The Transdisciplinary Approach to Evolutionary Economics: An Integrated Science of Economics and Biology

This chapter explores the transdisciplinary approach of evolutionary economics, which aims to integrate principles from both economics and biology. Evolutionary economics argues that neoclassical models of centralized market economies based on rationality and equilibrium are oversimplified and unrealistic. Instead, it conceptualizes the dynamics and complexity of real-world market economies as decentralized systems of money-mediated bilateral transactions, stressing the self-organizing nature of their emergence through bottom-up processes without a central auctioneer. Evolutionary economics studies the evolution of economic institutions and systems through mechanisms such as mutation, replication, and selection, akin to biological evolution and emphasizes the imitation and diffusion of external and internal rules to understand the qualitative and dynamic nature of the market economy as observed in financial crises and technological innovations. It also proposes a shift in scientific methodology peculiar to the social sciences to accommodate the complexity, diversity, reality, and evolution differently from natural sciences, advocating for the approaches of Lakatos, Caldwell, and Lawson. The author emphasizes the importance of basic concepts, methodologies, and policies in evolutionary economics, and advocates meta-theoretical “evolutionary perspectives” such as “evolutionary pluralism,” “coevolution of economy and economics,” and “theoretical institutional ecosystem.” He introduces the “micro-meso-macro loop” to explain complex interactions between “replicators” and “interactors” analogous to biological “genes” and “organisms” at multi-hierarchical nested levels of the socioeconomic system, and presents a novel policy framework in evolutionary economics called “Evolutionary Institutional Design (EID),” which aims to influence economic systems through altering both outer and inner institutions at the meso-level.