Competition as an evolutionary process: Mark Blaug and evolutionary economics (original) (raw)
Related papers
An introduction to evolutionary theories in economics
Journal of Evolutionary Economics, 1994
This paper presents the basic ideas and methodologies of a set of contemporary contributions which are grouped under the general heading of "evolutionary economics". Some achievements-especially with regard to the analysis of technological change and economic dynamics -are illustrated, some unresolved issues are discussed and a few promising topics of research are flagged. contributed to equilibrium theories: for example one often cites Alfred Marshall on "the Mecca of economics [lying] in economic biology rather than economic mechanics" (Marshall 1948, p. xiv); and also the "as...if" argument by Milton Friedman (1953) can be considered the most rudimentary use of an evolutionary point of view in order to justify the assumptions of equilibrium and rationality. In addition, of course scholars like Veblen, von Hayek and, even more so, Schumpeter, have anticipated many of the ideas that contemporary evolutionary economists are struggling with. 2 However, the wave of current evolutionary theorizing is probably fostered by several convergent factors. There is certainly a growing recognition of the difficulties that equilibrium theories which presume perfectly rational agents face in interpreting wide arrays of economic phenomena -ranging from the generation of technological change all the way to the diversity of long-term patterns of growth. But, of course, we know from the history of science that anomalies and falsifications alone are not sufficient to spur alternative theories. In addition, a rich empirical literature, concerning the nature of the processes of innovation and the institutions supporting them, to a good extent inspired by evolutionary ideas, has shown that an evolutionary theoretical perspective can provide useful heuristics for applied research. Not only that: the empirical work has suggested fruitful inductive generalizations and taxonomies from which evolutionary theories can draw behavioral assumptions and "stylized facts. ''3 Finally, the development of quite general formal machineries able to account for the properties of dynamical systems displaying various forms of non-linearities increasingly allows rigorous analytical treatments of evolutionary processes. 4 This, together with the possibility of computer implementations of formal gedankenexperiment concerning diverse "artificial economies" (Lane 1993a, b), holds the promise of establishing also formally sound bases for evolutionary analyses of economic change.
Structural Change and Economic Dynamics, 1997
In this paper, it is argued that the espousal of biological analogies by evolutionary economists cannot reveal the most important features of evolutionary change in economic processes. Analogies are used to best effect in the preliminary stages of research and in their normal linguistic role as illustrative devices in argumentation. An economic process may sometimes appear to operate 'like' a biological one; however, it is inappropriate to then model such a process 'as if' it is essentially biological due to its timeless qualities. Because of this timelessness, the model cannot address history except through the contrived use of Newtonian comparative statics, with the force of competition acting as the equilibrating mechanism. In contrast, the self-organization approach to system behaviour is founded upon an observable historical process, captured in the entropy law. It deals with non-equifibrium structural change, as found in historical experience, not timeless Newtonian comparative statics, workable only in contrived laboratory experiments. The advantage of the self-organization approach is that it encompasses time irreversibility, structural change and fundamental uncertainty in an analytical framework which can be used in empirical settings. The economic self-organization approach offers an analytical framework which can embrace a range of other positions. It can deal with Austrian considerations concerning the variety of subjective knowledge, aspiration and uncertainty and it can give spontaneous order an explicit process meaning. A wide range of institutionalist insights can be translated into propositions concerning self-organization. Marshallian neo-classical approximations concerning the short period operation of the price mechanism in certain market conditions can be dealt with. What we cannot incorporate is the post-Marshallian general equilibrium analysis which has become so popular in modern The ideas contained in this paper are drawn from related seminar presentations at the Realism in Economics Workshop and the Post-Keynesian Seminar at the University of Cambridge. Related seminar papers were also presented at the
Evolutionary economics and the competition between scientific paradigms
Globalization and Business
The choice of physics as a model for the development of economic theory, a methodological direction which has been particularly dominant since the Second World War, has increasingly been criticized by economists, and not only by evolutionary economists, but by members of a variety of schools. Many of these critics see biology as an alternative methodological direction that merits investigation. Modelling economics on biology is not a new idea; it is an attempt to revisit a number of questions which were left behind at the turn of the twentiieth century. Thus the fundamental ques- tion is whether the concept of evolutionary economics was abandoned prematurely, or for good reasons. At present, it seems that the unifying position of these different “evolutionists” seems to be a growing contempt with the neoclassical economics, especially to its simplifying assumptions, which take inventions, innovations and dissem- ination of information as external variables The concepts that schumpet...
Economics as an Evolutionary Science
The Journal of Socio-Economics, 2004
Economists have long followed developments in the 'hard' sciences with an eye toward applying those developments to their own discipline. Hypothesis testing of positive statements, the use of mathematics as the formal language of economic theory, and the use of experiments are all examples of methods economists have borrowed from other disciplines. Economics as an Evolutionary Science is another attempt to improve the field of economics by borrowing the methodology of the natural sciences. Gandolfi, Gandolfi and Barash (GGB) try to incorporate what E.O. Wilson calls consilience (Wilson, 1998) into economics. Wilson argues that the natural sciences have advanced further than the social sciences because all the areas of the natural sciences overlap in a logically and empirically consistent manner. For example, chemists do not posit theories that violate the agreed upon laws of physics; instead chemists build upon those laws when extending their own field. This cross-relatedness and consistency has not been tried in the social sciences, argues Wilson, to the detriment of those who study it. GGB take up the gauntlet thrown down by Wilson, and attempt to link theory from the relatively hard science of biology to economics. In a bold and thought-provoking work, the authors try to make evolution the basis of economic analysis. Many economists have recognized the similarities between economic and evolutionary theory; in addition to making plain those similarities, this book moves further, and attempts to integrate evolution more fully into economics. The authors follow some lines of thought from both evolutionary theory and economic theory to their logical conclusions. Building on Stigler and Becker's (1977) idea that all consumers have the same utility function, the
Competition as Evolutionary Process
ECONOMICS AND MANAGEMENT, 2012
Economists regard market competition as the basis for the science of economics and most of them understand competition through equilibrium framework. However, some scholars criticize neoclassical approach by allegations that it is wrong to assume perfect competition as a driving force of the market; profit and loss are disequilibrium characteristics. The market is viewed as one of the firm's main sources and constraints. Each rival seeks to maximise its market share by becoming the most productive, effective and the largest market leader, or by avoiding competition because of differentiation of products. This paper suggests that innovation is not the only option for competition. The firm may choose to be simpler instead of being more advanced as well. Therefore, firms in more advanced markets that are at the frontier of innovation have no choice and must innovate to keep their positions there. Conversely, in less advanced markets firms are prone to look for easier ways.
Evolutionary concepts and business economics
Journal of Business Research, 2003
In the field of economics, a distinct 'new' subdiscipline called ''Business Economics'' is steadily evolving where the aim of its contributors is to produce useful insights into the nature of the firm and its competitive environment, which in turn inform the practice of Strategic Management. Inevitably, it has been the practice thus far to base this Business Economics upon neoclassical thinking rather than the emerging evolutionary models of economic systems. Evolutionary economics is essentially concerned with dynamic systems and with behavioural trajectories within such systems. This is in direct contrast with the neoclassical fixation upon stasis, equilibrium and global rationality (i.e. allseeing, all-knowing decision makers). Such an approach renders difficult the examination of bounded rationality and the development of competitive advantage in a dynamic environment. We argue that the evolutionary perspective on the competitive structures in which strategic management is practised has a pivotal role to play in the practice of strategy. In particular, we identify specific approaches to strategic management (and particularly competitive strategy), which result from an acceptance of the evolutionary nature of the strategic environment.
Redefining Evolutionary Economics
Evolutionary and Institutional Economics Review, 2006
The aim of this paper is to redefine evolutionary economics in view of its negative and positive identities. The negative identity is formed as a counterargument to neoclassical economics with the hypotheses of optimizing agents and equilibrium, and this functions as a 'vision' that leads to the positive identity. According to the vision, the market is not a universally designed or constructed system, but an autopoietic system or a spontaneous order. In order to specify the positive identity, we examine the ontological/epistemological double meanings of evolutionary economics that entail a recursive relation between economy and economics. Evolutionary economics is redefined as the economics of a largescale, complex and uncertain economy that exists as a loosely connected system with a micro-macro loop structure, facilitated by such social institutions as rules or conventions, multi-layered buffers and routines. It also means the 'analogical-evolutionary pluralist' approach within economics as well as meta-economics in terms of the relationship between economics and history of economics or other disciplines of science. Keywords: the negative and positive identity, bidirectional causal relation, analogicalevolutionary pluralism, meta-economics, large-scale and complex system, multi-layered adjustment, buffer, micro-macro loop.