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Why Information Grows: The Evolution of Order, from Atoms to Economies Paperback – February 14, 2017
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Finalist for the 2015 Hayek Book and Lecture Prize
"An impassioned argument for the advantages of an information-centric view of economic growth, and for understanding the different capacities of nations to provide solutions to human problems... Hidalgo persuasively demonstrates the value of this approach by placing the ideas firmly in their historical context, both in information theory and in physics... Hidalgo's perspective on economic wealth is wildly fresh and creative. Physicists will enjoy reading about familiar ideas in new ways, and will also find value in learning how these ideas can be applied fruitfully in areas seemingly far away from physics. Economists and other social scientists will find new concepts ripe for profitable use."
About the Author
Cesar Hidalgo leads the Macro Connections group at the MIT Media Lab and is an Adjunct Lecturer in Public Policy at the Kennedy School. A trained physicist, he also has extensive experience in the field of economic development and has pioneered research on how big data impacts economic decision-making.
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This conversational approach allows the key concepts to emerge quickly and naturally. To briefly summarize the arguments:
The universe is made of energy, matter, and information. Information emerges spontaneously in out-of-equilibrium systems, like the swirls of milk in coffee. This information would be short-lived if not for the ability of solids to allow information to endure and be recombined with other information into more complex forms: Energy is needed for information to emerge, and solid matter is needed for information to endure. Information grows since matter can compute in an iterative process that uses the information embedded in solids to transform energy into different solids and new information.
Computation happens in plants or bacteria, but the human brain is the ultimate incarnation of the computational capacities of matter. We organize our brain and our society to beget new forms of information, deposited in objects and language. These allow us to distribution information, both knowhow and knowledge. What's the difference between the two? We know how to walk, but most of us don't know the biomechanics of how we walk. Some rare individuals know both, and can combine that information with robotics and prosthetics to build new creations like artificial limbs.
Humans have the unique ability to do what César poetically describes as "crystallize information". We create objects from our imagination and from the collective fiction we develop with others through expression and language. We eventually hit limits of what we can compute and manifest on our own, forcing us to work with others to form a distributed computer...a social network with an emergent collective intelligence. This human network leads to economies embedded in social and professional networks that predate and constrain economic activity.
The inequality of the wealth of nations is an inevitable consequence of the inequality of the distribution of large networks of knowledge and knowhow. César then leverages his previous in-depth work on economic complexity to make four important testable predictions:
• Simpler economic activities will be more ubiquitous.
• Diversified economies will be the only ones capable of executing complex economic activities
• Countries will diversify toward related products
• Over the long run (> five years), a region's level of income will approach the complexity of its economy, as approximated by product exports
Society is a collective computer, augmented by the products we produce to compute new forms of information. The social and economic problem that we are truly trying to solve is that of embodying knowledge and knowhow in networks of humans. This evolves the computational capacity of the human race, and ultimately helps information grow.
César certainly could have made this a highly mathematical treatise suitable for publication in Nature or the PNAS. Indeed, for the more technical reader, the book's 25 page appendix provides copious references that back up the author's claims. I enjoyed the behind-the-scenes insight into the works of figures that were new to me like Ilya Prigogine, Francis Fukuyama, and Wassily Leontief.
The book ends with a powerful moral imperative: "We worry about money and taxes instead of owning the responsibility of perpetuating this godless creation: a creation that grew from modest physical principles and which has now been bestowed upon us." César comes from and contributes to a community of thinkers and makers that learn from the past and live in the present from which a better future can emerge. By describing the importance of information from atoms to economies, he implicitly bids the reader to do the same. "Our world is different from that of early hominids only in the way in which atoms are arranged": Here's to ever-increasing information, our ability to work peacefully together in society to achieve it, and to the beautiful complexity that information and augmented computation brings.
It also provides an interesting and new perspectives of what economy is, and how to measure it. More than just being an alternative approach it's quite complementary, and specially convenient for the times we live in which we have a lot of data about all the data we have.
Yes it's also a book about data,… and it doesn't mention "Big Data". Thanks for that César. It's also a book about technology and yet the word barely appears (César instead uses a very poetic name the reader will find beautiful and appropriate).
And yet the book has gaps (for those gaps I first 4★ed the book but then I thought contents were good enough and that I had a very pleasurable reading). And the gaps are not small:
One of the main concepts introduced in this book is that of economic complexity, an index that can be applied to regions, industries or companies. And yet the author doesn't give a definition of it (he gives a hint, enough to show that the index is difficult to define in bare words). Well, he could have used an appendix to provide a definition!
Then the author claims this index predicts future rates of growth (in conventional economic terms). Yes, it shows how that correlation exists between the economic complexity index measured for countries in 1985 and present rates of growth. Bu that's just one correlation, it's far from enough. Ok, he believes on his index,… thus the natural next thing to do is to show current values of economic complexity for countries, and thus give us a prediction of future economic growth (and with that, an option of testing the prediction). Mysteriously enough the author doesn't provide that information either.
(Note the negative synergy of the lack of a formal definition of the index, and the lack of the current data… specially when claimed that the index predicts our future).
Finally, I felt there's also a gap between the first part, in which he introduces information and entropy, and how both are in essence physical (solid) phenomena and not just mathematical, and also how matter computes; and the second part in which he jumps to a bigger scale, that of societies. It's somehow difficult to understand how both parts connect. At the end of the book he gives a very good summary, which certainly helps establishing the connection. Strangely enough, it's actually outside the main body of the text, in the acknowledgments (yes I read them, they actually have interesting ideas and stories), in which César more clearly manifests the link:
"As I […] tried to escape the rhetorics of deprivation, guilt, prosperity, optimization, equilibrium, and wealth, I learned that economic growth was nothing more than an epiphenomenon of a larger, more universal, and more relevant phenomenon. This is not the growth that captures headlines and political agendas, but the growth that makes possible the existence of life and society— even if we ignore it. This is the growth of physical order, or information. Soon I had to accept that information was what it was all about. At this point, I could no longer see the economy in terms of income, regulations, and agents. The economy was a mundane manifestation of something deeper."
Gaps or no gaps, I thoroughly recommend this book.
The author describes the basic principles of how information grows, at any level, to transcend to humans - a species particularly able to create and store information.
Next, the author provides compelling arguments on how information and its complexity is what lies behind old fashioned aggregate factors of growth and development (physical and human capital). In this new approach to growth, the most developed of societies will be those able to support largest, and more complex, networks of persons and firms to support the manufacturing of a manifold of products.
A very pleasant reading for everybody as it does not require any specialized knowledge
Most recent customer reviews
it'a actually two books in one , one centered on physical concepts, the other a...Read more