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Evolutionary economics is a theory proposing that economic processes evolve and that economic behavior is determined both by individuals and society as a whole.
Veblen used an example of social hierarchy and status to make his point, noting that demand for some goods tends to increase when the price is higher—otherwise known as conspicuous consumption.
Veblen drew upon many fields of studies, including anthropology, sociology, psychology and Darwinian principles.
Austrian economist Joseph Schumpeter also played an important role in the development of evolutionary economics.
His model of creative destruction described the essential nature of capitalism as a relentless drive towards progress, expanding on Veblen’s early observations.
Of course, the process never ends because genetic mutations mean that new organisms with completely new and perhaps "better-suited" sets of attributes recurrently appear and challenge the older species.
Approach Economics Economy Essay Evolutionary Evolving
A competing theory of evolution is Jean-Baptiste de Lamarck's 1809 theory of "adaptive selection".According to the theory, failure paves the way to economic prosperity by encouraging greater efficiency and the development of better products and services.It also teaches us more about how society's needs develop over time.Indeed, the term "evolutionary" has been bandied about so freely that perhaps the only real definition of it is the following: a theory is said to be "evolutionary" if it is my theory, it is said to be "mechanical" if it is your theory.(!)Early Evolutionary Economics The most popular conception of evolution is Charles Darwin's famous 1859 theory of "natural selection" applied to species of living organisms.Evolutionary economists believe the economy is dynamic, constantly changing and chaotic, rather than always tending toward a state of equilibrium.The creation of goods and the procurement of supplies for those goods involves many processes that change as technology develops.American economist Thorstein Veblen came up with the term evolutionary economics.He believed psychological factors presented better explanations for economic behavior than traditional rational choice theory.Changes in behavior or features, not random "mutations", are what create variety in the Lamarckian scheme.Modern biology embraces only the Darwinian process, but in the context of social sciences, like economics, the Lamarckian process may actually be better suited than the Darwinian.