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This essay charts an intellectual journey. Geoffrey M. Hodgson became an institutional economist in the 1980s. He explains how he discovered institutional economics and what strains of institutional thought were attractive for him. Another issue raised in this essay is how institutional researchers organize and move forward. Hodgson argues for an interdisciplinary approach, but this is not without its problems.

In his article on “What Is Still Wrong with Austrian economics?,” Peter Boettke considers matters of strategy for the Austrian school and stresses the importance of institutions and institutional analysis. This comment takes up both themes. Two possible strategies for institutional research are considered. Then the place and role of institutions in Austrian analysis are addressed. It is argued that Austrian thinking has been caught in a dilemma between making theory as general as possible, or of taking on board the historically specific character of key institutions in market economies. The different approaches of Ludwig Mises and Carl Menger to this quandary are compared, with attention to the central concepts of property and capital.

Marx is widely regarded today as an “evolutionary” economist. However, what is clear from a close examination of the writings of both Marx and Engels is that they did not actually take Darwin′s theory of natural selection on board. Consequently, if their theory of socio‐economic change is evolutionary, it is not so in a Darwinian sense. Considers the different sense in which the economics of Marx can be regarded as “evolutionary” and the distance between Darwinian and Marxian conceptions of natural or social change.

Present‐day economics is characterised by the fragmentary and reductionist approach that typifies most social sciences. Economists generally fail to recognise that the economy is merely one aspect of a whole ecological and social fabric; a living system composed of human beings in continual interaction with one another and with their natural resources, most of which are, in turn, living organisms. The basic error of the social sciences is to divide this fabric in fragments, assumed to be independent and to be dealt with in separate academic departments (Capra, 1982, pp. 194–5).

In much of philosophy and social theory since classical antiquity, human belief and reason have been placed in the driving seat of individual action. In particular, social theory has often taken it for granted, or even by definition, that action is motivated by reasons based on beliefs. In contrast, a minority has criticized the adoption of this ‘folk psychology’ that explains human action wholly in such ‘mind first’ terms. Critics point out that such explanations are a mere gloss on a much more complex neurophysiological reality. These dualistic and ‘mind-first’ explanations of human behavior are unable to explain adequately such phenomena as sleep, memory, learning, mental illness, or the effects of chemicals or drugs on our perceptions or actions (Bunge, 1980; Churchland, 1984, 1989; Churchland, 1986; Rosenberg, 1995, 1998; Kilpinen, 2000).

This essay explores evolutionary and competence‐based theories of the firm. Evolutionary theories can be regarded as a subset of a wider class of theories, variously described as “capabilities”, “resource‐based”, or “competence‐based” theories of the firm. These contrast with a different set of contractarian theories, emanating largely from the work of Coase. It is argued that the contractarian theories of the firm misleadingly assume given individuals thus neglecting processes of individual learning and transformation. Similarly underestimated is importance of technology and the persistence of variety in firm structure and performance. The genesis of the alternative, competence‐based approach is outlined, including the important subset of “evolutionary” approaches of the Nelson‐Winter type. The paper concludes with a discussion of the relevance of the competence‐based approach to strategic management.