Transcript Slide 1

Evolutionary Economics
Primary aim: make you acquainted to basic principles of the
evolutionary approach to economics
Evolutionary Economics defined by its
history:
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Capitalist evolution an open-ended process of qualitative
change (driven by innovations)
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Innovations include institutional and organizational
improvements of firms and the market context
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International trade and FDI reflect the interaction between
innovation and diffusion of technology at a global scale
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Economic growth depends on the systemic properties of
the imitations and technology diffusion that follow an
innovation (Sectoral, Regional and National Systems of
Innovation)
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Schumpeter highly critical of attempts to apply theories
from the natural sciences to economics
For a survey of of literature on EE:
Fagerberg, J (2003), Schumpeter and the revival of
evolutionary economics: an appraisal of the literature (in
Journal of Evolutionary Economics 13:125-159)
Evolutionary processes:
Competitive selection is analogous to Darwininan
Natural selection (survival of the fittest)
Economic change when a firm substitutes one mob for
another
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firm = a repertoire of modes of behaviour (mob)
mob = a rule (routine) for making decisions or for the
production of a product in a multi-product firm.
No average, profit-maximizing firm: A population of
firms, where the probability for survival depends on
realized profits.
Analogies to biology?
Darwinian change: Natural selection where genes mutate
by chance
Lamarckian change: Routines (mob:s) are changed through
learning
Haldane’s dilemma
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If the probability for genetic change is small, then the cost
of genetic change (the ratio of ‘selective deaths’ to
‘survivors’) has to be high.
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But if the number of ‘selective deaths’ increases over a
certain limit, the whole population will be eliminated
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Hence, the rate of genetic change has to be slow
Questions for discussion:
1) M. Friedman has argued that profit-maximiser are the only
firms that will survive competitive selection. Thus, the
assumption about profit maximisation in mainstream
economics is the most adequate behavioural rule for
predicting economic processes.
Do you agree?
2) Assess the importance of a) Darwinian change and b)
Lamarckian change. Does the two types of change make
any difference for the policy-maker, for instance, with
regard to type of social model to be implemented?
3) Do institutions for standardisation have any influence on
growth by making mobs more or less uninvadable. Is a
complete system of property rights prefereable?