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The neoclassical economics fails in delivering a realistic description of how the economy works, how individuals and companies choose and perform, of how intermediate bodies participate to policymaking.

Evolutionary economics is a powerful alternative, both in contents and methodology. Indeed, it represents a new paradigm, with its own evaluation criteria for scientific soundness, acceptable explanations, its formal methods, the way it represents novelties over time, its ethical stance, the way through which it is transmitted by teaching.

 

 

1. Human beings

Guidelines for a study of whole human beings, not just homo oeconomicus.

2. Pluralism

Methodological guidelines to the description of societies and economies, renouncing to methodological individualism.

3. Time

The fundamental difference between evolutionary and neoclassical economics relies on the concept of time.

4. Substantive examples of intertwined micro- and macroeconomic theory embedding key methodological insights of evolutionary economics

4.1. Consumer theory

A sharp systematic list of differences of the consumer theory under neoclassical and evolutionary economics.

4.2. Agent-based models: a structured set of consumer rules and a testbed for general routines

The most typical formal tool in evolutionary economics is agent-based modelling, by which all agents are individually modelled and emerging properties can arise. In this paper, an extensive treatment of consumers in agent-based possible models is provided. In this other paper, the key concept of "routine" is introduced and you are given a testbed for comparing results from the implementation of routines with real data in an interpersonal validation procedure for agent-based models.

4.3. Companies dynamics

Dynamic oligopolies with competition on a multiplicity of leverages (technology, product differentiation, prices, advertising,...) and persistent profits, more or less turbolent market shares, etc. are common presence in evolutionary industrial dynamics. In this paper, an exploration of modelling about companies is provided, introducing issues of structural fragility between real and financial markets. The dual problem of labour market and micro-macro success is a key concern.

4.4. Macroeconomic dynamics: a graph representation

With time delays and varying elasticities, macroeconomic variables are interconnected and they can be usefully represented by network graphs.

5. Comparing history-friendly evolutionary models with empirical realities

In this book, a chapter is devoted to the way emerging properties in both real and artificial worlds (including history-friendly models) become the main line of conjuction between the two (ch. 16).

6. What's an acceptable explanation

In evolutionary economics, you explain a certain situation (e.g. a configuration of values and structures) by taking a step back in time, describing a historical state, offer certain dynamics (laws of motion) which generate the current and future (alternative) states and a "final stage", chosen with some criteria. You don't regress back ad infinitum; you accept that there was a certain past and you detect and demonstrate modifications of it. The explanation is the way things change. This is in contrast with neoclassical explanation that relies on the equilibrium concept. Explanation is the formal demonstration that the state is optimal (in the sense of Nash, Pareto, etc.). It's an instantaneous equilibrium (e.g. between demand and supply), where all agents are maximising something and don't want to introduce further changes. If something exogenously (thus unexplainable) change, a new equilibrium is reach instantaneously (indeed: timelessly, since it's just the crossing point of curves and the solution of a system of equations where time is out). Even when there is a talk of time and the utilization of differential equations gives the appearance of time, everything is reversible. Instead, in the evolutionary paradigm all events take time; they cumulate and multiply over an irreversible time, with an arrow from the burden of the past to the tension towards the future. Their inertial development and delays in transmission from a variable to another, thanks to agent-to-agent microdynamics, provide a "time window" in which the observer (an analyst empowered by the theoretician's production) can understand and envisage what is going to happen, while recognising that the multiplicies of factors at play and dynamic influences engender key uncertainties. The actions of humans can change the future. A forecast can lead to action that avoid the forecasted events. It's falsification is not a failure, but a scientific success. In this sense, we are anti-Popperian.

7. Multi-dimensional representations of parametres and outcomes of simulation models

In this book, a few chapters are devoted to graphical methods to represent 10+ parametres in the same sheet to provide ways to give insights on the high non-linearities typical of our modelling way (ch. 12-15).

8. Teaching evolutionary economics

Teaching at EWI alternates the presentation of the key concepts of economics, redefined along evolutionary economics lines, and the distribution of real data (long time series for most countries in the world), so that the student can detect whether the overall indications are matched by data. This implements the fundamental difference between theoreticians (the teacher) and the would-be analyst (the student). In so doing, we are aiming at a critical reader who can articulate a long reasoning, as envisaged in this book, who literally enters into models (human participated simulations), and develop an actively critical attitude, ready to read and react to media coverage of the real world, aware of interpreting fraameworks and support or reject certain policies to change the world.

More in general, evolutionary economics puts emphasis on interactivity in teaching, openness to a plurality of opinions, dialogue with history and geography more than with natural sciences.

9. Ethics for evolutionary economics

In the multiple and dynamic outcomes of evolutionary models and argumentations, where a plurality of agents have a plurality of interests, including conflictual ones, the economist should take side and make explicit value judgements, before providing advice on policies. There is no unified optimization procedure that may allow her or him to evaluate ours as the best of all possible worlds. On the contrary, we are always at the crossroad of development pathways that can be better or worse than the starting point. Moreover, tt may well turns out that a pathway leading to advantages for a group is damaging others. Pareto optimality cannot be the ethical guiding principle of evolutionary economics. On the contrary, we are insisting on the full responsibility of the agents for the direct and indirect development pathways connected with their choice, their lack of it, and of events that, while beyond their influence, require reactive and pro-active action on their part.

10. Connection with world class evolutionary economics

Some of the reference websites of evolutionary economics are the Journal of Evolutionary Economics, Industrial and Corporate Change and the Sant'Anna repository of papers. For teaching, see the Journal of Pluralism and Economics Education.

Fundamental books are Nelson R. R. and Winter S. G., Evolutionary theory of economic change (1982); Nelson R. R., Dosi G., Helfat C. E., Pyka A., Saviotti P. P., Lee K., Dopfer K., Malerba F. Winter S. G., Modern evolutionary economics - An overview (2018), and, in policy terms, Piana V. et al. Innovative economic policies for climate change mitigation (2009).

 

 

 

 

 

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