Evolutionary Economic Thought

Evolutionary Economic Thought

European Contributions and Concepts

New Horizons in Institutional and Evolutionary Economics series

Edited by Jürgen G. Backhaus

Evolutionary Economic Thought explores the theoretical roots of the evolutionary approach, and in so doing, demonstrates how it fits squarely into the theoretical mainstream. Focusing on the institutions of evolutionary change and the processes – such as competition – that generate change, this book takes account of important European contributions to the discipline, hitherto overshadowed by the American paradigm. As such, the book serves to broaden the current discourse. Whilst evolutionary economics itself is a well-researched and widely documented field, this book will be credited with establishing a history of evolutionary economic thought.

Chapter 6: Reconstructing the early history of path-dependence theory

Staffan Hultén

Subjects: economics and finance, economic psychology, evolutionary economics, history of economic thought


1 Staffan Hultén INTRODUCTION Had Joseph A. Schumpeter never written ‘Add successively as many mail coaches as you please, you will never get a railway thereby’ or dared to suggest that it is possible to write the economic history of the United States in the second half of the 19th century in terms of railroad construction and its effects, the pathdependence theory would perhaps never have emerged.1 Path-dependence theorizing is path-dependent on the evolution of thought in the social sciences and it so happened that Schumpeter’s grand example triggered intellectual developments that had direct influence on path-dependence thinking. Path-dependence theory continues to develop and to some extent there exist different visions of what we mean by path-dependence theory. In my mind path-dependence theory proper is the theory codified by P.A. David and W.B. Arthur during the 1980s. One of the most renowned claims of this path-dependent theory is that a winning technology may not be the best choice because small historical events can give an initial advantage to an inferior technology. The initial advantage creates a snowballing effect, based on learning-by-doing and learning-by-using and a rapidly expanding installed base that attracts investments in production, R&D and marketing. The technology is locked in.3 A very common source of lock-in in a dynamic setting is that the actors ‘prematurely’ select a technology without giving sufficient time for the competing technologies to develop. The short term gains from internal production economies and often from external economies defeat the long term advantages...

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