Posts filed under ‘Evolutionary Economics’
Process Explanation: What Is It, Really?
| Nicolai Foss |
As I have recounted on an earlier occasion (here), my interest in economics was, after about 1.5 years of a somewhat unsuccessful economics study, finally stimulated by discovering what may broadly be called “process approaches” to economics, particularly the work of Axel Leijonhufvud, and Austrian and evolutionary approaches. I was captivated by the claims inherent in these approaches of studying “real” market “processes” in “time,” taking account of “genuine uncertainty,” “surprises,” “ignorance,” etc. — all in contrast to the (I then thought) mindless neoclassical obsession with equilibrium states.
Clearly, the Austrian marketing effort seemed much superior to the mainstream one, much less dull and much more concerned with reality. (more…)
Ofek on Seabright’s Company of Strangers
| Peter Klein |
Haim Ofek reviews Paul Seabright’s The Company of Strangers: A Natural History of Economic Life (Princeton, 2004) for EH.Net. Some friends have highly recommended the book to me as a grand synthesis of market theory, institutional analysis, economic history, and evolutionary biology. I started reading it last year but my interest waned after a couple of chapters. (I guess I don’t have a taste for evolutionary biology; a lot of it reads like Just So Stories to me.)
Here is a 2005 interview with Seabright in Reason Magazine.
Schumpeterian Competition and Economic Growth
| Peter Klein |
Nobel Laureate Michael Spence writes about sustained high growth in today’s (gated) WSJ. Focusing on Botswana, China, Hong Kong, Indonesia, Korea, Malaysia, Malta, Oman, Singapore, Taiwan, and Thailand, Spence notes:
While each instance of sustained high growth is to some extent idiosyncratic, they share certain features. In all cases, there is a functioning market economy with its price signals, incentives, decentralization and enough definition of private property ownership to enable investment. All attempts to circumvent this necessary condition through central planning have met with major misallocations of resources and failure.
Isn’t it wonderful that the Austrian and public-choice critiques of central planning are so well-known that invoking them seems almost, well, trite?
A key feature of sustained high growth, Spence adds, is resource mobility:
Contrary to the image that sometimes comes from a macroeconomic overview, productivity growth at these rates is not achieved by having everyone do what they were doing before, but a little bit more efficiently. The portfolio mix of economic activity changes very rapidly. This is what Schumpeter called “creative destruction” and Paul Romer calls “churn.” . . . This movement of people geographically and across sectors is not an ancillary side effect of the growth process, but rather the essence of it.
Incidentally, Schumpeterian competition is not always easily discernible at a microeconomic level. Paul Vaaler and Gerry McNamara find mixed evidence for increasingly “dynamic competition” in the US technology sector. (See also the essays in Paul’s book with Lee W. McKnight and Raul L. Katz.)
Here’s To You, Mrs. Robinson
| Peter Klein |
I’m not a great fan of Joan Robinson but believe she has admirers among the O&M clientèle. So here’s a pointer to a new book on Robinson’s work and significance, Joan Robinson’s Economics: A Centennial Celebration (Cheltenham, UK: Edward Elgar, 2005). The volume, edited by Bill Gibson, stems from a 2003 conference on the centenary of Robinson’s birth. This passage from Michael Lawlor’s review in EH.Net may spark some interest:
One thing she particularly saw as useful in Marshall was his awareness of the difficulty of treating time by equilibrium constructs. Thus, rather than the highly artificial dynamic equilibria of modern theories of growth (of any stripe), she wanted dynamic economics to be “open” to uncertain expectations, technological change, habits, and the possible irreversibility that came with the “choice of technique.” In other words, she insisted that a theory of economic growth should be alive to the kinds of issues that, economic history teaches, have been real aspects of capitalist economies of the past. . . . She did not want to construct models that would reach the same “equilibrium” from radically different starting points, but ones that depended crucially on where a system began to determine part of where it ends up. In short, she wished for a dynamic economics in which a particular set of institutions and a particular history ought to be given its due as a factor that could influence the time path of an economy.
But as Donald Harris particularly emphasizes, this is no easy task. In fact one could say that her long struggle with a variety of complex approaches to such questions in the theory of economic growth (her most mature statements on this topic are to be found in Robinson, 1956 and 1962b) ended in her rejecting “equilibrium” altogether as a way to capture the manifold influences of “history” (Robinson, 1985).
“Original” Institutional Economics
| Peter Klein |
Nicolai has noted that evolutionary economics is weak on public policy. But things may be changing. The theme for the 2007 meeting of the Association for Evolutionary Economics is “Contributions of Institutional Economics to Public Policy Debates: Past and Present.” Here is the call for papers.
Note that “evolutionary” is defined here as “institutional/evolutionary.” The instructions say the papers “must be grounded in and contribute to the literature of Original Institutional Economics in the tradition of Commons, Veblen, Mitchell, Kapp, Myrdal, Polyani, etc.”
I confess this is the first I’ve seen the term “original institutional economics.” I can see why the organizers prefer it to “old institutional economics,” the term used by new institutional economists to describe the early twentieth-century American institutionalists whose contributions are largely forgotten today. (Coase: “Without a theory they had nothing to pass on except a mass of descriptive material waiting for a theory, or a fire.” )
Workshop on Evolution and Policy
| Nicolai Foss |
In an earlier post, I pointed out that evolutionary economics is remarkably weak when it comes to the normative foundations of the EE enterprise. Thus, evolutionary economists do not shy away from making often strong pronouncements on policy, for example, on IPR policy, regional policies, etc., but these policy statements are seldom defended by references to explicit welfare standards.
There are signs that a recognition is spreading that the normative foundations of policy is a weak spot in evolutionary economics. Here is an announcement of an interesting workshop (I may go myself) on “normative policy implications from recent advances in the economics of innovation and industrial dynamics” (what a sexy title!): (more…)
Organizations and Markets 
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