Diversity and economic evolution: Failures of competitive economic systems

This paper has two themes. First, diversity of relevant attributes driving the dynamics of socioeconomic systems, including industrial systems' is oft en needed to increase their likelihood of transiting to a superior state. H owever systems left to their own devices do not always evolve to states whe re they possess sufficient or optimal diversity for further evolution or gr owth to a superior state. Evolutionary market mechanisms can be of this nat ure. Structural adjustment policies and globalization seem to be adding to industrial and other types of uniformity. Hence, real danger exists that gl obal industrial structures influenced by field effects will become "piled u p" and reduce the likelihood of the global economic system evolving to a su perior economic state. Furthermore, diversity is an important driving force in other growth processes, e.g., those adding to the stock of knowledge. S econd industrial diversity of techniques and behaviors may be potentially P aretian valuable as a means of optimal adjustment to continual technologica l change and as a manifestation of specialization according to differences in individual abilities and in those of organizations. Insofar as attempts at benchmarking try to ensure uniform adoption of "best practice" in indust ry, they are likely to be doubly damaging because short-nln potential Paret ian benefits are forgone, and in stifling industrial diversity they may als o undermine industrial diversity as a source of future economic growth.