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To cite this article: Søilen, K.S. (2017) Why the social sciences should be based in 
evolutionary theory: the example of geoeconomics and intelligence studies. Journal 
of Intelligence Studies in Business. 7 (1) 5-37. 

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Why the social sciences should be based in 
evolutionary theory: the example of geoeconomics 
and intelligence studies 

Klaus Solberg Søilena 
aDepartment of Engineering, Natural Sciences and Economics, 
Faculty of Marketing, Halmstad University, Halmstad, 
Sweden; klasol@hh.se 

 

Journal of Intelligence Studies in Business 

PLEASE SCROLL DOWN FOR ARTICLE 
 



 

 

    
 
 

 
Why the social sciences should be based in evolutionary 
theory: the example of geoeconomics and intelligence 
studies 
 
Klaus Solberg Søilena  
 

aDepartment of Engineering, Natural Sciences and Economics, Faculty of Marketing, 
Halmstad University, Halmstad, Sweden 
 
*Corresponding author: klasol@hh.se 
 
Received 15 January 2017; accepted 2 February 2017 

ABSTRACT This article gathers arguments for why the social sciences should be based in 
evolutionary theory by showing the shortcomings of the current paradigm based on the study of 
physics. Two examples are used, the study of intelligence studies and geoeconomics. After a 
presentation of the geoeconomics literature and an explanation of what the organic view of the 
social sciences is, we follow the study of economics as it developed after the Second World War 
to see where it went wrong and why.  

KEYWORDS Economics, evolutionary theory, geoeconomics, geopolitics, intelligence studies, 
social sciences 

 
1. INTRODUCTION 
The development of theory is essential to any 
science. A little more than a century ago it 
looked as if the study of economics was going to 
be based on evolutionary theory. Then focus 
shifted with the methodenstreit and then after 
the Second World War it was decided that the 
new brave social sciences would be based on the 
study of physics.  

The victors of the Second World War were 
aware that the struggle for theory was more 
important than the military struggle. With a 
military you may win the war, but to win the 
peace you have to convince people of your moral 
high ground. Oakeley, in her book “History & 
Progress” (1923), expressed it this way:  

 
The principles which England and her allies 
are opposing is not merely one that claims 
moral worth (…) It is (…) a theory of history 
(from chapter “German though: The real 
conflict”, pp. 136-7). The great struggle 
seems then ultimately to be more accurately 

expressed as the struggle whether ideas 
have a sway in life.  

 
The allies were fighting German materialism, 
evolutionary thinking, the idea of history as 
physical power, as expressed by Treitschke 
(1898), and at the end simply the notion of 
power (Macht) in the literature altogether. 
This was done to avoid “Prussian world-
dominion”.  

Instead we got American world dominion, 
but without the theories that said so or 
explained how. We got in its place a set of 
unrealistic and idealistic theories such as 
individual free choice, equilibrium theories and 
free open markets. But reality finally caught 
up with the theory. The gap between them 
became too big at the end of the Cold War, 
bringing the physics paradigm in the social 
sciences to a definite impasse. Germany had 
never shown any enthusiasm for the new social 
sciences. Now the new Chinese superpower 
made it clear it was not going to adopt Western 
values. In Russia the news was welcomed as a 
relief. Instead the social sciences now have to 

Journal of Intelligence Studies in Business 
Vol. 7, No. 1 (2017) pp. 5-37 
Open Access: Freely available at: https://ojs.hh.se/ 

 



 6 
distinguish between on one hand explaining 
human and social behavior as it is and on the 
other hand thinking about how the world could 
be. This development may also lead to a revival 
of romanticism.  
1.1 The example of intelligence 

studies and geoeconomics 
Not all disciplines had adopted the new 
paradigm. Some, such as intelligence studies, 
have lived their lives largely outside of the 
ivory towers of academia. Others, such as the 
study of geopolitics, never left the old 
paradigm. Those disciplines that embraced the 
Realpolitik assumption found themselves to be 
popular again (they had been relevant all 
along, but now others rediscovered their 
relevance). The new version of geopolitics, 
called geoeconomics, automatically looked to 
the study of biology rather than physics. The 
aim of geoeconomics is to present intelligence 
(e.g., economic, political, or social) in the form 
of maps, wisdom and maxims that help explain 
current events and make predictions (For 
examples see Søilen, 2012, pp. 140-295). It is a 
discipline adapted to the world of globalization 
and multinational enterprises which shifted 
the power balance from the nation state to 
private organizations. The methodology of 
geoeconomics is similar but not exactly the 
same as the study of geopolitics (Søilen, 2012; 
Søilen, 2010; Søilen, 2016; Wigell and Vihma, 
2016). Geopolitics was defined as an 
evolutionary science right from the start with 
Kjellén (1914) and had only to continue.  

The new study of intelligence studies, with 
its focus on information and its tradition in the 
practical work of intelligence organizations 
may also be based in evolutionary theory, even 
though most contributions in competitive 
intelligence, market intelligence and business 
intelligence do not take this approach. Like so 
many other management disciplines they 
focused on solving practical problems and as a 
consequence have been seen as less valuable as 
academic disciplines. Critics fail to see that 
these disciplines left theory because the 
existing scientific paradigm seemed unrealistic 
and to change it seemed an impossible task.  

While intelligence studies is often 
concerned with the micro level, geoeconomics is 
primarily occupied with the macro level. This 
then is how the two studies fit together, 

                                            
1 Thanks to Karin Jakobsen at Ventus Publishing for 
permission to reprint parts of the book for part 2 of 
this article.  

theoretically, methodologically and in the 
content they study. But unlike the study of 
geopolitics, intelligence studies is at the very 
beginning of its theory development, mainly 
because it has lived its life largely outside of 
academia and gained its legitimacy as a 
distributor of valuable practices to 
professionals. For geopolitics and geoeconomics 
it is a question of sticking to their roots, 
adjusted for a number of biases identified 
during the past half a century, which can be 
summarized as the seduction of maps (i), the 
seduction of history (ii) and the seduction of 
current events (iii) (See Søilen, pp. 21-35).  

The study of geoeconomics is what we today 
should call a multidisciplinary field building on 
the study of history, geography (maps) and 
political science (the study of power based on 
realpolitik assumptions) to explain current 
events and try to predict future action by 
organizations. Intelligence studies is also 
practiced as a multidisciplinary field, in fact all 
relevant social sciences today are forced to 
become multidisciplinary, meaning simply to 
revert the failures of specialization by the 
current scientific paradigm in order to become 
more relevant again. The overspecialization 
and over-compartmentalization that was the 
physics paradigm has led to entire disciplines 
like economics and political science becoming 
ever more irrelevant.  

The next section of the paper is in large 
part a reprint from the book “Geoeconomics”  
(Søilen, 2012)1 which explains the relevance of 
geoeconomics, its methodology and how it fits 
with evolutionary theory and the evolutionary 
approach to the social sciences, but it also 
presents current research in geoeconomics.   

2. GEOECONOMIC THEORY 
2.1 The geoeconomic literature 
There cannot be any politics without political 
realism, and economic issues lie at the core of 
politics. The person, company, or nation which 
possesses economic wealth has resources, and 
resources are power; where power is defined as 
the ability to control the actions of others, thus 
increasing one’s own opportunities for creation 
of further and future wealth. We find this same 
notion in Klare’s understanding of geopolitics 
as the study of “the contention between great 
powers and aspiring great powers for control 
over territory, resources, and important 



 7 
geographical positions, such as ports and 
harbors, canals, river systems (fresh water 
supply), oases, and other sources of wealth and 
influence” (Klare 2003: 51; see also Klare 
2001), but today it’s no longer the nation states 
who are driving these processes, but corporate 
interests which answer to different logic: thus 
the importance and relevance of Geoeconomics 
(Søilen, 2012, p 104).   

Cowen and Smith (2009) have previously 
shown how there is a recast from geopolitics to 
geoeconomics as the globalization ideologies 
from the turn of the 21st century have faltered. 
Instead events have been understood with a 
geopolitical and geoeconomic logic. At the same 
time there has been an auto-destruction during 
the last decade of the relevance of critical 
geopolitics as presented by Dalby (1991) and 
Tuathail (1996). More constructivist criticism 
against geoeconomics comes from other 
geographers like Sparke (2007). Much of the 
interest for Geoeconomics is coming from 
authors and topics outside the Western world, 
for example from Russia (Cf. Alexander, 2011; 
Anokhin and Lachininskii, 2015; Lachininskii, 
2012; Rozov, 2012), the Russian-German 
relationship (Szabo, 2014) and former Soviet 
states  (Scekic et al., 2016),  but first of all 
China (Cf. Ciuriak, 2004; Holslag, 2016; 
Hsiung, 2009, Huotari & Heep, 2016, 
Kärkkäinen, 2016; Khurana, 2014; Søilen, 
2012 B) and comparisons inside of China 
(Schlevogt, 2001),  as if the political struggle is 
also a struggle for ideas, and more precisely for 
a new scientific paradigm. There are also those 
who see the geoeconomic logic as a new balance 
of power between East and West (Couloumbis, 
2003), and those who argue that the US policy 
was geoeconomic all along (Mercille, 2008), or 
still is (Morrissey, 2015). As shown by Barton 
(1999) the system of Flags of Convenience can 
be seen as one of the oldest examples of 
geoeconomic flexibility, or a logic of 
geoeconomics. The first writings on 
geoeconomics had a focus on natural resources 
(Kärkkäinen, 2016), realizing that the third 
world could have greater strategic importance 
than Europe (Hudson et al., 1991), and the 
West (oil, water). Resources would in many 
cases have a larger meaning and include the 
financial system (Sidaway, 2005), and 
infrastructure like oil and gas pipelines (Vihma 
& Turksen, 2015). Also the notion of geography 
as space of economic importance has 
reemerged, not only concerning the new 
passages by the North Pole (Moisio & Paasi, 
2013). 

What is largely missing in the current 
literature is the attempt to build and explain 
geoeconomic theories. In this article we suggest 
how this is done through a paradigm shift, by 
shifting attention from the study of physics to 
biology and evolutionary theory. The shift itself 
is not new, but has been suggested at 
numerous intervals for more than a century. As 
a consequence the focus in the next section is 
just as much to explain historic events in the 
history of the social sciences, and more 
precisely for the study of economics and 
business. 

2.2 The organic view of the social 
sciences 

The organic view of the social sciences says in 
essence that we human beings are not so much 
in control of our behaviour as we think we are. 
We are predominantly emotional and not 
particularly rational creatures. We learn not by 
theory, but by trial and error, that is through 
failures. Consequently, we should seek to 
understand human behaviour more by 
personal experience and by studying values, 
which are the basis of character-formation, 
rather than by losing ourselves in the 
uncharted waste of abstract theories and 
assumption of rationality. The latter may be 
intellectually interesting, but do us little 
practical good. All living organisms are 
nowadays studied in the light of evolutionary 
theory, except for Man. We have to ask why. 
Why should the social sciences be any different 
from zoology in this respect, unless we hold 
that Man stands outside biology? If we do hold 
that, as some Christians do by advocating 
creationism, then at least we are being 
consistent; but that is not the position of the 
social sciences today. Yet these sciences 
continue to define themselves as not part of 
biology. The intention here was good: this line 
was taken partly in order to emphasize that 
Man has moral obligations. But a problem 
arises when the morality and values assumed 
are ones which belong to and favour one 
particular civilization or viewpoint. Then we 
are facing not morality but moralism, the 
attempt of one person or culture to impose its 
values on others. We see this clearest today in 
the struggle between Western and Eastern 
values. In the light of claims about value-
neutrality of the social sciences, it is 
problematic that most social-science journals 
support Western values. The validity of 
Western values must be questioned, if the 
social sciences are to have any credibility in the 



 8 
21st century. Or alternatively, the study of 
human behaviour must revert to the 
humanities, where moral positions are less 
problematic.  

It is no more than a century ago that we 
eliminated the moral component from the 
study of economics. At the beginning of the 
twentieth century, but particularly after the 
Second World War, the discipline of economics 
decided to assimilate itself to physics and its 
logic of “dead material” (non-organic). The 
original motive for this was that physics was 
and is a successful science, and the social 
sciences needed greater rigour. It was also seen 
as a way to solve the normative problem, by 
literally taking the moral component out of the 
equation. Furthermore, it was an inevitable 
consequence of splitting the discipline of 
political economy into two instrumental parts, 
political science versus economics and, later, 
management. Over the past two decades, there 
has been criticism of this approach, and of the 
lack of results produced by ever greater 
specialization. Over specialization seems to 
have shifted much of our research away from 
reality and towards obscurity, abstraction, and 
dogma. The phenomenon of interdisciplinary 
studies can be seen as a reaction against this 
development; so we saw a significant growth of 
interest in interdisciplinary scholarship 
around the turn of the 21st century. But this 
only solved parts of the problem.  

Another characteristic of twentieth-century 
social-science research and methodology was a 
tendency towards linear thinking. Everything 
in economics seemed to be explainable in terms 
of the intersection of straight lines on x and y 
axes. Our linear way of thinking – as opposed 
to the cyclical ideas of Ferdinand Tönnies 
(1887) and the pendulum ideas of Hegel (1820), 
his thesis, antithesis, and synthesis – can be 
traced back to the Old Testament and the 
introduction of Christianity to Europe. The 
notion was reinforced in the period we call the 
Enlightment. The linear paradigm peaked with 
the contempt for the historical method on the 
part of the social sciences following the Second 
World War. That is the direction that is here 
being questioned. We must question not only 
the lack of useful results, but equally the claim 
of objectivity. So what are the alternatives? 

The discipline of geoeconomics is founded on 
an organic understanding of social behaviour. 
This is also a method borrowed from the 
natural sciences too, but from the discipline of 
biology. By “organic” we mean that Man and 
human organizations function rather like 

living organisms. They too are brought into life, 
grow, and fade away, some sooner than others. 
Evolutionary theory is a powerful explanatory 
tool for any science, including the social 
sciences. That does not mean that all social 
behaviour can be understood by studying 
evolutionary theory, but this is the model with 
greatest explanatory strength and most 
potential to explain and predict human 
behaviour.  

This line of thinking is not novel within 
economics. Evolutionary thinking got off to a 
good start in the discipline of economics in the 
USA with Thorstein Veblen in the closing 
decades of the nineteenth century. But 
economists chose to abandon evolutionary 
theory at the turn of the twentieth century, in 
part because it did not correspond to our 
political convictions about how Man should 
think about himself and society. The new 
slogan of the time was liberalism, 
individualism, and free choice – ideas that had 
been seriously challenged by evolutionary 
thinking, which had a more deterministic 
perspective on human life. The newly liberated 
discipline saw that as infringing on our ability 
to think of ourselves as free individuals with 
almost unlimited choices. Furthermore, a new 
world power needed to make a break with the 
existing scientific tradition, especially to the 
extent that it was associated with German 
thinking. The change of scientific paradigm 
corresponded in time to the rise of the 
American Empire and continuation of English-
speaking world dominance under new 
leadership. Thus, although the original 
thought underlying the new empiricist 
paradigm was largely European (Austrian, 
French, British), its development was mostly 
American.  

The organic view of social behaviour in fact 
goes back far further than the nineteenth 
century. A Venetian ambassador to France 
once said “States are like men in that their 
vigour and prosperity does not last forever; 
they mature, they grow old, they succumb” 
(quoted in Ross and McLaughlin 1981: 305). 
The Venetian diplomatic corps wrote some of 
the finest geopolitical analyses of all time, and 
their city’s dominance lasted for more than 
three centuries. The methodological focus was 
not on algebra, 3×3 matrices, and Cartesian co-
ordinates, such as we see so often in the social 
sciences today, but much broader. It covered 
observations on national character, ways of 
life, natural resources, and military strength 
and tactics. This methodological tradition later 



 9 
spread to Rome and to the Catholic Church. We 
find it, for instance, in the writings of Olaus 
Magnus, Archbishop of Uppsala, who in 1555 
published an extensive book on the history of 
the Nordic people (Magnus 1982). 

The methodology was representative for the 
time; readers wanted books to give clear 
answers to real problems. A modern-style 
empirical article would probably have 
provoked outright laughter – “How long did you 
live there? Where did you travel? Do you speak 
the language? You mean to say you know 
because you questioned 250 people at a 
supermarket?” Even if you put half a dozen of 
these research articles together it can still be 
difficult to say anything specific about a given 
social problem. Often it will be more useful to 
read a good magazine, like the Economist or 
some Quarterly Review. Consequently 
companies often complain that they get too 
little value from modern social-science 
research. If business-school academics largely 
ignore this critique that is largely because they 
are safe to do so: it does not threaten them. 
They are responsible not to the world of real-
life business but to a promotion system which 
is based on the type of research that 
businesspeople are complaining about. So 
companies often look for the social data they 
need among other sources, by piecing together 
gleanings from geography (maps), history, and 
current events (Søilen, 2012, pp. 107-109).  
2.3 Evolutionary theory versus 

environmental adaptation 
In order to apply evolutionary theory to the 
social sciences we need to distinguish between 
a number of different issues. One problem is 
that people mean different things by the word 
“evolution”. The term is often used to refer to 
the fact that all living organisms are linked by 
descent from a common ancestor. 
Alternatively, it is sometimes used to refer to 
ideas about how the first living organisms 
appeared; that might instead be called 
“abiogenesis”. We also use “evolution” when we 
really mean natural selection, which is just one 
of the many mechanisms of evolution. 

François Perroux (1983: 23) defines 
evolution as “changes that are interlinked, as 
opposed to a ‘random’ succession of events and 
structures occurring in irreversible and 
historical time”. These changes are what we 
may call genotypic changes. 

In a strict sense then, non-heritable changes 
are not part of what we call evolution. Instead 
we may call them environmental adaptations. 

To many social scientists it seems that 
environmental adaptation is more relevant 
than evolution to their own subjects. 
Evolutionary theory is relevant chiefly to the 
natural scientist, who studies behaviour over 
generations. Not even the long-term business 
cycles of Schumpeter and the Kiel School bear 
much relation to evolution. What seems to be 
most relevant for evolutionary economists is 
therefore Man’s phenotype, where phenotype is 
defined as the morphological, physiological, 
biochemical, behavioural, and other properties 
exhibited by a living organism. An organism’s 
phenotype is determined by its genes and its 
environment. 

At the cultural level mutation is not 
uninteresting to economists either: Chinese 
and Pakistanis are at least two mutations 
apart, Europeans and Africans perhaps as 
many as six or more. There are particularly 
many mutational differences within the 
African continent as this is where Homo 
sapiens first evolved. We need to consider what 
role, if any, these particular genetic differences 
have for economic behaviour. As a comparison, 
modern neuroscience is showing a genetic basis 
for behavioural differences between the sexes: 
for instance, females communicate more 
sensitively than males.  

Then there is the variable of change. We 
acquire new customers, develop and buy new 
computers, and communicate with one another 
using new tools and behaviour. We must 
distinguish between those changes which are 
“evolutionary” and those which are not. 
Evolution in biology refers to (i) “the biological 
process in which inherited traits become more 
or less common in a population over successive 
generations”, recognizing that (ii) “Over time, 
this process can lead to speciation, the 
development of new species from existing ones” 
(Wikipedia article on “evolution”). Under (i), we 
need to discover whether, say, a travelling 
salesman’s son becomes better at selling, 
whether younger people today are able to use 
computers more efficiently than older people, 
and to what extent the content of our 
communication and way of communicating are 
changing with each new generation. Under (ii), 
we need to discover how rapidly these inherited 
changes occur. What biologists disagree about 
is not whether these changes occur, but 
whether they are continual or happen in 
occasional bursts (so-called punctuated 
equilibrium, advocated for instance by Stephen 
Jay Gould). The extreme case of change, in 
which an animal’s lineage diverges into 



 10 
separate species, seems to have little relevance 
for the study of economics, for the foreseeable 
future at least (ii above). What cannot be 
ignored by economists is the modification of 
“inherited traits” (i). What we need to discover 
is whether these changes have any 
implications for our economic models, and how 
significant they are. In other words, we need to 
ask what are inherited traits and what are 
explanatory factors to be accounted for in 
economic theory? It should be possible to begin 
coming up with answers to these questions 
soon thanks to the advance of genetic research. 
Without ever forgetting the contribution 
attributable to Man’s free will, we should be 
able to explain how a given individual will 
behave, based on his or her genome together 
with what we know about how he or she has 
acted in the past (habit). When we achieve this 
we are starting a real scientific study of Man, 
not before.  

For evolution to continue, there must be 
mechanisms to create or increase genetic 
variation, and mechanisms to decrease it. The 
mechanisms of evolution are mutation, natural 
selection, genetic drift, recombination, and 
gene flow. These can be grouped into two 
classes: those that decrease genetic variation 
and those that increase it. We can treat the 
physical properties of the world as constants. 
Human behaviour is changing. It is Man’s 
appreciation of how the physical properties can 
be exploited which evolves. Then there are the 
other limitations as to Man’s action related to 
his resources; the material, capital and what 
man is capable of doing.  

What are then the fundamental building-
blocks of geoeconomics? From a materialist 
perspective these could be material, capital, 
people, and actions. By acting on material 
mankind initiates an evolution which is proper 
to his species. Since mankind has chosen not to 
share material in common, but to control it 
through the institution of private property, 
capital is another building-block. Capital and 
private property are products of political law. 
Other man-made limitations include social 
rules and ethics, whether these are causes or 
effects. 

The first question is why Man acts as he 
does? The answer will tell us what kind of 
actions to expect, which will help us foresee the 
direction of our evolution. When facing a 
decision, man participates in the process as a 
whole being; his interests are not only 
economic, but aesthetic, sexual, and 
humanitarian. These other interests cannot be 

assumed away if we are to understand the 
underlying causes or motives for human action 
and to suggest realistic answers. Or, as Veblen 
(1899: 10) puts it: “Changes in the material 
facts breed further change only through the 
human factor. It is in the human material that 
the continuity of development is to be looked 
for; and it is here, therefore, that the motor 
forces of the process of economic development 
must be studied if they are to be studied in 
action at all”. This is a materialist approach, 
without necessarily being a Marxist one.  

We appreciate the complexity of the task 
when we consider that we must list all the 
possible motives for action Man can have, and 
decide which motives are strongest for each set 
of possible actions. We would need to do this for 
all human beings and all their economic actions 
every day. And it will be difficult to decide 
which actions are economic and which are not, 
since an economic action may be caused by a 
non-economic action. Unless we can achieve 
this, which at this point seems well-nigh 
impossible, we will not achieve complete 
certainty about our evolution. 

The question then becomes, how accurate an 
estimate can we make of a person’s, a 
company’s, or a nation’s evolution, based on 
what we can observe? And will it be accurate 
enough to be worth our undertaking? We can 
always describe economic actions in terms of 
basic principles of evolutionary science and 
make them serve as examples without 
pretending that they have predictive 
capabilities, in much the same way as case-
studies are written today: as descriptive data 
that resemble real life. One thing is clear: the 
better the knowledge we have about a subject’s 
actions, the greater the likelihood of getting 
accurate predictions. It will not do to sit at a 
desk and draw general conclusions from small 
data-sets. This is a major difference from the 
mechanistic approach, whose advocates believe 
that useful conclusions can be drawn from 
mathematical reasoning once a number of 
limited variables are found and defined. The 
major problem here is that they are way too few 
to be of much value. 

The natural sciences nowadays are 
concerned with “dynamic” relations and series. 
Unlike chemistry, which was able to move 
away from its taxonomic stage and develop into 
a modern science, economics ignored new 
developments in the study of biology and 
chemistry and clung instead to the idea of 
natural rights, with its roots in the writings of 
the eighteenth-century French physiocrats, 



 11 
men such as Quesnay, Baudeau, Le Trosne, 
and Mirabeau, but also Condorcet, Gournay, 
and Turgot (cf. Veblen 1899: 2). These men laid 
the groundwork for the British development of 
economics, which evolved into the Lausanne 
school with its refinement of the mechanistic 
programme as applied to economics, and that 
in turn led to the blossoming of the new 
approach in the USA with the neoclassical 
school, first of all the Chicago school of 
economics, setting so the standard and the 
definition of what the Nobel Prize in economics 
should reward.  

It may be that the marginalist school will 
fade away as the American empire declines, or 
because the number of remaining marginalists 
drops below some critical mass, rather than as 
a consequence of the persuasiveness of 
evolutionary arguments. Others would argue 
that the marginalist school will wither when 
other schools can make better predictions 
about economic behaviour. And these 
possibilities are not exclusive.  

This is a constructivist perspective on 
social-science paradigms. Identifying the 
limitations of the marginalist approach, 
criticizing its assumptions, in a word 
“deconstructing” it, is only a first step, and will 
not be enough to make geoeconomics a real 
alternative. Besides, many marginalists would 
agree with their critics to an extent: “our 
approach is an over generalization of reality, 
but it is the only way we know to develop an 
economic science”. If evolutionary economists 
want to offer an alternative, they must develop 
an alternative method which yields answers to 
real-life problems. Instead Geoeconomics can 
succeed where Evolutionary Economics or the 
evolutionary approach to Economics has failed 
by developing a coherent methodology. 

The deconstructionist critic argues that 
marginalist economics typically assumes 
perfect competition, meaning that all parties 
have equal ability to compete. This assumption 
is refuted by what is called the Matthew 
principle, from the words of the evangelist: “for 
whosoever hath, to him shall be given”, 
implying that it is easier for the rich to 
accumulate than the poor (Boulding 1981: 75). 
This is relevant to evolutionary economics 
since economic development is almost bound to 
increase inequality, particularly in its early 
stages (op. cit.: 77). The great evolutionary 
development of the last two hundred years has 
undoubtedly increased world inequality (loc. 
cit.), even though more people are enjoying a 
higher standard of living. These facts in 

themselves will put further pressure on the 
marginalist school. 

“The activity is itself the substantial fact of 
the process, and the desires under whose 
guidance the action takes place are 
circumstances of temperament which 
determine the specific direction in which the 
activity will unfold itself in the given case. … 
The economic life history of the individual is a 
cumulative process of adaptation of means to 
ends that cumulatively change as the process 
goes on, both the agent and his environment 
being at any point the outcome of the last 
process. His methods of life today are enforced 
upon him by his habits of life carried over from 
yesterday and by the circumstances left as the 
mechanical residue of life of yesterday”. 
(Boulding 1981: 75–7) 

In mainstream economic theory these forces 
are assumed away. Another important 
assumption in marginalist economics is the 
maximization of gain. In reality, do we try to 
maximize gain, or to minimize the fear of loss? 
Do we compete against all alike, or less against 
certain groups, family, and neighbours? 
Marginalist economics also assumes free 
choice. This is questioned by a number of 
physicists and neurobiologists (Cf. Nicolas 
Gisin in Brunner, Gisin, and Scarani, 2005). 
Research by Angela Sirigu showed that 
experimental subjects formed a conscious 
intention to perform an action only slightly 
after they had in fact started to perform it. If 
that is true, it puts the whole of rational choice 
literature into question. Possibly the most 
convincing argument for an evolutionary 
approach in the social sciences was propounded 
by the Russian scientist Petr Kropotkin. 
Kropotkin (1902: vii–x) observed two aspects of 
human life which may help to explain 
behaviour. One was the extreme severity of the 
struggle for existence, and the great loss of life 
when food is scarce (the law of Mutual 
Struggle). The other was the fact that bitter 
struggle for the means of existence fails to 
occur among animals of the same species (the 
law of Mutual Aid). When food was plentiful he 
observed the phenomena of mutual aid and 
mutual support. Thus individuals who enter 
the market economy from a situation of mutual 
struggle are often more motivated to work and 
succeed. The concept of struggle for existence 
as a factor in evolution was introduced by 
Darwin and Wallace. The idea of the law of 
Mutual Aid was suggested by Kropotkin’s 
professor at the university in St Petersburg, 
Karl Kessler, who was also dean of the 



 12 
university. Kropotkin essentially took up 
Kessler’s side as and proved both of them 
empirically. When Man has more than enough 
money to live he sets out to help his fellow man. 
This observation speaks against the 
assumption of constant competition, but fits 
well with observations of billionaires’ 
behaviour, for instance in the USA recently, at 
least on the face of things. Bill Gates and 
Warren Beatty, like Rockefeller and Carnegie 
before them, have decided to give away large 
parts of their fortunes to charity. The problem 
can also be seen from a more selfish 
perspective: it is easy to spend a million dollars 
on consuming, but difficult to spend a billion 
dollars. There are only so many things to buy. 
Our needs may stay constant, but we want 
different things. Giving may still be an 
expression of pure self-interest, as when it 
results in greater power and an enhanced 
reputation. 

The problem from the perspective of 
economic theory is that we have constructed 
our economic models with the individual as the 
reference point, acting to maximize his own 
self-interest at the present moment. Our 
models have been set up to portray economic 
life as a matter of seeking to maximize 
satisfaction of our wants, assuming that the 
individual knows what is best not only for 
himself, but indirectly also for others. All these 
assumptions must be questioned.  

The discipline of economics has been 
imposing individualist assumptions, not only 
at the cost of thinking about society, but also at 
the cost of thinking for the long term. Attempts 
by economists like Nicholas Georgescu-Roegen 
to discount for future generations were rejected 
since it was thought – justifiably – that this 
would make our economic models very 
complicated. But perhaps even more important 
was that it would call into question the way we 
live. Georgescu-Roegen was a mathematician, 
so he did not object to the complexity, but it was 
argued that the models would be difficult to 
explain to a non-mathematical audience and to 
practising businesspeople, and difficult to 
apply. His ideas about discounting for future 
generations were seen as a political statement 
which broke with existing utilitarian practices. 
They were seen as a threat to our modern 
liberal democracy built on free trade. Thus, 
from being the favourite student and follower 
of Schumpeter, he soon became an outsider, 
and went to teach at minor universities. But in 
reality, of course, the accepted margin a list or 
neoclassical models are just as political as the 

models advocated by Georgescu-Roegen. But 
worse, and as I will show in more detail, they 
are leading Man’s development in the wrong 
direction, encouraging the consumption of 
future generations’ resources. 

Some will see this as implying a rather 
sombre outlook on human existence, but there 
is another element to consider, as mentioned 
before: our ability to shape our own evolution. 
We have the ability to change our nature by 
altering our ideas and actions (habits). In the 
short run we can adopt new habits, in the long 
run we can expect changes through genetic 
modifications and mutations. That is, we are 
not necessarily the pre-programmed 
competitive machines we are sometimes made 
out to be, but a complex competitive organism 
where only one aspect is mechanical. Thus, to 
be considered truly human in today’s world one 
requires a good portion of empathy and an 
interest in others’ wellbeing. These values are 
already becoming part of our nature. Science 
has shown that we have become more human 
just by living closer together in cities. These 
findings refute the idea, held by some, that we 
were more social and more caring when we 
lived in small isolated groups. The fact that we 
can include empathy in our equations, 
however, does not mean that we must abandon 
evolutionary theory or our biological 
explanatory models. Empathy is part of nature, 
and can be explained as such. 

Social ideas have influenced us for 
millennia, but they first had significant impact 
on our lives during the period we call the 
Enlightenment, in the eighteenth century, 
through the writings of philosophers such as 
Voltaire, Montesquieu, Rousseau, Hume, Kant, 
and Schiller. To ignore the values bequeathed 
to us by these men and others would mean to 
close our eyes to human evolution. We should 
not allow ourselves to be reduced to mere 
animals, not even when we get bored with the 
entire project of civilization (as sometimes 
seems to happen) and decide to inflict massive 
destruction on our own kind. Afterwards we 
wake up full of remorse. 

This, then, must be the full perspective of 
any introduction to the theory of competitive 
advantage, if we are to address the interests 
and concern of all mankind. The biological 
perspective is important not only because it 
gives us scientific data (since we indisputably 
are a part of evolution), but also because it 
helps us to realize our limitations. When 
evolutionary theory was abandoned at the turn 
of the last century (economics) and again at the 



 13 
end of the Second World War (political science), 
we swapped realism for elegant models and 
politically-correct opinions about the world, 
which have merely ended by making our 
studies less useful and putting our species in 
greater danger. Instead we need more realistic 
models that can incorporate the idea of change 
(Søilen, 2012, pp 107-114).  

2.4 Theoretical foundations and 
academic influences for the 
evolutionary approach 

The study of economics has two objectives; 
first, to develop theory to attempt to explain 
and predict human economic behaviour 
(economic theory), secondly to provide 
economic actors or agents with tools enabling 
them to conduct business and public operations 
more efficiently (applied fields). Of these, the 
second is the less problematic. The discipline of 
economics is continually providing economic 
agents with practical working tools to enhance 
organizational performance and efficiency. 
Much of this is done under the heading of 
management, and in close collaboration with 
practising businesspeople. It is the former 
objective which is a cause for concern. The 
larger methodological question is what basis 
we can found the discipline of economics on, to 
give its models predictive power. Are there any 
such models?  

The choice of physics as a model for the 
development of economic theory, a 
methodological direction which has been 
particularly dominant since the Second World 
War, has increasingly been criticized by 
economists, and not only by evolutionary 
theorists, but by members of a variety of 
schools. Many of these critics see biology as an 
alternative methodological direction that 
merits investigation. Modelling economics on 
biology is not a novel idea; it is an attempt to 
revisit a number of questions which were left 
behind at the turn of the twentieth century. 
Thus the fundamental question is whether the 
concept of evolutionary economics was 
abandoned prematurely, or for good reasons.  

The French philosopher and mathematician 
René Descartes inspired two lines of scientific 
thought. One was abstract, mathematical, and 
mechanistic; it led to significant advances in 
knowledge thanks to men like Leibniz and 
Newto2. The other approach explored the 

                                            
2 Newton is said to have been inspired by Descartes 
after having read his “geometry”. 
 

development of our living world with 
everything in it, from insects to animals. This 
second approach was taken forward by men 
like Buffon (1749), Lamarck (1809), Cuvier 
(1812), Wallace (1876), Darwin (1872), and 
Wegener (1915). In these terms we can say that 
evolutionary economists are trying to show 
where the former line of thought falls short 
when applied to the understanding of economic 
behaviour, and where the second line may be of 
help.  

Adam Smith (1776) is often used as a 
reference by the neoclassical or marginalist 
school of economic thought. We shall argue 
that Smith, Thomas Malthus, and Alfred 
Marshall (1890) were in fact all inclined 
towards the evolutionary approach. If that is 
so, it means that the neoclassicals are not so 
much “classical” as “neo”. The “marginalist 
school”, which is a better term for the 
neoclassicals, might also be called the 
“mechanical approach”, as compared with the 
evolutionary approach. The marginalist school, 
or marginalism, studies marginal concepts in 
economics: problems related to marginal cost, 
marginal productivity, marginal utility, the 
law of diminishing rates of substitution, and 
the law of diminishing marginal utility. 
Marginal calculations were a natural direction 
to follow once the physics paradigm had been 
selected. 

The evolutionary model is implicit in 
Marshall’s Principles of Economics, even 
though he did not incorporate the idea into his 
more formal theories. That was part of the 
problem for evolutionary economists at the 
turn of the century: they had not succeeded in 
producing applicable theories and models, but 
mostly left their analyses on the descriptive 
level. So when it came to building a scientific 
platform on which the positivist study of 
economics could stand it was the French 
economist Léon Walras who was chosen. 
Walras and his successors had mathematicized 
the Newtonian system3. They could offer the 
discipline of economics a rigorous methodology 
which promised to deliver elegant answers, all 
in the spirit of the natural sciences. The 
underlying assumption was that if this method 
had worked wonders for the natural sciences 
then it should do the same for the social 
sciences. In other words, their answers 
promised to be more precise than what 

3 Their primary tool was elementary and linear 
algebra.  



 14 
economists had delivered before; and that 
promise was delivered. The fact that the new 
models and their predictions often failed to 
correspond to actual economic behaviour was 
mostly due to their assumptions. They were 
nevertheless far better than nothing (a point 
which continues to be a main argument for the 
marginalists), and hence the evolutionary 
perspective was gradually lost from the 
discipline of economics (Boulding 1981: 17). 
However, it soon became clear that the problem 
was no longer one of precision, but of relevance. 
In other words, the answers were detailed and 
elegant and might have been correct, but they 
did not correspond to the economic realities. 

Later, with Paul Samuelson – whose models 
essentially involved stable parameters and a 
dynamics based on stable differences or 
differential equations – economics became even 
more Newtonian, less Darwinian (Boulding 
1981: 84). If it were not that current economic 
theories have still not demonstrated 
themselves to be the relevant predictive tools 
that economists had hoped for, our scientific 
journey would probably have ended here. But 
it continues.  

The best philosophical foundation for 
economic research seemed to many to be a 
renewal of utilitarianism. The rehabilitation of 
economic theory was due to the Austrian Carl 
Menger – known to students today for his 
theory of supply and demand. Menger’s 
essential aim was to discover the laws 
determining prices and to initiate discussions 
of supply and demand, human needs and 
marginal utility (Schumpeter 1992: 84). The 
biggest flaw in his assumptions is that Man is 
not entirely hedonistic, his nature is not wholly 
fixed and predetermined:  

He is not simply a bundle of desires that are 
to be saturated by being placed in the path of 
the forces of the environment, but rather a 
coherent structure of propensities and habits 
which seeks realisation and expression in an 
unfolding activity (Veblen 1898: 11).  

Both Karl Marx and Menger were much 
influenced by Ricardo. Menger gave rise to 
what has today become mainstream economics, 
but that was not his original role. Menger was 
at one time the outsider, at a time when Marx 
and the German historical school led by Gustav 
von Schmoller represented the consensus 
                                            
4 It was they who called Menger and his followers the 
“Austrian School”, to distinguish them from 
prevailing thinking among German economists. 
5 This point is discussed clearly by Bertrand Russell 
(1903). 

within the discipline of economics4. Critique of 
the “mechanistic approach” is by no means new 
either. In his 1875 book The Character and 
Logical Method of Political Economy, the Irish 
classical economist John Elliott Cairnes 
disputed Jevons’s idea that economic truths 
are discoverable through mathematical 
reasoning (op. cit.: vi). What maths can do is 
illustrate and simplify conclusions that have 
been reached by other methods, or in his words: 

 
I have no desire to deny that it may be 
possible to employ geometrical diagrams or 
mathematical formulae for the purpose of 
exhibiting economic doctrines reached by 
other paths. (op. cit.: vii)  

 
The reason why mathematics can have only 
limited application to economics is twofold. 
First, “its close affinity to the moral sciences 
brings it constantly into collision with moral 
feelings” (op. cit.: 3). The second is even more 
fundamental: maths is ultimately by nature 
just another language, even if of course much 
more precise than ordinary languages5. But 
precision by itself does not help. In the same 
way as we do not solve a problem by translating 
it into a foreign language, maths by itself 
cannot solve economic problems. It can only 
express what is already there in a simpler and 
clearer form. Progress using maths in the 
social sciences only comes through our ability 
to see and handle ideas more easily. The 
advantage is the same that came from the 
development of symbolic logic6. Both 
mathematics and symbolic logic are very 
helpful in summing up what we have already 
discovered, but we have to draw the inferences 
for ourselves. 

Why has physics not provided a successful 
cornerstone for the social sciences? When we 
compare the results of the social sciences to 
those of the natural sciences, we find that 
social phenomena are more difficult to study, 
less tangible, less physically observable. Social 
systems are just too complex if we hope to pin 
down individual behaviour; they contain too 
many variables, with too many possible and 
often irrational outcomes, to be explained via 
physics and mathematics alone. More 
important, our mathematical approaches are 
not capable of treating the element of change – 

6 Unfortunately, the success of symbolic logic has 
reduced interest informal logic, a subject with much 
greater applicability in everyday life. 



 15 
what is often referred to in the scientific 
literature as the dynamic aspect. Newtonian 
and Cartesian numerical mathematics, which 
has dominated the study of economics for a 
century now, is unsuitable for the more 
structural and topological relationships found 
in evolutionary systems, except insofar as the 
topological relationships can be mapped and 
converted into numerical relations (Boulding 
1981: 86).  

Economic theory as developed in the 
twentieth century builds on a number of 
mechanistic assumptions. These assumptions 
were first criticized by Herbert Spencer in his 
2 volumes book “the principles of sociology” (In 
Peel, 1972: 6), who held that they must be 
wrong because “it assumes the character of 
mankind to be constant”. Or put differently, 
the problem is that “existing humanity” does 
not exist, but is constantly changing. Change is 
the law of all things, true equally for a single 
object as for the entire universe; all things are 
mutable: shells into chalk, sand into stone. 
“Strange would it be, if, in the midst of this 
universal mutation, man alone was constant, 
unchangeable” (op. cit.: 7). Everything is in a 
state of continual change or fluctuation, even 
the things we think of as most stable. 
Dynasties and private fortunes seldom last 
more than a few centuries; even a stone 
monument has a limited life. We seem to have 
a cognitive difficulty with change, probably 
because we constantly need to find order in our 
everyday lives. We have a strong need to live 
and find our balance in the present, hence we 
prefer to think in terms of constants rather 
than of fluctuation. This seems to be the way 
we are born. In much the same way, we do not 
feel the earth speeding round the sun, and that 
is good: if we did, we would not be able to 
concentrate on anything else. In other words, 
we seem inclined to think in the linear terms of 
a static, mechanistic world perspective. 
Likewise, we think we can have knowledge of 
the future, but we cannot. Instead we are 
continually surprised; and to top it all we are 
not surprised that we are constantly surprised. 
Within rational choice theory we might define 
these observations as a set of rationality errors. 
They mark a biological limit to our 
understanding of the real world, i.e. of Kant’s 
Ding an sich.  

                                            
7 Paul Krugman (1996) calls neoclassical economics 
and evolutionary science “sister fields” (though he will 
not give up the maximization and equilibrium 
approach).  

From the above one might take it that we 
are confronted with an either/or choice between 
marginalist and evolutionary approaches. To 
the extent that these premisses are not 
contradictory, the method used should be 
whichever method has the strongest predictive 
power in each particular case of economic 
behaviour. It is not a question of either Newton 
and physics or Darwin and biology7. So far as 
we can tell to date, the evolutionary approach 
to economics is not necessarily, and not 
necessarily always, a replacement for 
neoclassical economics. For instance, it seems 
that it is more suited for studying economic 
behaviour over the long term, when the 
element of change becomes most significant. 
There are many problems, e.g. of production 
that are simple enough for marginalist 
calculations to be of value, but they seldom 
include problems of social complexity like 
international business. 

To complicate the question further, in many 
cases marginalists and evolutionary 
economists will both espouse the same methods 
or theories. So for instance game theory is seen 
as a marginalist contribution by some, because 
it can be highly quantitative, but as an 
evolutionary approach by others, because it is 
dynamic and does not seek to maximize a given 
set of variables. Game theory can also be 
studied from either a mathematical or a non-
mathematical perspective, as in the writings of 
von Neumann and Morgenstern (1944) on one 
side and Axelrod (1984) on the other (Søilen, 
2012, p. 119).  

2.5 On the European continent: from 
Buffon to Lamarck, Cuvier, and 
Darwin 

Much attention is given to Darwin, but 
mechanisms of evolution had already been set 
out by the French naturalist Jean-Baptiste 
Lamarck in his classic 1809 work Zoological 
Philosophy. Lamarck began as a botanist 
before becoming a professor of invertebrate 
zoology, and he is known for having developed 
the first positivist theory of evolution for living 
organisms, but also for the influence he had on 
Darwin8. 

Others would want to mention Buffon as a 
pioneering figure. His contributions 
established the scientific foundation and the 

8 Darwin learned about Lamarck through a fellow 
student while studying medicine at the University of 
Edinburgh. 



 16 
scope for natural history, a subject which he 
himself thought always leads back to a 
reflection on oneself (Buffon [1749] 1984: 39)9. 
Buffon called this the first truth:  

 
...that man must arrange himself in the 
class of animals, of which he resembles 
above all in what is material, but even his 
instincts may seem more certain than his 
reason, and his industries more admirable 
than his arts. (op. cit.: 45) 

 
He reckoned that, when mankind becomes 
aware of the true possibilities contained in his 
intellect, “he could make his nature perfect, 
morally, as well as physically” (op. cit.: 247). 
This project, to improve mankind morally, has 
given rise to a whole series of normative, 
politically-correct studies in the social sciences, 
in connexion with topics such as gender, 
sustainable development, immigration, and 
human rights. Putting it differently, many 
university departments today, especially in our 
newer universities, are not so much asking 
what the truth is, as what it ought to be, based 
on what kind of human beings we want to 
create. This becomes a new form of positivism 
whereby politicians steer science in an 
intended direction instead of letting it be free. 
It may also be seen as an evolutionary 
approach, but we must then distinguish 
normative from positivist evolutionists.  

Unlike other animals, man can decide the 
direction of his own social development. In 
other words, he can elevate himself. This is 
done by creating an ideal, not by accepting 
what is “natural”. The problem, when we move 
away from the notion of natural truths, is to 
know which ideal is the right one to follow and 
who should decide which it should be. Some 
academics go so far as to claim that the 
“natural” as such does not exist. One can then 
argue that the sciences can never really escape 
from the domain of politics, since all scientific 
findings have political consequences, whether 
we are talking about Stalinism or the atom 
bomb. On the other hand one might argue that 
more politics will not make university life any 
more manageable, as became apparent on 
campuses all over the Western world in the 
1960s and 1970s. It is true that we can never 
become fully objective in the sense that we can 
escape our own subjective minds, but we can 

                                            
9 Buffon wrote his magnum opus over the years 1749 
to 1788. A summary edition appeared the following 
year, in 1789.  

develop scientific methods to reduce our biases. 
To argue otherwise is in a sense to be a 
methodological fundamentalist. 

One might ask what a book about zoological 
philosophy has to do with the study of human 
behaviour. The fact is that when Lamarck 
wrote about living organisms in general he 
actually had mankind in mind, as we see in a 
passage such as:  

In order to give a living body the ability to 
move without impulsion from a communicated 
force, to be aware of objects outside of himself, 
to form ideas, to compare or combine these 
ideas, and to produce opinions which to him are 
ideas of another order, in one word, to think; 
not only is this the biggest of all miracles which 
the forces of nature have attained, but, in 
addition, it is the proof of the employment of a 
considerable time, as nature has achieved 
nothing but gradually. (Lamarck [1809] 1994: 
122) 

We might see Lamarck’s contribution to 
evolutionary economics as implicit in his 
writings, even though it was Herbert Spencer 
who first developed the idea explicitly: namely, 
that societies are like organisms, in that they 
(i) augment in mass, (ii) gain in complexity, (iii) 
their parts gradually acquire a mutual 
dependence, and (iv) society is independent of 
each of its component units, i.e. is not affected 
by individual deaths. These similarities are 
often referred to as the four parallelisms (Peel 
1972: 57). There are other parallels to human 
life as well. In Chapter VII of his book Lamarck 
discusses the influence of different 
circumstances on the actions and habits of 
animals, and the influence of those actions and 
habits on their living bodies, as causes of 
modifications to their structure and anatomy 
(Peel 1972: 206). Habits become a second 
nature. Lamarck reminds us that for a long 
time we have observed the influence that 
different states of our organism have on our 
character, our inclinations, our actions, and 
even our ideas. But he also notes that no-one 
has yet recognized the influence of our actions 
and our habits on our structure. Our whole 
organism changes when our behaviour 
changes. These changes are so slight that we 
hardly notice them. They are hard to notice 
because they only become apparent after a very 
long time. To demonstrate this, look at an old 
photo of your grandparents. Not only the 
clothes are different: their facial expressions 



 17 
are different too. The implication is that we 
have become our own evolutionary machines, 
even though the changes that we can observe 
are very small. What is driving this machine 
forward so fast is a system of technological 
development and economic growth. The 
changes in our organisms are initiated by 
needs. “If these new needs become constant or 
long lasting, the animals take on new habits, 
which are as constant as the needs which 
brought them to life” (Peel 1972: 208). 

Lamarck notes that the great diversity of 
animal life must be understood against the 
background of the great range of diverse needs 
that appear when new species encounter one 
another in an ever-changing environment. 
Basic human needs for food, clothes, and 
shelter are much the same now as they were in 
the Stone Age, but their expression is changing 
because of the fact that we as human beings 
create new needs through a social mechanism 
called in everyday life “fashion” and the 
constant struggle for ever-higher living 
standards (again a form of social competition) 
in the shape of better and more diverse food, 
more clothes, and larger and more expensive 
houses than others have, than our neighbour 
has. In marketing we call this last form wants, 
to separate them from needs, which are more 
constant). We do this because we are always 
seeking greater comfort or because we want to 
impress our fellowman, out of some version of 
a struggle to survive but also out of habit and 
perhaps because we do not always know how 
else to express our will. This creation of new 
forms and degrees of need is a human 
characteristic, because we have the time and 
the resources to indulge in it. 

Our needs are seemingly endless and 
depend only on our imagination. But the 
strength of some needs decreases as others are 
fulfilled. Man is always looking to maximize his 
satisfaction (the marginalist perspective). We 
know too that types of need change: from basic 
human needs to luxury and what are 
understood as projects for self-realization, as 
we ask what the meaning of life is 
(evolutionary perspective). The discipline of 
marketing, we recall, is largely about how to 
register and communicate these needs and 
wants.  

As human being we act when there is a need 
to change something, to improve something. Or 
putting it differently, a person who is satisfied 
with everything will seldom find a motive for 
pursuing truly great endeavours. “In human 
beings and in the most perfect of animals, life 

cannot be conserved without irritation in the 
parts which must react...” (Peel 1972: 344). 
This phenomenon can be observed in business 
life too, as when the son or daughter of some 
great industrialist is too happy with life as it is 
to take on the hard work needed to develop his 
or her father’s business. Often such individuals 
feel they have nothing to prove; all needs are 
satisfied, there is no irritation. This is 
noticeable when we consider the contrast 
between entrepreneurs and executives. The 
former are often less risk-averse, more 
adventurous and curious, while the latter are 
typically more concerned with stability and a 
steady flow of income. From a biological 
perspective these characteristics may be seen 
and understood as different types of 
psychological irritation, results of environment 
and upbringing as well as inheritance. 
Teaching entrepreneurship from an 
evolutionary perspective then becomes largely 
a matter of making the student aware of these 
irritations and maintaining them.  

Darwin was also indebted intellectually to 
the French naturalist and zoologist Georges 
Cuvier. In a famous letter to Ogle in 1882, as a 
thank for a gift, Darwin described Linnaeus 
and Cuvier as his “two gods”. Cuvier set out to 
tell the history of our planet by showing all of 
the changing processes it has been through, 
continually giving life to new species. One 
example is the different types of shell found in 
separate marine strata (Peel 1972: 150). Cuvier 
noted that among all the thousands of fossils 
he had investigated, there was never a single 
human bone, which led him to conclude that 
mankind is a relatively young species. Cuvier’s 
endpoint is Darwin’s starting point: if all those 
other species had a predecessor, then the same 
must be true for mankind. We must have 
evolved from other species.  

Darwin begins his Origin of Species by 
drawing a difference between natural and 
domestic variation (Darwin [1852] 1994: 5). 
Even though Nature continues to bring about 
changes in mankind, these variations are 
considerably smaller than those of the 
domestic or self-imposed kind. This starting 
point has a parallel in modern evolutionary 
economics, with the contrast between those 
who focus on universal Darwinism, 
represented by Hodgson and Knudsen, and 
those who focus more on domestic variation, 
represented by Nelson, Winter, Cordes, and 
Witt (Witt 2006: 473–6). Thus it is problematic 
to speak about a single school of evolutionary 
economics. Instead what we have are different 



 18 
varieties of theory with different starting 
points. Rather than one school, there are 
various schools which all share an evolutionary 
approach. If we accept the arguments for the 
evolutionary approach, it follows that all social 
sciences that claim to be scientific must adhere 
to this method. Also the study of history, which 
is part of the humanities, can be understood as 
following the methods of evolutionary theory.   

Man’s “self-imposed” variation has 
increased significantly over the past hundred 
years. This domestic variation is governed by 
complex laws: 

 
Variability is not actually caused by man; he 
only unintentionally exposes organic beings 
to new conditions of life, and then nature 
acts on the organisation and causes it to 
vary. (Darwin op. cit.: 410) 

 
Rather, we select among the variations given to 
us by Nature, accumulating them in any 
manner desired. The same principles that act 
in circumstances of domestication also act in 
Nature (op. cit: 412). The individuals selected 
are those which find a competitive advantage 
in the environment within which they live and 
function. Finding such an advantage depends 
on the individual’s ability to adapt. Since 
numerous individuals are involved and only 
some can succeed, competition is often fierce. 
These are very much the same forces that are 
involved in economic life.  

In Nature males try to win females by being 
vigorous, by struggling, by acquiring special 
weapons, means of defence, or charm. In 
economic life mankind tries to gain an 
advantage in very similar ways. What this 
means is that the theory of natural selection is 
valid also for the discipline of economics; but, 
more, that it is being enhanced by the free-
market economy, which in turn is the product 
of our philosophical ideals, such as freedom of 
the individual. In economic life Man struggles 
to satisfy human needs in very much the same 
way as animals struggle to survive: first by 
adapting, then by competing and trying to find 
a competitive advantage, a niche from which he 
can fend off competitors and sit undisturbed.  

The most common form of domestic 
variation is indefinite variability. These are 
changes that last for a limited time only, like 
coughs or colds resulting from a chill (op. cit.: 
6–7). Habits, inheritance, and the use or disuse 
of particular body parts are other reasons for 
variation. It is hard to distinguish clearly 
between individual differences and minor 

varieties, or between more plainly marked 
varieties and subspecies, or between 
subspecies and species (op. cit.: 212). These are 
all different degrees of variation. Nature 
preserves these differences with the same 
keenness, hoping they will result in a 
competitive advantage. These ideas are 
relevant to and would find a natural place in 
the discipline of economics, if economists would 
accept them. “Differentiation” is one of the 
generic strategies in Porter’s model of 
competitive behaviour. Porter’s contributions, 
although ignored by mainstream economists, 
in fact amount (probably unintentionally) to 
one of the more successful blueprints for a new 
discipline of evolutionary economics.  

What we have seen so far is that a first 
academic grouping developing the ideas which 
would eventually underlie evolutionary 
economics was well established in France with 
men like Buffon, Cuvier, and Lamarck, long 
before Darwin. Darwin belonged to a second 
grouping, but we will postpone discussion of 
this (and take it up in conjunction with the 
fourth grouping), because its influence on 
economics occurred mainly in North America. 
Before looking at that we shall consider a 
grouping that historically came third, and was 
located in German-speaking Europe.  
2.6 Germany and Austria: Austrian 

versus historical schools 
Economics as defined by marginalists is the 
study of a particular range of social facts to do 
with how we produce, distribute, exchange, 
and consume scarce resources. As anyone who 
has considered the matter will have noticed, it 
has also a lot to do with money, or wealth. 
When economics and political science was a 
single subject, about a century ago, the study of 
political economy was defined as the science of 
wealth (Cairnes 1875: 8). The laws of this 
phenomenon of wealth were “simply the facts 
of wealth, such facts as production, exchange, 
price; or again, the various forms which wealth 
assumes in the process of distribution, such as 
wages, profits, rent, interest, and so forth” (op. 
cit.: 18–19). This definition, however, was 
inappropriate for the new group of economists 
who wanted to turn economics into a true 
science after the model of the natural sciences. 
The new definition needed to be value-neutral, 
and could not include factors such as power or 
the natural status that results from having 
different starting points in life. The 
assumption had to be that all human beings in 
principle have the same possibilities. The new, 



 19 
more specialized science of economics, which 
was to replace political economy, was to be 
“positive” rather than “hypothetical” like its 
predecessor; and the tools which were to 
achieve that was the discipline of mathematics 
and empirical research. This soon created an 
academic and scientific culture based on small, 
narrowly-defined empirical projects, such as 
we today find in most highly-regarded 
economics and management journals.  

This would not be a problem, if it were not 
for the fact that, well over a century later, we 
have not made the advances we hoped for in 
terms of theory building. We are however wiser 
by many experiences. For one thing, we have 
refuted Marxism, and we have also tested the 
limits of the mathematical method. In the 
words of the Japanese economist Michio 
Morishima, in his Introduction to the 
posthumous book by Schumpeter and 
Takata10: 

 
Since the second world war economics has 
become mathematicised to what could be 
deemed an excessive degree (…) economics 
has become isolated; the isolation has in its 
turn promoted mathematical inbreeding. 
(Schumpeter and Takata 1998: vii) 

 
The reasons why mathematics has prevailed 
ever since as the dominant paradigm must be 
sought elsewhere. Some critics argue that the 
study of economics has become a political tool, 
a means of defending free trade through the 
use and abuse of statistics. And the heavy use 
of mathematics in economics helps keep its 
critics at bay, rather as Latin preserved the 
Catholic Church from its critics in the days of 
Erasmus of Rotterdam. Today a whole class of 
bureaucrats and experts are putting forward 
figures and calculations that only a minority 
can understand and few can question. 

Specialization within the discipline of 
economics, furthermore, has not always 
benefited the subject. After all, human beings 
do not only perform economic actions. A person 
also performs religious, political, and social 
actions, and, more importantly, these various 
actions have direct influence on each other. 
Thus, a practising Muslim may avoid earning 
interest. This more complex range of human 
actions as the starting point for the German 
                                            
10 This book was a response to Böhm-Bawerk’s 1914 
book Macht oder ökonomisches Gesetz (“Power or 
Economic Law”). Takata and Schumpeter met for 
discussions in 1931. Whereas Takata wanted to 
incorporate power into the study of economics, 

sociologist Niklas Luhmann. Luhmann (1985) 
saw human behaviour as a set of distinct and 
interacting social systems. Accordingly his 
framework is well suited for an evolutionary 
approach to the social sciences, although to 
date his theories have chiefly inspired 
numerous interdisciplinary and 
multidisciplinary studies.  

When economics parted company with the 
disciplines of history, politics, and social 
investigation in general, its models and 
academic forms became simpler and more 
refined, but the discipline did not become 
better at predicting future events: 

The role of politics and sociological elements 
in explaining economic phenomena has 
gradually diminished, until finally pure 
economics (neo-classical school) has come to be 
regarded as the most important tool for 
elucidating economic problems. (Schumpeter 
and Takata 1998: ix) 

This is the same neo-classical school which 
Schumpeter once helped to found in Europe 
based on the ideas of Eugen von Böhm-
Bawerk11. In fact, initially Schumpeter’s work 
was seen as too mathematical and too 
theoretical for most English and American 
economists. It was not until after Schumpeter 
had gained a secure academic position in the 
USA that he began changing his views, and 
drifted away from the use of maths towards the 
evolutionary approach, just as Boulding did 
after him. Unfortunately for us, this came 
rather late in his life. Schumpeter was never 
able to complete his ideas on evolutionary 
economics. The closest he got to describing his 
method was in the outline at the end of his 
History of Economic Analysis, a book he never 
finished. Today Schumpeter’s contributions to 
economics are mostly associated with the study 
of entrepreneurship, an area which was to be 
taken forward by a fellow Austrian emigré, 
Peter Drucker. Unlike Schumpeter, Drucker 
never made any real attempts to set his 
theories within a broader methodological 
perspective so he was mostly ignored by fellow 
academics. His fame stems almost entirely 
from the fact that CEOs and managers found 
his books relevant. The same can only be said 
for a few economists who have won the Nobel 
prize.  

Schumpeter wanted to leave that aspect to the 
discipline of sociology 
11 Böhm-Bawerk in turn drew his inspiration largely 
from Carl Menger. 



 20 
Schumpeter looked to a range of different 

disciplines for inspiration. This is confirmed 
not only by his wide general reading, but by his 
affiliation and sympathy with the Kiel school of 
economics and by his academic training in the 
Austrian school. In his theory of economic 
development, Schumpeter attempts to offer a 
theory of economic change in purely economic 
terms. In the Japanese edition of the book he 
says that his aim is the same as that of Marx’s 
economic teaching; he places his concept of 
economic evolution in a Hegelian setting: “He 
concentrated his analytical powers on the task 
of showing how the economic process, changing 
itself by virtue of its own inherent logic, is 
incessantly changing the social framework – 
the whole of society in fact” (Schumpeter 1952: 
ix). What distinguished Marx from his 
contemporaries and predecessors in economics 
was a vision of economic evolution as a distinct 
process generated by the economic system 
itself (loc. cit.) and a deterministic certainty 
about future economic events and their 
consequences12.  

Although trained in the Austrian school, 
Schumpeter’s convictions lay elsewhere, 
influenced not so much by Eugen von Böhm-
Bawerk as by adherents of the historical school 
– Marxists like Hilferding and Kautsky, but 
above all evolutionary economists of the Kiel 
school such as Lowe and Lederer, with their 
focus on “structural” theories of growth and 
business cycles. Together with the Kiel-school 
economists, many of whom ended up at the 
New School in New York, Schumpeter 
represents the third academic grouping in 
evolutionary economics. However, when they 
moved to the USA it was the physics paradigm 
and their mathematical contributions to the 
marginalist school that were wanted, not their 
evolutionary ideas. The young continent also 
approved of the laissez-faire doctrines of the 
Austrian school, the very same doctrines which 
has just turned the Western world close to 
bankrupt. The evolutionary ideas were 
abandoned with much of the rest of the 
intellectual baggage European emigrés carried 
with them from a Nazi-infested Europe. 
American evolutionary thought was soon a 
thing of the past, associated with men like 
Veblen and later with isolated mavericks like 
Boulding and Georgescu-Roegen, who were 
treated as unsuitable to teach at the great 

                                            
12 The Foreword to Schumpeter’s book by his widow 
Elisabeth Boody explains the essence of his 
philosophy even better. 

universities. Those who conformed to the new 
methodological plan for the discipline of 
economics could advance in their careers; those 
who did not were at best ignored. The new 
paradigm was established. 
2.7 The USA: from Veblen to 

Boulding via Spencer 
Many economists had been inspired by Herbert 
Spencer’s introduction of the evolutionary 
approach into the social sciences. An American 
economist of Norwegian extraction, Thorstein 
Veblen, is often seen as the first real 
evolutionaryeconomist on that continent, but 
also as the last of the classical evolutionists 
(Peel 1972: xlvii). In his famous 1898 article 
“Why is economics not an evolutionary 
science”, Veblen wrote that economics was 
“helplessly behind the times”. Biology as a 
science was on its march forward. The social 
sciences needed to follow. It is likely that 
Veblen had read and was influenced by the 
British economist Alfred Marshall, fifteen 
years his senior, who in 1890 pointed out that 
economists had much to learn from the recent 
history of biology when developing their 
science. “Darwin’s profound discussion of the 
question [in The Origin of Species] throws a 
strong light on the difficulties before us”, wrote 
Marshall (1890: bk 1, ii). He felt strongly that 
it was biology, rather than Newtonian 
mechanics, which should be the model for the 
study of economics.  
 

It is commonly thought that evolutionary 
economics is an attempt by economists to 
adapt economics to the principles of the 
natural sciences. In fact one might well 
argue that it was the other way round: 
Darwin is said to have got the idea of 
natural selection by reading Malthus. 
(Boulding 1981: 84) 

 
When we look more closely at the history of 
economics we find that most useful progress 
has been achieved within the applied fields, 
such as the study of marketing or 
management, which are more concerned with 
real-life situations and applications than with 
theory building. Yet it is the theoretical 
advances which have been rewarded, for 
instance with the Nobel Prize. An important 
question is how far the discipline of economics 



 21 
really needs theory-building in order to justify 
its existence. Many business schools, especially 
graduate schools and master’s programmes, 
are perfectly satisfied with teaching students 
how to do things (know-how), developing their 
skills and giving them “tools”. This matches 
Heidegger’s notion of the future of the social 
sciences and the humanities as 
Steuermannskunde or Kybernetik 
(etymologically, “the art of the helmsman”), 
focusing on the ability to solve practical 
problems. These ideas have been shaping 
business schools for decades now.  

There is a another point here too, as 
mentioned before. There seems to be no real 
correlation between economic theory-building 
and economic success among industrial 
nations. Thus countries like Germany, South 
Korea, Japan and China are highly competitive 
nations economically, but have contributed 
little to the development of modern economic 
theory, particularly as compared to English-
speaking countries. The latter have lost much 
of their industry over the last few decades 
while those theories were being created. Their 
economies have shifted from a society of 
craftsmen and industrial production to one of 
knowledge production and services, a shift 
which has been very much supported by their 
own economic theories. Both the USA and 
Britain, which are producing most of these 
theories, are now suffering from general 
economic decline.  

We talk of “economic theory”, but mean very 
different things. How often does phenomenon 
A (cause) have to lead to phenomenon B (effect) 
for the relationship to be called a theory? Some 
talk of theory if they have done a small 
empirical experiment which gives answers that 
go in one direction. Others avoid the term 
altogether. There is less confusion about the 
term “economic law”: few economists today 
would claim to have discovered any economic 
laws13. R. F. Harrod, one of the founders of the 
Oxford Economics Research Group, may have 
come closest when he put forward a law of 
evolutionary economic behaviour summarized 
as “Nothing for nothing” (Perroux 1960: 8), but 
such common-sense theories are of little value. 
The evolutionary perspective on human 
behaviour leaves little place for a formulation 
of natural law in terms of definite normality. 
Nor does it leave room for that other question 
of normality, namely what should be the end of 

                                            
13 An economic law may be defined as a case where a 
phenomenon A invariably leads to a phenomenon B. 

the developmental process under discussion 
(Veblen 1899: 12). The best way for the 
evolutionary approach to demonstrate its value 
is to produce theories with greater predictive 
success than those produced by alternative 
schools of thought, or else to reject the idea of 
theories in the social sciences altogether.  

 
One of the real challenges to evolutionary 
economics is how to define and measure 
change. Early evolutionists discovered that 
the differences in traits and species 
increased with geographical distance, and 
they sought to classify change into (i) 
change of stations, and (ii) change of habit. 
A habitat is a special environmental area 
inhabited by a particular species or 
organism. Similar animals may be found at 
many stations, but only within one habitat 
(Wallace 1876: 4).  
 

There are a number of reasons why comparable 
research projects are troublesome in 
economics. First there is the globalization 
argument: economic agents travel extensively 
and live all over the world. They cannot be 
defined as belonging to one geographical 
location. Secondly, any research that points to 
differences in economic performance between 
human groups is likely to meet serious 
criticism. One of the advantages of marginalist 
theory is that it is politically correct, since it 
complies with human-rights ideals and 
assumes that all men have the same economic 
abilities and possibilities initially, regardless of 
upbringing, cultural background, or genetics. 
This in turn is what makes differing economic 
outcomes fair, from the marginalist’s point of 
view. We know this is not so: for instance, 
children born in wealthy families have a better 
than average chance of economic success 
themselves, not least because they can expect 
to inherit their parents’ fortune. In that sense 
it could be argued that neoclassical economics 
is a convenient tool for the rich to defend their 
property.  

Veblen’s definition of evolutionary 
economics does not ignore cultural differences, 
nor does it ignore the notion of power:  

 
[evolutionary economics is] the theory of a 
process of cultural growth as determined by 
the economic interest, a theory of a 
cumulative sequence of economic 



 22 
institutions stated in terms of the process 
itself. (Veblen 1899: 13) 
 
... where man’s knowledge of facts may be 
formulated in terms of personality, habit, 
propensity/natural tendency and will power. 
(op. cit.: 5)  

 
This is the culturalist position, so heavily 
criticized by the academic establishment today 
for its political incorrectness. Men living under 
different climatic conditions will tend to 
behave differently. They have simply 
developed different habits. For instance, in 
many places on earth the climate is simply too 
hot to engage in much economic activity. We 
see this in large parts of sub-Saharan Africa, 
the Arab world, and South-East Asia. We also 
behave differently depending on our 
geographical location. Thus, island people tend 
to keep to themselves, or make occasional 
outbursts into the world, but are also inclined 
to engage in large-scale export efforts to stay 
competitive. Among competitive Island 
economics there is always the realization that 
if they keep to themselves they will decline, 
even if that is just as true for landlocked 
countries. We see this not only with Japan, but 
also with Britain, Sweden (half-island), 
Taiwan, South Korea (half-island), and 
Singapore. Our cultures have imprinted their 
particular traits on us, which again helps to 
explain our behaviour, including our economic 
behaviour. This does not mean that individuals 
cannot break out of these patterns, or that 
cultures do not change. They do. The 
culturalist position does not have to be a 
dogmatic one. Culturalists are also attacked for 
embracing the scenario summarized as 
survival of the fittest, implying that some 
individuals survive at the expense of others. 
However, it has been suggested that a better 
phrase would be survival of the fitting, since 
success is not restricted to a single individual 
or species, and survival seems to be more a 
question of finding a niche than of forcing 
others out (Boulding 1981: 18). In the wild, 
animals who are not adapted, who have not 
found some sort of advantage, disappear. 
Darwin called that the survival of the fittest, a 
phrase he borrowed from the English 
philosopher Herbert Spencer (rather than vice 
versa). Again, objections to the doctrine have a 
lot to do with ways in which it has been 
exaggerated. It does not necessarily mean 
aggressive behaviour. We do not want to live in 
a society where only the fittest survive; that 

would be inhumane. Instead we have 
constructed a political and social system in 
which those who are “unfit for survival” receive 
some form of help. However, if those who asked 
for help formed the majority of citizens, the 
nation would lose its competitive advantage. So 
the theory does apply and the effects of this 
phenomenon can be observed in large part of 
the Western world today. The consequences are 
economic and social distress. What corresponds 
to extinction in business life is bankruptcy. 
Bankruptcy does not mean that the bankrupt 
actually disappears, it merely simulates 
disappearance by excluding agents who 
perform poorly from conducting further 
business for a period of years. Furthermore, the 
precise consequences of bankruptcy vary, 
depending on the social-welfare system in place 
in a particular country. Thus the metaphor of 
survival of the fittest does not have the same 
consequences in modern society as it has in 
Nature, and the cruelty involved is often 
exaggerated but on the whole the theory holds.  

Spencer, who was greatly influenced by 
Adam Smith and Lamarck, is one of the more 
neglected among classical sociologists. The 
reasons for this neglect are many: in part 
political, in part due to his outspoken, 
consequent denial of historic analysis as a 
method to gain scientific knowledge, and, no 
doubt, in part due to his notoriously blunt 
statements. His ideas were frequently utopian. 
Hence Spencer remained interesting for a long 
time as a literary figure but (like Marx and 
Comte) quickly became unacceptable as a 
scientist. His Lamarckian biology was 
dismissed in Europe, partly because it was bad 
timing to present a value-free social science in 
a Western world marked by high 
unemployment and great social misery. He was 
misunderstood, as when he is associated with 
social Darwinism and laissez-faire politics. In 
reality he argued for increased State 
intervention. Spencer survived in the USA by 
virtue of ideas such as rejection of absolute 
standards of truth and elevation of practice 
over theory. In the 1920s and 1930s these ideas 
were taken up by Dewey. Two features were 
never abandoned in the US: (i) economics-
based models of social structure, and (ii) 
methodological individualism (Peel 1972: xl). 
He also inspired a whole new school of 
American anthropologists, including L. H. 
White, J. H. Steward, Marshall Sahlins, and 
Elman Service, who saw the task of 
anthropology as being to trace the path by 
which cultures “evolve” (loc. cit.). This 



 23 
approach was inspired by the long-established 
German discipline of Völkerkunde. A similar 
approach is familiar in linguistics – as when we 
can trace the Indo-European languages back to 
Sanskrit – and we see something similar when 
scholars trace the development of mythologies 
(Cox 1870). The movements of populations 
suggested by such investigations are being 
confirmed today by genetic research. If 
sociology is not to be value-free, it must have a 
moral basis. This moral stance was widely 
accepted in sociology following Spencer, but 
has since been largely forgotten. As Spencer 
saw it, the chief role of evolutionary sociology 
was to reconcile Man to the inexorable 
processes of Nature. He wanted to describe a 
theory of social change. Economists who have 
worked to unite economics and sociology along 
these lines have included Schumpeter, Vilfredo 
Pareto, and Ferdinand Tönnies, a German 
sociologist who taught economics at Kiel 
University (Schumpeter and Takata 1998: 
xxxiii). Tönnies is perhaps best known for 
having reintroduced Thomas Hobbes into the 
social sciences. This strengthened the 
evolutionary approach to economics. The 
notion of power is vital in understanding 
human behaviour because we live in social, 
hierarchical systems. Had Tönnies not died in 
1936 he would probably have had to flee 
Germany, as his children and so many of his 
colleagues did because of the rise of Nazism. 
The Nazis made a short process of anyone 
criticizing their movement. Tönnies was 
considered a social democrat, but this was also 
the fate of many conservative German 
intellectuals like the Manns and Carl 
Schmitt.Daniel Defoe’s Robinson Crusoe 
represents life at the opposite extreme to the 
world of economics as portrayed by Hobbes. 
Economic marginalists reason very much as if 
Man were created as an isolated individual in 
Nature, like Robinson Crusoe on his island, 
and Crusoe is therefore a favourite trope 
among marginalist economists. Their critics 
argue that we do not live like Crusoe, so that 
any such comparison is a gross 
oversimplification bound to give false answers. 
Evolutionary economists argue that (whether 
we like it or not) the world is more Hobbesian 
than we care to admit, and that the task of a 
science is to describe reality. 

For significant new discoveries in the study 
of Man and human behaviour, we are reliant 
on future work by psychologists, biologists, and 
neuropsychologists to show us how we reason 
and why. This is an argument in favour of more 

interdisciplinary research in economics. A 
sensitive specialist pursuing his investigations 
in any field, Boulding reminds us (1950: viii), 
finds himself on the frontiers of other 
disciplines. That was also very much a 
watchword in Boulding’s own research. How 
can you study economics in mediaeval times 
without considering religion, and how can you 
study economics during the Industrial 
Revolution without considering the class 
distinctions of that period, Boulding asked 
(Perroux 1960). In the same way, how can you 
study the economics of today without 
considering the phenomenon of globalization – 
probably the greatest accelerator of change 
ever known on this planet, leaving aside 
natural catastrophes.  

Every age, every nation, every climate 
exhibits a modified form of humanity (Peel 
1972: 7). This universal law of physical 
modification is also the law of mental 
modification (op. cit.: 9). According to Spencer 
all imperfection is unfitness. Progress, 
therefore, is not an accident, but a necessity 
(op. cit.: 13). Rather than civilization being 
artificial, it is a part of Nature. Spencer 
thought that this imperfection would end and 
Man would attain some sort of completeness. 
Thus according to Spencer the law of evolution 
may be expressed as a change from a less 
coherent homogeneity to a more coherent 
heterogeneity. There is and can only be one 
evolution, as all the different existences are 
component parts of the same cosmos. Why 
should mankind be different, why should he 
follow different laws from all other living 
organisms? That is the question that every 
social scientist must ask himself. Furthermore, 
towards what form is Man evolving? For Peel 
the ultimate man is seen as one whose private 
requirements coincide with the public ones (op. 
cit.: 26). Considered over a large time interval, 
we find that Man’s character is growing more 
civilized, less violent, shaping into what we 
might call “social man”. The further we come 
away from violence, the more successfull we 
seem to evolve. This development in our 
character can be seen for instance in styles of 
leadership over recent centuries – a shift from 
the boss to the leader, who gives fewer orders 
and instead aims to be a role model through his 
actions; from the military commander type 
associated with the early days of 
industrialization to the team player of today. 
This is also reflected in the terms “social 
intelligence” and “emotional intelligence”, 
which have become a focus today. We also 



 24 
speak of “people skills”, but seem to mean the 
same thing. True, others say that Man is 
becoming ever more selfish, a result of his 
striving for ever more independence. But that 
may represent more a backlash than an actual 
long-term trend. The evolution of our character 
can rather be plotted as a rising curve, so far as 
present data indicate at least.  

Taking human actions as a starting point 
for the human sciences, instead of theories or 
ideas, has given us some of the most useful 
techniques or methods available in the social 
sciences today, including game theory and 
rational choice theory. But these contributions 
are not necessarily marginalist or even 
neoclassical. We shall rather argue that game 
theory relates more closely to informal and 
formal logic than to mathematics. In fact it is 
really a non-marginalist approach, with no 
fixed number of variables to be optimized. And 
yet arguably game theory, invented by the 
German economist Oscar Morgenstern and the 
Hungarian-born mathematician John von 
Neumann, is one of the better analytical tools 
available to describe and analyse social 
dynamic realities. It is also interdisciplinary, 
meaning that it is equally applicable in any of 
the social sciences, and in the humanities.  

So long as scarcity is a major problem, the 
economic forces that constrain us will be very 
real. On the island of Utopia there is no need 
for the discipline of economics, because 
everything that people need is available in 
plenty, and people do not ask for more than 
they need. In Thomas More’s book the 
character Peter Giles believes that:  

Till property is taken away there can be no 
equitable or just distribution of things, nor can 
the world be happily governed: for as long as 
that is maintained, the greatest and the far 
best part of mankind will still be oppressed 
with a load of cares and anxieties. 

More draws this conclusion from his 
experience of early sixteenth-century England, 
ruled by Henry VIII, where “all things will fall 
to the share of the worst men” and where “all 
things are divided among the few”. From a 
national perspective this situation improved 
dramatically with industrialization, which 
allowed a large proportion of the poor to rise 
into the middle class, like in today’s China. 
From an international perspective the problem 
is more complicated, since what we have been 
doing is largely exporting low-wage jobs to 
other, less developed countries: as the saying 
goes, out of sight out of mind. The possibility of 
continual improvement in standards of living is 

limited, since it is those who already have 
money who have the best chance of making 
more. That is a consequence of the efficiency of 
financial markets, which has brought us to a 
point where the free-market system is once 
again being criticized as unfair because it is to 
the advantage of those who are already ahead. 
The result of these mechanisms in the Western 
world has been a poorer middle class.  

More’s Utopia is a land where leisure is to 
be used for reading books, playing chess, and 
engaging in gardening. But the problem of who 
will do the work if everyone lives a life of ease 
is solved by slavery; as More says, “All the 
uneasy and sordid services about the halls are 
performed by their slaves...”. In modern times 
the work these slaves contribute with can be 
compared to our taxes. To take a current 
example, a universal or citizen’s salary to 
replace unemployment benefits is mere 
relabeling and will not change the problem as 
to where the wealth will come from in a world 
free of slaves.  

Man is always a child of his time, and the 
social scientist can seldom ignore the values of 
his time. Being a successful social scientist is 
to a large extent a question of writing in 
conformity with the values of one’s time. Those 
who do not do that are choosing to live the hard 
way. One economist who places in that 
category was Nicholas Georgescu-Roegen, 
Schumpeter’s favourite student. Few if any 
have done more to advance the evolutionary 
approach in the study of Man. 
 
2.8 Georgescu-Roegen : the right 

man at the wrong time 
Bioeconomic analysis sees new technology as a 
set of Man’s most sophisticated exosomatic 
organs. A stick picked up in the woods as a club 
meant a stronger arm, one of the earliest 
examples of an exosomatic organ. According to 
Georgescu-Roegen (1980: viii), Man’s 
exosomatic evolution has brought with it three 
“predicaments”, or unpleasant situations from 
which escape seems difficult. The first is 
conflict between various human communities 
or cultures. Thus Homo indicus is different 
from Homo americanus, in that the former 
travels more by foot and the latter by car. The 
predicament may also reflect differences in 
taste. The second predicament is the conflict 
between the two social classes of governors and 
governed. The third predicament is ranges of 
technically-sophisticated equipment, such as 
PCs, the Internet, and mobile phones today. 



 25 
This equipment is continually changing, and 
creating problems about haves and have-nots. 
We see this today in the area of e-commerce, 
where certain countries including Japan, 
South Korea, the USA, and Sweden are ahead 
of the field and the companies are becoming 
bigger and fewer. 

Georgescu-Roegen’s bioeconomics builds on 
one major principle: mankind must not 
discount the future. By this he means that the 
price of a resource should be determined by all 
potential buyers, including those who are not 
yet born. “And since future generations cannot 
be present now, we should bid in their place” 
(op. cit.: xii). This problem is highly relevant 
today, since past generations have raised their 
standard of living by imposing debt burdens on 
future generations. Thus, we may say that our 
current degradation of the environmental and 
the living conditions on the planet is in part a 
result of our economic theories.  

Georgescu-Roegen begins from the 
assumption that mankind is going to be around 
for a long time: “the dinosaurs lasted hundred 
and twenty millions years”14. If this 
assumption is correct, or so long as we do not 
know how long mankind will exist, we should 
manage our natural resources with care. 
Marginalist economic theory typically models 
economic problems as if each generation were 
the last. When economies are put under heavy 
strain, the chances of war will increase. 
Georgescu-Roegen (op. cit.: xi) reminds us that 
“all major wars have had no main objectives 
other than the possession or the control of 
natural resources”. We have seen recent proofs 
of this whether it is in the form of America’s 
war on Iraq (geopolitical logic) or with Chinese 
investments in Africa (geoeconomic logic). The 
difficulty with the discounting problem is that 
we have no way of knowing what resources 
future generations will need and how long they 
should be discounted for and, we could add, at 
what rate. To help resolve this question the aim 
of Georgescu-Roegen is: 

a world organization whose role be to decide 
the acceptable rhythm of depletion of mineral 
resources and their distribution among all 
nations according to a rough criterion of 
hierarchical needs. (op. cit.: xii) 

This is the idea of the World State, a project 
which will become relevant in the 22nd century 
at the earliest. It is in turn largely a question 
of human political and social evolution. 

                                            
14 G-R wrote this some years ago, 165-185 million 
years is probably a closer number today 

Georgescu-Roegen follows Schumpeter’s 
idea that the evolutionary approach is not an 
economic “theory” in the marginalist sense of 
the word, but must be more of an “analysis”. 
His first book (Georgescu-Roegen 1966), in 
which he outlines his thoughts on evolutionary 
economics, is entitled Analytical Economics: 

 
… theoretical science is logically ordered 
knowledge. A mere catalogue of facts, as we 
say now a day, is no more science than the 
materials in a lumber yard are a house. (p. 
15) 
 
And: 
 
... if the cornerstone of science is the dogma 
that all phenomena are governed by 
mechanical laws, science has to admit that 
life reversal is feasible. (p. 83) 

 
Instead Georgescu-Roegen suggests that 
economic analysis should follow the formula 
set by Cuvier: nommer, classer, décrire (name, 
classify, describe) – what is called a taxonomic 
process, or filing system. This same search for 
a universal principle of classification once led 
to the birth of formal logic. Theoretical science 
is a logically ordered description. Marginalist 
economic theory is an attempt to show that 
mathematics can be the logic for the study of 
economic phenomena. But, whereas the 
purpose of economics is to understand 
economic facts, the purpose of pure science is 
not prediction, but knowledge for its own sake 
(Georgescu-Roegen 1971: 37). This is the 
excuse science gives for not always producing 
realistic findings. Georgescu-Roegen rejects all 
accurate predictions in the social sciences: “No 
analytical device can allow you to describe the 
course of your future actions” (op. cit.: 335). He 
instead agrees with the Hegelian approach we 
find in Schumpeter: “If economics is to be a 
science not only of ‘observable’ quantities, but 
also of man, it must rely extensively on 
dialectical reasoning” (op. cit.: 337). Dialectical 
reasoning cannot be exact, but can be largely 
correct. It implies that we attempt to express 
ourselves in numbers, weights, or some other 
measure. “Hence careful reasoning and 
analysis should be the backbone of economics”, 
as Marshall suggested” (ibid.). Dialectical 
reasoning opened the way of literary 
economics, where both sides of each argument 



 26 
are weighed up. That is also very much the 
tradition of critical theory applied in 
geoeconomics. 

In his next major book Georgescu-Roegen 
discussed the law of entropy, based on ideas of 
the German physicist Rudolf Clausius, who 
held that change undergone by matter and 
energy must be qualitative change (197: 1). 
Georgescu-Roegen argued that an economy is a 
biological process governed by the law of 
entropy, not by the laws of mechanics. The book 
is a critique of Homo economicus, in which 
Georgescu-Roegen takes up the objection that 
economics as a science strips Man’s behaviour 
of every cultural propensity, which is to say 
that Man is treated as acting mechanically 
(ibid.). Georgescu-Roegen’s thermodynamic 
approach to economics is based on Carnot’s 
work on entropy from 1865 and Boltzmann’s 
from the 1870s: 

A cultural propensity may be a factor in 
economic growth, as when cultural activities in 
countries such as France, Spain, or Italy 
encourage the growth of tourism. It might have 
been similar observations that led Spengler to 
the thesis that economic growth depends upon 
the degree of compatibility between the 
economic components of the respective culture 
(op. cit.: 362). 

 
Evolution appears so mysterious to us only 
because man is denied the power of 
observing other planets being born, 
evolving, and dying away. And it is because 
of this denial that no social scientist can 
possibly predict through what kinds of 
social organizations mankind will pass in its 
future. (op. cit.: 15) 

 
Had economics recognized the entropic 
nature of the economic process, it might 
have been able to warn its co-workers – the 
technological sciences – that “bigger and 
better” washing machines, automobiles, and 
super jets must lead to “bigger and better” 
pollution. (op. cit.: 19)  

 
Economic theorists like Robert Solow, Joseph 
Stiglitz, and Paul Samuelson have praised 
Georgescu-Roegen’s mathematical 
contribution, but none of them have shown any 
interest in his ideas on evolutionary economics 
and bioeconomics. None could have failed to 
notice that Georgescu-Roegen was 
Schumpeter’s favourite student at the Harvard 
Graduate Seminar. So it was impossible to 

ignore him; but his thoughts deviated too much 
from existing theory.     

Herman Daly (1999) has asked how long 
neoclassical economists can go on ignoring 
Georgescu-Roegen’s contributions. For 
instance, what will future generations say 
about the fact that we are systematically 
denuding the planet of oil and gas, resources 
which may be needed for more important tasks 
in the future when alternatives are not 
available? Faced with the threat of global 
warming, environmental deterioration, and 
now the financial crisis, Georgescu-Roegen’s 
economics are long overdue for a review.  

Solow and the marginalists assume that 
natural resources can always be substituted. 
His well-known work in growth theory is based 
on an aggregate production function in which 
resources do not appear at all: it takes 
production to be a function solely of capital and 
labour (Daly 1999: 15). This is like expressing 
improved cuisine as a function of a cook and a 
kitchen, forgetting the ingredients. The Solow–
Stiglitz variant of the Cobb–Douglas function 
including resources is expressed as: 

 
𝑄 = 𝐾$%𝑅$'𝐿$) 

 
– where Q is output, K is stock of capital, R is 
the flow of natural resources used in 
production, L is the labour supply, 
a1+a2+a3=1, and a>0. In reality, increase in 
capital implies depletion of resources; and if 
K→∞, then R will rapidly be exhausted by the 
production of capital (Daly 1999: 17). 
Georgescu-Roegen calls this a “conjuring trick”. 
Land and resources have been eliminated, on 
the argument that capital is a near-perfect 
substitute. If so, then resources could equally 
be substituted for capital (reverse 
substitution). To do that would run counter to 
the whole direction of neoclassical theory, 
which is to deny any important role to Nature 
(op. cit.: 18).  

None of Georgescu-Roegen’s ideas on the 
biophysical foundations of economics were ever 
canonized by inclusion in Samuelson’s famous 
textbook. There has been no interest in 
Georgescu-Roegen’s ideas at MIT, the 
American Economic Association paid little 
attention to his death, and hardly a trace of his 
influence is left in the economics department of 
Vanderbilt University, where he taught for 
twenty years (op. cit.: 13). One reason may be 
that few economists understood his ideas with 
their emphasis on advanced mathematics, 



 27 
physics, and biology15. He may also have been 
too interdisciplinary for his own time. A further 
reason may be that he is said not to have been 
easy to work with. A deeper explanation would 
be that if one accepted Georgescu-Roegen’s 
ideas, the consequence would be a complete 
paradigm shift in economics. The political and 
economic implications of accepting his theories 
would amount to nothing less than a revolution 
in the way we organize our lives, and it is 
perhaps one we are not yet ready to undertake. 

Georgescu-Roegen’s own explanation of why 
his ideas were never accepted was in terms of 
a Romanian proverb: “In the house of the 
condemned one must not mention the 
executioner”. After arguing his case for decades 
without ever getting much response, 
Georgescu-Roegen gave up on standard 
economics and resigned from the American 
Economic Association (op. cit.: 15). In his own 
words “I was a darling of the mathematical 
economists as long as I kept contributing pieces 
on mathematical economics” (Georgescu-
Roegen 1992: 156). 

Schumpeter too had come to the United 
States as a two-edged sword, like Georgescu-
Roegen later. Influenced by Léon Walras and 
W.S. Jevons, economics departments in the 
USA, especially after the Second World War, 
decided to base development of their discipline 
on the mechanical perspective. To many critics 
this system quickly came to look more like a 
church than a community of independent 
thinkers. However, despite enthusiastic 
espousal of the mechanical approach in the 
USA, one American economist was never 
willing to abandon Georgescu-Roegen’s ideas: 
namely, Kenneth Boulding, a strong 
independent thinker among American 
economists. 

2.9 Parallels between Boulding and 
Luhmann: cybernetics and scial 
systems 

In his 1968 book Beyond Economics, Boulding 
identifies some of the methodological 
limitations of economic theory:  
 

                                            
15 This is an odd trait among many fellow economists, 
they argue for mathematics, by which they imply the 
right amount of mathematics, enough to separate 
them from academics studying the humanities. But, 
when someone with a physics background comes 
along, it becomes evident that they know too little 
mathematics, and then the physicists end up in the 
wrong. 

(i) the ceteris paribus assumption, 
associated with Marshall, involves isolating 
a problem by assuming that all other 
variables are held constant. The problem 
with this assumption, Boulding argued, is 
that it leads to results that are true only in 
a very limited domain, and there is a danger 
of over generalization.  
 
(ii) the method of simultaneous equations, 
associated with Walras and the Lausanne 
School, based on the proposition that any 
system of variables, each of which can be 
written as a function of all the others, yields 
n of these equations that are consistent with 
one another (Boulding 1968: 10). This 
method often gives results that are 
mathematically correct but economically 
meaningless, such as negative prices.  
 
(iii) the study of macroeconomics, as 
associated with Keynes16, consists 
essentially in using wage aggregates of 
economic variables as the basic parameter 
of simplified models, the exact properties of 
which can be fairly easily determined. The 
Problem lie in the generalizations within 
these models, such as the “level of 
employment”, and the “price level”. 
Furthermore, society has not become 
classless17. Economic theory assumes that 
all individuals have the same starting point, 
the same possibilities. Only then can it be 
fair. This ignores such factors as (family) 
contacts, culture, and nationality, relevant 
to the competition to win business contracts, 
and parental income, relevant to receiving a 
university education. It also ignores the 
phenomenon of contracts won through 
bribery, which means that much business 
conducted outside the Western world must 
be excluded from the theory. Perhaps the 
problem is that economics in fact remains a 
moral science, as in the old Cambridge 
Tripos, “in spite of all attempts to 
dehumanize the science of Man”, Boulding 
concludes (1968: 12).  

 

16 Macroeconomics began to emerge in the models of 
Irving Fisher and Knut Wicksell, but culminated in 
the work of John Maynard Keynes. 
17 The essence of the term “class” as used today has to 
do with income differences. The Marxist proletarian–
bourgeois–capitalist distinction has become less 
relevant today, in the West at least. Instead we have 
other, newer class divisions, as in “new class theory”.  



 28 
Boulding takes as his starting point the ideas 
of a theory of change outlined by Schumpeter. 
As any pioneering scientist would necessarily 
do, he begins by asking what types of change 
occur in economics; and he concludes that there 
are two types: long-term and short-term. The 
biggest form of social change would be called a 
revolution. Revolution can be understood as a 
social reaction to a situation where there has 
been no hope of change for too long.  

Boulding’s social-dynamics perspective is 
inspired by Georgescu-Roegen’s ideas. If 
economics is to be a science, it must use 
dialectical reasoning. But whereas Georgescu-
Roegen thinks this relationship must be 
“extensive”, Boulding holds it to be “relatively 
insignificant” (Boulding 1981: 20). 

Boulding argues that there are two types of 
process at work in human history: one 
dialectical, involving conflict and the victory of 
one group over another; and one non-dialectical 
– incidental, cumulative, evolutionary, and 
continuous (Boulding 1970: v). Of these two he 
sees the dialectical process as merely waves 
and turbulence on the great historical tides of 
evolution and development. One of the 
problems with the dialectical process is that it 
focuses on conflict likely to lead to even greater 
conflict (op. cit.: 52). The process of biological 
evolution seems on the whole to be non-
dialectical (op. cit.: 55). Boulding believes in the 
historical method, but whereas Boulding 
thinks that the future can in part be 
understood by studying history, Georgescu-
Roegen disavows any predictions about the 
future (Georgescu-Roegen 1971: 335)18. 
Boulding himself acknowledges that the ability 
to predict is less robust than the ability to 
understand.  

Boulding defines four processes through 
which we suppose that we might be able to gain 
knowledge of the future. These are: (i) random 
processes, such as throwing dice. For this 
method, recorded information is irrelevant. (ii) 
Deterministic mechanical processes, as used 
for instance when estimating future population 
figures; (iii) theological processes, in which 
movement through time is guided by some 
image or information-structure of the agents in 
the system at the outset; and (iv) the 
evolutionary process. Boulding (1970: 19) 
chooses to see human history largely as an 
extension of the evolutionary process from the 

                                            
18 No analytical device can enable you to describe the 
course of your future actions. 

biological into the social domain (an idea which 
goes back at least to Spencer). These methods 
are relevant for the discipline of intelligence 
studies within such areas as early warning, 
signal analysis, scenario analysis and just 
general prediction.  

According to Boulding (1981: 11) the 
evolutionary perspective presupposes that at 
any one point in time and space there will be 
an ecosystem, and with a given set of 
parameters this will move to an equilibrium 
where the rate of growth of all populations 
within it will be zero. This seems to conflict 
with his later critique of the equilibrium 
approach19. However it is possible that 
Boulding, like Schumpeter before him, changed 
his mind. Boulding also criticized neoclassical 
economics for not having incorporated time and 
space as factors in their theories, even though 
obviously “all productive processes involve 
space and a fine vine will turn into vinegar” 
(Boulding 1970: 19).  

“Bioevolution is characterized by constant 
ecological interaction, which is selection, under 
conditions of constant change of parameters, 
which is mutation” (Boulding 1981: 12). Put 
differently, mutation takes place in the egg, 
selection in the chicken (op. cit.: 65). The 
parametric changes can be physical, such as a 
change of climate, but the basic source of 
change is genetic mutation, that is change in 
the DNA sequence. Evolution is not a 
deterministic system, like celestial mechanics, 
because it is not an equilibrium system. It 
involves inherently unpredictable changes of 
parameters because of the long-run importance 
of improbable events (op. cit.: 69). As economic 
life is a subset of human activity, we should 
expect it to follow the general principles of 
evolution (op. cit.: 16). The principle of 
ecological interaction is the ultimate 
foundation of the evolutionary perspective (op. 
cit.: 11).  

Like Georgescu-Roegen, Boulding equates 
human history with the evolution of artefacts. 
Human artefacts are of three kinds: (i) 
“things”, material objects; (ii) organizations; 
and (iii) learning processes (op. cit.: 15). This is 
very much the Materialist perspective to 
economics. Material artefacts have developed 
from the flint arrowhead to the space shuttle; 
organizations have developed from the clan to 
the corporation; and people’s minds have 

19 But in Tang et al. (1976) Boulding says that 
“equilibrium is a fiction of the human imagination 
and is really unknown in the real world” (p. 3). 



 29 
developed alongside these. Exchange is the 
mechanism through which this process is 
carried on. Exchange, which contains an 
element of reciprocity, makes the parties 
involved better off, hence more fit for 
competition. Labour hours and price are two 
examples, or forms, of exchange. Price may be 
seen as the expression of the balance or 
equilibrium of the social system of needs. Thus 
the evolutionary approach to economics may be 
more relevant in times of great transformation, 
like the one mankind is facing today through 
the globalization process.  

According to Boulding (1985: 7) it was his 
year at the International Christian University 
in Japan in 1963–4 that led him to a renewed 
interest in evolutionary theory, which 
produced A Primer on Social Dynamics in 1970 
and Ecodynamics in 1978. In 1970 he also 
wrote a book on Economics as a Science, in 
which economics was treated as an ecological 
science. We see how both Schumpeter and 
Boulding were open and akin to Asian ideas 
and analysis for understanding social economic 
behaviour through a direct cooperation with 
Japanese economists.  

Even before that, in Beyond Economics 
(1968), Boulding defined a general theory of 
growth, which said that all growth phenomena 
have something in common. The phenomena 
can be classified into: (i) simple growth, the 
growth or decline of a single variable or 
quantity by accretion or depletion; (ii) 
population growth, that is births and deaths; 
and finally (iii) structural growth, as when a 
butterfly emerges from a chrysalis (Boulding 
1968: 64). Growth phenomena in the real world 
usually involve all three types (op. cit.: 65). In 
the same book Boulding defines “social 
systems” as whatever is not chaos (op. cit.: 98). 
The best way to reduce the complexity of 
human history to manageable, systematic form 
is to break up the social system into 
subsystems (op. cit.: 101). The same logic is 
applicable to the human sciences. 

The idea of the social world as made up of 
systems is an idea he held on to. In his 1985 
book The World as a Total System we find the 
same idea of the social sciences as systems: 
“The social system is so interconnected that 
any division of it is a little arbitrary, but, as we 
shall see, we can conveniently divide it into the 
economic system, the political system, the 
communication system, and the integrative 

                                            
20 Boulding wrote about social systems in 1970. 
Luhmann wrote about evolution as early as 1972, and 

system” (Boulding 1985: 29). The same idea is 
also central to the philosophy of the German 
sociologist Niklas Luhmann, who published his 
classic Soziale Systeme the same year. Social 
evolution is also a central idea for Luhmann20: 
“What evolves is simply meaningful 
possibilities, each possibility that is selected 
yielding new eligible possibilities”. Only to the 
extent that money guides our choices does 
economics have strong predictive power in the 
social sciences, Luhmann concludes.  

Boulding (1985: 31) divides the world into 
three kinds of system: physical, biological, and 
social. Social systems are an evolutionary 
development out of biological systems. They 
involve biological organisms that have the 
powers of communication, consciousness, and 
the ability to produce artefacts (op. cit.: 71).  

One of the great differences between the 
socio sphere and the biosphere is the much 
greater importance of decisions in social 
systems for determining the future (op. cit.: 
82). There are many ways of classifying social 
systems. Luhmann divides them into:  

 
1. Subsystems of society: 

a) Religion 
b) Law 
etc. 

2. Social systems proper: 
a) Interactive  
b) Organizational systems  

3. Other systems.  
 
Boulding, on the other hand, classifies social 

systems according to the nature of the 
relationships (1985: 83), into: 

 
1. The threat system 
2. The exchange system  
3. The integrative system 
 
The world economic system is seen as 

interacting closely with the political system 
and with organizations like the church, 
families, clubs, and so forth (op. cit.: 89). 

Another biological idea which interests 
Boulding is Man’s limited ability to understand 
his own environment. What we know is a 
function of what we can imagine. That is to say 
that our brain, not the external environment, 
controls and sets limits to what we are capable 

about social systems as early as 1970. Boulding 
makes no reference to Luhmann. 



 30 
of understanding21. This view, that we increase 
our knowledge of the world by studying the 
brain, not only by studying external reality, 
may be called a neurological approach to the 
social sciences. “We construct images in our 
minds of the world or even the universe as a 
succession of constantly changing states 
through time” (Boulding 1981: 9). Boulding 
shows great interest in this cognitive approach 
to the social sciences (cf. Boulding 1985: 9; 
1956). Today neuroeconomists like Antonio 
Rangel have made great advancements in this 
direction (Rangel et al., 2008). 

The belief that an image is true often 
derives from authority, or from evidence. In 
some cases we resolve the ambiguity of 
evidence by experiment. That only applies, 
however, to systems which are stable, 
repeatable, and divisible, such as chemical 
systems, where, for instance, all hydrogen 
atoms are essentially similar. We cannot do 
experiments on unique events or on the past 
(Boulding 1981: 10).  

Boulding explains (1950: viii) that “the first 
focus of my dissatisfaction with economics is in 
the theory of the firm, or the economic 
organism, and its immediate relationships and 
interactions”. This leads him to a “relationship” 
perspective on economics. We find the same 
parallel between the relational perspective of 
marketing by Gummesson and the Nordic 
School and Kotler’s mechanistic and 
marginalist perspective on marketing (see e.g. 
Gummesson 2002). As such this Nordic school 
is very much founded in the European 
continental intellectual tradition.  

Boulding’s second focus of dissatisfaction 
(1950: ix) was with Keynesian 
macroeconomics, with “the failure to 
distinguish between the exchange of payment 
and the process of production”. This led him to 
the process perspective on economics. Both 
concepts belong to what we could call 
evolutionary economics.  

We can follow the change in Boulding’s 
perspective on economics through his books, 
from the more mathematical contributions he 
wrote while he was in Michigan, to the 
anything-but-mathematical writings of his 
Colorado years. What started as mere echoing 
of the status quo in economic thought 
developed into a strong, highly-differentiated 
contribution to the discipline of economics, 
turning him into a strong independent thinker, 

                                            
21 The first philosopher to set this idea out in detail 
was Kant, in his Critique of Pure Reason of 1781 

but also an outsider. Unlike many other 
evolutionary economists discussed here, 
Boulding never limited himself to any one 
perspective but continued to move in many 
different intellectual directions at once. This 
may have been his biggest weakness as an 
economist, in that he was unable to complete 
and present a coherent system of economic 
thinking.  

To sum up, the academic community of 
evolutionary economists in America can be 
divided into two: on one side economists of the 
Midwest, inspired by the English-language 
economics literature, such as Veblen and 
Boulding, and on the other side the European 
diaspora, including Kiel School economists and 
men like Schumpeter and Georgescu-Roegen. 
Of the five groupings defined here, the third, 
fourth, and fifth can be described as 
evolutionary economists, while the first and 
second were groupings which made direct 
contributions to a discipline of evolutionary 
economics.  

The purpose of this historical trajectory has 
been to show how the study of Geoeconomics 
and intelligence studies can be based on the 
same ideas which are often referred to as an 
evolutionary approach. As such the studies 
have a methodological foundation as a part of 
the study of economics too. This does not mean 
of course that the evolutionary approach needs 
to lead to the study of geoeconomics only. 
Geoeconomics can also be said to belong to 
critical theory and the normative sciences.  

3. CONCLUSION 
In this article we have shown why and how the 
scientific basis and methodology of the study of 
economics and management can be 
evolutionary theory and the evolutionary 
approach.  

As an example, intelligence studies is a 
discipline and an approach to the study of 
business that sees information as a basic 
building block for the study of organizations 
and human behaviour. It is not unique in this 
sense but shares this starting point with other 
information sciences after the shift called the 
Information Age with a focus on information 
and knowledge, as opposed to the age of the 
Industrial Revolution with its focus on more 
narrowly defined tasks and outcomes 
measured as a function of man hours, capital 
and material. However, unlike all the other 



 31 
information sciences its methodology may be 
defined as biology instead of physics right from 
the start.  

The study of geoeconomics is a discipline 
that studies the macro environment of 
organizations through what we today should 
call a multidisciplinary approach consisting of 
history, geography and political science (the 
realpolitik assumption). The starting point is 
not Marshall’s Descartesian systems à la 
supply and demand curves, but the world map, 
resources and cultures. Both intelligence 
studies and geoeconomics have more to gain as 
disciplines and sciences by using the 
evolutionary approach not only to explain their 
findings but to build coherent theory. So have 
all disciplines who study man.  

As a new study all researchers have not 
agreed upon clear definitions of geoeconomics 
yet (Mattlin and Wigell, 2016) and there is a 
need for analytical methods as suggested by 
Wigell (2016). It suffices to look at the reference 
list to see that geoeconomics is new ground. 
The average article on the topic came out in 
2011. The median publication date is 2012. The 
oldest publication is from 1991 and could be 
defined as an outlier. The number of 
researchers with profiles on Google Scholar 
who say they focus on geoeconomics are less 
than a dozen, but then many scholars in this 
field will typically steer clear of the publication 
haze that indexes promotes. Of course the 
numbers for geopolitics are much higher.  

At the beginning of the 21st century it was 
clear that neoclassic theory as developed after 
the Second World War had mostly been a 
flawed project, now even admitted at their own 
conferences and declared by conservative 
media like The Economist. The neoclassic or 
marginalist paradigm is not able to predict 
economic behavior and its explanations of 
current events are too simplistic and narrow to 
be of much use outside of its journals, even 
though the committee for the Nobel Prize in 
economics (“in memory of Alfred Nobel”), which 
is still the final guarantor of the neoclassic 
paradigm, do their utmost to convince the 
public of the opposite. Instead other schools 
have done better in the meantime, like 
institutional economics. Keynesianism and 
Marxism have also seen a revival in past 
decades and are clearly more relevant 
directions within the study of economics.  

The evolutionary approach was left for the 
wrong reasons, not because the science itself 
was flawed, but because of the way it was used, 
applied, first of all by German national 

socialists and fascists to dominate other people 
and countries. This is much like leaving the 
science of nuclear physics because of what 
happened in Hiroshima and Nagasaki. It’s 
understandable, but irrational. Besides, the 
new American superpower needed a new 
paradigm, its own (the theories were invented 
on the European continent, but the new science 
developed on the American continent). Those 
who deviated from this new paradigm were 
marginalized in the post-war academic world. 

A good example is Peter Drucker who was 
successful outside of academia among CEOs 
and corporations. He was more relevant than 
all the neoclassic scholars put together. Other 
scholars, who had completely different 
opinions about economics but could do the 
necessary math needed in neoclassic economics 
(econometrics, advanced statistics and 
calculus), like Georgescu-Roegen, were 
embraced, at least for a while, but isolated as 
soon as he openly objected to the paradigm. 
Other scholars who started out supporting the 
neoclassic paradigm, like Schumpeter, saw its 
scientific flaws and deviated from it in later 
life. Schumpeter went back to evolutionary 
theory at the end of his “Economic Analysis”, 
published by his wife after his death.  

Critical theorists can argue that the 
neoclassic paradigm has basically served to 
preserve the power of a certain American and 
Anglo-Saxon dominated elite. Thus the decline 
of the neoclassic paradigm coincides with the 
decline of the American superpower. The fact 
that it’s not scientific arguments that alter 
scientific paradigms, but geopolitical shifts is 
itself a confirmation of the relevance of 
evolutionary theory for the study of man.  

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