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'temporary' outcome of a path-dependent process that may yet give rise to a subsequent
endogenous process of 'innovating out' of equilibrium. Path dependence then is dei ned
in terms of a sequence of 'temporary' equilibria. Setteri eld contends that if all equilibria
are conceived as essentially temporary equilibria, then 'the antagonism between histori-
cal time and the concept of a state of equilibrium is at least attenuated' (1997, p. 68).
A not unrelated take on this issue is to be found in Bassanini and Dosi (2001) in their
discussion of path dependence. Having given the idea of asymptotic path dependence a
multi-equilibrium interpretation, they go on to recognise the need to 'broaden the dei ni-
tion of path dependence to encompass the case where there is no convergence [lock-in]
to any asymptotic behaviour' (p. 54). However, like Setteri eld they view this alternative
form of 'path dependence without asymptotics' as a sequence of 'temporary' resting
states or equilibria:
Actually, many examples, from the evolution of institutions, organisations and technologies,
suggest a world wherein temporary resting states are 'metastable' in the sense that, on a longer
time scale, that are persistently overcome by new development leading to new 'temporary
resting states'. (Bassanini and Dosi, 2001, p. 54)
While Setteri eld's idea of 'endogenously innovating out of equilibrium' is a useful cor-
rective to the usual appeal to the necessity of an exogenous shock to move the economic
system out of an equilibrium state, we still fail to see why the notion of 'temporary'
equilibria or resting states is needed. How do we (or economic agents themselves) know
an economic system is in a state of 'temporary' equilibrium? And how short in duration
can a position of 'temporary' equilibrium be before it becomes indistinguishable from a
process of incremental endogenous change? Or, on the other hand, how long in duration
before it becomes indistinguishable from the idea of punctuated equilibrium.
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In our view, the very idea of equilibrium - whether path-dependent or not - is dii cult
to reconcile with what is generally taken to be the dei ning feature of an economy viewed
as an evolving system. According to Witt (2003, 2006), for example, the key focus of
evolutionary economics is on the processes and mechanisms by which the economy
self-
transforms itself from within
, that is on processes of endogenously generated change.
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This conception is fundamental to what Castellacci (2006 ) calls an
evolutionary ontol-
ogy
:
The co-existence of random and systematic factors driving economic evolution . . . and the
combination of inertial and dynamic forces, both constitute important elements in an attempt
to explain the most important stylised facts about economic evolution . . . the existence of
structural change (the old Schumpeterian 'creative destruction'), persistent dif erences in
growth rates between regions and countries, phenomena of path dependency, and cumula-
tive causation patterns. Such real phenomena are regarded as unique events in historical time.
Dif erently from the neoclassical metaphor of a steady state, evolutionary scholars describe an
ever-changing and never-ending process of growth and transformation. (p. 869)
Evolutionary thinking requires a shift in mindset from the characterisation of equi-
libria to the specii cation of dynamic and historical processes. Economic evolution is a
species of 'far-from-equilibrium' process and what keeps economies far from equilib-
rium is the particular set of knowledge-generating and application processes that dei ne
the modern economy. Since knowledge is never in equilibrium, it is dii cult to envisage
