The Evolutionary Paradigm and the Economics of Technological Change

Since the eighteenth century, economics has been intent on becoming a scientific discipline. Yet, in choosing its sources of inspiration in other sciences, it has the knack for being late by at least a few scientific revolutions [Passet 1979]. Much economic reasoning is still based on the concept of equilibrium that is an analog of Newtonian physics, long since superseded by the theory of relativity [Menard, 1980, 1981]. In the extreme assumption of pure and perfect competition and general equilibrium, firms are only reacting as quantity adjusters to price signals and their behavior is totally determined. Another contending analogy for economic reasoning has been biology and evolutionary theory. Despite Alfred Marshall's admonitions, Thorstein Veblen's suggestions (1898) and repeated attempts thereafter, economic analysis has been largely resistant to the onslaught of evolutionism. In relation to technological change, economists' resistance to the evolutionary framework is surprising, since most other social sciences have adopted it when dealing with technology. Recently, Richard Nelson and Sidney