Abstract
The paper starts from Schumpeter’s proposition that entrepreneurs carry out innovations (the micro level), that swarms of followers imitate them (meso) and that, as a consequence, ‘creative destruction’ leads to economic development ‘from within’ (macro). It is argued that Schumpeter’s approach can be developed into a new—more general—micro-meso-macro framework in economics. Center stage is meso. Its essential characteristic is bimodality, meaning that one idea (the generic rule) can be physically actualized by many agents (a population). Ideas can relate to others, and, in this way, meso constitutes a structure component of a ‘deep’ invisible macro structure. Equally, the rule actualization process unfolds over time—modelled in the paper as a meso trajectory with three phases of rule origination, selective adoption and retention—and here meso represents a process component of a visible ‘surface’ structure. The macro measure with a view to the appropriateness of meso components is generic correspondence. At the level of ideas, its measure is order; at that of actual relative adoption frequencies, it is generic equilibrium. Economic development occurs at the deep level as transition from one generic rule to another, inducing a change of order, and, at the surface level, as the new rule is adopted, destroying an old equilibrium and establishing a new one.
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Notes
The concept of meso takes on an intermediate position in the distinction between micro and macro, and hence presumes that distinction. The micro-macro distinction became popular after the publication of Keynes’s General Theory, in which he demonstrated that the aggregates of individual decisions (micro) of a Walrasian or similar (neo-) ‘classical’ equilibrium was consistent with various states of the system when defined in terms of aggregates of other (macro) variables, in particular, employment, income and money volume. The present-day proponents of the so called “new” classical macro economics view the problem differently, but the important point here is that the established distinction between micro economics as dealing with Walras-type decision variables and macro economics as dealing with the mentioned aggregate variables has survived and is serving as a powerful taxonomic device and classifier for textbooks and teaching curricula in the discipline. This dichotomy did not exist at a time when Keynes was alive and when Schumpeter wrote his essay on Keynes. Schumpeter suggested calling “monetary analysis” or “income analysis” for what today is called macro economics, arguing that, “(s)ince the aggregates chosen for variables are, with the exception of employment, monetary quantities or expressions, we may also speak of monetary analysis, and, since national income is the central variable, of income analysis” (Schumpeter 1952/1997, 1997, p. 282). It is evident that the usage of the terms micro and macro economics is a mere convention and that we could employ with equal vindication Schumpeter’s terminology, or a similar one, to denote appropriately the distinction between the two sets of variables. Evolutionary economists see no necessity to follow the conventional terminology and usually refer, when talking about micro economic analysis, to firms, households or behavioral routines, and when talking about macro economic analysis to the division of labor and knowledge or static and dynamic relationships between aggregate magnitudes.
The term ‘meso’ emerges as constituent concept, as we shall see, from an evolutionary perspective that defines micro and macro in this way. At this juncture, it is noteworthy that there is an impressive basket of all kinds of meso studies. The contributions to this large and growing research area include works on life cycles by Klepper (1997) and Grebel et al. (2006), on the entrepreneurial core of a meso-based economics Baumol (1968), on institutionally embedded Schumpeterian entrepreneurship Ebner (2002, 2010), on the co-evolutionary (technology-institution) dynamic by Nelson (2005), on modelling industrial evolution by Winter et al. (2003), on Schumpeterian competition by Winter (1984), on selective adoption and self-organization by Gowdy (1992), Foster (2000), and Knudsen (2002), on the historicity of industrial evolution by Malerba et al. (1999), on path dependence by David (2005), and Arthur (1989), on organization and innovation dynamics by Grebel (2009), Werker and Athreya (2004), Malerba (2006), Audretsch (1995), and Cordes (2005), on technical systems by Carlsson and Stankiewicz (1991), on heterogeneity, networks and industrial innovations by Cantner and Krüger (2004), Saviotti and Pyka (2008), Elsner (2010), and on methods and modelling building blocks Safarzyn’ska and van den Bergh (2010), to mention but a few from a rich set of important contributions.
The term operant has been associated with a ‘Commodity Approach’. The term ‘generic’, in turn, shall denote the set of slow changing or ‘classical’ variables; these are typically kept constant in neoclassical economics.
We are of course free to choose any term, but we think that the use of the stem ‘gen-’ has the advantage of embracing various meanings that are relevant for our analysis. The term ‘genetic’ is used in biology in reference to biological information, but we are interested only in the general aspect of information (gen), not in its biological specification (-etics, or gen-e). The stem ‘gen’ can be also associated with the terms ‘genesis’ or ‘generation’. The use of this meaning of the word stem is relevant for our analysis when dealing with change, for instance, when discussing the generation of novelty. While it would be sufficient to call this level simply X-level, we think that the neologism ‘generic’ can additionally provide a substantive meaning in that it can be associated in its stem generally with information, but also allows us to distinguish biological information (gene, genetic) from social and economic information (generic rule, generic analysis), and because the generality of the word stem allows us to include other relevant meanings, such as (rule) generation.
The entropy law applied in its wider sense states that all physical phenomena follow an irreversible course from order to chaos; chaos denoting here non-order, without the predictive connotation of the chaos models. See Georgescu-Roegen (1971).
For a more detailed discussion on the cortical areas and generic capabilities of Homo Sapiens Oeconomicus, see Dopfer (2005).
For a rule approach, see Holland et al. (1986). Our unified rule approach resembles in many ways that of Holland, et. al. However, it differs in that it introduces a rule taxonomy distinguishing between subject rules (cognitive, behavioral) and object rules (social and technical organizational). It, further, introduces a multi-level (micro-meso-macro) co-evolutionary dynamic between the two with a view to explaining the static and dynamic of the economy as a whole. Rules and (rule) carriers are the primary analytical units of the generic level of the economic system.
Veblen’s failure to provide any clear analytical exposition of the concept of cumulative causation has lead to its ignorance in the mainstream as well as in technically more sophisticated camps of heterodox economics, such as complexity theory or complexity economics.
From a theoretical perspective it seems important to recognize that a close connection between Veblen’s approach and the concept of routines may be established. In their An Evolutionary Theory of Economic Change, Nelson and Winter (1982) made a seminal contribution to economics by introducing Schumpeter’s concept of innovation and by developing it along Darwinian lines. However, unlike Schumpeter, they unpacked the intricate notion of innovation by suggesting the concept of routines. Their work gave rise to an enormous and still growing literature on routines, for instance, Lazaric and Raybaut (2005), Vromen (2004), Hodgson and Knudsen (2006), Cohendet and Llerena (2003), or, rediscovering Veblen along micro-meso-macro, Brette and Mehier (2008).
We have introduced the canonical approach of rule, where rule has been defined as any idea with a deductive format for economic operations. The classic Nelson-Winter routine, or “organizational gene”, is a rule the carriers of which are subjects in a context that is organized by social and technical rules. A particularity of the term routine is that it refers, at least literally, to a completed process of routinization, or what Veblen called ‘habituation’. Human individuals are carriers of cognitive rules that allow them (if routinized) to perform operations in the ‘internal environment’ of the brain, and of behavioral rules that allow them (if routinized) to perform operations in the ‘external environment’ of social contexts. See, e.g. Ostrom (2004), Budzinski (2001), Dietrich (2006), Encinar and Munoz (2006), Dopfer and Potts (2008).
The generic architecture proposed gives the notion of relative frequency a dual meaning. First, referring to process, it can be conceived as relative meso frequency, and second, referring to structure, as relative macro frequency. The issue of relative frequency and its significance for economics has been thoroughly analyzed by Metcalfe (1998, 2002), Metcalfe et al. (2006).
There exists arguably still no coherent ‘evolutionary macro economics’ today. However, there is available a number of works that head exactly into that direction. These include for instance a study by Metcalfe et al. (2006) which links self-organization and self-transformation and explains the macro dynamic as emergent property of micro diversity and of meso change. In evolutionary growth models, self-organization and structure are dealt with in a dynamic context (unlike in neoclassical endogenous growth models). Contributions include works by Saviotti and Pyka (2008), Kwasnicka and Kwasnicki (2006), Silverberg and Verspagen (2005), Llerena and Lorentz (2004), Peneder (2004), and Alcouffe and Kuhn (2004), Fagerberg (2003), Verspagen (2002), Foster (1987, 2000).
Other important building blocks of a macro theory refer to the division of knowledge and labor. Building on the legacy of Smith, Petty, Babbage and Storch, recent contributions include works by Leijonhufvud (1995), Loasby (1999), Metcalfe (2002), Helmstädter (2003), Antonelli (2008), Amendola and Gaffard (2003), and Foray (2004), as well as to issues of (macro) distribution, e.g. global distribution by Pyka et al. (1999).
These works are paralleled by developments in agent-based modelling, in which agents are taken to be a bundle of data and behavioral methods, and the objective is to generate particular classes of macro regularities from particular classes of repeated interactions of agents. In the received taxonomy, this will be micro economics, but, considering that the models include all agents, all transactions and all reallocation outcomes of an economy, these and related models may well be conceived as ‘macro’ economics. The question to be settled is this: how much aggregation do we require for calling an analysis as belonging to macro economics? Contributions to this growing field include works by Pyka and Fagiolo (2005), Tesfatsion (2002), or Bandini et al. (2004).
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Acknowledgements
I gratefully acknowledge comments and suggestions by Georg D. Blind, Uwe Cantner, Richard Day, Peter Fleissner, John Foster, Jason Potts, Andreas Pyka, Mike Richardson, Markus Schwaninger, Ulrich Witt, and Charles R. McCann Jr.
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Dopfer, K. The origins of meso economics. J Evol Econ 22, 133–160 (2012). https://doi.org/10.1007/s00191-011-0218-4
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DOI: https://doi.org/10.1007/s00191-011-0218-4
Keywords
- Micro-meso-macro-framework
- Mesoeconomics
- Neoclassical versus evolutionary economics
- Schumpeterian economics
- Evolutionary ontology
- Knowledge
- Unified rule theory
- History of economic thought
- Schumpeter
- Hayek
- Marshall