to perfection than the norm. The editor has done an excellent job in monitoring...