Theory and realism in economics: Richard R. Nelson, equilibrium and economic change

Abstract This paper revisits the work of Richard R. Nelson (1930–2025), focusing on his critique of equilibrium theory, to explore persistent methodological debates within the field of economics. It examines the tension between theoretical abstraction and empirical realism, arguing that Nelson’s evolutionary approach offers a compelling alternative to the dominant general equilibrium framework. By foregrounding processes of change, uncertainty, and adaptive behaviour, Nelson (alongside Sidney G. Winter) challenges the discipline’s tendency to model economies as static, fully understood systems. While this paper does not aim to provide a comprehensive review of their contributions, it highlights how their critique remains strikingly relevant today. Despite methodological refinements, shifts in research topics and policy engagement, mainstream economics continues to struggle with dynamic, out-of-equilibrium analysis. Revisiting Nelson’s legacy is not only timely, but also essential for those seeking a more realistic and responsive economics.