ABSTRACT
This chapter addresses some problems involved in the application of an evolutionary perspective to the theory of economic and institutional change. First, does evolution, in biology or society, lead to some optimal or ideal outcome, as has been suggested in the past? It is argued in this chapter that such Panglossian interpretations of evolutionary theory are ill-founded in both biological and economic terms. Second, if socioeconomic development is evolutionary, what is the level at which evolutionary selection and innovation operate? Furthermore, while many biologists propose that the unit of biological selection is the gene, what is the analogous unit of selection in socio-economic systems? There are two prominent answers to these questions in the literature. The first is the idea of ‘group selection’ in the work of Friedrich Hayek, and the second is based on the notion of habits and routines as genes, as in the work of Thorstein Veblen, Richard Nelson and Sidney Winter. In surveying these issues, this chapter proposes a non-reductionist theoretical framework, involving a hierarchy of selective and replicating units, and the coexistence of both habitual and purposeful behaviour.
