Political economy of evolution: remarks upon receiving the Veblen-Commons award.
Journal of Economic Issues › Vol. 38 Nbr. 2, June 2004
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Political economy of evolution: remarks upon receiving the Veblen-Commons award.
I was always fascinated by social evolution, so I was happy when I read Thorstein Veblen's argument that economics must become an evolutionary science. All institutionalists agree with Veblen's principle that social analysis must begin with institutions embodying human relationships rather than with arbitrary laws of psychology. The notion of starting with specific institutions implies different institutions in different times and places, so it implies change and evolution. My own view of evolution, which agrees with Veblen's, may be found in Sherman 1995 and in Dugger and Sherman 2000.
Neoclassical economists deny evolutionary change in basic institutions and concentrate on long-run equilibrium analysis. Institutionalists all agree that there is evolution, but the notion is seldom developed in detail and rarely applied to specific cases. The key to a concrete evolutionary paradigm lies in two dichotomies made by Veblen. These dichotomies indicate the most important questions to ask, but not the answers. The questions must be answered by empirical research for each specific society. The dichotomies are certainly not a set of transhistorical and inevitable laws. They are flexible methodological approaches. Two Dichotomies In many of his works, Veblen stated a dichotomy between "business" (economic institutions) and "industry" (technology). Business and industry refer to the specific case of capitalism, but in more general terms, this dichotomy between economic institutions and technology is important in many societies. Sometimes the institutions promote technology, but in other times and places the ins...See the full content of this document
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