Darwinism and Institutional Economics
Hodgson, Geoffrey M., Journal of Economic Issues
Thorstein Veblen proposed that economics should be reconstructed as a "post-Darwinian" science. One of the aims of this essay is to explore the meaning of this statement. A second aim is to show that American institutional economics had largely abandoned this commitment to Darwinian principles by the time of Veblen's death. In this context, the appearance of the book by David Hamilton (1953)--especially with its original title of Newtonian Classicism and Darwinian Institutionalism--is all the more remarkable. It reestablished the Veblenian links between Darwinism and institutionalism that most institutionalists had abandoned.
The first part of this essay summarizes the philosophical and analytical meaning of Darwinism and counters some prominent misunderstandings in this area. The second part shows how Veblen had incorporated these Darwinian ideas into his thinking. The third part shows how institutionalists after Veblen abandoned these Darwinian ideas. Having established this context, the fourth part emphasizes the importance of Hamilton's contribution.
What Is Darwinism?
A host of misunderstandings surround the question of Darwinism and its relation with the social sciences. Contrary to widespread suppositions, Darwinism does not support any form of racism, sexism, nationalism, or imperialism or provide any moral justification for "the survival of the fittest." Furthermore, Darwinism does not imply that militant conflict is inevitable, that human inequalities or power or wealth are inevitable, that cooperation or altruism are unimportant or unnatural, that evolution always leads to optimization or progress, that social phenomena can or should be explained in terms of biology alone, that organisms can or should be explained in terms of their genes alone, that human intention is unimportant, or that human agency is blind or mechanistic.
Humans differ from plants and most animals in that they have language and culture. We prefigure many actions and consequences in our minds and act intentionally. The mechanisms of socio-economic evolution and biotic evolution are very different. In studying socio-economic evolution we are concerned with human welfare and wellbeing, and not merely with survival or fecundity. All that is vitally important. But it does not diminish the importance or analytical value of Darwinism one iota.
Above all, Darwinism means causal explanation, where a cause is understood as necessarily involving transfers of matter or energy. Divine, spiritual, miraculous, or uncaused causes are ruled out. Explanations of outcomes are in terms of connected causal sequences. In addition, Darwinism upholds that the evolution of organisms and complex systems involves the mechanisms of variation, inheritance, and selection.
Darwinism upholds that every event or phenomenon has a cause. As the institutional economist Albert Wolfe (1924, 465) it, All science must ... rest on the faith that nothing happens without a cause and that every cause has an effect." This applies to human intentionality as well as everything else. Contrary to widespread belief, causal explanation does not mean that intentions are ignored in Darwinism; it simply means that they are caused, and they have to be explained. Also contrary to widespread belief, the commitment to the idea that every event or phenomenon has a cause does not imply that every event is predictable or that event regularities are pervasive or that the universe is a Parmenidean block or a machine. The principle of causal determination is not the same as determinism, as it is often defined (Bunge 1959; Hodgson 2002b).
Of course, Charles Darwin died before the idea of a gene was formulated and before the incorporation of Mendelian genetics into biology. Without relevant knowledge of the mechanisms of reproduction, Darwin did not rule out the possibility of the Lamarckian inheritance of acquired characters.
The importance and enduring value of Darwinism is its elaboration of a causal mechanism of evolution involving variation, inheritance, and selection. …