Thermodynamic Theories of Entrepreneurship in the New Economy

What is innovation? Is it dividing the box into ever smaller cubes of specialization — as in Adam Smith’s “division of labor, determined by the extent of the market” — and governed by some thermodynamic process of wrenching order from entropy?

This is the Matt Ridley model in his stirring new book How Innovation Works, which I have been discussing here at the Daily Prophecy.

Or is real innovation going outside the box? Even launching new boxes with folding wings and vertical takeoff and landing capacity? Or perhaps, as in the case of the fascinating new “Rhaegal” unveiled on the cover of the current issue of IEEE Spectrum, creating entirely new airborne containers for commerce?

The Spectrum story, “Rising to the Challenge: Turbine Powered Long-Range Cargo Drones Could Upend the Air Freight Industry,” tells the tale of a brand-new invention from Sabrewing Aircraft Company (SACO). Headquartered in Hanger number two at Camarillo Airport in California, the pioneering startup also has a “Dragonworks” facility at Hayward Airport.

While Google, Airbus, and a throng of rivals have spent decades trying to put people into flying cars and self-driving planes, Ed De Reys and his team of ingenious aeronauts figured out that it would be better to remove humans totally. Without the human factors, cargo planes would be cheaper, lighter, more robust, capacious, energy efficient, easy-to-design and build, and more profitable.

The Rhaegal does not need a runway, a restroom, weather alarms, soundproofing, windows, flight attendants, COVID panic warnings, or specialized loading gear. With no pilot or control panels in the way, its 5,400 pounds of cargo can enter through the nose. The craft has vertical takeoff and landing capabilities, pinpoint targeting for parking lot deliveries, and some 1850 kilometers of range.

AI Meets Aviation

For aircraft design, artificial intelligence landing gear, engineering, CAD, computational fluid dynamics, and 3D printed components, Sabrewing opened a Silicon Valley lab in Mountain View.

Developed by a team from such companies as McDonnell Douglas and FedEx, partly financed in Japan, and named for a mythical pterodactyl in A Game of Thrones — the Rhaegal could ultimately revolutionize aviation and commerce. Who can imagine what exotic “containers” may ultimately be invented for the new vessel or technology platform as it revitalizes the learning curves and possibilities of controlled flight?

As De Reyes writes, “The Rhaegal uses an AI landing system to spot obstacles from above, including vehicles, people, rocks, and uneven surfaces… including landing pads aboard ships at sea.” It can land in mud, snow, sand, marsh, or deep puddles.

Its AI also provides a “Detect and Avoid (DAA) system that can avoid any air traffic that may cross its path, using an array of radar from Garmin, cameras from Iris Automation, and Lidar from Attollo — which collectively enable far more flexible routing than previous terrestrial systems.

“Prior to takeoff, the operator loads into the computer an exact flight plan, provided by the air traffic control authorities that includes procedures for departing in any weather and sets the frequencies, routes, and clearances to the final destination. “That way,” says De Reyes, “it can find its way home even if it loses communication with the operator or air traffic control.”

With a weight and size that incurs Federal Aviation Administration regulations that mean it must remain in contact with air traffic control at all times, the Rhaegal’s “pilot” can reside anywhere. It controls the craft through a satellite link that connects through the onboard AI “cockpit” to local air traffic control.

Now, this innovation seems to fit nearly all of Ridley’s criteria — gradual, evolutionary, serendipitous, recombinant, team-based, inexorable, entailing trial and error, and different from invention. It certainly springs from a pullulating web of technologies and inventions around the world.

But it may not be so “gradual” as he says. Sabrewing took just four years to launch its invention. Not exactly serendipitous, but coming from a process of planning by a team of near geniuses in the related fields.

Today’s Prophecy

To put it all together in a company and deliver it to the world in four years, it took De Reyes, a test pilot and engineer who had previously patented the invention of a nitrogen powered turbine engine that does not combust any fuel at all. If Sabrewing prevails in the global contest for the next delivery system for global commerce, let’s call him the inventor.

But nothing about this process is usefully described in Ridley’s grandiose hollow theory as creating “improbable order” by “expending and converting energy” in some “crystallized consequence of energy generation” beginning with an “improbable arrangement of synaptic activity in [De Reyes’] brain.”

Hey, folks, let’s all acknowledge than in an age of information — and all human epochs are dominated by intellect — thermodynamic theories of entrepreneurship as “reassembling chemical elements” are merely new materialist superstitions. They have less real-world relevance than the most far-fetched religions.

Takeaway: Understanding the prospects for investment in the new economy, the entropy of information theory is far more useful than the cosmic religions of thermodynamics.


George Gilder
Editor, Gilder’s Daily Prophecy

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