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

Businesses are themselves a form of design. The design of a business encompasses its strategy, organizational structure, management processes, culture, and a host of other factors. Business designs evolve over time through a process of differentiation, selection, and amplification, with the market as the ultimate arbiter of fitness. One of the

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

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,

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

A growing population will increase the total wealth of a society as the amount of available labor grows. But growing wealth on a per-person basis (thus raising individual standards of living) requires increasing productivity, and increasing productivity requires specialization.

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

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

Modern efforts to understand the economy as an evolutionary system avoid such metaphors and instead focus on understanding how the universal algorithm of evolution is literally and specifically implemented in the information-processing substrate of human economic activity. While both biological and economic systems share the core algorithm of