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Economists should not, according to Jones, neglect the legal, cultural, and social impediments that affect the dissemination of full-blown market behavior outside Western society. Custom, traditions, beliefs, and values combine with economic choice to produce existing culture. But, within these interactions, the economic choices of self-interested individuals and their formal institutions hold the upper hand. Jones rejects the hypothesis of “cultural nullity,” according to which culture depends entirely on the economy. Jones also rejects the alternative “cultural relativist” hypothesis, where each culture maximizes its own values, and the free market and capitalism are themselves cultural artifacts. For Jones, the cultural context within which capitalism develops is relevant only as a second-order factor to explain the pace and uneven nature of the global diffusion of wealth-maximizing, self-interested, and competitive behavior.

The purpose of this paper is to present a “human ecology economics (HEE)” framework for understanding economic growth and development challenges in Eastern Europe.

The HEE approach relies on evolutionary and complex systems processes; it expands the field of ecological economics by incorporating interdisciplinary material from the humanities; and it allows a long‐run perspective with a focus on sustainability of human systems. Using this framework and primary research from Hungary, Estonia, and Azerbaijan, challenges to Eastern European development are identified.

The main limit to Eastern European sustainable development is not “production capital”, i.e. the availability of natural resources, fixed human‐made capital, and intermediate consumption, but instead shortages of “transaction capital”, i.e. “social capital, informational capital, and financial capital.”

Rigorous analytical models of, and precise predictions of, change in the human ecology are at present not possible using evolutionary and complex systems approaches; however, Eastern Europe can be fruitfully studied through the HEE approach, and certain simulation methods and lessons from recent history are suggested.

Greater support for various kinds of transaction capital is recommended, including for social and communication networks, for information exchange between small and medium size businesses, for innovation and creative learning by doing, for financial intermediation, for better inter‐party cooperation at the national level, etc.

The need for greater social cooperation, including a reduction in discrimination exercised by dominant individuals or groups, arises as a more important pre‐condition for sustainable economic growth than is commonly believed.

Scholars, policymakers, and practitioners might appreciate the more comprehensive interdisciplinary framework for understanding economic growth and development challenges in Eastern Europe, especially the role played by intangible belief systems, social agreements, and levels of cooperation.