Eric D. Beinhocker

This book is packed with ideas and anecdotes circling around the topics of evolution without an end state and bottom-up modeling. It felt like an economic theory book, a history book, a management book, a politics book, a biology book, even a self-help and relationship advice book. While the diversity of applications for the core ideas is plentiful the author manages to keep statements grounded in research and is wary of slippery paths leading to hot air speculation. It was a delight to see how meticulously he constructs each argument, sometimes building the foundation for several long chapters before laying out a conclusion. A very carefully written and edifying book.

While reading i was eager to apply the ideas to my own life. How do i manage my own evolution? Do i have an optimal portfolio of experiments as well as exploit the familiar turf for sustenance? How can i explain the bitterness inducing blotches on the processes at my job? What role can i play in the development of culture around me? Why is our government the way it is?

Things are not set in stone and are not evolving towards a predetermined perfect equilibrium state. We are all in a car, endlessly moving, wheeling our way around pitfalls, reacting, learning and we each get to turn the wheel a tiny bit.… (meer)

I consider The Origin of Wealth by Eric D. Beinhocker to be the most important book I've read this year. It brings together insights from psychology, network theory, complexity studies and more into a incomplete-but-illuminating view of how societies have created wealth over time. Wealth, in this case, is about so much more than financial value. It's the sum total of non-relational things that humans find valuable.

The perspective of complexity economics shows the shallowness of our common political divides. While it doesn't provide answers, it does show that the questions are much more nuanced than either the Left or the Right thinks about them.

This book is about so much more than economics, in the narrow academic sense. It's about humanity and how we achieve things in groups.

This book starts with a critique of traditional economics. The primary problem with traditional economics is that it makes unrealistic assumptions about human behavior and system dynamics. Traditional economics assumes that economic agents are perfectly rational actors with perfect knowledge. It also assumes that economies are stable systems that only temporarily leave equilibrium in the face of external factors. Even with these limiting assumptions, traditional economics has been able to introduce many powerful ideas into reasoning about the economy. However, these assumptions are wrong in ways that make many of the economic "laws" that are used to guide real policy fundamentally flawed.

A more realistic set of assumptions completely changes the nature of economic systems.

They are dynamic. They are constantly changing in response to internal factors, not stable systems responding to external inputs.

They are made of individual agents with incomplete information. These agents are rational, but they are inductively rational. They identify patterns based on of past experience and update those patterns as they acquire new information.

The actions of agents are constrained by network structure. Agents are limited in who they can interact with and information takes time to propagate across the whole network.

The system evolves over time. Both what success looks like and the best strategies for achieving success change as the agents interact in the system. These interactions give rise to macroeconomic phenomena, such as boom and bust cycles.

In dynamic systems, such as economies, best ways to optimize is to apply an evolutionary algorithm. This should not be taken as saying that the economy has exact analogues for biological evolution. Rather, that it follows a generic evolutionary algorithm where strategies that best fulfill a fitness function are amplified and modified over time while less fit strategies decline.

Over time, physical technologies, social technologies, and business plans propagate or decline based on their fitness for creating value for people. The fitness function is based both on physical constraints (good building materials must actually hold things up) and on human values. This constantly evolving system leads to the growth of wealth.

There is so much more to the book than this. For example, despite the focus being economics, I consider this book one of the best leadership books I've read this year. The complexity view of economics realizes that we cannot understand the economy without understanding human interactions in general. In the end, that's what makes this such a powerful book.… (meer)