No. 2026-23 - Policy Discussion Paper: Beyond Optimization and Blind Selection - Reflexive Agency in Economic Evolution

Abstract:

Evolutionary economics explains economic change through variation, selection, retention, transmission, innovation, and institutional transformation, whereas much of economics explains outcomes through purposive choice. This article argues that these modes of explanation become recursively connected once economic agents can represent the evolutionary processes in which they participate and intentionally alter their operation. It develops the concept of reflexive economic evolution: agents do not merely choose within given constraints or adapt to existing selection pressures, but can generate new possibilities, modify selection environments, organize transmission, and sometimes revise the criteria and mechanisms by which variants are selected. This latter second-order capacity is termed meta selection. Reflexive economic evolution does not imply comprehensive control or a predetermined social end-state: guidance changes the distribution of possible trajectories under uncertainty rather than determining a trajectory. The framework shows how intentional and evolutionary explanations can be causally complementary, why effective agency is partly endogenous, and why policy should be understood not only as changing current outcomes but also as reshaping the evolutionary environment in which subsequent adaptation and innovation occur.