TOWARDS AN EVOLUTIONARY ECONOMIC THEORY

Regional Development, Endogenous

This book presents a systematic collection of up-to-date essays and analyses studying the operation and development of human societies from the biophysical perspective. The authors compare the biophysical approach with mainstream neoclassical economic theory, both theoretically and empirically. The theoretical part is discussed in the first six chapters of the book. The authors show that neoclassical theory is not consistent with many laws of nature while the biophysical theory is directly derived from the laws of nature. In the rest of the book, many different authors, including the editors, show in great empirical detail how economic development is extremely strongly correlated with the use of energy and other resources, while neoclassical explanation of economic development is disconnected from a consideration of resources required and hence is generally full of errors, externalities, and exceptions. Given the clear superiority of the biophysical economic theory over the neoclassical economic theory, at least in my opinion, one is tempted to ask why the neoclassical theory is still the dominant theory and why so few people have even heard about the biophysical theory. The most important reasons, as pointed out by the authors, appear to be that economists are not sufficiently trained in the natural sciences and that the neoclassical theory serves the current establishment well. Another reason is that some major improvements need to be made on the research of biophysical theory to make it more attractive to broader audience. This book shows that these improvements often can be made simply by consistently and thoroughly applying the principles of biophysics to different practical problems.

The Case against Carbon Prices

'This book reflects the new level of maturity of evolutionary and institutional economics. The field of evolutionary economics has moved beyond merely describing the economy as an evolving complex system and is now developing empirically testable models of economic evolution. This book is a major contribution to the revolution now taking place in economic theory as traditional welfare economics is being replaced by more realistic models of human behavior and economic organisation.'- John Gowdy, Rensselaer Polytechnic Institute, US 'Statistical analogies and hypotheses testing now attract increasing attention in the evolutionary approach to economics. As much as evolutionary theorizing calls for new concepts to be able to go beyond static equilibrium analysis, as much does empirical work in evolutionary economics require an extension of the tool box of linear time series analysis and statistics. Foster and Holzl have brought together an excellent collection of papers highlighting both the broad range of problems facing such an extension and the possible solutions. The methodological studies and the practical applications in this volume represent a guide post for future empirical work in evolutionary economics.'- Ulrich Witt, Max Planck Institute, Jena, Germany This book takes up the challenge of developing an empirically based foundation for evolutionary economics built upon complex system theory.

This article assesses Childe’s theory of the impact of the commencement of agriculture on Neolithic economic development and its socioeconomic consequences, as outlined in his book Man Makes Himself. It also relates his theory to contemporary views on economic development, paying attention to current theories of sustainable economic development. After providing a biographical note on V. Gordon Childe (an Australian-born archaeologist and anthropologist) and introducing his basic ideas, it examines Childe’s criterion of successful economic development. Subsequently, the essence of Childe’s two-phase model of early agricultural development is summarized and its validity is evaluated. Childe is identified as a Marxist. The influence of Marxism on his life and theories is given careful consideration. It is suggested that contemporary economists should pay greater attention to the ‘big’ history of economic change, as Childe did.

Ontological Issues in Evolutionary Economics: The debate Between Generalized Darwinism and the Continuity Hypothesis

The article discusses theoretical approaches to the factors of economic development. These approaches include theories that were created as a result of the search for the causes of differentiation in development rates and that recognize that the most important thing for development is the mobilization of the region's internal potentials. The authors analyze four concepts: New Economic Geography, Evolutionary Economics, Sustainable Development, and Intellectual Specialization. The new economic geography considers spatial relations not as one of many, but as the main factor determining socio-economic processes of growth and development. According to the concept, the main role is played by two internal forces that cause the processes of concentration and deconcentration of human/economic activity, and the result of these forces is the formation and development of agglomeration. Evolutionary economics is one of the most modern theories of economic growth and development. This theory describes economic processes by analogy with evolutionary processes in nature. Three features distinguishing it from other theories are indicated: the concept of equilibrium, the dynamics of processes, and the characteristics of business entities. The concept pays special attention to such properties as diversity, complexity, and uncertainty of socio-economic processes, which are necessary conditions for development and for development. Sustainable development is an extension of the neoliberal paradigm. Economic development is still in the forefront here, but social and environmental factors are taken into account to preserve the foundations of life and development for present and future generations. The subject of sustainable development economics is management in the society-economy-environment system. The concept of intellectual specialization is a new approach in the European Union's policy, which has become a key element of its regional policy. The strategy includes three interrelated priorities: smart growth; sustainable development; and inclusive inclusion. The aim of the strategy is to develop an individual approach for each region in all EU countries to overcome the recession and ensure long-term development.

Summary In this paper is a detailed analysis of the basics in the theory of economic development during the period from mid last century until today. It states the most significant theories, points out their ranges, offers a critical review regarding their treatment of development, especially regional, rural and local one. It observes those theories according to different classifications existing in scientific literature, primarily the ascend theory, stagnation theory, balanced economic growth theory; then, short-term and long-term development and growth theories; traditional and endogenous theories; economic growth stages theory emphasized after the WW II; structural changes theory; dependency theory, neo-classic counter-revolution theory and endogenous theory as a new growth theory. The analysis becomes wider with a study on development in regional economy theories and rural studies and it systematizes the classification of those theories according to regional economy academics. Distancing ourselves from any particular division as the most suitable and acceptable one, the theories are treated separately and in an historic context, in order to encircle the time framework which from modern theories, dealing with local level development difficulties, resulted. It asserts The Community-led Rural Development Theory, often referred to as the Community Development Theory, or marked as Bottom-up Partnership Approach. The analysis of development theories asserts that mixed exogenous - endogenous approach to development links the rural/local development to the globalization process mostly due to fast technology changes of the IT and communication sectors.

Realism and evolutionary economics

The paper shows that the major methodological problems of modern economics are rooted in internal contradictions and inconsistencies of positivism as applied to social sciences. Evolutionary economics is considered as an alternative approach to mainstream economics, capable of overcoming internal deficiencies that mainstream economics faces. But within evolutionary economics one can find different methodological grounds leading to multiple views on how to analyze complex economic reality, build models and evaluate them properly. It is argued that unifying methodological principles of evolutionary economics are to be found in the philosophy of critical realism. The most appropriate scientific method is that of computer simulations.

A general Darwinian framework is employed to arrive at an interpretation of Schumpeter's work that brings out clearly its specific evolutionary aspects. Schumpeter's theory of economic evolution is seen to be still highly relevant to evolutionary economics, because it sheds light on some fundamental issues: the relationship between evolutionary theory and equilibrium analysis, the usefulness of Darwinian theory for economics, and the precise nature of the evolutionary forces at work in economic systems.

The generic features of an evolutionary theory which are identified in the conceptional discussion of the present paper can be shown to be present already in Schumpeter's 1912 work, The Theory of Economic Development . None the less, it is argued that Schumpeter fell short of a level of generality by which he would have succeeded in providing a true foundation for evolutionary economics. The reason is his eagerness--very clearly visible in the lost seventh chapter--to align his theory with the economic reasoning of contemporary pure economic theory that was moulded in an equilibrium-oriented heuristic and the methodology of comparative statics. Schumpeter's conception--which, in opposing the idea of borrowing from Darwinian thought, he called development--is rather a special theory of the unsteady capitalist growth process passing through booms and crises. Throughout all of Schumpeter's writings the notion of development is therefore closely related to the business cycle phenomenon. The paper argues...

Why study “optimizing behavior”? Globalization via deregulation and privatization is supported by the implicit and widespread belief in an economic model that teaches the avoidance of government intervention in socio-economic life. The old laissez faire belief was revived in the Reagan-Thatcher era, and then gained ground explosively after the collapse of central planning in communist countries. The old fight through the 1970s was between the idea of regulated markets in the west and strong central planning under communism. The question for our era is whether markets should be regulated for social purposes, as they were in western Europe prior to the fall of the wall, or whether the current laissez faire binge will continue in spite of its inherent financial instabilities and the irreversible loss of jobs in previously well-off western nations. In particular, laissez faire teaches that regulations should have been avoided, and this has led to the peculiar problem that financial derivatives are a highly leveraged and unregulated form of credit creation. In contrast, the standard economic theory to be described in this chapter does not admit “money” in any form, shape, or fashion. The “losing side” in the Cold War has adopted capitalism with a vengeance, and is now beating its former enemies: China and Russia, as of 2007, sit on the largest Dollar reserves in the world.

Islamic Economics & Finance within the Context of Development Economics in Nigeria

This paper investigates whether since the 1980s neoclassical economics has been in the process of being supplanted as the dominant research programme in economics by a collection of competing research approaches which share relatively little in common with each other or with neoclassical economics. A shortlist of the new approaches in recent economics includes game theory, experimental economics, behavioral economics, evolutionary economics, neuroeconomics, and non-linear complexity theory. Two hypotheses are advanced – one regarding the relation between economics instruction and economics research and one regarding the nature of the economics research frontier – to describe social-institutional practices that contribute to the replication of economics as a field. Two further hypotheses are advanced – one regarding the boundaries of the field and one regarding how the field appraises itself – to create a historical–methodological framework for evaluating the question of change in economics and change in recent economics in particular. Finally, the paper distinguishes three leading explanations – the ‘breakdown’ view, the ‘takeover’ view, and the ‘maturity’ view – of why neoclassical economics no longer dominates a mainstream economics.