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Richard R. Nelson (1930–2025)

Nelson spent his career on how economies change technically and why they differ, and he came to think that the equilibrium theory he was trained in could not answer either question. With Sidney Winter he wrote An Evolutionary Theory of Economic Change (1982), which modelled firms as bundles of routines that search for better ways of working and are sorted by competition, and which revived evolutionary economics as a field. The book called itself “unabashedly Lamarckian” and disavowed any aim toward a higher-level evolutionary theory. Later, in 2006 and 2007, Nelson rejected the narrow universal Darwinism of close biological counterparts, memes as units, while accepting a broad one: a “roomy intellectual tent” of variation and selection in which mechanisms may differ greatly. His other lasting contribution, the comparative study of national innovation systems, came from the same interest in how institutions shape what an economy can learn.

Richard R. Nelson was born in New York City in 1930. After two years at the University of Wisconsin he transferred to Oberlin College, where he took his BA in 1952, and he took his PhD in economics at Yale in 1956. A postdoctoral year at MIT and a post as assistant professor at Oberlin came before the RAND Corporation, where he worked as a research economist from 1957; he became associate professor at the Carnegie Institute of Technology in 1960, served on the staff of President Kennedy’s Council of Economic Advisers from 1961 to 1963, and returned to RAND before moving to Yale, where he was professor of economics from 1968 to 1986 and for a period directed the Institution for Social and Policy Studies. In 1962 he organised and introduced The Rate and Direction of Inventive Activity, the National Bureau of Economic Research volume that, in the words of his Research Policy obituary, “can be said to have launched the field of innovation studies, at least in the United States”. At Columbia University he was Henry Luce Professor and later George Blumenthal Professor at the School of International and Public Affairs, and from 2005 directed the Earth Institute’s Program on Science, Technology and Global Development. His honours included the Tinbergen, Leontief and Veblen-Commons awards and the Honda Prize. He died in 2025.

Key concepts

The economics of basic research. “The Simple Economics of Basic Scientific Research” (Journal of Political Economy, 1959) argued that private firms will invest too little in basic research, since its results are uncertain, long in coming and hard to keep private, and that the loose definition of goals in basic research is a rational response to the great uncertainty it involves. The paper became one of the foundations of the case for public funding of science. With Edmund Phelps he argued in 1966 that education matters for growth chiefly because it speeds the diffusion of new technology. The Moon and the Ghetto (1977) asked why a society that could land men on the moon could not solve the problems of its cities. He returned to the question in “On the Uneven Evolution of Human Know-How” (Research Policy, 2003) and “The Moon and the Ghetto Revisited” (Science and Public Policy, 2011), treating it as the unevenness of technological advance across areas of human need, great in medicine and slight in education, and analysing it through the concept of the innovation system.

Routines, search and selection. An Evolutionary Theory of Economic Change replaced the maximising firm with a firm that does what it has learned to do. Its routines, the regular and predictable patterns of its behaviour, “play the role that genes play in biological evolutionary theory”: they persist, they are passed on as successful firms grow and are imitated, and they are selected by the market. When performance falls short, firms search for new routines, and that search, part deliberate and part blind, is the source of variation; the authors found the distinction between the two “unhelpful and distracting” for a theory of the firm. Because firms change their routines in response to their circumstances and pass on what they learn, the theory “contemplates both the ‘inheritance’ of acquired characteristics and the timely appearance of variation under the stimulus of adversity”. The book also distinguished formal theorising from what it called appreciative theorising, the looser account of a phenomenon that practitioners and historians give, and treated the two as working together. Nelson and Winter “emphatically” disavowed any aim of pursuing biological analogies for their own sake or toward a higher-level evolutionary theory.

National innovation systems. National Innovation Systems: A Comparative Analysis (1993), which Nelson edited, compared fifteen countries’ arrangements of firms, universities, government laboratories and policy for producing and absorbing technology. The concept was Christopher Freeman’s (1987), given its fuller statement by Bengt-Åke Lundvall (1992); Nelson’s volume, together with Lundvall’s book, helped establish it as a standard unit of analysis in innovation studies.

Physical and social technologies. In later work Nelson distinguished physical technologies, ways of transforming materials, from social technologies, ways of organising people, and treated institutions as the social technologies that have become standard. With Bhaven Sampat he developed this as a way of bringing institutions into growth theory (2001), and in essays collected in Technology, Institutions, and Economic Growth (2005) he argued that technologies and the institutions that support them co-evolve, each shaping the conditions under which the other changes.

Universal Darwinism. In “Evolutionary Social Science and Universal Darwinism” (Journal of Evolutionary Economics, 2006) Nelson separated two forms of the programme. The narrow form looks for close counterparts between cultural and biological mechanisms, with memes as the units of culture, and he rejected it. The broad form is a “roomy intellectual tent” unified by a theory of variation and selection, in which mechanisms may differ greatly from one domain to another, and social scientists inclined to evolutionary theory, he wrote, “can be happy in that camp”. “Universal Darwinism and Evolutionary Social Science” (Biology and Philosophy, 2007) set out the differences between cultural and biological evolution that a universal Darwinism needs to encompass if it is to be broad enough to cover both.

Where Nelson stops

Nelson’s broad universal Darwinism shares with the generalised Darwinism of Geoffrey Hodgson and Thorbjørn Knudsen the view that mechanisms differ from domain to domain.

The routine, the concept the 1982 book rests on, did not stay settled either. Markus Becker’s “Organizational Routines: A Review of the Literature” (Industrial and Corporate Change, 2004) found that the researchers who followed Nelson and Winter “have not always had the same idea of what routines are and what effect they have on organizations”, which had left the literature “riddled with ambiguities”. Nelson took part in the sorting: with Becker, Nathalie Lazaric and Winter he wrote “Applying Organizational Routines in Understanding Organizational Change” (Industrial and Corporate Change, 2005).

Key works

See also: Evolution · Economic and institutional change · The criterion · Lamarck and the inheritance of acquired characters · Schumpeter · Veblen · Arthur