------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (March 2008)

Geoffrey M. Hodgson, _Economics in the Shadows of Darwin and Marx: 
Essays on Institutional and Evolutionary Themes_. Cheltenham, UK: 
Edward Elgar, 2006. viii + 265 pp. $100 (cloth), ISBN: 1-84542-497-2.

Reviewed for EH.NET by Gary Mongiovi, Department of Economics and 
Finance, St John's University.


Charles Darwin and Karl Marx, each in his own way, radically 
transformed our understanding of human history. Marx developed a 
powerful theory of how economic systems change over time. But 
Darwin's theory of natural selection has become the preferred 
metaphor of social scientists who want to understand how institutions 
emerge, take root and evolve. One recent example of this 
"evolutionary turn" is the hypothesis put forth by Gregory Clark in 
_A Farewell to Alms_ (Princeton University Press, 2007), that 
England's industrialization in the early nineteenth century can be 
explained by the high fertility of the medieval nobility, who, 
through a process of natural or cultural selection, infused the 
country's population with traits conducive to economic growth. In 
another recent book, Niall Ferguson draws upon Darwinian principles 
to account for, and justify, the modern financial system (see _The 
Evolution of Financial Services _, Oliver Wyman, 2007). In the book 
under review, Geoffrey M. Hodgson, Research Professor in Business 
Studies at the University of Hertfordshire, argues in the same vein 
that Darwin rather than Marx provides the appropriate model for 
making sense of socio-economic change.

Marx read _On the Origin of Species_ in late 1860. His initial 
reaction was positive; he wrote to Ferdinand Lassalle in January 1861 
that "Darwin's work is most important and suits my purpose in that it 
provides a basis in natural science for the historical class 
struggle" (K. Marx and F. Engels, _Collected Works_, Vol. 41, p. 246; 
International Publishers, 1985). But Marx's enthusiasm began to wane 
as soon as it dawned on him how much Darwin owed to Malthus. In June 
1862 Marx commented to Engels that "Darwin rediscovers among the 
beasts and plants, the society of England with its divisions of 
labour, competition, opening up of new markets, 'inventions,' and 
Malthusian 'struggle for existence.' It is Hobbes' bellum omnium 
contra omnes ..." (_Collected Works_, Vol. 41, p. 381). Marx 
anticipated that reactionaries would appeal to Darwin's theory as "a 
conclusive reason for human society never to emancipate itself from 
its bestiality" (_Collected Works_, Vol. 43, p. 217). By 1866, Marx 
was championing Pierre Tr?maux's _Origine et Transformations de 
l'Homme et des autres ?tres_ (Paris, 1865) -- now justly forgotten -- 
as a "significant advance over Darwin." For Marx, Tr?maux's great 
improvement was that he placed progress at the center of his 
conception of evolution, whereas "Darwin regards [progress] as purely 
accidental ..." (_Collected Works_, Vol. 42, p. 304).

Marx's endorsement of Tr?maux over Darwin was a serious lapse in 
judgment. But the misstep is explained by the affinities between 
Tr?maux's theory and Marx's project to expose a set of forces that 
drive socio-economic development. Opposition to this idea that 
history has a "logic" is at the heart of Hodgson's coolness toward 
Marx. Whereas Darwin recognized that biological systems are open -- 
subject to external forces like climate change or species migration 
-- Marx, Hodgson charges, explains capitalism's historical trajectory 
almost entirely in terms of internal mechanisms. Hodgson further 
contends that Marx ascribes to these mechanisms a teleological 
character that is incompatible with the open-endedness of Darwinian 
evolution: they propel the system toward collapse, and set the stage 
for the next phase of human history, socialism. In biological 
systems, new traits originate as random mutations, and proliferate if 
they confer some survival advantage on an organism or population in 
the prevailing environmental conditions; these new traits may in turn 
react back on the natural environment. Because the biological system 
is open, and its constituent elements interact with one another in 
complex ways, the outcome of the process is not susceptible of 
prediction: there is no determinate end-point. In this respect, 
Darwin's perspective is closer than Marx's to the "old 
institutionalist" tradition that has inspired Hodgson's work over the 
past two decades.

Hodgson wrongly asserts that Marxism overlooks the indispensable 
social functions of customs and institutions as repositories of 
collective knowledge. Marx knew that institutions evolve as solutions 
to problems that individuals and groups encounter in going about 
their business; in his account of how capitalism develops, custom is 
a crucial element of the superstructure that reinforces the 
underlying economic basis of society. Marx saw also that institutions 
exhibit inertia: they persist long after the circumstances that gave 
rise to them have disappeared. As often as not, the new institutions 
themselves helped to bring about the transformation of the material 
conditions of society. This disjunction between institutions and the 
evolving mode of production, Marx hypothesized, generates tensions, 
or contradictions, that lead eventually to the withering of old 
institutions and their replacement by new ones: a socio-economic 
system is pushed forward through history by the tensions generated by 
the production relations which form the system's institutional core. 
Hodgson does not consider whether this bold hypothesis is a fruitful 
way to approach the analysis of socio-economic change; he simply 
dismisses it as "teleological" and moves on.

Social Darwinists like Herbert Spencer, William Graham Sumner and, in 
our own day, Charles Murray maintain that natural selection accounts 
for the misery that market economies inflict on large numbers of 
people: the poor are poor because they are inferior or unfit in some 
objective sense. This is not an application of a metaphor, but a 
claim about actual social and biological processes. Though its 
environmental niche is small, Social Darwinism, now generally 
regarded as morally repugnant and empirically vacuous, poses 
something of a difficulty for anyone who wants to argue that the 
theory of evolution provides an apt template for the explanation of 
social processes. In Chapter 3 Hodgson rescues Darwinism from this 
ditch. He points out that the term "Social Darwinism" was rarely used 
before the mid-1920s, and when it was used it was usually deployed by 
progressives against free-market fundamentalists. We learn also that 
the writers conventionally labeled Social Darwinists were in fact not 
genuine Darwinians. But the misapplication of allegedly Darwinian 
ideas in support of "an ethics of rapacity and greed" (p. 47; the 
words belong to the sociologist Erville Woods) -- a development that, 
as we have noted, Marx foresaw -- led to a reaction among social 
scientists, particularly sociologists, who sought to purge their 
disciplines of all traces of biological causality. Talcott Parsons 
plays a malign role in Hodgson's story. Parsons, who wanted to carve 
out a secure and influential professional niche for sociology, 
strategically broadened the definition of Social Darwinism to 
encompass "anyone who applied biological ideas in the social 
sciences" (p. 54). He then distorted the views of those who fell 
within the definition, demonized the distorted views, and erected a 
barrier between the social sciences and biology.

Hodgson makes a persuasive case that the history of the term "Social 
Darwinism," in particular its transformation into an epithet, 
contributed to the disappearance of biological reasoning from the 
social sciences. But a few loose ends remain. For a start, Hodgson 
doesn't explain why Parsons thought a full-throttle attack on Social 
Darwinism would advance the professional interests of sociologists. 
Nor is it clear how Veblen and the American institutionalists fit 
into the argument. They recognized the evolutionary character of 
social phenomena, were never tarred with the Social Darwinist brush, 
and were an influential presence in American economics into the 
1950s, long after Parson's crusade had succeeded in marginalizing the 
ideas of Spencer and Sumner. The near-demise the Veblenian tradition 
owes little to the assault on biological approaches that Hodgson 
describes. In economics the dominant metaphors had, from early on, 
been drawn mainly from physics. The institutionalists showed that a 
"biological" outlook might be more appropriate for understanding a 
large class of human activities; but they were swimming against the 
current.

In Chapter 4 Hodgson elaborates his critique of Marx. The charge that 
Marx's theory is teleological is here connected to another criticism 
-- that he lacks an adequate theory of human agency, of why people 
behave as they do. While a Marxian theory of agency would be useful 
to have (and a good deal of work, ignored by Hodgson, has been done 
in that direction), the fact that Marx did not himself provide one 
doesn't invalidate his general approach. Marx was primarily 
interested in how the system as a whole reproduces and evolves, and 
at that level of analysis, some degree of abstraction about 
individual behavior is not only permissible but necessary. To be 
sure, class interests and material conditions do not compel people to 
behave in ways that bring about some inevitable path of social 
development. Marx knew this, even if he was confident that capitalism 
would eventually collapse under the weight of its internal 
contradictions. He knew too, though, that those material conditions 
have ramifications for what people believe about the world, for how 
they make choices, and consequently for how society evolves. 
Hodgson's remarks on these matters were initially made in 2001, as 
the opening contribution to a debate with Alex Callinicos, whose 
rebuttal, presented here as the second part of the chapter, makes 
short work of Hodgson's caricature of Marx's views.

The book loses its thematic focus after Part 1. Readers looking to 
find direct engagement with the ideas of Darwin and Marx can put the 
book aside once they have gotten through Chapter 4. Darwin recedes 
into the background, and Marx receives no attention at all after 
Chapter 6. This is not to say that the remaining sections of the book 
lack interest.

In Part 2 Hodgson scores some hits against the critical realist 
school. He begins by dismantling the claim often made by critical 
realists that their methodological tenets support an emancipatory 
left-of-center politics. He then moves on in Chapter 6 to critique 
several concrete analytical applications of critical realism -- its 
utilization in defense of Marx's theory of the tendency of the profit 
rate to fall; and the attempt to explain Britain's late-twentieth 
century industrial decline as the result of trade union resistance to 
technological change and workplace reorganization. In these chapters 
Hodgson delivers a penetrating dissection of critical realism's 
vulnerabilities, though the effect is marred by the occasional cheap 
shot, as when he writes that critical realism "is a means for Marxist 
academics to make political postures while simultaneously earning 
their crust doing serious academic work" (p. 93).

Chapter 7 is an insightful assessment of "The Problem of Formalism in 
Economics." Hodgson identifies two extreme positions on mathematical 
formalism: (1) rejection of formalism out-of-hand, a view which is 
close to the critical realist stance; and (2) the treatment of 
formalism, in itself, as the criterion of scientific legitimacy, 
without due regard to whether the formal techniques utilized in a 
particular argument cast light on the real world -- an attitude that 
is all too evident in modern economics. Hodgson advocates a 
middle-of-the-road approach: formalism can be useful if we are 
attentive to the interpretative context in which any given formal 
model is developed and applied. This sensible view, however, then 
raises the question, left unaddressed by Hodgson, of what other 
criteria are necessary to gauge the usefulness of a model.

The third part of the book is concerned mainly with taxonomic issues: 
how are institutions, habits, rules, routines, customs and norms 
different from one another, and how are they connected? Much of the 
ground covered here is familiar, and there is a good deal of 
hair-splitting on display. These chapters flunk the MEGO test ("My 
Eyes Glazed Over").

Hodgson has less to say than one might expect about how new 
institutions originate, or why they take this or that particular 
form. Marx provides a potential answer to such questions, but Hodgson 
consigned Marx to the dustbin of history in Part 1, and wants to 
leave him there. When, in Chapter 10, Hodgson does take a stab at the 
problem of how institutions and rules come into existence, his 
analysis lets us down. With coauthor Thorbj?rn Knudsen, he approaches 
the issue via a technical exercise that has become common in the new 
institutionalist literature, a game-theoretic computer simulation 
aimed at showing how a particular rule -- in this case, the 
convention about whether cars are to be driven on the left or right 
side of the road -- might emerge from the undirected choices of 
atomistic agents. It is a curious exercise for Hodgson to undertake 
because it seems to be fundamentally at odds with the "old 
institutionalist" injunction not to treat social actors as atomistic 
entities. If institutions really do matter, our default setting ought 
to be skepticism toward any attempt to explain even a simple rule in 
terms of a model that abstracts from social and political context. 
Hodgson's simulation results undermine the view that habits must be 
grounded in given individual preferences; but I'm not sure we need 
this sort of analysis to tell us there's something fishy about the 
crude reductionism of utility-maximization models. That the 
convention under examination involves no issue of conflict also 
limits its interest.

The book's central message is that "Explanations of socio-economic 
phenomena [ought not to be] reduced ... to individuals [or] to 
institutions alone" (p. 201). Few would disagree. In elaborating this 
message, Hodgson overstates the differences between his own 
methodological approach and Marx's; herein lies the book's principal 
flaw. Hodgson presents Darwin and Marx as mutually exclusive 
alternatives, when they are in many respects complementary to one 
another. Darwinian evolution is indeed "random" in a way that Marx's 
capitalist dynamics are not. There's a good reason for this. Social 
systems are different from biological systems, and the Darwinian 
metaphor can carry us only so far. One has the impression that 
Hodgson wants to shield institutionalism from being tarnished by too 
close an association with Marxism. Yet his perceptive and careful 
reflections on social transformation would be considerably enriched 
by a more liberal assimilation of Marxian insights.


Gary Mongiovi teaches economics at St John's University. He and Steve 
Pressman co-edit _The Review of Political Economy_.

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