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Economics, Evolution and the State

Economics, Evolution and the State

The Governance of Complexity

Edited by Kurt Dopfer

This book focuses on the emerging field of evolutionary economic policy, highlighting the interface between the state, markets, and the evolutionary complexity of modern economies. The contributors explore the possibilities and limitations of governance, and provide a unique platform for the advancement of modern evolutionary economic theory.

Chapter 10: Innovation and the Learning Policy Maker – An Evolutionary Approach Based on Historical Experience

Joachim Schwerin and Claudia Werker

Subjects: economics and finance, evolutionary economics


1 Joachim Schwerin and Claudia Werker2 1. INTRODUCTION Economic policy should be based on an appropriate analysis of the economic system it tries to influence and it should be carried out as much as possible in a non-disruptive manner: if one was to propose guiding principles for the conduct of economic policy, these two statements would hardly be contested. In particular the second principle reflects an evolutionary policy approach that adopts a systemic perspective. Rather than disrupting the internal working mechanisms, political actions should build upon existing systemic processes and modify them as little as possible. In practice, however, such ‘harmonious’ policy making becomes the more difficult to achieve the more turbulent the part of socio-economic life targeted by policy proves to be. Especially in fields characterised by complex dynamics shaped by continuous change and a multitude of overlapping causal factors, sound policy making requires politicians to be able to learn. Learning places them in a position to fit their measures to the current state of the evolving socio-economic system at each point in time. The field of innovation and growth constitutes a prototypical example of such a dynamically changing part of economic life. In this chapter, we will explore the possibility to design, implement and perform a learning innovation policy. We start from the observation that learning cannot occur in a world where everything is the result of pure chance. In such an environment, the past offers no guidance for present and future decisions. Learning...

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