Regular contributor Stuart Kauffman is joined this week by Richard Melmon, a managing partner at Bullpen Capital.
What is an economy? The word derives from the ancient Greek for household stewardship. The economy is the steward of our material lives. But who is this steward? And how does it decide the makeup of the pantry?
The modern economy is breathtakingly volatile and diverse. Our era is experiencing a period of "punctuated equilibrium" (thank you Stephen J. Gould), in which all peoples of the globe are rapidly being brought into modernity (some kicking and screaming). The globalization of modernity has been enabled by the digestion of Internet, mobile and social digital mutations, all of which were enabled by the grandest digital mutation of them all, the semiconductor chip, with its inherent capacity to improve itself by 10X every few years.
The chip is analogous to the first multicellular animal emerging from the mutation of some single-celled precursor. The emergence of Intel, Apple, Microsoft, Amazon, Google, Facebook, etc., is analogous to the emergence of the various families of animals, all built around the same underlying chip-driven principles. Branching from these major trunks are thousands of smaller firms.
All of this together has created a dizzyingly complex set of new products and services, the sum of which have caused the most rapid collective improvement in human material well-being in history.
In the biosphere, mutative change is mediated by slight instabilities in an entity's DNA. In the econosphere, mutative change is mediated by slight instabilities in the thinking of special individuals we call entrepreneurs, who tweak the DNA of stable, successful businesses.
Each tweak creates a new possibility. Tweak by tweak, the econosphere is charged with these new possibilities. Like the biosphere, it is constantly growing out of an ever emerging "adjacent possible." Out of this possible, pruned and shaped by market forces, comes our perception of the real economy. But we don't actually live in even a momentarily determined "real" economy.
The economy is always only "becoming." The entrepreneur's activity, our economy's steward, never ceases. Nothing is final. There is only the becoming of things, driven by the mutative stewardship of the world's entrepreneurs, who have, over the course of human history, created everything material with which we fill our daily lives.