POLITICAL ECONOMY OF EVOLUTION by Howard Sherman (for the Veblen-Commons Award talk)

I was always fascinated by social evolution, so I was happy when I read Veblen’s argument that economics must become an evolutionary science. All institutionalists agree with Veblen’s principle that social analysis must begin with institutions embodying human relationships, rather than with arbitrary laws of psychology. The notion of starting with specific institutions implies different institutions in different times and places, so it implies change and evolution. My own view of evolution, which agrees with Veblen,.may be found in Sherman 1995, and in Dugger and Sherman, 2000. Neoclassical economists deny evolutionary change in basic institutions and concentrate on long-run equilibrium analysis. Institutionalists all agree that there is evolution, but the notion is seldom developed in detail and rarely applied to specific cases. The key to a concrete evolutionary paradigm lies in two dichotomies made by Veblen. These dichotomies indicate the most important questions to ask, but not the answers. The questions must be answered by empirical research for each specific society. The dichotomies are certainly NOT