Geography Reference
In-Depth Information
According to Witt (2003, 2006), the key focus of evolutionary economics is on the
processes and mechanisms by which the economy
self-transforms itself from within
. Thus
theories on economic evolution have to satisfy three basic requirements. First, they must
be
dynamical
. This criterion rules out any kind of static or comparative-static analysis,
and focuses attention on change. Second, evolutionary economics must deal with
irre-
versible
processes - the past cannot be recovered and it imparts legacies that condition the
behaviour of economic agents in the present and the future; this rules out all 'dynamical'
theories that describe stationary states or equilibrium movements, the preoccupation of
traditional mainstream (neoclassical) economics. Rather, in the context of evolutionary
economics, 'dynamical' refers to such features as emergence, convergence, divergence,
and other patterns and trajectories that are rooted in real historical time. This distinc-
tion is critical since while mainstream economists - and the 'new economic geography'
theorists - claim to deal with 'history', this notion is merely a logical construct relating
to the 'initial conditions' of the abstract mathematical models used to determine stable
equilibrium outcomes: there is no real history in such approaches. And third, theories
on economic evolution must cover the generation and impact of
novelty
as the ultimate
source of self-transformation. As Witt emphasises, the criterion of novelty - its gen-
eration and its role in economic transformation - is crucial to any theory of economic
evolution. It is the creative capacity of economic agents (individuals and i rms), and the
creative functions of markets, that drive economic evolution and adaptation (see also
Metcalfe et al., 2006).
As Schumpeter insisted, transformation arises endogenously, from within the socio-
economic system, and enterprise-driven innovation and adaptive development are the
primary processes (Ramlogan and Metcalfe, 2006). Thus innovation and knowledge
assume central importance in evolutionary economics. Knowledge is not something
that is separate from, or autonomous to, the economic process in the manner of some
pregiven 'factor of production' (as it is in so-called 'endogenous growth' models); rather
it is the internal development of knowledge that renders the underlying process of eco-
nomic evolution both adaptive and transformative in character (Fine, 2000). Knowledge
never stands still, but is constantly being created. It is this continual process that drives
economic evolution, and renders capitalism restless, in constant motion:
The origins of restless capitalism lie in its unlimited capacity to generate knowledge and new
behaviour from within, and it is the propensity for endogenous variation that makes it so
dynamic and versatile, sui ciently so that economies may be completely transformed in struc-
ture over relatively short periods of historical time. Growth is not simply a result of calculation
within known circumstances, but of human imagination and the search for novelty and com-
petitive advantage. Moreover, every advance in knowledge creates the conditions for further
advances . . . economic growth is an autocatalytic process in which change begets change.
(Metcalfe et al., 2006, p. 9)
Thinking about the economy as a dynamical, irreversible and self-transformational
system opens up new space for theoretical, ontological and epistemological exploration.
Indeed, as noted by Dopfer, Potts, Klaes and Witt among others, the attraction for many
of evolutionary economics is precisely its permissiveness towards heterodox perspec-
tives and approaches, and a range of dif erent metaphors (see also Castellacci, 2006).
Thus it is possible to identify neo-Veblenian, neo-Schumpeterian, neo-Hayekian, and
