Toward a Non-Marginalist Theory of Economic Change

Abstract

Economics and biology have much in common in terms of their intellectual heritage and in the nature of their subject matter. It should come as no surprise, therefore, that many current controversies in biology have great relevance for economic theory. Among these is the theory of “punctuated equilibria” in evolutionary theory. This article draws on this controversy in biology in order to examine some of the issues surrounding the notion, implicit in neoclassical growth theory, that economic change occurs with the accumulation of characteristics acquired by natural selection at the margin. Implications of non-marginalist change include the following: (1) if selection is not entirely due to gradual changes at the margin, then events such as sudden turbulence must be given an important role in a general theory of economic change, and (2) once we leave the knife’s edge of marginal optimization there is more latitude in what constitutes “fitness” than the neoclassical paradigm allows. The article then presents some evidence for the existence of punctuations in economic history and ends with a discussion of some of the elements a general theory of economic change should include.