Earnshaw 2012 Evolution Beyond Biology

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Biological Theory ISSN 1555-5542 Biol TheoryDOI 10.1007/s13752-012-0050-6

Evolution Beyond Biology: Examining theEvolutionary Economics of Nelson andWinter

Eugene Earnshaw

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THEMATIC ISSUE ARTICLE: HOW EVOLUTIONARY IS EVOLUTIONARY ECONOMICS?

Evolution Beyond Biology: Examining the EvolutionaryEconomics of Nelson and Winter

Eugene Earnshaw

Received: 1 May 2010 / Accepted: 13 June 2012

� Konrad Lorenz Institute for Evolution and Cognition Research 2012

Abstract Nelson and Winter’s An Evolutionary Theory

of Economic Change (1982) was the foundational work of

what has become the thriving sub-discipline of evolution-

ary economics. In attempting to develop an alternative to

neoclassical economics, the authors looked to borrow basic

ideas from biology, in particular a concept of economic

‘‘natural selection.’’ However, the evolutionary models

they construct in their seminal work are in many respects

quite different from the models of evolutionary biology.

There is no reproduction in any usual sense, ‘‘mutation’’ is

directed as opposed to blind, and there is no meaningful

distinction between phenotype and genotype. Despite these

substantial departures from the conceptions of evolutionary

biology, I argue that the ‘‘evolutionary’’ economics of

Nelson and Winter is indeed a legitimate extension of

Darwinian evolutionary principles to a novel domain, and

that the traditional conception of evolution by natural

selection must be revised. The novel features of evolu-

tionary economics models reflect the distinctive theoretical

requirements faced by economists. I further contend that

reproduction, heredity, blind variation, and the genotype/

phenotype distinction are all inessential to evolutionary

theory, and that their role in evolutionary biology is a

domain-specific feature of biological theory.

Keywords Darwinism � Evolution � Evolutionary

economics � Evolutionary theory � Lamarckism � Natural

selection � Philosophy of biology

Nelson and Winter’s (1982) book An Evolutionary Theory

of Economic Change presents itself as a challenging

alternative to the neoclassical orthodoxy of the discipline.

Drawing on Darwinian evolutionary principles for inspi-

ration, the authors develop what they term ‘‘evolutionary

models’’ of economic change that bear explicit and con-

scious analogies to models of population genetics. For this

reason, their work bears considerable interest as an object

of philosophical analysis. An examination of attempts at

evolutionary model-building in other domains than biology

is valuable in shedding light on the nature of evolution

more generally, precisely because of the historical con-

nection between biology and evolutionary theory.1 In

broadening our analysis, we can minimize the danger that

our understanding of evolution mistakenly includes aspects

which are particular to biology rather than evolution. We

can also understand more specifically how evolutionary

economics may instantiate the broader patterns of evolu-

tion by natural selection in an appropriately domain-spe-

cific fashion. Rather than attempting to take evolutionary

theory as practiced in biology as given and attempting to

extend it to a non-biological domain, we will examine an

extension of evolutionary modeling to a non-biological

domain to see what it can tell us about evolutionary theory.

There are striking similarities between the evolutionary

models of Nelson and Winter (henceforth N&W) and the

typical structure of biological models of evolution by nat-

ural selection. However, there are other aspects of the

N&W’s models which diverge so sharply from traditional

biological evolution that their models arguably are missing

features necessary for evolution by natural selection (ENS).E. Earnshaw (&)

Institute for the History and Philosophy of Science

and Technology (IHPST), University of Toronto, Toronto,

ON, Canada

e-mail: [email protected]

1 Naturally, this assumes that the target of analysis is a genuine case

of evolution, or at least close enough to be interesting. That N&W

indeed do present such a case will be argued subsequently.

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Biol Theory

DOI 10.1007/s13752-012-0050-6

Author's personal copy

This raises a question: either N&W are not really modeling

ENS after all, or the example of N&W demonstrates that

conventional evolutionary theory fails to accurately capture

the evolutionary character of certain non-biological mod-

els. Although in either case, analysis may prove fruitful, I

intend to argue that an examination of the ‘‘evolutionary’’

models of N&W suggests that we should revise aspects of

the traditional understanding of ENS.2

I will focus on three distinct aspects of N&W’s evolu-

tionary models which can be seen as departures from

genuine evolution. N&W’s models involve directed vari-

ation, they lack a distinction between phenotype and

genotype, and they lack reproduction and heredity. In

examining the evolutionary models of N&W, I will suggest

that the traditional understanding of the nature of evolution

by natural selection is too narrowly based on biology, and

as such may reflect specifically biological concerns that are

not properly part of natural selection considered abstractly.

N&W’s models represent a population undergoing evolu-

tionary change via natural selection (among other things),

and by examining the explanatory structure of their

account, we can refine our broader understanding of evo-

lution by natural selection.

ENS in Biology

There are many distinct accounts of evolution by natural

selection available in the biological and philosophical lit-

erature. The dominant analysis in the philosophy of biol-

ogy, versions of which can be found in Lewontin (1970),

Sober (1984), and Godfrey-Smith (2009) among many

others, conceives ENS as having three key elements: var-

iation, heredity, and fitness differences. The main ‘‘rival’’

account, the replicator-focused view associated with Hull

(1988, 2001) and Dawkins (1976, 1982) and applied to

economics by Hodgson (2002), differs from some aspects

of this view, but accepts analogues of each of these ele-

ments. Hodgson speaks of ‘‘variation, inheritance, and

selection’’ (2002, p. 270) as the key ingredients. While

there is some dispute among the various authors over the

best definition of each term, and over the extent to which

these elements are individually necessary and jointly suf-

ficient for ENS, some version of these three elements

seems widely accepted—perhaps as widely accepted as

anything about ENS.

These elements presuppose a population of individuals;

evolution will consist of some change over time in the

composition of this population. Each of the three elements

of ENS are then understood as additional characteristics of

this population. The individuals must vary: in other words,

not every individual can have exactly the same traits as

every other. There must also be fitness differences, which

are normally understood in terms of propensities for sur-

vival and reproduction: individuals that fail to survive are

gone from the population (and can no longer reproduce),

and new individuals enter the population via the repro-

duction of existing individuals. If individuals with a par-

ticular trait tend to be better at this3 than individuals with

an alternative trait, then there is a fitness difference

between the traits. If individuals tend to be similar to their

parents (heredity), then the higher fitness trait will tend to

become more prevalent in the population compared to the

lower fitness trait.

Novelty is another key concept involved in evolutionary

modeling. It must be distinguished from variation: varia-

tion refers to the existence of actual differences between

individuals at a particular time, whereas novelty refers to

the possibility (or the actual occurrence) of a trait emerging

in the population that did not previously exist. Novelty may

be seen as a certain sort of failure of heredity, and in

biological contexts may be thought of as the possibility of

mutation. Its importance has been emphasized by some

authors—for example Hull et al. (2001) make it a consti-

tutive part of evolution by natural selection. However,

Sober (1984) and Godfrey-Smith (2009) conceive of

selection as operating on the variation as it exists in the

population, and therefore while selection may in a certain

sense be sterile without an accompanying source of novelty

(in that one expects the variation in the population to

gradually decrease under the influence of natural selection

in most circumstances), it can nevertheless operate. How-

ever, it is clear that the actual explanation of evolution by

natural selection that one gets from Darwin (1859) and

others (e.g., Fisher 1958) essentially employs a mechanism

of novelty. The gradual emergence of complex adaptive

mechanisms is incomprehensible without it, as is the pro-

cess of speciation. So while in a certain sense it may be

accurate to separate novelty from ENS, in the explanatory

contexts where natural selection is most indispensable,

novelty plays a key role. As we shall see, novelty also plays

a key role in N&W’s models.

I take the question of the key explanatory contexts of

evolution by natural selection to be an important one.

There are bound to be disanalogies between models that

operate in different domains. The relevant question is how

significant these differences are for our explanatory pur-

poses. In his recent book Darwinian Populations and

Natural Selection (2009), Godfrey Smith categorizes pop-

ulations according to how prototypically Darwinian they

2 Insofar as any account of ENS can be ‘‘traditional.’’ I sketch what I

take to be key features of the dominant analysis in the next section.

3 That is, at survival and reproduction. Specifying ‘‘better’’ very

precisely is tricky; see, e.g., Sober (1984).

E. Earnshaw

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are along several axes of similarity. So, for example, it is

typically Darwinian (to Godfrey-Smith) to at some point in

the life cycle have a ‘‘bottleneck’’ where there is just one

reproducing entity (such as a fertilized egg, or what have

you), and it is also typical to have a distinction between

germ and soma. It turns out that human reproduction is

very typical on these criteria. But for such measures to

have interest from the point of view of philosophy, they

have to impact our explanatory projects in a significant

way—in a way that ‘‘makes a Darwinian difference’’ (p.

104), as Godfrey-Smith puts it. And I take it that so long as

a population’s change over time is explained in a charac-

teristically Darwinian way, such disanalogies as may exist

between the population as modeled and a more prototypical

population are not of broad significance. This, at least, is

how I propose to consider N&W’s models: the test of their

status as evolutionary models is in the nature of the

explanations they offer.

Nelson and Winter’s Models

In the course of An Evolutionary Theory of Economic

Change, N&W develop several distinct models.4 While the

models differ in various particulars, they share broad

similarities, which are motivated by N&W’s own views

concerning the nature of firms, innovation, and economic

change. The models posit a population of firms, each of

which is characterized by, at minimum, a capital stock and

a production technique. The production technique deter-

mines the production characteristics of the firm’s capital

stock such as the amount of labor used and the output of

‘‘goods.’’ The production technique of each firm in the

population together with other specified parameters such as

a demand curve for the goods produced by the industry

determines the costs and sales of the firms per unit of

capital stock. From this, profits can be calculated. Given

profits, some function determines the change in each firm’s

capital stock—for example, firms that lose money might

probabilistically shrink, and profitable firms might proba-

bilistically grow. When all of these values are specified, the

model is a Markov process; that is, a mathematical system

where the state of the system at a given time suffices to

determine the probabilities of all possible future states of

the system.

Thus far, we have a population of entities with varying

traits, we can track the change in prevalence of the traits in

the environment, and changes in the environment can

advantage some traits over others. Depending on the initial

conditions and parameters, we may see the gradual

extinction of all variants but the most profitable, or a move

to an equilibrium situation, or an ongoing oscillation. We

can explain these changes by appealing to the interaction of

the production technique of each firm with the environ-

ment. Given the cost of labor, some techniques may be

profitable, others will lose money, and the profitability of

the firms causes them to grow or shrink, and may even

drive some firms out of business entirely.

However for several of their models, N&W add a further

element that is essential to their purposes: a source of

novelty in the system. As they argue, ‘‘To fill in the

ranks… decimated by competitive struggle at earlier times,

or to make possible the appearance of entirely new pat-

terns, some mechanism analogous to genetic mutation must

be posited. Otherwise, selection can only bring about the

dominance of the best of the patterns that started the con-

test’’ (1982, p. 142). We have already seen that a source of

novelty also plays a key explanatory role in biological

evolution by natural selection.

For N&W’s economic models, ‘‘innovation’’ plays this

role of introducing novelty into the system. They model

innovation as a ‘‘search’’ by firms for a new production

technique to replace their old technique. Firms that engage

in search may or may not find a new production technique;

if they do, the relevant characteristics of the technique are

generated via model assumptions probabilistically from a

space of possible techniques. Once a firm has found a new

technique, it will adopt the technique only if it judges it to

be more profitable than the old technique—and firms are

generally modeled as liable to error in judging the char-

acteristics of new techniques. The addition of innovation to

the evolutionary economic models is a key factor that

allows them to model economic change and technical

innovation over time. It also is another respect in which

their evolutionary models both parallel biological evolution

in some respects while diverging in others.

Analogies

Although it may already be fairly clear, I wish nevertheless

to specify more precisely why we ought to take seriously the

claim that N&W’s models involve evolution by natural

selection in just the same sense that biological models can. I

will highlight what I take to be the key evolutionary aspects

of their most complex model, which simulates the historical

development of the production techniques of an industry.

The fact that the model is a Markov process means that,

given a specification of the state of the population at a

particular time, the probability of each possible subsequent

state can be calculated. This means that their model gives

4 I will characterize their models generally to begin with, but much of

my more specific analysis will be focused on one of the more complex

models they discuss, presented in chap. 9, which attempts to recreate

the change over time of an actual historical industry.

Evolution Beyond Biology

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us a complete picture of the possible ways in which the

system can change, and how likely each such path is to

occur. They are sufficient to simulate the trajectory of the

entire system.

Given the environment, some types are less successful

and others more successful. Over time, trait types (pro-

duction techniques) that are less well suited to the envi-

ronment will tend to decline and eventually vanish. This

means that over time, the population will change in an

incremental, directional, broadly predictable fashion,

insofar as we expect the combination of novelty and

selection to gradually drive the population to increasingly

‘‘efficient’’ production techniques—efficient in the sense of

producing more output for lower costs. And we can

therefore appeal to the force of evolution by natural

selection to explain the gradual increase in efficiency of the

industry as a whole.5 This is strikingly similar to how one

would explain the gradual increase in the average value of

any trait that gives a competitive advantage via biological

evolution—whether it be height, or fecundity, or what have

you.

This is not to suggest that evolutionary models must

always behave in directional, incremental fashion, or that

efficiency in evolutionary models must always increase. It

is merely to suggest that we can explain such phenomena,

when observed in a population, by appeal to ENS. N&W’s

model seems to do just that: it generates the historical

pattern of change observed in the industry by modeling the

introduction of novel variants together with the competitive

success of more efficient variants.

Over time, techniques develop in the industry that would

have been extremely improbable given the initial config-

uration of the industry. This corresponds to what Godfrey-

Smith identifies as one of the key roles of natural selection

in biological evolution: changing ‘‘the population-level

background’’ in such a way that ‘‘traits that are otherwise

very unlikely to arise via the immediate sources of varia-

tion, become much more likely to arise.’’ (2009, p. 50). In

N&W’s model of industry change in chap. 9, this is exactly

what occurs: the expansion of successful firms and the

pressure on less successful firms to innovate leads to the

development of increasingly efficient productive tech-

niques. Because search for techniques is local, the most

efficient techniques in the possibility space are initially

inaccessible, but over time, the process of search and

selection brings the industry within striking distance.6 We

see a cumulative process of stepwise ‘‘adaptation’’ where

each step represents a small improvement, but which

eventually results in a situation where a ‘‘mutation’’ that

had previously been impossible becomes likely.

N&W can explain the spread of an advantageous trait, the

increase of an advantageous measurable character, the

achievement of initially improbable novelty. These are all

fairly distinctive successes of evolution by natural selection,

and N&W seem to explain them in broadly the same way as

biologists would. There are definitely disanalogies, which

must be examined more closely, but I take it that the analogies

are sufficiently striking to justify our subsequent inquiry.

Disanalogies

Despite the similarities between the explanatory resources

of N&W’s models and those of evolutionary biology, there

are distinct differences that might undercut the extent to

which N&W can accurately be conceived as offering

evolutionary explanations. I will focus on three disanalo-

gies in particular. In what I consider to be ascending order

of importance, these are that variation is not blind, there is

no distinction between phenotype and genotype, and that

there is no reproduction, and therefore no inheritance.

In N&W’s models, firms do not always have a chance of

innovating. Generally, they employ what is termed a ‘‘con-

servative’’ assumption that only unprofitable firms attempt to

change their production technique. Furthermore, there is a

definite bias towards the emergence of beneficial variations,

in the sense that firms are able to, in biological terms, eval-

uate (albeit imperfectly) the effectiveness of a prospective

‘‘mutation’’ and decide whether to mutate or not.

This is certainly a disanalogy from how mutation is gen-

erally conceived in biology—although research has sug-

gested that bacteria mutate differentially in response to

stressful situations (Foster 2007), which is analogous to firms

attempting to innovate when they are unprofitable. Donald

Campbell (1960) made the ‘‘blindness’’ of variation a key

element in his conception of evolutionary epistemology,

which has been widely influential. Campbell was concerned

with explaining knowledge acquisition as an evolutionary

process: he conceived variation as emerging out of a back-

ground context of already existing adaptation, but as insen-

sitive to environmental context, to the correct solution, and to

the relative ‘‘correctness’’ of previous trials. Variation in

N&W is sensitive to the environment, because a prospective

5 It should be observed that in most of the scenarios they consider,

much of the increase in efficiency over time is attributable to

innovation rather than selection. As I observe elsewhere, that natural

selection is not the whole story does not mean it is not part of the

story. But additionally, in N&W’s model, unprofitable firms are

motivated to innovate. Since selective disadvantage (i.e., unprofit-

ability) plays a key role in the process of novelty generation, it should

be credited with contributing to increased efficiency in this regard too.

It is rather as if the unsuccessful genotypes started to mutate rapidly—

fitness still plays a role in this context as well, albeit an unusual one.

6 The search for innovation is local in only some versions of N&W’s

models. In others it depends on an exogenous factor—the independent

‘‘advance of scientific knowledge,’’ more or less.

E. Earnshaw

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variation is tested with regard to its profitability in the current

environment. And the variation is also sensitive to the correct

solution, in that variations that emerge in the population are

biased towards more efficient techniques. It might therefore

appear that the source of novelty is insufficiently ‘‘blind’’ to

fit with Campbell’s account.

However, N&W’s model does not really fall afoul of the

blindness criterion. The mechanism of novelty they employ

involves first a blind draw from a possibility space, fol-

lowed by a ‘‘test’’ for profitability. This test can itself be

understood as a selective process. So the apparent bias in

the novelty that emerges in the system can be understood as

due to an initial selection that takes place on the novel

variants, not as inherent to the variation itself.

However, I also think that Campbell’s emphasis on the

importance of ‘‘blind’’ variation can be somewhat mis-

leading. Contra Campbell, I do not take blindness to be a

necessary feature of evolutionary explanations generally.

This is because natural selection will still continue to

operate regardless of whether mutations tend to be advan-

tageous, disadvantageous, or neither. In his foundational

book, The Genetical Theory of Natural Selection (1958),

Fisher argued that most mutations would tend to be disad-

vantageous. But he did so in the context of showing that

despite this fact, evolution by natural selection could still

lead to the fixation of increasingly advantageous genotypes.

There are good reasons why biologists believe that muta-

tions do not tend to be systematically beneficial for organ-

isms. However, these are specific to their understanding of

the causal processes responsible for mutation, and are

independent of the formal structure of evolutionary theory.

And if systematically disadvantageous mutations are com-

patible with ENS, symmetrically, systematically advanta-

geous mutations should also be compatible. Although

systematically advantageous mutations will contribute to

the evolutionary trajectory of the system and therefore form

part of the explanation for any adaptations that occur, this is

nevertheless compatible with part of the explanation for the

trajectory (and any resulting adaptations) being due to

selection. Just as in the more standard case, we see adap-

tation emerging from the effect of selection overwhelming

the maladaptive bias of mutation, we can understand

selection and an adaptive mutational bias as complementing

one another in the alternative case. Recall that for authors

such as Sober (1984) natural selection operates only on

existing variety: if this is accurate, it is clear that any bias in

the process that produces the variety is irrelevant to the

existence and operation of selective process.

It might nevertheless be argued that the problem is not

whether systematically beneficial mutations are compatible

with ENS, but whether variation is ‘‘directed’’ in the sense

of responding sensitively to the needs of the organism. A

random process might generate systematically beneficial

outcomes (as with free lottery tickets). If systematically

beneficial outcomes are generated by a kind of intelligent

process, however, the situation appears different, and per-

haps more problematic, particularly if the novelties are

generated in response to the needs and desires of agents

(Cordes 2006). Variation that responds to the needs of the

individual is Lamarckism, not Darwinism, it might be

claimed. On this view, evolutionary economics begins to

look distinctly Lamarckian. After all, not only did Lamarck

conceive of variations as arising in response to the needs of

the organism, but he saw these directed variations as being

inherited. While some authors accept economic and cul-

tural evolution as unproblematically Lamarckian (Mani

1991; Dopfer 20017), for others who conceive Lamarckism

as incompatible with Darwinian evolution, Lamarckism

disqualifies anything from being legitimately evolutionary.

I regard concern over Lamarckism as a substantial red

herring. The Lamarckian mechanism of evolution involves

two aspects, corresponding to the two ‘‘laws’’ of his Phi-

losophie Zoologique. One law posits the enlargement and

complexification of organs when used and the diminish-

ment of unused organs. These acquired changes are then

thought to be inherited—his second law (Lamarck 1914).

The inheritance of acquired characters is perfectly com-

patible with Darwinism (as can be illustrated by the fact

that Darwin believed that acquired characters were indeed

inherited). From an evolutionary perspective, an ‘‘acquired

character’’ is just a novel character. Indeed even in stan-

dard neo-Darwinism certain acquired characters are

inherited—namely characters that are acquired in the

genetic material, that is, mutations. And while in standard

neo-Darwinist biological scenarios there is little reason to

suppose that heritable acquired characters will be adaptive,

other authors have emphasized that the evolved robust

goal-directed nature of the developmental processes of

organisms tends to make the novel responses of the

organism to environmental insults an adaptive one (Jab-

lonka and Lamb 1995). Evolution that takes place via

inherited adaptive novelty is not evolution via natural

selection. But that does not mean that a model that incor-

porates inherited adaptive novelty cannot also incorporate

evolution by natural selection. It is true that, if individuals

could guide their variation perfectly in response to their

environment, there would be little role for natural selection

to play. Natural selection is a process whereby change in

the population is explained as due to the success of some

variants at the expense of others. Directed variation

explains change in a population as the result of the

7 For both Mani and Dopfer, most emphasis is on the inheritance of

acquired characters, rather than the ‘‘sensitive response’’ to circum-

stance, although I take it both would accept that ‘‘sensitive response’’

in the production of novelty is a common feature of economic

behavior.


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individual response to its environment. Therefore, the lar-

ger the role directed variation plays in explaining popula-

tion change, the smaller the role that is left for natural

selection to fill. However, this should not be seen as a

serious problem. In biology, change can come about from

many sources other than fitness differences.8 The more

change is due to those sources, the less it is due to fitness

differences. Not every model has to assign a large role to

natural selection. However, there is no reason that a fairly

large amount of directed variation cannot coexist in a

model with a large amount of change due to natural

selection. Indeed, that is precisely what I take to be going

on in N&W’s models.

Lamarckism should not be seen as being an alternative to

Darwinian evolution, at least, not in the broad sense of

evolution by natural selection that we are concerned with

here. Darwin himself was a Lamarckian in the sense of

believing in the inheritance of acquired characters. The fact

that in biology many acquired characters cannot be inherited

is because of specific facts about the inheritance mechanisms

of living things in the world (particularly the germ/soma

distinction), not because we could not construct an evolu-

tionary theory that incorporated inheritance of acquired

characters. And while guided variation and natural selection

are in some sense alternative mechanisms of population

change, there is no reason an evolutionary model cannot

include both mechanisms, any more than a biological model

is less ‘‘evolutionary’’ for including migration and mutation

alongside fitness as drivers of population change.

Phenotype and Genotype

Another striking disanalogy between N&W’s evolutionary

economics models and popular views concerning the nat-

ure of biological evolution is that N&W do not have any

real analogue of a distinction between phenotype and

genotype. This distinction plays a central role in many

accounts of biological evolution (Dawkins 1982; Sober

1984; Stephens 2004), as well as some attempts to recon-

struct more general evolutionary principles applicable to

economics (Faber and Proops 1991, Nelson 2001). The

difficulty of shoehorning the distinction between phenotype

and genotype into the economic sphere has struck some

commentators as generally undermining the relevance of

‘‘Darwinian’’ evolution to economic contexts (Witt 2001).

In N&W, firms have production rules and capital stock

and that is it. There is no separate set of traits that are

selected compared to those that are inherited. This is

connected to the already remarked upon ‘‘Lamarckian’’

appearance of N&W’s models: any change that a firm

acquires over time continues to be possessed by that firm at

subsequent times by default. While Nelson in a subsequent

paper reconstructs the routines of the firm as the genotype

and the phenotype as the firm itself, he observes that

‘‘unlike phenotypes (living organisms) that are stuck with

their genes, firms are not stuck with their routines. Indeed

they have built in mechanisms for changing them’’ (Nelson

2001, p. 172). In addition to this disanalogy, in biology the

concept of genotype is linked to the notion of traits that are

inherited via reproduction, and of traits that exist prior to

the developmental process. When biologists speak of

phenotypic traits, they are referring to the traits of the

organism that come about via the process of development.

These are, on the standard understanding, not directly

inherited by the organism’s offspring, but may be indirectly

transmitted via the inheritance of genotypic information

that brings about a similar developmental process in the

progeny. The fact that firms do not develop nor reproduce

in N&W’s models would therefore seem to undercut the

substance of the identification of ‘‘firm’’ with ‘‘phenotype.’’

Since the lack of reproduction by firms is related to the

absence of the phenotype/genotype distinction, part of the

issue must be deferred until we consider the lack of

reproduction more specifically. However, it is still worth

mentioning that it is not uncommon to employ biological

models of evolution that abstract away from the genotype/

phenotype distinction.9 Such models are generally of

asexually reproducing populations where ploidy can be

ignored. Indeed, what may make the distinction between

genotype and phenotype pressing for biologists are factors

such as diploid inheritance, dominance, sexual reproduc-

tion, and (most importantly) the mechanisms of develop-

ment.10 These biological facts demand to be incorporated

into all but the most abstract biological models, and

guarantee that the traits relevant to selection are not just

identical to the heritable traits of an organism’s parents, but

a complicated function of them.

But surely it is clear that the central role of develop-

ment, diploid inheritance, dominance, and sexual repro-

duction are very domain-specific features of terrestrial

biology—and most pressing with regard to animal biology,

as opposed to fungi, bacteria, etc., which make up a large

proportion of the living world. There is no reason to expect

that evolutionary models in other domains must employ

8 So for example, Sober (1984) might say that there are lots of other

evolutionary forces than natural selection, such as drift, migration,

etc., any of which may be responsible for part of the evolutionary

change.

9 See, for example, equations A1 and A2 in Godfrey-Smith (2009,

pp. 165–166).10 This is not to suggest that these are the only possible motivations

for a phenotype/genotype distinction, merely that they may be salient

for biologists.

E. Earnshaw

123


these concepts. And the fact that simple biological models

often dispense with the phenotype/genotype distinction

further supports the idea that it is inessential to biological

theorizing generally, and to evolutionary theorizing as

well.11 The key requirement here is that of heredity, which

is related to but independent of the existence of a genotype/

phenotype distinction in the population in question.

Reproduction

The most significant difference between N&W’s evolu-

tionary economics models and the conception of ENS in

biology is the lack of reproduction in N&W’s models.

Biologists might forgivably be tempted to dismiss the

analogy between evolutionary economics and evolutionary

biology entirely at this point, given the centrality of

reproduction to biological evolution. How can natural

selection occur if there is no reproduction? Heritable var-

iation in fitness is supposed to be the recipe for Darwinian

evolution, but the concept might seem nonsensical if there

is no fitness and no heredity. However, I will argue that

there is an analogue for reproduction in N&W’s models,

and that this analogue, while differing from biological

reproduction in some important ways, suffices for natural

selection. That is, the analogue plays a role in N&W’s

models that is explanatorily equivalent to reproduction in

biological models, and the difference, while making a

difference in certain contexts, doesn’t make a difference to

the main evolutionary explanatory projects.

The analogue for reproduction in N&W’s models is the

change over time of the capital stock of each firm. Each

firm at any time has a whole-numbered quantity of capital

stock, and it is the capital stock which, given the produc-

tion technique of the firm, determines the labor inputs and

production output of the company as a whole. As we have

previously observed, N&W provide in their models for the

growth or decrease of firms via change in their capital

stock: unprofitable firms have a tendency to lose capital

stock over time; profitable firms add to it. Firms with zero

capital stock no longer produce any goods and for most

practical purposes can be seen as being ‘‘extinct.’’12 The

capital stock can be seen as being in many respects similar

to individual organisms that share their genotype: each unit

of capital stock has both a cost and revenue; these deter-

mine the profitability, which, analogously to fitness,

determines the probability that there will be more or fewer

individuals with that genotype in the next generation.

If one considers the firm in N&W’s work as analogous

to a population of individuals with a shared genotype, the

apparent divergence between the economic and biological

models largely disappears. Many biological models are

already indifferent to the question of whether each indi-

vidual is replaced from generation to generation,13 or

whether some continue to exist and others enter or leave. It

is just the same with capital stock: N&W assume that the

vast majority of the capital stock continues to exist from

time period to time period, but it is sufficient from the point

of view of the model that the capital stock of the firm at one

time is a function of the capital stock at a previous time.

Both organisms in evolutionary biology and units of capital

stock in evolutionary economics can play the role of

‘‘individuals’’ in a model of evolution by natural selection.

And we can conceive of the change over time in the pop-

ulation as taking place via reproduction, or not, as we see

fit; what is significant from the point of view of our models

is that the ‘‘genotype’’ of the individual fix an average

‘‘fitness’’ value whereby one can determine the change in

size of each distinct genotype group.

In both evolutionary economics and evolutionary biol-

ogy, therefore, we can model change over time as the

growth or decrease of groups of individuals that share a

trait in common: this trait being the genotype for evolu-

tionary biology; the production technique for evolutionary

economics. So long as the model is sufficiently specified,

we can determine the probabilities that some genotypes

shrink and others grow relative to one another, leading to

the evolution of the population via natural selection. We

can thereby explain all the important things that ENS is so

handy for: the spread of a superior trait, the progressive

change towards more and more of whatever is systemati-

cally advantageous, the accumulation of adaptations that

open up the possibility space to the previously inaccessible.

However, what this illustrates is not that reproduction

features in N&W’s models. It shows, rather, that repro-

duction as such is inessential to evolution by natural

selection: it is a mode whereby ENS can occur, but it is not

required for ENS, unless one means reproduction in the

very broadest sense of ‘‘producing more of the same.’’ The

key idea is of growth, and of variation in growth rates

11 My view is that the emphasis on it, and on the interactor/replicator

distinction, and the unit of selection/unit of heredity distinction, is

parasitic on the actually important distinction with regard to ENS, the

distinction between individual and trait. Even the most abstract

characterization of selection appears to require three related elements:

the population, made up of individuals, who possess distinguishing

traits. Change in the distribution of traits in the population constitutes

evolution, but can only occur via changes in the individuals.12 Although in N&W’s chap. 9 model, provision is made for firms

with zero capital to perform research and possibly enter the

marketplace.

13 See, again, equation A1 from Godfrey-Smith (2009, p. 165). It tells

you what the new frequency of the type is, and it is derived from the

assumption of asexual, discrete generations, but it does not specify

whether a ‘‘discrete’’ generation involves the parent dying, or budding

off children and surviving itself, or engaging in cellular division such

that there is no answer to the question of whether the parent survives.


123


(Matthen and Ariew 2002). After all, an evolutionary

biology model can remain silent about how exactly indi-

viduals are entering the population, and whether the parent

individuals are replaced by children or continue to survive

themselves. Indeed, in cases such as cell division, it is not

clear whether such questions even have answers.

The key requirement is that the model must have some

mechanism whereby the prevalence in the population of a

type of individual can change, and that the tendency of a

type to change is influenced by some kind of competitive

advantage vis-a-vis its alternatives. In standard evolution-

ary models, this is satisfied by assigning each type a ‘‘fit-

ness’’ in the environment. In N&W, this is satisfied by

calculating the profitability of each production process in

the environment. So long as fitness and profitability feed

back in to affect the prevalence of the type in the popu-

lation, we have evolution by natural selection.

This approach offers a solution to the difficult problem

of distinguishing reproduction from growth. Because var-

ious plants can create new ‘‘individuals’’ via processes that

look a lot more like growth than reproduction, it is an

extremely difficult question of how to understand the nat-

ure of populations such as dandelions or aspen trees in the

context of evolution. If what counts is prevalence in the

environment, however, we do not have to keep rigid track

of an arbitrarily defined individual, nor do we have to

discount the spread of a type through processes of growth

rather than reproduction. Whether we count the aspen as

one large growing individual or many reproducing indi-

viduals is analogous to whether we treat the corporation as

one large individual that grows via adding capital stock, or

as many units of capital stock that add to their number in

some fashion or other. In either case, a very large tree (or

corporation) represents success, however we choose to

analyze it in terms of growth or reproduction. Indeed, the

mode of representation can be chosen depending on the

purposes of the modeling enterprise.

This reconstituted, very abstract conception of repro-

duction is matched by a similarly revised and attenuated

notion of heredity. N&W state that, ‘‘The tendency for…routines to be maintained over time in our theory plays the

role that genetic inheritance plays in the theory of bio-

logical evolution’’ (p. 142). In other words, heredity simply

consists in the tendency for firms to exist over an extended

time period, and to maintain the same routine by default.

This continuity over time is required if natural selection is

to play a role in explaining evolutionary change. Without a

backdrop of stability, the success of one variant over

another is a meaningless concept: the very concept of the

success of a variant presupposed that a variant continues in

existence and that the prevalence of a variant at one time

depends on its prevalence at previous times. N&W quite

rightly adopt this criterion of stability as the key

contribution of biological heredity to evolutionary models.

Biological heredity is the means by which biological sys-

tems maintain the stability necessary for evolution; but it is

stability, not heredity, which is essential to natural selec-

tion considered in the abstract.

A contrary view has been advanced by Godfrey-Smith

(2009) who argues that growth and persistence are both very

marginal cases of ‘‘reproduction,’’ in the sense required for

ENS. His objection is centered around the notion of mul-

tiplication. Without multiplication of entities in the popu-

lation, he argues that the Darwinian possibilities of the

population are extremely limited—in particular, ‘‘origin

explanations’’ of adaptive novelty (which proceed, as dis-

cussed above, by making the emergence of an adaptive

novelty more likely) are ruled out. For cases where the

population can only shrink, Godfrey-Smith’s point is a fair

one. However, as N&W’s model demonstrates, there is no

reason why a model lacking reproduction cannot involve

growth in the population. This perhaps illustrates an

advantage of looking at cases outside of biology, although

species selection suggests a similar moral to me. The focus

on reproduction as the only mode of population change

obscures in Godfrey-Smith’s analysis that growth can be

understood as increasing the size of the population. One can

measure the size of a population in terms of head count, but

that isn’t the only mode available. When we say the pop-

ulation of America is larger than it was thirty years ago,

head count is not the only available interpretation. A species

can grow without speciating: it can increase its overall

prevalence, and that can legitimately be understood as an

evolutionary change. This strikes me as a rather more robust

understanding of the evolutionary success of a species than

one that looks purely at ‘‘child species.’’ And we have

already seen that N&W’s model does support origin

explanations, which undermines the idea that growth and

persistence can’t do the job. So it seems to me that, on the

explanatory criterion that Godfrey-Smith himself employs,

the centrality of reproduction to ENS cannot be defended.

This is not to say that the lack of reproduction and

heredity in N&W is insignificant. I will discuss some of the

significant differences momentarily. In particular, it has

consequences in terms of how we understand novelty to be

realized. But such differences are, one might say, mere

variants; the models are all models of ENS, by virtue of

specifying the population dynamics of a group of individ-

uals divided into classes of variants via the feedback of

competitive advantage into prevalence.

Beyond Biology

Probably the most significant difference from the biologi-

cal to be found in N&W’s models has to do with the

E. Earnshaw

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association of units of capital stock in the larger entity of

the firm. Earlier I interpreted the units of capital stock as

the ‘‘individuals’’ in the model in order to draw the clearest

parallel with individuals in evolutionary biology. However,

that is not how N&W conceive their models: they see their

model as treating a population of firms, not a population of

capital stock, and they conceive natural selection as

applying to these firms via the growth or contraction of the

firm. I hope it is clear that these two perspectives are not

contradictory: insofar as a firm’s growth or contraction is

constituted by its gaining or losing units of capital stock,

both perspectives identify natural selection with such gains

or losses. The difference is in the terminology used to

describe the same process.

Regardless of how we choose to describe the process, it

has an interesting property as compared to standard bio-

logical models: because ‘‘mutation’’ (that is, the research

and adoption of a new production technique) is a process

carried out by the firm as a whole, N&W model it as being

instantaneously and costlessly applied to all of the firm’s

units of capital stock. If we view the model with units of

capital stock as our individuals, this means that all indi-

viduals that share a genotype mutate in tandem. Such a

linkage is clearly not something we would expect to see in

biology. This has the consequence that more prevalent

production techniques are not subject to more production

of novelty (unless one adds the idea of a ‘‘research budget’’

to the model), in the way that we would expect a successful

biological type to be subject to more variation in virtue of

its ubiquity (Darwin 1859). However, it is perfectly clear

why N&W choose to model change the way that they do.

They explicitly avow that instantaneous and costless tran-

sition to a new technique is an idealization, and suggest

that exploring more realistic models might be worthwhile,

but state that the assumption is harmless and warranted by

gains in simplicity and tractability. And it is clear why

N&W believe that a firm adopting a new practice will try to

implement it across the entire company, just as it is clear

why the cost and slowness of this process might be treated

as a sort of ‘‘friction’’ that can in some cases be ignored for

simplicity’s sake.

To be more specific, the choices made by N&W in

building their model, while in this case diverging quite

dramatically from what would seem realistic in the context

of biology, are made based on the specific context of the

domain they are investigating. Reproduction and heredity

are handled very differently—to the extent that both

essentially vanish from the models. But it is precisely

because N&W do away with reproduction and heredity in

any standard biological sense that examining their models

is so instructive. Both these concepts are revealed to be

domain-specific artifacts of biological theory specially:

neither is required for a functional evolutionary model.

The ‘‘recipe’’ for natural selection is often said to be

‘‘heritable variation in fitness.’’ I suggest that this is really

just the recipe for selection in biology. If fitness is under-

stood as referring to reproduction, it is dispensable.

‘‘Heritable variation in fitness’’ could perhaps be better

rendered, therefore, as ‘‘variation in stable tendencies to

growth.’’

Conclusion

N&W were impelled to their evolutionary models by dis-

satisfaction with economic theorizing about change and

innovation. While inspired by Darwinian evolutionary

biology, they developed sophisticated models distinctively

their own. These models are evolutionary in the full sense

of the term, despite diverging strikingly from models of

evolutionary biology. Analysis of their models suggests

that we revise some traditional conceptions of the nature of

evolution by natural selection. Variation need not be blind,

there is no need for a firm phenotype/genotype distinction,

and reproduction and heredity are required only in a highly

attenuated sense. These results shed light both on the

prospects and methods by which evolutionary thinking may

be extended to yet further domains, as well as revising our

view of the nature of selection within biology itself.

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