Week09EarlyEvolutionaryEconomics.ppt

Political Economy: Evolutionary Economics Early contributions Recap Modern evolutionary theory much richer than “survival of the fittest” Feedback between organism environment Positive as well as negative feedbacks Symbiosis as well as competition Interdependence of firms/sectors as well as raw competition Collective behaviour as well as individual “Web of life”/ “Web of commerce” Directed evolution Essential concepts variation environment/organism feedback Darwin’s influence Darwin’s “Origin” published 1869 Influence substantial on Victorian mindset (from “primogenesis” to “science” to explain species) The “new” economics circa 1870 Dominant analytic techniques static Jevons’ marginal optimisation of utility Walras’ General Equilibrium Marshall’s profit maximising firms Mathematical functions for maximising utility/profit Work out point at which change stops No evolution from the optimum… Some recognition of superiority of dynamic/evolutionary approach: The “new” economics circa 1870 Aware of importance of evolutionary dynamics… “If we wished to have a complete solution ... we should have to treat it as a problem of dynamics. But it would surely be absurd to attempt the more difficult question when the more easy one is yet so imperfectly within our power.” (Jevons 1871 [1911]: 93) “The Mecca of the economist lies in economic biology rather than in economic dynamics. But biological conceptions are more complex than those of mechanics; a volume on Foundations must therefore give a relatively large place to mechanical analogies; and frequent use is made of the term “equilibrium”, which suggests something of statical analogy… (Marshall, “Principles”, 8th edition, p. 19) And since then… Clear expectation that theory would develop dynamical/evolutionary approach from static beginnings: “The main concern of economics is thus with human beings who are impelled, for good and evil, to change and progress. Fragmentary statical hypotheses are used as temporary auxiliaries to