Deducing Principles of Economics from Ontological Constraints on Information

Abstract

A crucial idea of institutional economics as established by Veblen and Ayres is the tension, even contradiction between technological progress and institutional change. In abstract terms, this is based on the assumption that the evolution of knowledge follows an autonomous logic, and that social competition interferes with it. I try to reformulate this idea in the context of universal evolutionary theory, starting out from the definition of knowledge as a set of evolving rules with physical substance. Important consequences of this approach are: Firstly, the theory of the economic agent has to be based on the analysis of phylogenetic constraints on the brain/mind, and secondly, the evolution of knowledge manifests the Handicap Principle, in the sense that truthful information in universal systems of communication comes at a loss of adaptive efficiency. This vindicates the original institutionalist theory.

Keywords: Institutionalist views on technological progress, information as physical phenomenon, rule - based approach to knowledge, phylogenetic constraints on mind, handicap principle in evolution

JEL Classification: A12, B25, D80