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Evolutionary economics

Evolutionary economics is part of mainstream economics as well as a heterodox school of economic thought, inspired by evolutionary biology. Much like mainstream economics, it stresses complex interdependencies, growth, structural change, resource constraints but differs in the approaches which are used to analyze these phenomena. Evolutionary economics deals with the study of processes that transform economy for firms, industries, production and growth within, through the actions of diverse agents from experience and interactions, using evolutionary methodology. Evolutionary economics analyses the unleashing of a process of technological and institutional innovation by generating and testing a diversity of ideas which discover and accumulate more survival value for the costs incurred than competing alternatives; the evidence suggests. Mainstream economic reasoning begins with the postulates of scarcity and rational agents, with the "rational choice" for any agent being a straightforward exercise in mathematical optimization.

There has been renewed interest in treating economic systems as evolutionary systems in the developing field of Complexity economics. Evolutionary economics does not take the characteristics of either the objects of choice or of the decision-maker as fixed. Rather its focus is on the non-equilibrium processes that transform the economy from within and their implications; the processes in turn emerge from actions of diverse agents with bounded rationality who may learn from experience and interactions and whose differences contribute to the change. The subject draws more on evolutionary game theory and on the evolutionary methodology of Charles Darwin and the non-equilibrium economics principle of circular and cumulative causation, it is naturalistic in purging earlier notions of economic change as teleological or improving the human condition. A different approach is to apply evolutionary psychology principles to economics, argued to explain problems such as inconsistencies and biases in rational choice theory.

Basic economic concepts such as utility may be better viewed as due to preferences that maximized evolutionary fitness in the ancestral environment but not in the current one. In the mid-19th century, Karl Marx presented a schema of stages of historical development, by introducing the notion that human nature was not constant and was not determinative of the nature of the social system. Marx based his theory of economic development on the premise of developing economic systems. Inferior systems were beset by internal contradictions and inefficiencies that make them impossible to survive over the long term. In Marx's scheme, feudalism was replaced by capitalism, which would be superseded by socialism. At the same time, Charles Darwin developed a general framework for comprehending any process whereby small, random variations could accumulate and predominate over time into large-scale changes that resulted in the emergence of wholly novel forms; this was followed shortly after by the work of the American pragmatic philosophers and the founding of two new disciplines and anthropology, both of which were oriented toward cataloging and developing explanatory frameworks for the variety of behavior patterns that were becoming obvious to all systematic observers.

The state of the world converged with the state of the evidence to make inevitable the development of a more "modern" framework for the analysis of substantive economic issues. Thorstein Veblen coined the term "evolutionary economics" in English, he began his career in the midst of this period of intellectual ferment, as a young scholar came into direct contact with some of the leading figures of the various movements that were to shape the style and substance of social sciences into the next century and beyond. Veblen saw the need for taking account of cultural variation in his approach, he emphasised the conflict between "industrial" and "pecuniary" or ceremonial values and this Veblenian dichotomy was interpreted in the hands of writers as the "ceremonial / instrumental dichotomy". The "ceremonial" was related to the past, conformed to and supported the tribal legends; the "Veblenian dichotomy" was a specialized variant of the "instrumental theory of value" due to John Dewey, with whom Veblen was to make contact at the University of Chicago.

Arguably the most important works by Veblen include, but are not restricted to, his most famous works, but his monograph Imperial Germany and the Industrial Revolution and the 1898 essay entitled Why is Economics not an Evolutionary Sci

Charles C. Holt

Charles C. Holt was Professor at the Department of Management at the McCombs School of Business at the University of Texas at Austin, he is well known for his contributions to exponential smoothing. Holt holds MS degrees from the Massachusetts Institute of Technology, he earned a MA and a PhD from the University of Chicago. In his paper from 2002, Charles C. Holt describes how a young but distinguished-to-be group of economists came together at the Graduate School of Industrial Administration at Carnegie Mellon University in the 1950s and set out to develop quantitative and computerized decision methods for business and industry. Holt further claims that, "ooking back, all members of the team would agree that their GSIA years were among the most interesting and exciting of their careers." Holt had come from an engineering background at M. I. T. Franco Modigliani had worked on production smoothing. Jack Muth, with an undergraduate degree in industrial engineering and was interested in applying engineering methods in economics.

Herb Simon was dedicated to determining how managers made decisions in organizations and in modeling their behavior. The four developed control methods and applied them to microeconomics by computing variables for production and the labor force in a firm, their solutions were in the form of linear decision rules where production, for example, at a point in time was made a linear function of past inventory levels. The four were eager not only to develop the theory and mathematics of this subject but to demonstrate how their ideas could be put to work in an actual enterprise. So they searched around in Pittsburgh until they found a paint factory, willing to supply them data; the result was one of the earliest uses of control methods in economics, namely Holt, Modigliani and Simon. After the completion of the paint-factory work, Holt turned his attention to the use of linear decision rules in macroeconomic models, he developed a model, quadratic in the criterion function and linear in the systems equations to analyze fiscal and monetary policy.

All of these developments with optimal linear decision rules can be thought of today as optimal feedback rules which are computed using dynamic programming methods on linear-quadratic systems that yield Riccati equations, which are used to obtain the key components of the feedback gain matrix. This approach is sometimes called “modern control” to distinguish it from “classical control”. Charles C. Holt, Forecasting Trends and Seasonals by Exponentially Weighted Averages, Carnegie Institute of Technology, Pittsburgh Office of Naval Research memorandum no. 52. Charles C. Holt, Franco Modigliani, John F. Muth and Herbert A. Simon, Planning Production and Work Force, Prentice-Hall, Inc. Englewood Cliffs, New Jersey. Charles C. Holt, "Linear Decision Rules for Economic Stabilization and Growth", Quarterly Journal of Economics, 76, pp. 20-45. Charles C. Holt, "Learning How To Plan Production and Work Force", Operations Research, 50, pp. 96–99. Charles C. Holt, "Forecasting Trends and Seasonals by Exponentially Weighted Averages", International Journal of Forecasting, 20, pp. 5–10

Cheng Yen

Cheng Yen is a Taiwanese Buddhist nun and philanthropist. She is the founder of the Buddhist Compassion Relief Tzu Chi Foundation, ordinarily referred to as Tzu Chi, a Buddhist humanitarian organization based in Taiwan. In the West, she is sometimes referred to as the "Mother Theresa of Asia". Cheng Yen was born in Taiwan during the Japanese occupation, she developed an interest in Buddhism as a young adult, ordaining as a Buddhist nun in 1963 under the well known proponent of Humanistic Buddhism, master Yin Shun. After an encounter with a poor woman who had a miscarriage and a conversation with Roman Catholic nuns who talked about the various charity work of the Catholic Church, Cheng Yen founded the Tzu Chi Foundation in 1966 as a Buddhist humanitarian organization; the organization began as a group of thirty housewives. Tzu Chi grew in popularity and expanded its services over time to include medical and disaster relief work becoming one of the largest humanitarian organizations in the world, the largest Buddhist organization in Taiwan.

Cheng Yen is considered to be one of the most influential figures in the development of modern Taiwanese Buddhism. In Taiwan, she is popularly referred to as one of the "Four Heavenly Kings" of Taiwanese Buddhism, along with her contemporaries Sheng-yen of Dharma Drum Mountain, Hsing Yun of Fo Guang Shan and Wei Chueh of Chung Tai Shan. Cheng Yen was born "Chin-Yun Wong" in 1937 in Kiyomizu Town, Taikō District, Taichū Prefecture, Japanese Taiwan. Unlike most of the other prominent Taiwanese Buddhist leaders, Cheng Yen was born in Taiwan rather than mainland China, her uncle was childless, so she was given to be raised by her aunt and uncle. Cheng-Yen grew up during the Japanese occupation of Taiwan during World War II, where she witnessed the devastating effects of war and experienced the bombings in Taiwan; these experiences were credited as contributing to what she regarded as the truth behind the concept of impermanence. In 1945, when she was eight years old, she looked after her sick brother in a hospital for eight months, so learned more about people's pain and helplessness.

At the age of 23, her father died from brain blood vessel disorder that brought about hemorrhaging and stroke. It was in searching for a burial place for him that Cheng Yen first came into close contact with the Buddhist Dharma, associated doctrines, Buddhist scriptures. After her father's death, Cheng Yen took over managing her father's theaters and became financially responsible for her family. Upon deciding to become a nun, Cheng Yen ran away to a temple in 1960, fearing that if she were to ask leave in advance, she might not be permitted to go. After her first attempt at running away, her mother found her three days and brought her back home, she ran away from home a second time in 1961. She left to travel through eastern Taiwan with a friendly nun by the name of Xiūdào. Cheng Yen followed a nontraditional route to becoming a nun. Cheng Yen shaved her own head before she had been ordained a nun. After traveling for two years, Cheng Yen decided that she needed to become an ordained nun in order to continue her lifestyle.

She went to the Lin Chi Temple to register for ordination, but was turned down because she did not have a master. To become a nun in Taiwan, one must be the disciple of a master for two years before ordination. Cheng Yen encountered Yin Shun, he accepted her request, an hour. In February 1963, she became the disciple of her mentor, Yin Shun, who gave her the dharma name of Cheng Yen and the courtesy name of Huìzhāng. Yin Shun gave her the expectation of "doing all for the Buddhist religion and for all beings", written with six characters in Chinese; these six characters became the highest ideals for Cheng Yen in belief and practice. In May 1963, shortly after receiving her ordination as a nun, she went to Pu Ming Temple in Hualien County to continue her spiritual formation; as a part of that formation, she recited the Lotus Sutra, which she revered, every day and transcribed every month. It was during her six months there that she vowed to commit herself to the Lotus Sutra and the "Path of the Bodhisattvas."

Cheng Yen was influenced by the Lotus Sutra, which she called the culmination of the Buddha's teachings. Cheng Yen's initial exposure to the Lotus Sutra happened when she left her family in Fengyuan, Taichung County, stayed away from the world by lodging in a small hut in Taitung County, in eastern Taiwan. While in Taitung, she accidentally found a Japanese version of the Lotus Sutra, was pleased with what the book said, she had a friend bring back a Japanese copy of the Lotus Sutra from Japan, was inspired by the Muryōgi Kyō, or what is better known as the Innumerable Meanings Sutra, traditionally regarded as the prologue to the Lotus Sutra. The Innumerable Meanings Sutra addresses human problems, weather behavior, psychiatric and spiritual issues. There were two watershed events that occurred in 1966 that are credited with having inspired Cheng Yen to found Tzu Chi; the first event occurred. After seeing blood on the hospital floor, she learned that a Taiwanese aborigine woman had a miscarriage.

They were forced to carry the pregnant woman back up the mountain after they could not afford the 8000 New Taiwan dollar deposit. The aborigine woman died; this story actu