The Origin of Wealth

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

But why does the fashion industry go through this iterative, and in many ways, wasteful, process? The reason that your shirt was evolved rather than designed is that no one could predict exactly what kind of shirt you would want out of the almost infinite space of possible shirt designs. The old Soviet Union tried this kind of rational prediction i

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.

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 majo

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

Businesses fuse Physical and Social Technologies together and express them into the environment in the form of products and services.

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

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.