Thoughts on Evolutionary Economics: Organic Models of Economic Growth

‘Progress’ or ‘evolution,’ industrial and social, is not mere increase and decrease. It is organic growth, chastened and confined and occasionally reversed by decay of innumerable factors, each of which influences and is influenced by those around it; and every such mutual influence varies with the stages which the respective factors have already reached in their growth. In this vital respect all sciences of life are akin to one another, and are unlike physical sciences. And therefore in the later stages of economics, when we are approaching nearly to the conditions of life, biological analogies are to be preferred to mechanical, other things being equal. (Alfred Marshall 1898: 42-3)

Examine the Thesis: Economic models must not be closed. Rational models are not reflective of nature as a function of change and therefore time. The creative and adaptive enterprises of men cause rational economic models to become outdated in the long run. Rational economic models are suitable for short run analysis but can not make accurate long run predictions.

The obvious truth … is that the economic system continuously changes qualitatively. The most important aspect of the economic process is precisely the continuous emergence of novelty. Moreover, the novelty always represents a qualitative change. Nature thus has an infinite number of properties. It is because of this fact and because of the ever-present merging novelty that the human mind cannot grasp actuality with the aid of analysis alone; it also must use dialectics. (Georgescu-Roegen 1979: 321-2)

Economic models must utilize a function incorporating synthetic a priori propositions (Kant), where rational and empirical claims exist to capture innovation and creativity. This achievement will allow for accurate models predicting economic growth and explain hysteresis and supply irreversibility.

I will argue that neoclassical economic models operate in the outdated modernist paradigm that utilizes rational closed systems which are, as a result, authoritarian and unsustainable with respects to free market innovation and evolution. My argument is that economic models need to shift towards a post modern conception that accounts for freedom and change. In this way economics will reflect nature accurately, i.e. men are free agents that facilitate changes. This will provide a democratic and sustainable model for economic progress.

Economists to Discuss:
Marshall: “Principles of Economics, 8e” ch. 8, Biology/ evolution of economics
Schumpeter: Innovation and economic growth
Raffaelli: “Marshall’s Evolutionary Economics”
Hodgeson: “The Mecca of Alfred Marshall”:
J.S. Metcalfe:  “Alfred Marshall and the General Theory of Evolutionary Economics
John Foster: “Economics and the Self-Organisation Approach: Alfred Marshall Revisited?”: Irreversibility

Philosophers to Reference:
Hume: “Enquiry Concerning Human Understanding”: Induction/ Cause and effect/ problem of probability
Kant:  “The Prologemena of Future Metaphysics”: synthetic a priori
Hegel: Dialectics
Feuerbach: Materialism
Nietzsche*: “The Gay Science”: Machtgelüst or Will to power

Examine Concepts and Themes:
Evolutionary Economics: Bioeconomics, ecological economics, Non-equilibrium economics, development and growth economics, behavioral economics, complexity economics, cultural economics,
Economic Modeling: Static vs fluid models; Rational (Mechanical) vs Irrational (Adaptive) models
Hysteresis and Irreversibility: Indelible supply side expansion
Economic Change: Growth and development
Matter is constantly changing, i.e. inconsistent variables of force and time
Economic systems change qualitatively, Not just quantitatively
Evolution: cannot be captured by closed mathematical analysis
Hegel’s dialectical treatment: superior, but difficult to quantify
Dialectical Relations: Contrivance and routine; evolution and equilibrium; creative and analytic= fluid and static= possible and actual
Neoclassical economics= modern economic method
(have not developed a post modern model economic theory)

POLITICAL ECONOMY or ECONOMICS   i s a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites  of wellbeing. The Mecca of the economist lies in economic biology rather than in economic dynamics… Economic problems are imperfectly presented when they are treated as problems of statical equilibrium, and not of organic growth.

Alfred Marshall