EconPapers    
Economics at your fingertips  
 

Market failure vs. system failure as a rationale for economic policy? A critique from an evolutionary perspective

Peter Schmidt

Journal of Evolutionary Economics, 2018, vol. 28, issue 4, No 4, 785-803

Abstract: Abstract This paper reconsiders the explanation of economic policy from an evolutionary economics perspective. It contrasts the neoclassical equilibrium notions of market and government failure with the dominant evolutionary neo-Schumpeterian and Austrian-Hayekian perceptions. Based on this comparison, the paper criticizes the fact that neoclassical reasoning still prevails in non-equilibrium evolutionary economics when economic policy issues are examined. This is more than surprising, since proponents of evolutionary economics usually view their approach as incompatible with its neoclassical counterpart. In addition, it is shown that this “fallacy of failure thinking” even finds its continuation in the alternative concept of “system failure” with which some evolutionary economists try to explain and legitimate policy interventions in local, regional or national innovation systems. The paper argues that in order to prevent the otherwise fruitful and more realistic evolutionary approach from undermining its own criticism of neoclassical economics and to create a consistent as well as objective evolutionary policy framework, it is necessary to eliminate the equilibrium spirit. Finally, the paper delivers an alternative evolutionary explanation of economic policy which is able to overcome the theory-immanent contradiction of the hitherto evolutionary view on this subject.

Keywords: Market failure; System failure; Economic policy; Policy advice; Evolutionary economics; Non-equilibrium economics (search for similar items in EconPapers)
JEL-codes: B41 B52 B53 E61 H00 H53 O30 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1007/s00191-018-0564-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Market failure vs. system failure as a rationale for economic policy? A critique from an evolutionary perspective (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joevec:v:28:y:2018:i:4:d:10.1007_s00191-018-0564-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/191/PS2

DOI: 10.1007/s00191-018-0564-6

Access Statistics for this article

Journal of Evolutionary Economics is currently edited by Uwe Cantner, Elias Dinopoulos, Horst Hanusch and Luigi Orsenigo

More articles in Journal of Evolutionary Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2024-04-09
Handle: RePEc:spr:joevec:v:28:y:2018:i:4:d:10.1007_s00191-018-0564-6