1) A Non-Equilibrium Evolutionary Economic Theory. 2) Self-Organization of Markets & The Approach to Equilibrium

Ayres, R.U. & Martinas, K. (1990). 1) A Non-Equilibrium Evolutionary Economic Theory. 2) Self-Organization of Markets & The Approach to Equilibrium. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-90-018

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Abstract

Modifying some of the canonical assumptions of general equilibrium theory, in this paper we derive a computable economic progress function Z for any economic unit (EU) with bounded rationality (BR). The progress function depends only on the internal economic state of the unit, as measured by possessions: goods, money and (for individuals) the value of future labor and leisure. In the absence of depreciation and aging the progress function is non-decreasing. It does not presume utility maximization or general equilibrium. Thus, the underlying theory is essentially in the evolutionary tradition.

Arguments are presented for interpreting the progress function as a stock of economically useful information.

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