Thorstein Veblen's approach to economics is currently gaining new attention in the economic community in the context of a conceptual and methodological debate about how Darwinian concepts should be harnessed to further develop economic theory. This controversy is the frame which I would like to choose to clarify the potential of Veblen's ideas for modern economics and to discuss some of Professor Ranson's comments to my JEI article (Cordes 2005b).
Currently it is still not clear in what sense Darwinian theory is relevant for economics (see, e.g., Vromen 2004; Witt 2003, 3). While there is no doubt that the human species is a result of natural evolution, it has not yet been clarified how the modern forms of the human economy can be explained in terms of Charles Darwin's model of biological evolution. Two different answers, one proposed by Universal Darwinism and the other dubbed the "continuity hypothesis," have been given. As will be shown in this rejoinder, the latter approach is perfectly in line with Veblen's thinking, itself inspired by Darwinism. With respect to this ongoing controversy, Veblen's century-old ideas have an amazing relevance and actuality.
A prominent proponent of the notion of "Universal Darwinism" is Geoffrey Hodgson (2002). To him, a core set of Darwinian principles, along with auxiliary explanations specific to each scientific domain, is applicable to a wide range of phenomena. He argues that evolutionary aspects of the biological and cultural spheres both involve the general Darwinian principles of variation, inheritance, and selection. Universal Darwinism seeks to substantially apply Darwinian principles to cultural evolution; in other words, it is argued that these principles are also valid for explaining other forms of evolution. Consequently, Universal Darwinism is proposed as a broad theoretical framework for the analysis of the evolution of all open, complex systems, including economic systems.
However, by acknowledging the heterogeneity and concrete mechanisms of Darwin's paradigm, major problems of an approach based on a "universal" notion of Darwinism come to the fore. As argued elsewhere (Cordes 2004a), the sources of variation, the mechanisms of inheritance, the role of competition, and the units and processes of selection differ in the biological and cultural spheres. The principles and mechanisms of Universal Darwinism are derived from Darwinian evolutionary theory and thus take on some of its domain specificity. (1) Due to differences between the principles of evolutionary biology and economics, even very abstract analogies between these domains are unlikely to hold.
The inventor of Universal Darwinism, Richard Dawkins (1983), has claimed that Darwinian principles may be as universal as the laws of physics. However, this conclusion does not imply that biological principles or physical laws can easily be applied to the explanation of human behavior and cultural evolution. In this respect, I share some of Ranson's objections. Neoclassical economics has constructed a misleading analogy between Newtonian classical mechanics and the economic sphere, a fact that was heavily criticized by Veblen himself (1898). For similar reasons it seems doubtful when proponents of Universal Darwinism claim that the biological and cultural spheres both involve the general core...