We consider the microfoundations controversy from the perspective of economic evolution and show that the debate can benefit from lessons learned in evolutionary biology. Although the analogy between biology and economics has been noted before, it has rarely focused on clarifying the micro- macro distinction in economic theory and modelling. The macroevolution controversy in biology has generated testable theories such as the existence of punctuated equilibria in evolutionary history, the distinction between selection and sorting, and group selection. The micro-macro debate is further developed in biology than in economics due to a greater degree of specialisation and interaction of various sub-disciplines. The task for economists is to distinguish between insights directly relevant for economic theory and ones that hinge on unique features of biological systems. We argue that both micro and macro processes drive economic change and that macroeconomic change cannot be explained by micro level optimising alone. We show that debates in biology about group selection and punctuated equilibria are directly relevant to understanding economic evolution. The distinction between reductionism and holism is of little use and in its place a hierarchical approach is proposed. This allows for both upward and downward causation and interaction between levels. Specific topics incorporating ideas from evolutionary theory into economics are: economic exaptations, macroeconomic consequences of institutions, and group selection. Two insights are: selection (sorting) can occur at levels above the individual firm; and, macroeconomic theories can be formulated without reference to firm level descriptions. Micro and macro approaches to economic change are complementary.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)