Evolutionary Economics

In contrast to orthodox economics, evolutionary economics has constant change and bounded rationality as the foundation of all its analysis. This implies that one studies the processes of markets with innovation instead of the equilibria of markets with a fixed set of goods, and adaptive routine behavior instead of individual utility or profit maximization. Evolutionary economics thus leaves space to study evolving societies whose legal and other framework has not been stable long enough to let it reach equilibrium—as is the case in all existing societies.

Evolutionary economics traces its roots back to Adam Smith's (1723–1790) invisible hand, which coordinated the wills and actions of many market participants. Evolutionary biology as it has developed since the nineteenth century fertilized the development of evolutionary economics. Before the ...