The Evolutionary Analysis of Economic Policy

This important book analyses evolutionary approaches to economic policy. Its main purpose is to explore the policy implications of evolutionary economics, in particular of approaches inspired on the one hand by Schumpeter and revived by Nelson and Winter which deal with industrial evolution under constant institutions and, on the other hand, of approaches inspired by Hayek and North, which analyse the ways in which institutions themselves evolve. Hitherto evolutionary economists have paid little attention to policy issues, and the relatively few policy implications that they have produced are divergent. Whereas the Neo-Schumpeterian approach has often been used to support political interventions, the Hayekian viewpoint holds that economic policy detracts from economic performance. More systematic evolutionary analysis of economic policy is required if these one-sided findings are to be transcended. Furthermore, such analysis can be expected to develop a coherent theory of economic policy which will plug the gaps and rectify the errors (such as approval of socialist planning and Japanese industrial policies) of both neoclassical and alternative approaches to policy. Evolutionary economists and policy analysts will find this book of great interest, as will economists and students of economics who are interested in enlarging their views with excursions outside the standard curriculum.