The Origin of Wealth

The Economy Evolves Modern science provides just such a theory. This book will argue that wealth creation is the product of a simple, but profoundly powerful, three-step formula—differentiate, select, and amplify—the formula of evolution. The same process that has driven the growing order and complexity of the biosphere has driven the growing order

Evolution is an algorithm; it is an all-purpose formula for innovation, a formula that, through its special brand of trial and error, creates new designs and solves difficult problems.

Nelson notes that while Physical Technologies have clearly had an immense impact on society, the contributions of Social Technologies have been equally important and in fact, the two coevolve with each other.36 During the Industrial Revolution, for example, Richard Arkwright’s invention of the spinning frame (a Physical Technology) in the eighteent

Take a look out your window. No matter where you are, from the biggest industrialized city to the smallest rural village, you are surrounded by economic activity and its results. Twenty-four hours a day, seven days a week, the planet is abuzz with humans designing, organizing, manufacturing, servicing, transporting, communicating, buying, and selli

During the 1970s, as scientists came to know more about the behaviors of complex systems, they became increasingly interested in systems in which the particles were not simple things with fixed behaviors like water molecules, but were things with some intelligence and the capability of adapting to their environment. Water molecules cannot adapt the

Smith’s view was that the most just mechanism for allocating resources from the point of view of the individual was one that enabled people to pursue their own self-interest and make their own choices. After all, people are usually the best judges of their own happiness. At the same time, the best allocation of resources for society as a whole was

The complexity of all this activity is mind-boggling. Imagine a small rural town, the kind of quiet, simple place you might go to escape the hurly-burly of modern life. Now imagine that the townspeople have made you their benevolent dictator, but in exchange for your awesome powers, you are responsible for making sure the town is fed, clothed, and

But saying that both economic and biological systems are subclasses of a more general and universal class of evolutionary systems tells us a lot. This is because researchers believe that there are general laws of evolutionary systems.28 Scientists consider certain features of nature universal. For example, gravity works the same way on the earth as

While economists were pursuing their vision of the economy as an equilibrium system, during the latter half of the twentieth century, physicists, chemists, and biologists became increasingly interested in systems that were far from equilibrium, that were dynamic and complex, and that never settled into a state of rest. Beginning in the 1970s, scien