Evolution provides a single theoretical framework for studying all aspects of all species. It does not function in the same way for economics, even though the two subjects have been entwined throughout their histories. The purpose of this article is to ask if this is a problem and if so what can be done about it.
An early fork in the road that led economic theory away from evolutionary theory was the general equilibrium model of Leon Walras and others, which attempts to create a mathematically complete description of human economic behavior, comparable to Newton’s laws of motion for physical objects. This is not how evolutionary theory developed for a good reason. Living systems are more complex than physical systems and their properties change over time. Even physical systems are often too complex to model with a set of mathematical equations (e.g., the weather).
Evolutionary theory achieves its generality in a different way. Evolutionists have a conceptual toolkit that can be applied to the study of any aspect of any organism. This includes asking four questions in parallel, concerning the function, history, physical mechanism, and development of the trait. For example, species that live in the desert are typically sandy colored to avoid detection by their predators and prey (a functional explanation). The sandy coloration is achieved by different physical mechanisms, depending upon the species—fur in mammals, chitin in insects, feathers in birds (a physical explanation). The particular mechanism is based in part on the lineage of the species (an historical explanation) and develops during the lifetime of the organism by a variety of pathways (a developmental explanation). Answering these four questions results in a fully rounded understanding of coloration in desert species. All branches of biology are unified by this approach.
The same approach can be applied to the core topics of economics, such as how groups succeed or fail as cooperative units, how large-scale social institutions arose during human history, how societies can function well without their members having the welfare of the society in mind, and the nature of trust, discounting the future, and risk-tolerance—all topics addressed by the other articles in the special issue of the Journal of Economic Behavior and Organization introduced by this article. It is important to stress that evolutionary theory includes the study of cultural in addition to genetic evolution and therefore can address the rapid changes taking place all around us. Mathematical and computer simulation models play an important role in the inquiry, but in a way that is tailored to particular subjects and closely coordinated with empirical research. Once again, this is not a weakness but the only way that formal theory can operate for the study of complex systems.
In our experience, based on hundreds of conversations with economists and public policy experts of all stripes, most are open-minded and unthreatened by evolution. Their main question is “What is the added value of an explicitly evolutionary perspective, compared to the way that I and my colleagues have been approaching our subject on our own?” They typically advance four reasons why an evolutionary perspective might not add value:
1) Smart people converge on the right answer, even if they employ different perspectives;
2) Functional organization can be studied without requiring a specifically evolutionary perspective;
3) There’s no point in speculating about how things evolved in the distant past when they are available to be studied in the present; and
4) All branches of knowledge should be consistent with each other but that doesn’t mean that they all must be consulted. Evolutionists seldom need to consult quantum physics and perhaps economists seldom need to consult evolutionary theory.
These are fair points that receive respectful consideration in our article. We conclude that while each has a degree of legitimacy, they fail for any sizeable human-related subject. Hence, evolution can and should serve as a general theoretical framework for economics and public policy, in the same way as for the life sciences.
The evolutionary paradigm should be consulted by people across the political spectrum. It affirms the importance of self-organizing processes, including competitive market processes as a powerful form of cultural evolution, while also stressing the need for the processes to be refereed. It highlights the ability of small groups to manage their own affairs, while also stressing that some spheres of activity require larger scales of social organization. It is progressive in the sense of working toward positive change, while also respecting the wisdom of existing societies—including religious societies—as products of cultural evolution. The evolutionary paradigm provides a new set of navigational tools for steering an intelligent course between the stale and ineffective policy recommendations of current perspectives.