Creative Evolution in Economics

Using the theory of the adjacent possible (TAP), we describe a recombination process, agent epistemology, and the contours of rationality under creative evolution. In so doing, we rederive Hayek's results about local knowledge, reinforce the salience of heuristics over traditional rational choice, improve upon modern growth theory, further the understanding of the role of entrepreneurs in creatively evolving the economic system, and provide new arguments against technocracy and representative agent aggregation. We also demonstrate the surprising and practical usefulness of ordinary agents employing nonlogical schemes of thought like aesthetics, cultural practices, and randomness in making and realizing plans