Population Thinking and Evolutionary Economic Analysis: Exploring Marshall's Fable of the Trees

It is increasingly recognised that population thinking is a basic characteristic of evolutionary economics. By taking its starting point in what is here called Marshall's fable of the trees, the paper demonstrates that there are several forms of population thinking. The most basic form is intra-population thinking for single populations, and this thinking easily extends to structured populations, where selection takes place at several levels. But there is also a need of applying inter-population thinking to the co-evolution of populations and intra-to-inter population thinking to the emergence of new populations. To transform these forms of population thinking into evolutionary analyses, there is a need of simple analytical tools. The paper emphasises a simple and basic tool for population thinking 'Price' equation. This little known equation provides a surprisingly powerful tool for the partitioning of overall evolutionary change into a selection effect and what may be called an innovation effect. This partitioning serves as a means of accounting for evolution and as a starting point for the explanation of evolution. The applications of Price's equation cover relatively short-term evolutionary change within individual industries as well as the study of more complexly structured populations of firms. It also, to some extent, helps to understand the effects of co-evolution between populations and the emergence of new populations.