Dear All,
Chuck is right. Interesting article. Seems to be an exciting book ....
http://www.nytimes.com/2009/12/22/opinion/22brooks.html?_r=1
Key excerpts:
--snip--
Over the past decades, many economists have sought to define the
differences between the physical goods economy and the modern protocol
economy. In 2000, Larry Summers, then the Treasury secretary, gave a
speech called “The New Wealth of Nations,” laying out some
principles. Leading work has been done by Douglass North of Washington
University, Robert Fogel of the University of Chicago, Joel Mokyr of
Northwestern and Paul Romer of Stanford.
Their research is the subject of an important new book called “From
Poverty to Prosperity,” by Arnold Kling and Nick Schulz.
Kling and Schulz start off entertainingly by describing a food court.
There are protocols everywhere, not only for how to make the food, but
how to greet the customers, how to share common equipment like trays and
tables, how to settle disputes between the stalls and enforce contracts
with the management.
The success of an economy depends on its ability to invent and embrace
new protocols. Kling and Schulz use North’s phrase “adaptive
efficiency,” but they are really talking about how quickly a society
can be infected by new ideas.
--snip--
But they are still economists, with worldviews that are still
excessively individualistic and rationalistic. Kling and Schulz do not
do a good job of explaining how innovation emerges. They list some banal
character traits — charisma, passion — that entrepreneurs supposedly
possess. To get a complete view of where the debate is headed, I’d
read “From Poverty to Prosperity,” and then I’d read Richard
Ogle’s 2007 book, “Smart World,” one of the most
underappreciated books of the decade. Ogle applies the theory of
networks and the philosophy of the extended mind (you have to read it)
to show how real world innovation emerges from social clusters.
Economic change is fomenting intellectual change. When the economy was
about stuff, economics resembled physics. When it’s about ideas,
economics comes to resemble psychology.
--snip--
What particularly interests me about this article is a key insight in
the last two sentences: "When the economy was about stuff, economics
resembled physics. When it’s about ideas, economics comes to resemble
psychology." Both the importance of behavioral economics and the
consilience of approaches that shed light on the knowledge economy are
vital aspects of understanding how things work in the larger world of
human affairs.
Cohen recommends two books. To these, I'd add a third book by David
Warsh, "Knowledge and the Wealth of Nations: a Story of Economic
Discovery." In the 1980s, Warsh wrote "The Idea of Economic Complexity,"
one of the early efforts to apply the ideas of what would become
complexity theory to economics." Warsh also maintains an excellent free
website titled "Economic Principals" that provides insight on these
issues and much more.
http://www.economicprincipals.com/
Warm wishes,
Ken
Ken Friedman, PhD, DSc (hc), FDRS
Professor
Dean
Swinburne Design
Swinburne University of Technology
Melbourne, Australia
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