Darwin himself suggested the idea of generalizing the core Darwinian principles to cover the evolution of social entities. Also in the nineteenth century, influential social scientists proposed their extension to political society and economic institutions. Nevertheless, misunderstanding and misrepresentation have hindered the realization of the powerful potential in this longstanding idea. Some critics confuse generalization with analogy. Others mistakenly presume that generalizing Darwinism necessarily involves biological reductionism. This essay outlines the types of phenomena to which a generalized Darwinism applies, and upholds that there is no reason to exclude social or economic entities.-1 -

Contributions in modern theoretical physics and chemistry on the behavior of nonlinear systems, exemplified by Ilya Prigogine's work on the thermodynamics of open systems (Prigogine and Stengers, 1984), attract growing attention in economics (Anderson, Arrow, and Pines, 1988; Arthur, 1990; Baumol and Benhabib, 1989; Mirowski, 1990; Radzicki, 1990). Our purpose here is to relate the new orientation in the natural sciences to a particular nonorthodox strand of thought within economics. All that is needed for this purpose is some appreciation of the general thrust of the enterprise, which involves a shift of perspective from the determinism of conventional physics (which presumably inspired the neoclassical research program in economics) to the nonteleological open-endedness, creative, and nondetermined nature of evolutionary processes.

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The morality and rationality issue is explored from an Axelrod-type perspective; that is, it is discussed in terms of recurrent-prisoner's-dilemma-type games and behavioral strategies or programs for playing them. We argue that intuitive notions of rationality and morality can be shown to be mutually compatible if two assumptions are made: (1) that morality is specified as a general behavioral disposition or program whose rationality is to be determined in comparison to alternative behavioral programs and (2) that the recurrent game is specified as a prisoner's dilemma game with an exit option. The results of a simulation experiment are presented, showing that a “moral program” (specified as one that never defects, but exits in response to an opponents defection) is successful in competition with a variety of alternative programs, including Tit for Tat.

The purpose of this paper is to outline an evolutionary approach to the process of competition among institutions. We shall focus, in particular, on two issues: first, the role of the competitive process as a knowledge-creating process; and, second, the issue of what inferences, if any, can be drawn from the nature of this process regarding the desirability of its outcomes. In discussing both issues we will draw a parallel between ordinary market competition and competition in the realm of institutions. Some clarifying comments in order to narrow down what we mean by "evolutionary approach" and "institutional competition" precede the analysis.JEL classification: H10, H70, K00.