If institutional economics is truly an “evolutionary” economics, it is because it has the capacity to explain the phenomenon of institutional change and because it incorporates the principles of that explanation in both theoretical and applied inquiry. While it cannot be argued that all that has been labeled “institutional” economics in the past rests either explicitly or implicitly on a coherent theory of institutional change, contemporary institutionalists generally agree that such a theory is, and must be, the diagnostic characteristic of the institutionalist perspective.