Skip to main content Accessibility help
×
Home
  • Get access
    Check if you have access via personal or institutional login
  • Cited by 12
  • Print publication year: 2005
  • Online publication date: September 2009

16 - Evolutionary theorizing on economic growth

    • By Gerald Silverberg, Professor of Economics, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT), Maastricht, the Netherlands, Bart Verspagen, Research Fellow Eindhoven Centre for Innovation Studies ECIS Eindhoven University of Technology, Maastricht, the Netherlands
  • Edited by Kurt Dopfer, Universität St Gallen, Switzerland
  • Publisher: Cambridge University Press
  • DOI: https://doi.org/10.1017/CBO9780511492297.016
  • pp 506-539

Summary

Introduction

While an evolutionary perspective has been urged upon economists since at least the time of Alfred Marshall (1890; see Hodgson, 1993, for a contemporary reiteration), what has been lacking until recently, at least for a large portion of the economics profession, has been a body of formal theory and quantitative analysis on an explicitly evolutionary basis. This has changed since the work of Richard Nelson and Sidney Winter in the 1960s and 1970s (summarized in Nelson and Winter, 1982), which operationalized and extended many of the concepts going back to Joseph Schumpeter (1934, 1942), Armen Alchian (1950), Jack Downie (1955), Josef Steindl (1952) and others. Since then a number of authors have been enlarging on this foundation and systematically extending the evolutionary economics paradigm in a number of directions. A survey of some of these can be found in Nelson, 1995.

In this chapter we intend to deal with the basics of a formal evolutionary approach to technical change, economic dynamics and growth. In so doing we will leave out for the most part the burgeoning new areas of application of evolutionary ideas to game theory, learning dynamics and bounded rationality, organization theory, financial markets, industrial organization and the interface between economics, law and culture – most of which are dealt with elsewhere in this volume.

References
Adams, H. (1919), The Degradation of the Democratic Dogma, reprinted 1969, New York: Harper & Row
Aghion, P., and Howitt, P. (1992), ‘A model of growth through creative destruction’, Econometrica 60(2): 323–51
Alchian, A. A. (1950), ‘Uncertainty, evolution and economic theory’, Journal of Political Economy 58(3): 211–21. [Reprinted in U. Witt (ed.) (1993), Evolutionary Economics, Aldershot: Edward Elgar.]
Andersen, E. S. (2001), ‘Satiation in an evolutionary model of structural economic dynamics’, Journal of Evolutionary Economics 11(1): 134–64
Arrow, K. J. (1962), ‘The economic implications of learning by doing’, Review of Economic Studies 29: 155–73
Arthur, W. B. (1988), ‘Self-reinforcing mechanisms in economics’, in P. W. Anderson, K. J. Arrow and D. Pines (eds.), The Economy as an Evolving Complex System, Reading, MA: Addison-Wesley, 9–33
Arthur, W. B. (1994), Increasing Returns and Path Dependence in the Economy, Ann Arbor, MI: University of Michigan Press
Axtell, R., and Epstein, J. M. (1995), ‘Agent-based modeling: understanding our creations’, Bulletin of the Santa Fe Institute (winter): 28–32
Ballot, G., and Taymaz, E. (2001), ‘Training policies and economic growth in an evolutionary world’, Structural Change and Economic Dynamics 12: 311–29
Baumol, W. J. (1986), ‘Productivity growth, convergence, and welfare: what the long-run data show’, American Economic Review 76(5): 1072–85
Bertalanffy, L. von (1932), Theoretische Biologie, vol. Ⅰ, Berlin: Borntraeger
Booker, L., D. Goldberg and J. Holland (1989), ‘Classifier systems and genetic algorithms’, in J. Carbonell (ed.), Machine Learning: Paradigms and Methods, Cambridge, MA: MIT Press
Boulding, K. E. (1978), Ecodynamics: A New Theory of Societal Evolution, Beverly Hills and London: Sage
Boulding, K. E. (1981), Evolutionary Economics, Beverly Hills and London: Sage
Bruckner, E., W. Ebeling, M. A. Jiménez Montaño and A. Scharnhorst (1994), ‘Hyperselection and innovation described by a stochastic model of technological evolution’, in L. Leydesdorff and P. van den Besselaar (eds.), Evolutionary Economics and Chaos Theory, London: Pinter, 79–90
Chiaromonte, F., and Dosi, G. (1993), ‘Heterogeneity, competition and macroeconomic dynamics’, Structural Change and Economic Dynamics 4: 39–63
Conlisk, J. (1989), ‘An aggregate model of technical change’, Quarterly Journal of Economics 104: 787–821
Dawid, H. (1999), Adaptive Learning by Genetic Algorithms: Analytical Results and Applications to Economic Models, revised 2nd edn., Berlin: Springer-Verlag
DeLong, J. B. (1988), ‘Productivity growth, convergence and welfare: comment’, American Economic Review 78(5): 1138–54
Dosi, G., Fabiani, S., Aversi, R. and Meacci, M. (1994), ‘The dynamics of international differentiation: a multi-country evolutionary model’, Industrial and Corporate Change 3: 225–41
Downie, J. (1955), The Competitve Process, London: Duckworth
Ebeling, W., and R. Feistel (1982), Physik der Selbstorganisation und Evolution, Berlin: Akademie-Verlag
Edelman, G. M. (1987), Neural Darwinism: The Theory of Neuronal Group Selection, New York: Basic Books
Eliasson, G. (1977), ‘Competition and market processes in a simulation model of the Swedish economy’, American Economic Review 67(1): 277–81
Eliasson, G. (1991), ‘Modelling the experimentally organized economy’, Journal of Economic Behavior and Organization 16: 163–82
Epstein, J. M., and R. Axtell (1996), Growing Artificial Societies: Social Science from the Bottom up, Washington, DC: Brookings Institution
Fagiolo, G., and Dosi, G. (2003), ‘Exploitation, exploration and innovation in a model of endogenous growth with locally interacting agents’, Structural Change and Economic Dynamics, 14(3): 237–73
Feistel, R., and W. Ebeling (1989), Evolution of Complex Systems, Berlin: VEB Deutscher Verlag der Wissenschaften
Fisher, R. A. (1930), The Genetical Theory of Natural Selection, Oxford: Clarendon Press
Fontana, W., and Buss, L. W. (1994), ‘What would be conserved if “the tape were played twice”’, Proceedings of the National Academy of Sciences, USA 91: 757–61
Foster, D., and Young, H. P. (1990), ‘Stochastic evolutionary game dynamics’, Theoretical Population Biology 38: 219–32
Gerybadze, A. (1982), Innovation, Wettbewerb und Evolution, Tübingen, Germany: Mohr
Goldberg, D. (1989), Genetic Algorithms in Search, Optimization, and Machine Learning, Reading, MA: Addison-Wesley
Goodwin, R. M. (1967), ‘A growth cycle’, in C. H. Feinstein (ed.), Socialism, Capitalism and Economic Growth, London: Macmillan, 54–58
Grübler, A. (1990), The Rise and Decline of Infrastructures: Dynamics of Evolution and Technological Change in Transport, Heidelberg: Physica-Verlag
Henkin, G. M., and Polterovich, V. M. (1991), ‘Schumpeterian dynamics as a non-linear wave theory’, Journal of Mathematical Economics 20: 551–90
Hodgson, G. M. (1993), Economics and Evolution: Bringing Life Back into Economics, Cambridge: Polity Press
Hofbauer, J., and K. Sigmund (1988), The Theory of Evolution and Dynamical Systems, Cambridge: Cambridge University Press
Holland, J. H., and Miller, J. H. (1991), ‘Artificial adaptive agents in economic theory’, American Economic Review 81(2): 363–70
Horgan, J. (1995), ‘From complexity to perplexity’, Scientific American (June): 74–79
Houthakker, H. S. (1956), ‘The Pareto distribution and the Cobb-Douglas production function in activity analysis’, Review of Economic Studies 23: 27–31
Iwai, K. (1984a), ‘Schumpeterian dynamics Ⅰ: an evolutionary model of innovation and imitation’, Journal of Economic Behavior and Organization 5: 159–90
Iwai, K. (1984b), ‘Schumpeterian dynamics Ⅱ: technological progress, firm growth and “Economic Selection”’, Journal of Economic Behavior and Organization 5: 321–51
Jiménez Montaño, M. A., and Ebeling, W. (1980), ‘A stochastic evolutionary model of technological change’, Collective Phenomena 3: 107–14
Kaldor, N., and Mirrlees, J. A. (1962), ‘A new model of economic growth’, Review of Economic Studies 29: 174–92
Kandori, M., Mailath, G. J. and Rob, R. (1993), ‘Learning, mutations, and long-run equilibrium in games’, Econometrica 61(1): 29–56
Kwasnicki, W., and Kwasnicka, H. (1992), ‘Market, innovation, competition: an evolutionary model of industrial dynamics’, Journal of Economic Behavior and Organization 19: 343–68
Lane, D. (1993a), ‘Artificial worlds in economics: part Ⅰ’, Journal of Evolutionary Economics 3(2): 89–107
Lane, D. (1993b), ‘Artificial worlds in economics: part Ⅱ’, Journal of Evolutionary Economics 3(3): 177–97
Langton, C. G. (ed.) (1989), Artificial Life, Reading, MA: Addison-Wesley
Langton, C. G., C. Taylor, J. D. Farmer and S. Rasmussen (eds.) (1992), Artificial Life Ⅱ, Reading, MA: Addison-Wesley
Lotka, A. J. (1924), Elements of Mathematical Biology, reprinted 1956, New York: Dover
Lotka, A. J. (1945), ‘The law of evolution as a maximal principle’, Human Biology 17: 167–94
Maddison, A. (1991), Dynamic Forces in Capitalist Development: A Long-Run Comparative View, Oxford: Oxford University Press
Marchetti, C., and N. Nakicenovic (1979), The Dynamics of Energy Systems and the Logistic Substitution Model, Research Report 79–13, International Institute for Applied Systems Analysis, Laxenburg, Austria
Marshall, A. (1890), Principles of Economics, London: Macmillan (8th edn., 1920, London: Macmillan; 9th variorum edn., 1961, London: Macmillan)
McCombie, J. S. L. (1987), ‘Does the aggregate production function imply anything about the laws of production? A note on the Simon and Shaikh critiques’, Applied Economics 19: 1121–36
Metcalfe, J. S. (1988), Trade Technology and Evolutionary Change, mimeo, University of Manchester
Metcalfe, J. S. (2001), ‘Consumption, preferences and the evolutionary agenda’, Journal of Evolutionary Economics 11(1): 37–58
Monod, J. L. (1970), Le Hasard et la Nécessité, Paris: Seuil
Montroll, E. W. (1978), ‘Social dynamics and the quantifying of social forces’, Proceedings of the National Academy of Sciences, USA 75: 4633–37
Nakicenovic, N. (1987), ‘Technological substitution and long waves in the USA’, in T. Vasko (ed.), The Long-Wave Debate, Berlin: Springer-Verlag, 76–103
Nelson, R. R. (1995), ‘Recent evolutionary theorizing about economic change’, Journal of Economic Literature 33: 48–90
Nelson, R. R., and S. G. Winter (1982), An Evolutionary Theory of Economic Change, Cambridge, MA: Harvard University Press
Nelson, R. R., Winter, S. G. and Schuette, H. L. (1976), ‘Technical change in an evolutionary model’, Quarterly Journal of Economics 90: 90–118
Nicolis, G., and I. Prigogine (1977), Self-Organization in Non-Equilibrium Systems, New York: Wiley-Interscience
Phelps-Brown, E. H. (1957), ‘The meaning of the fitted Cobb-Douglas function’, Quarterly Journal of Economics 71: 546–60
Romer, P. M. (1986), ‘Increasing returns and long-run growth’, Journal of Political Economy, 94(5): 1002–37
Salter, W. E. G. (1960), Productivity and Technical Change, Cambridge: Cambridge University Press
Saviotti, P. P. (2001), ‘Variety, growth and demand’, Journal of Evolutionary Economics 11(1): 119–42
Schrödinger, E., 1945, What is Life? The Physical Aspect of the Living Cell, Cambridge: Cambridge University Press
Schumpeter, J. A. (1934), The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle (translated by R. Opie from the German edition of 1912), Cambridge, MA: Harvard University Press. [Reprinted in 1989 with a new introduction by J. E. Elliott, New Brunswick, NJ: Transaction.]
Schumpeter, J. A. (1942), Capitalism, Socialism and Democracy, New York: Harper & Row
Schwefel, H. P. (1995), Evolution and Optimum Seeking, New York: Wiley
Shaikh, A. (1974), ‘Laws of production and laws of algebra. The humbug production function: a comment’, Review of Economics and Statistics 56: 115–20
Shaikh, A. (1980), ‘Laws of production and laws of algebra: humbug Ⅱ’, in E. J. Nell (ed.), Growth, Profits, and Property: Essays on the Revival of Political Economy, Cambridge: Cambridge University Press, 80–95
Shaikh, A. (1990), ‘Humbug production function’, in J. Eatwell, M. Milgate and P. Newman (eds.), The New Palgrave: Capital Theory, London: Macmillan, 191–94
Sigmund, K. (1986), ‘A survey of replicator equations’, in J. L. Casti and A. Karlqvist (eds.), Complexity, Language and Life: Mathematical Approaches, Berlin: Springer-Verlag
Silverberg, G., G.Dosi, and Orsenigo, L. (1988), ‘Innovation, diversity and diffusion: a self-organisation model’, Economic Journal 393: 1032–54
Silverberg, G. and Lehnert, D. (1993), ‘Long waves and “evolutionary chaos” in a simple Schumpeterian model of embodied technical change’, Structural Change and Economic Dynamics 4: 9–37
Silverberg, G., and D. Lehnert (1996), ‘Evolutionary chaos: growth fluctuations in a Schumpeterian model of creative destruction’, in W. A. Barnett, A. Kirman and M. Salmon (eds.), Nonlinear Dynamics in Economics, Cambridge: Cambridge University Press, 45–74
Silverberg, G., and Verspagen, B. (1994a), ‘Learning, innovation and economic growth: a long-run model of industrial dynamics’, Industrial and Corporate Change 3: 199–223
Silverberg, G., and Verspagen, B. (1994b), ‘Collective learning, innovation and growth in a boundedly rational, evolutionary world’, Journal of Evolutionary Economics 4(3): 207–26
Silverberg, G., and Verspagen, B. (1995), ‘An evolutionary model of long-term cyclical variations of catching up and falling behind’, Journal of Evolutionary Economics 5(3): 209–27
Silverberg, G., and B. Verspagen (1996), ‘From the artificial to the endogenous: modelling evolutionary adaptation and economic growth’, in E. Helmstädter and M. Perlman (eds.), Behavorial Norms, Technological Progress and Economic Dynamics: Studies in Schumpeterian Economics, Ann Arbor, MI: University of Michigan Press, 331–71
Simon, H. A. (1979), ‘On parsimonious explanations of production relations’, Scandinavian Journal of Economics 81: 459–74
Simon, H. A., and Levy, F. K. (1963), ‘A note on the Cobb—Douglas production function’, Review of Economic Studies 30: 93–94
Solow, R. M. (1957), ‘Technical change and the aggregate production function’, Review of Economics and Statistics 39: 312–20
Solow, R. M. (1960), ‘Investment and technical progress’, in K. J. Arrow, S. Karlin and P. Suppes (eds.), Mathematical Methods in the Social Sciences, Stanford, CA: Stanford University Press, 89–104
Steindl, J. (1952), Maturity and Stagnation in American Capitalism, New York: Monthly Review Press
Tesfatsion, L. (2002), ‘Agent-based computational economics: growing economics from the bottom up’, Artificial Life 8: 55–82
Verspagen, B. (1993), Uneven Growth between Interdependent Economies: An Evolutionary View on Technology Gaps, Trade and Growth, Aldershot: Avebury
Verspagen, B. (1995), ‘Convergence in the world economy: a broad historical overview’, Structural Change and Economic Dynamics 6: 143–66
Verspagen, B. (2001), ‘Evolutionary macroeconomics: a synthesis between neo-Schumpeterian and post-Keynesian lines of thought’, Electronic Journal of Evolutionary Modeling and Economic Dynamics, http://www.e-jemed.org/1007/index.php
Winter, S. G. (1984), ‘Schumpeterian competition in alternative technological regimes’, Journal of Economic Behavior and Organization 5: 137–58
Witt, U. (2001), ‘Learning to consume – a theory of wants and the growth of demand’, Journal of Evolutionary Economics 11(1): 23–36
Young, H. P. (1993), ‘The evolution of conventions’, Econometrica 61(1): 57–84