Applied Evolutionary Economics and Complex Systems

Applied Evolutionary Economics and Complex Systems

Edited by John Foster and Werner Hölzl

This book takes up the challenge of developing an empirically based foundation for evolutionary economics built upon complex system theory. The authors argue that modern evolutionary economics is at a crossroads. At a theoretical level, modern evolutionary economics is moving away from the traditional focus of the operation of selection mechanisms and towards concepts of ‘complex adaptive systems’ and self-organisation. On an applied level, new and innovative methods of empirical research are being developed and considered. The contributors take up this challenge and examine aspects of complexity and evolution in applied contexts.

Chapter 1: Introduction and overview

John Foster and Werner Hölzl

Subjects: economics and finance, evolutionary economics


John Foster and Werner Hölzl Modern evolutionary economics is just over two decades old and its research programme continues to expand in innovative directions. A key development in recent years is the move away from the traditional focus on processes of selection towards the dynamics of complex systems (Foster and Metcalfe 2001). Increasingly, the economy and its components are seen as complex adaptive systems that change qualitatively in historical time. This shift in perspective has led to suggestions that new analytical tools and different empirical research methodologies are necessary. In the natural sciences, approaches to the development and functioning of systems, which apply both evolutionary and self-organization theory in a consistent and compatible way, have proven to be fruitful in recent years (see Kauffman 1993, Depew and Weber 1995). However, the economy, as a system with component sub-systems, is different in important ways to those found in physio-chemical and biological contexts. The challenge is not only to discover analytical representations of economic evolution but also to be able to connect them with empirical research. New and innovative methodologies and methods of empirical research are being developed by applied evolutionary economists. It is these that are of primary interest in this volume. Consequently, it is not the purpose here to review the literature on modern evolutionary economics, nor to provide a systematic account of empirical research methodologies that are still in their infancy. What is offered in the chapters that follow is, necessarily, selective, exploratory and...