Why Information Grows

1. Information is physical order, distinct from meaning

Information is not a thing; rather, it is the arrangement of physical things. It is physical order, like what distinguishes different shuffles of a deck of cards.

Information is physical. While often associated with the immaterial or digital, information is fundamentally a physical phenomenon. It represents the specific arrangement of matter in space, whether in the form of ink on paper, electrons in a computer, or atoms in a crystal.

Meaning is separate from information. A crucial distinction exists between information and meaning. Information is the raw physical order, while meaning is the interpretation given to that order by a knowledge agent, such as a human. This separation allows for the objective study of information in physical systems.

• Examples of information without inherent meaning:
  • The specific arrangement of water molecules in a whirlpool
  • The order of base pairs in a strand of DNA (before it's interpreted by cellular machinery)
  • The pattern of pixels on a digital screen (before a viewer interprets the image)

2. Out-of-equilibrium systems spontaneously generate information

After chaos there is information.

Emergence of order. Systems that are far from thermodynamic equilibrium, characterized by flows of energy or matter, have a remarkable tendency to self-organize and generate information spontaneously. This phenomenon, studied by Ilya Prigogine, helps explain the origins of complex structures in nature.

Examples abound in nature. We can observe this spontaneous generation of information in numerous everyday phenomena:

• The formation of a whirlpool as water drains from a bathtub
• Weather patterns and cloud formations in the atmosphere
• The intricate patterns in the flame of a candle

These systems demonstrate that information and order can arise naturally in the universe, without the need for external design or intervention. This principle is fundamental to understanding the origins of complexity in both living and non-living systems.

3. Solids and computation are crucial for information growth

Solids provide the stubbornness that information needs to fend off the growth of entropy.

Solids preserve information. While out-of-equilibrium systems can generate information, solids play a crucial role in allowing that information to persist and accumulate over time. The rigid structure of solids resists the entropic forces that tend to destroy information in more fluid systems.

Computation enables information processing. The ability of matter to compute – to process and transform information – is the third crucial element for the growth of complex information. This computational capacity is present at various scales in nature:

• Chemical reactions processing information about their environment
• Cellular signaling networks in living organisms
• Neural networks in brains
• Social and economic systems processing collective knowledge

Together, these three elements – out-of-equilibrium systems, solids, and computation – form the foundation for the growth of complex information in the universe, from the simplest physical systems to the most advanced technological and biological structures.

4. Humans uniquely crystallize imagination into tangible objects

The airplane, the helicopter, and Hugh Herr's robotic legs were all thoughts before they were constructed.

From mind to matter. Humans possess the unique ability to transform abstract ideas into physical reality. This process of "crystallizing imagination" sets our species apart and is the driving force behind technological and cultural evolution.

Examples of crystallized imagination:

• Architecture: Buildings that begin as mental concepts
• Technology: Smartphones, computers, and the internet
• Art: Paintings, sculptures, and musical compositions
• Scientific instruments: Telescopes, particle accelerators

This ability allows humans to reshape their environment in unprecedented ways, creating tools and structures that amplify our capabilities and reshape the world around us. It's a fundamental aspect of human creativity and innovation, enabling us to externalize our thoughts and share them with others in tangible forms.

5. Products amplify our capabilities by embodying knowledge

Products are magical largely because they augment our capacities. Planes endow us with the ability to fly, ovens with the ability to cook, and toothpaste with the ability to keep our teeth until old age.

Knowledge amplifiers. Products are not merely physical objects; they are repositories of knowledge and knowhow. When we use a product, we gain access to the practical applications of knowledge accumulated by countless individuals, often spanning generations.

The economy as a knowledge amplifier. This perspective reframes our understanding of the economy:

• It's not just about resource allocation or financial transactions
• The economy is a system that amplifies and distributes the practical uses of collective knowledge
• Products allow individuals to benefit from knowledge they don't personally possess

Examples of knowledge amplification through products:

• A smartphone gives access to vast information networks and computational power
• Modern medical devices embody centuries of scientific and engineering knowledge
• Even simple tools like a hammer or a pencil represent accumulated knowledge about materials, ergonomics, and manufacturing processes

This view highlights how technological progress and economic development are fundamentally driven by our ability to create, share, and utilize embodied knowledge through products.

6. Knowledge accumulation is constrained by individual and network limits

To fight our individual limitations we need to collaborate. We form networks that allow us to embody more knowledge and knowhow, because without them our ability to process information and create crystals of imagination would be highly limited.

The personbyte limit. Individuals have a finite capacity to accumulate knowledge and knowhow, which we can conceptualize as a "personbyte." This limit necessitates the distribution of knowledge across networks of people to tackle complex tasks.

Network formation challenges. Accumulating knowledge beyond the individual level introduces new difficulties:

• Coordinating and communicating across a network of specialists
• Ensuring compatibility and integration of different knowledge domains
• Maintaining and transferring knowledge over time and between individuals

Implications for economic activities:

• Simpler activities (requiring fewer personbytes) are more ubiquitous globally
• Complex activities concentrate in regions with well-developed knowledge networks
• The difficulty of transferring large networks explains why some industries remain geographically concentrated

Understanding these constraints helps explain patterns of industrial development, innovation clusters, and the challenges of economic development in different regions.

7. Economic complexity reflects a region's collective knowledge and knowhow

The mix of products a country exports are highly predictive of its future level of income, indicating that the knowhow that is embodied in a society helps pin down its level of prosperity.

Products as knowledge indicators. The range and sophistication of products a region produces provide insight into the collective knowledge and capabilities present in that economy. This concept forms the basis of economic complexity analysis.

Measuring economic complexity:

• Consider both the diversity of products exported
• And the ubiquity of those products (how many other countries can make them)
• Complex economies produce diverse, less ubiquitous products

Predictive power. Economic complexity measures have been shown to predict future economic growth better than many traditional economic indicators. This suggests that the accumulation of productive knowledge, rather than mere capital accumulation, is a key driver of economic development.

Key insights from economic complexity:

• Developed economies have dense networks of diverse, specialized knowledge
• Economic development involves acquiring new capabilities, not just more of the same
• The path to development often involves moving into adjacent product spaces that utilize similar knowledge

This perspective provides a new lens for understanding economic development and the sources of long-term prosperity.

8. Social institutions shape the networks that accumulate knowledge

Trust enables networks, but networks also enable trust.

Trust as economic lubricant. Social institutions, particularly the level of trust in a society, play a crucial role in shaping the networks that accumulate and utilize knowledge. High-trust societies can form larger, more fluid networks, enabling greater knowledge accumulation and economic complexity.

Institutional effects on network formation:

• Family-oriented societies tend to have smaller, more rigid business networks
• High-trust societies develop larger, more diverse professional networks
• Cultural norms affect the willingness to collaborate with strangers or form new connections

Examples of institutional impacts:

• Silicon Valley's culture of open information sharing vs. more secretive business cultures
• Differences in firm size and structure between countries with varying levels of social trust
• The role of professional associations and civic groups in fostering network formation

Understanding these social dynamics is crucial for explaining why some regions develop complex, knowledge-intensive economies while others struggle to do so, even when other factors like education or resources are similar.

9. Economic development stems from the growth of information

The growth of information in the economy, which is ultimately the essence of economic growth, results from the coevolution of our species' collective computational capacities and the augmentations provided by the crystals of imagination that we are able to make.

Information growth as development. Economic development, at its core, is about increasing a society's capacity to generate, process, and utilize information. This involves both expanding collective knowledge and creating products that embody and amplify that knowledge.

Coevolution of knowledge and products:

• New knowledge enables the creation of more sophisticated products
• These products, in turn, enhance our ability to generate and process information
• This positive feedback loop drives technological progress and economic growth

Implications for development strategies:

• Focus on building knowledge networks and institutions that support learning
• Invest in education and research to expand the knowledge base
• Foster environments that encourage innovation and the "crystallization of imagination"
• Develop policies that facilitate the flow of knowledge within and between organizations

This perspective reframes economic development as a process of growing a society's information-processing capabilities, rather than simply accumulating capital or optimizing resource allocation. It emphasizes the importance of knowledge, creativity, and social structures in driving long-term prosperity.

Last updated: September 6, 2024