Tag Archives: equilibrium

Daddy, where does innovation come from?

Plenty of folk have been linking to this excerpt from Matt Ridley’s new book The Rational Optimist, and with good reason – it’s a provocative piece that plays to advocates (and opponents) of free trade, open exchange, copyright reform and much more. The basic thesis? The one persistent factor that has encouraged innovation and new ideas is the freedom to pass them around and build upon them.

You should read the whole thing, as Ridley takes down in turn the usual answers offered to the question of innovation’s source – science, capital, IP, government. But here’s some stirring stuff from the conclusion:

We may soon be living in a post-capitalist, post-corporate world where individuals are free to come together in temporary aggregations to share, collaborate, and innovate, and where websites enable people to find employers, employees, customers, and clients anywhere in the world. This is also, as the evolutionary psychologist Geoffrey Miller reminds us, a world that will put “infinite production ability in the service of infinite human lust, gluttony, sloth, wrath, greed, envy, and pride.” But that is roughly what the elite said about cars, cotton factories, and (I’m guessing) wheat and hand axes too.

Were it not for this inexhaustible river of invention and discovery irrigating the fragile crop of human welfare, living standards would stagnate. Even with population tamed, fossil energy tapped, and trade free, the human race could quickly discover the limits to growth without new knowledge. Trade would sort out who was best at making what; exchange could spread the division of labor to best effect, and fuel could amplify the efforts of every factory hand, but eventually there would be a slowing of growth. A menacing equilibrium would loom.

In that sense, Ricardo and Mill were right. But so long as it can hop from country to country and from industry to industry, discovery is a fast-breeder chain reaction; innovation is a feedback loop; invention is a self-fulfilling prophecy. Equilibrium and stagnation are not only avoidable in a free-exchanging world. They are impossible.

What are your thoughts – is Ridley on to something here, or just grandstanding to libertarians, valleygeeks and copyleftists?

It’s clear that Ridley feels economic equilibrium is something to be feared, and on that point I’m not entirely sure I’m in agreement with him… chasing after perpetual growth has been a pretty messy business in the long term, after all. But I can’t fault his thoughts about innovation. I wonder if it would be possible to entirely disconnect innovation from a money economy? Impossible right now, sure, but in a hypothetical post-scarcity future it might just fly.