ABSTRACT
There he praised Marshall handsomely as one of the first economists to realise that economics is an evolutionary science and for his contribution to formal methods of analysis. Economics certainly needs its tools but the tools are not multi-purpose, and so evolutionary problems require appropriate evolutionary tools. From this perspective, the central message in Marshall is that economic evolution depends on a prior notion of economic order, an order that is transient but structured. Order relates to self-organisation and evolution to selftransformation: to put it rather too loosely, it is why evolutionary dynamics in Marshall depends on a notion of order in the presence of diversity. Change and stasis cannot be separated. The supporting idea, which makes Marshall’s approach explicitly evolutionary, is his principle of substitution in which the multidimensional heterogeneity of firms provides the material on which marketframed selection processes can work their adaptive effects. Such evolutionary systems can never be at rest while heterogeneity is present, and entry and exit are two of the principal processes via which economic heterogeneity is created and destroyed. In this respect there is a connection between the thought of Marshall and Schumpeter: both gave prominence to the role of new entrants as vehicles to transform economic activity in individual industries.
