Ridley Joins a Club of Ignorant Geniuses

Now that I have alerted my readers to the brazen brilliance of Matt Ridley’s How Innovation Works, I owe it to you to tell you why it is also supremely stupid.

Viscount Ridley will appear at Freedom Fest in Vegas next month to accept prizes for his book as the best Libertarian volume of the year. I’m sure it is.

But if he dares the trip and lavish laurels, he will also have to duck projectile denunciations from the audience for his docile acceptance of the prevailing hokum from the Santa Fe Institute. Led by Brian Arthur and cheered on poetically by Kevin Kelly of Wired, the Santa Fe folk see innovation as “inevitable,” the fruit of a mystical but material “technium,” all deriving from some mumbo jumbo from thermodynamics.

Innovations, says Ridley, in a fallback to the faith of his eminent ecclesiastical forebears, stem from an “infinite improbability drive.” He arrived at this idea in a eureka moment contemplating the similarities, which would electrify crowds only in Santa Fe, between iPhone and an eider duck.

“Both,” he realized in Pauline moment of revelation, “are doing the same thing: making improbable order (photographs, ducklings) by expending or converting energy.”

“Crystallized consequences of energy generation are what both life and technology are all about… physical states far from thermodynamic equilibrium.”

Indeed, his very idea of the essential identity of iPhones and eider ducks “is an improbable arrangement of synaptic activity in my brain, fueled by energy from food…”

Gee whiz, who could have thunk it? Creativity, even thought itself, is all explained by muddled sophomoric thermodynamics: “In this Universe, under the second law… entropy cannot be reversed, locally, unless there is a source of energy — which is necessarily supplied by making something else even less ordered somewhere else, so the entropy of the whole system increases.”

Cogent about the precedence of technology over science, Ridley understands that thermodynamics, essentially defined by Sadi Carnot in the early 1800s and related to information by Ludwig Boltzmann in 1886, was an effect not a cause of the innovation of the steam engine — which happened a century earlier, between 1712 (Thomas Newcomen) and 1763 (James Watt).

But somehow Ridley believes that innovation itself can be usefully depicted as some epiphenomenon of energy conversion. It’s what I call the “materialist superstition” — a denial of the autonomous power of ideas — and it remains a prevalent myth among sophisticated people.

Nordhaus Takes on Time-Prices

Ridley’s book itself, however, does resourcefully expound a significant innovation, what I call “time-prices.” They measure the economic value of a good or service by the amount of time you have to work to gain the money to buy it. In my view, based on money as time, they are the only real prices.

As he would readily acknowledge, he did not invent this idea. Like all the inventions he recounts in his book, it occurred to many people at various times. Its full meaning and importance are still being explored, most notably by economists Gale Pooley and Marian Tupy.

Perhaps the most notable progenitor of the concept is Nobel Laureate William Nordhaus of Yale. Nordhaus’ Nobel follows the usual Nobel rule of honoring economists for their worst, most fashionably banal blunders, in this case the economics of climate change and carbon taxes. But way back in 1993, in a presentation to the National Bureau of Economic Research, “Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not,” Nordhaus boldly propounded the fully Nobel worthy idea that such economic contrivances as consumer price indices, GDP deflators, hedonic adjustments, and Purchasing Power Parities totally miss the real progress of innovation.

Based on a scrupulous calculation of the number of hours of work a typical laborer would have to do to buy an incremental watt or lumen of light, Nordhaus shows that technological progress has been vastly underestimated by economists and governments. As David Warsh ejaculates in his Knowledge and the Wealth of Nations (2006), “the traditional story was off by three orders of magnitude, or a factor of a thousand-fold!”

As Ridley shows, “innovation has made it possible to work for a fraction of a second so as to be able to afford to turn on an electric lamp for an hour, providing the quantity of light that would have required a whole day’s work if you had to make it yourself by collecting and refining sesame oil or lamb fat to turn on a simple lamp, as much of humanity did in the not so distant past.” In Ridley’s calculation the actual mistake in the economic estimates of the productivity of lighting is about 70 thousand-fold.

Now this is a stunning insight. It overturns entire applecarts of iPhones and eider ducks. It means that virtually everything you read about industrial stagnation, inequality, economic growth, the plight of the middle class, the extent of poverty, the level of real interest rates, the advance of innovation, the need for government stimuli are radically and irretrievably wrong.

Today’s Prophecy

By all means read Ridley for the incandescent details. But don’t believe anything he writes about information theory or order or disorder or information entropy. He simply knows nothing about it.

Thus, he joins a club of ignorant geniuses, such as Norbert Wiener, Ray Kurzweil, Cesar Hidalgo, and even James Watson, all worshiping at the oxymoronic shrines of information as order.

As Ludwig Bolzmann saw in the late 19th century, information is disorder — what you do not expect — rather than the predictable regularities that proceed from the past. As Claude Shannon expounded in 1948, information is entropy. It is the surprising bits in messages that bear the information, not the orderly low entropy conduits that carry them.

To bear high entropy messages, full of surprising insights and innovations, such as Ridley’s book, it takes a low entropy carrier. Whether ink on paper or silicon and silicon dioxide chips or metal oxide disks or acoustic waves in the air, the material substrate of the carrier is irrelevant to the ideas it contains.

Ideas are not thermodynamic. They are unexpected disorder. As Norbert Wiener wrote in 1948, “Information is information, not matter or energy. No materialism that does not admit this can survive in the present day.” The laws of matter are low entropy and largely determined. But information is surprise. Innovation fuses the low-entropy carriers with the high-entropy creations.

By the time he gets to Vegas, maybe Ridley can figure out that the reason “innovation flourishes in freedom” is that information entropy depends on the degrees of freedom commanded by the creator of a particular invention.

Regards,

George Gilder
Editor, Gilder’s Daily Prophecy

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George Gilder is the most knowledgeable man in America when it comes to the future of technology — and its impact on our lives.

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