Evolutionary economics

Conventional economic reasoning begins with the definition of scarcity, then assumes the existence of a "rational agent" bent solely on the attainment of one goal - the maximization of her/his welfare as defined by that agent. All relevant information is assumed to be held in common ("perfect information", and the scheme of valuation ("preferences" or "tastes") used by the decision maker is also assumed to be constant and native to the agent ("nonenvy" or "independent preferences"). Given the foregoing stipulations, the determination of the "rational choice" for any agent becomes a straightforward exercise in the differential calculus. Evolutionary economics derives from a more modern tradition of inquiry, which does not take the characteristics of either the objects of choice or of the decision maker as fixed. Karl Marx began in the mid-19th century with his schema of stages of historical development, by introducing the notion that "human nature" was not constant and was not determinative of the nature of the social system; on the contrary, he made it a principle that human behavior was a function of the social and economic system in which it occurred. At approximately the same time, Darwin developed a general framework for comprehending any process whereby small, random variations could be accumulated over time and under the urgings of economic forces into large-scale changes that resulted in the emergence of wholly novel forms ("speciation"). This was followed shortly after by the work of the American pragmatic philosophers (James, Peirce, Dewey) and the founding of two new disciplines, psychology and anthropology, both of which were oriented toward cataloging and developing explanatory frameworks for the variety of behavior patterns (both individual and collective) that were becoming increasingly obvious to all systematic observers. The state of the world converged with the state of the evidence to make almost inevitable the development of a more modern framework for the analysis of substantive economic issues.

Thorstein Veblen began his career in the midst of this period of intellectual ferment, and as a young scholar came into direct contact with some of the leading figures of the various movements that were to shape the style and substance of the newly-minted social sciences into the next century and beyond. Veblen saw the need for taking account of cultural variation in his approach; no universal "human nature" could possibly be invoked to explain the variety of norms and behaviors that the new science of anthropology showed to be the rule, rather than the exception. His singular analytical contribution was what came to be known as the "ceremonial / instrumental dichotomy"; Veblen saw that every culture is materially-based and dependent on tools and skills to support the "life process", while at the same time, every culture appeared to have a stratified structure of status ("invidious distinctions") that ran entirely contrary to the imperatives of the "instrumental" (read: "technological") aspects of group life. The "ceremonial" was related to the past, and conformed to and supported the tribal legends; "instrumental" was oriented toward the technological imperative to judge value by the ability to control future consequences.