Evolutionary economics is a school of economic thought that is inspired by evolutionary biology. Although not defined by a strict set of principles and uniting various approaches, it treats economic development as a process rather than an equilibrium and emphasizes change (qualitative, organisational, and structural), innovation, complex interdependencies, self-evolving systems, and limited rationality as the drivers of economic evolution. The support for the evolutionary approach to economics in recent decades seems to have initially emerged as a criticism of the mainstream neoclassical economics, but by the beginning of the 21st century it had become part of the economic mainstream itself.
Evolutionary economics does not take the characteristics of either the objects of choice or of the decision-maker as fixed. Rather, it focuses on the non-equilibrium processes that transform the economy from within and their implications, considering interdependencies and feedback. The processes in turn emerge from the actions of diverse agents with bounded rationality who may learn from experience and interactions and whose differences contribute to the change.
Roots of evolutionary economics
Early ideas
The idea of human society and the world in general as subject to evolution has been following the mankind throughout its existence. Hesiod, an ancient Greek poet thought to be the first Western written poet regarding himself as an individual, described five Ages of Man – the Golden Age, the Silver Age, the Bronze Age, the Heroic Age, and the Iron Age – following from divine existence to toil and misery. Modern scholars consider his works as one of the sources for early economic thought. The concept is also present in the Metamorphoses by an ancient Roman poet Ovid. His Four Ages include technological progress: in the Golden Age, men did not know arts and craft, whereas by the Iron Age people had learnt and discovered agriculture, architecture, mining, navigation, and national boundaries, but had also become violent and greedy. This concept was not exclusive to the Greek and Roman civilizations (see, for instance, Yuga Cycles in Hinduism, the Three Ages of Buddhism, Aztecs’ Five Suns), but a common feature is the path towards misery and destruction, with technological advancements accompanied by moral degradation.
Medieval and early modern times
Medieval views on society, economics and politics (at least in Europe and Pax Islamica) were influenced by religious norms and traditions. Catholic and Islamic scholars debated on the moral appropriateness of certain economic practices, such as interest. The subject of changes was thought of in existential terms. For instance, Augustine of Hippo regarded time as a phenomenon of the universe created by God and a measure of change, whereas God exists outside of time.
A major contribution to the views on the evolution of society was Leviathan by Thomas Hobbes. A human, according to Hobbes, is a matter in motion with one's own appetites and desires. Due to these numerous desires and the scarcity of resources, the natural state of a human is a war of all against all:
“In such condition there is no place for industry, because the fruit thereof is uncertain, and consequently no culture of the earth, no navigation nor the use of commodities that may be imported by sea, no commodious building, no instruments of moving and removing such things as require much force, no knowledge of the face of the earth, no account of time, no arts, no letters, no society, and which is worst of all, continual fear and danger of violent death, and the life of man, solitary, poor, nasty, brutish, and short.”
In order to overcome this natural anarchy, Hobbs saw it necessary to impose an ultimate restraint in the form of a sovereign.
Economic development and socialism
Further theoretical developments relate to the names of prominent socialists of the 19th century, who viewed economic and political systems as products of social evolution (in contrast to the notions of natural rights and morality). In his book What is Property?, Pierre-Joseph Proudhon noted:
“Thus, in a given society, the authority of man over man is inversely proportional to the stage of intellectual development which that society has reached.” The approach was also employed by Karl Marx. In his view, over the course of history superior economic systems would replace inferior ones. Inferior systems were beset by internal contradictions and inefficiencies that made them impossible to survive in the long term. In Marx's scheme, feudalism was replaced by capitalism, which would eventually be superseded by socialism.