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The Information Theory of Capitalism and How It Is Revolutionizing Our World

Johannes Jacobse' Book Review of Knowledge and Power Published by Religion and Liberty, Volume 23, Number 3 at Acton Institute

We are trained and educated to comprehend the operations of the universe in a materialistic way, where physical and chemical processes are assumed to be the deepest level of knowledge that can be acquired. George Gilder, in his new book Knowledge and Power, disputes that. The universe, he writes, is actually a vast information system of unfathomable limits.

Ever since the rise of information theory in the 1940s, it is becoming increasingly clear that the universe is, in a sense, digital. Information, logic, data, whatever you want to call it, lies even deeper than the material operations that science has so ably discovered and quantified. This deeper informational dimension is dynamic and unpredictable. It is also how systems (biological, institutional, economic etc.) change and grow.

Gilder applies the principles of information theory to help us understand how economies grow. Known mostly for Wealth and Poverty, a book written over 30 years ago (earning him a reputation as "Ronald Reagan's most quoted economist"), Gilder lays out what he calls the sum of all his work: Information, not the management of processes, creates economic growth.

Gilder calls this the "information theory of capitalism" and it turns conventional thinking about free markets and statist economic theories on its head. Most of us think free marketers and statists are from opposite schools when in fact they are "fresh water and salt water" as Gilder calls them.

How so? Both share a vision in common: Markets are mechanical. This leads to an impoverished understanding of the role of the human person in economic expansion albeit to differing degrees. Think of their vision as Newtonian physics applied to economics; an illusion of determinism applied to human actions.

Continue Reading at Religion and Liberty, Volume 23, Number 3 at Acton Institute