Editing Evolutionary economics (section)

==Emergence as a separate field of study==

[[File:Veblen3a.jpg|thumb|upright|[[Thorstein Veblen]] (1857-1929) is considered by many as the "father" of evolutionary economics.]]

The term "evolutionary economics" might have been first coined by [[Thorstein Veblen]].<ref name="Hodgson2012"></ref> Veblen saw the need for taking into account cultural variation in his economic approach; no universal "human nature" could possibly be invoked to explain the variety of norms and behaviours that the new science of [[anthropology]] showed to be the rule rather than an exception.<ref name="Hodgson2004">[[Geoffrey Hodgson|Hodgson, G. M.]] (2004). ''The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism''. London and New York: Routledge.</ref> He also argued that social institutions are subject to selection process<ref name="CamicHodgson2011">[[Charles Camic|Camic, C.]], [[Geoffrey Hodgson|Hodgson, G. M.]] (eds.) (2011). ''Essential Writings of Thorstein Veblen''. London and New York: Routledge.</ref> and that economic science should embrace the [[Darwinian theory]].<ref name="Veblen1898">[[Thorstein Veblen|Veblen, T. B.]] (1898). Why Is Economics Not an Evolutionary Science? ''The Quarterly Journal of Economics, 12''(3), pp. 373-97.</ref><ref name="Veblen1899">[[Thorstein Veblen|Veblen, T. B.]] (1899). ''[[The Theory of the Leisure Class|The Theory of the Leisure Class: An Economic Study in the Evolution of Institutions]]''. New York: Huebsch. [https://web.archive.org/web/20211122223110/https://oll-resources.s3.us-east-2.amazonaws.com/oll3/store/titles/1657/1291_Bk.pdf Archived] from [https://oll-resources.s3.us-east-2.amazonaws.com/oll3/store/titles/1657/1291_Bk.pdf] on November 22, 2021.</ref><ref name="Veblen1919">[[Thorstein Veblen|Veblen, T. B.]] (1919). ''The Place of Science in Modern Civilisation and Other Essays''. New York: Huebsch. [[Project Gutenberg]]. [https://web.archive.org/web/20230605105330/https://www.gutenberg.org/cache/epub/39949/pg39949-images.html Archived] from [https://www.gutenberg.org/cache/epub/39949/pg39949-images.html] on June 5, 2023.</ref><ref name="Hodgson2012"></ref>

Veblen's followers quickly abandoned his evolutionary legacy.<ref name="Hodgson2004"></ref><ref name="Rutherford2011">Rutherford, M. H. (2011). ''The Institutionalist Movement in American Economics, 1918–1947: Science and Social Control.'' Cambridge and New York: Cambridge University Press.</ref> When they finally returned to the use of the term “evolutionary”, they referred to development and change in general, without its Darwinian meaning.<ref name="Hodgson2012"></ref> Further researchers, such as [[Joseph Schumpeter]], studied [[entrepreneurship]] and innovation using this term, but not in the Darwinian sense.<ref name="Hodgson1993"></ref><ref name="Witt2002">[[Ulrich Witt|Witt, U.]] (2002). How Evolutionary is Schumpeter's Theory of Economic Development? ''Industry and Innovation, 9''(1/2), pp. 7-22.</ref> Another prominent economist, [[Friedrich von Hayek]], also employed the elements of the evolutionary approach, especially criticizing “[[The Fatal Conceit|the fatal conceit]]” of socialists who believed they could and should design a new society while disregarding human nature.<ref name="Hayek">[[Friedrich von Hayek|Hayek, F. A.]] (1988). ''[[The Fatal Conceit: The Errors of Socialism]].'' In William W. Bartley III (ed.), The Collected Works of Friedrich August Hayek, Vol. I. London: Routledge. [https://web.archive.org/web/20230324080010/https://www.mises.at/static/literatur/Buch/hayek-the-fatal-conceit.pdf Archived] from [https://www.mises.at/static/literatur/Buch/hayek-the-fatal-conceit.pdf] on March 24, 2023.</ref> However, Hayek seemed to see the Darwin theory not as a revolution itself, but rather as an intermediary step in the line of evolutionary thinking.<ref name="Hodgson2012"></ref> There were other notable contributors to the evolutionary approach in economics, such as [[Armen Alchian]], who argued that, faced with [[uncertainty]] and [[incomplete information]], firms adapt to the environment instead of pursuing [[profit maximization]].<ref>[[Armen Alchian|Alchian, A. A.]] (1950). [[Uncertainty, Evolution, and Economic Theory]]. ''Journal of Political Economy, 58''(2), pp. 211-22. [https://web.archive.org/web/20150501230715/http://econfaculty.gmu.edu/wew/syllabi/Econ811JournalArticles/AlchianJPE.pdf Archived] from [http://econfaculty.gmu.edu/wew/syllabi/Econ811JournalArticles/AlchianJPE.pdf] on May 1, 2018.</ref>

===''An Evolutionary Theory of Economic Change'' and beyond===

[[File:Geoffrey_Hodgson,_2006.jpg|thumb|right|[[Geoffrey Hodgson]], recognised as one of the leading figures of modern critical [[Institutional economics|institutionalism]], Emeritus Professor in Management, [[Loughborough University]]]]

The publication of ''An Evolutionary Theory of Economic Change'' by [[Richard R. Nelson]] and [[Sidney G. Winter]] in 1982 marked a turning point in the field of evolutionary economics. Inspired by Alchian's work about the decision-making process of firms under uncertainty and the behavioural theory of the firm by [[Richard Cyert]] and [[James March]],<ref name="CyertMarch1963">[[Richard Cyert|Cyert, R. M.]], [[James March|March, J. G.]] (1963). ''[[A Behavioral Theory of the Firm]]''. Engelwood Cliffs, NJ: Prentice-Hall.</ref><ref name="Hodgson2012"></ref> Nelson and Winter constructed a comprehensive evolutionary theory of business behavior using the concept of [[natural selection]]. In this framework, firms operate on the basis of organizational routines, which they evaluate and may change while functioning in a certain selection environment.<ref name="NelsonWinter1982">[[Richard R. Nelson|Nelson, R. R.]], [[Sidney G. Winter|Winter, S. G.]] (1982). ''An Evolutionary Theory of Economic Change''. Cambridge, MA: Harvard University Press. [https://web.archive.org/web/20230323020332/http://inctpped.ie.ufrj.br/spiderweb/pdf_2/Dosi_1_An_evolutionary-theory-of_economic_change..pdf Archived] from [http://inctpped.ie.ufrj.br/spiderweb/pdf_2/Dosi_1_An_evolutionary-theory-of_economic_change..pdf] on March 23, 2023.</ref> Since then, evolutionary economics, as noted by [[Nicolai Foss]], has been concerned with “the transformation of already existing structures and the emergence and possible spread of novelties.”<ref name="Foss1994">[[Nicolai Foss|Foss, N. J.]] (1994). Realism and Evolutionary Economics. ''Journal of Social and Evolutionary Systems, 17''(1), pp. 21-40.</ref> Economies have been viewed as a complex system, a result of causal interactions (non-linear and chaotic) between different agents and entities with varied characteristics.<ref>Saviotti, P. P. (1996). ''Technological Evolution, Variety and the Economy''. Aldershot: Edward Elgar.</ref> Instead of perfect information and rationality, [[Herbert A. Simon|Herbert Simon's]] concept of [[bounded rationality]]<ref name="Simon1975">[[Herbert A. Simon|Simon, H. A.]] (1957). ''Models of Man: Social and Rational. Mathematical Essays on Rational Human Behavior in a Social Setting''. New York: Wiley.</ref> has become prevailing.

By the 1990s, as put by [[Geoffrey Hodgson]],<ref name="Hodgson2012"></ref>

<blockquote>“it was possible to write of an international network or ‘[[invisible college]]’ of ‘evolutionary economists’ who, despite their analytical differences, were focusing on the problem of analyzing structural, technological, cultural and institutional change in economic systems… They were also united by their common dislike of the static and equilibrium approaches that dominated mainstream economics.”</blockquote>