Gilder creates a very interesting analogy between capitalism and information theory . The same that powers internet , telephony and computers. Science initiated by Alan Turing in world war to decrypt German "Enigma" code and further developed by C. Shannon compression for bandwidth in mobile telephony .
To transmit data , we need a channel ( cable , optical fiber , open space ) and interference-free sound , predictable , ordered , no surprises, that is, with low entropy.
Instead , the information flows must reach for it as a clear signal. For information to provide us with knowledge , we should be surprised . If the signal that comes to us is completely predictable , we will not add knowledge. Information is the raw material of knowledge, this surprises us increase our knowledge forward . The signal should have high entropy -disorder ( high entropy of Shannon) - and an orderly discourse on canal , noise - low entropy . Creativity is the foundation of capitalism. Creativity is surprise. Otherwise, planning and socialism have triumphed.
The more freedom of choice is the issuer, information - surprises - can transmit. Companies , entrepreneurs - emitting - create ideas, unpredictable , surprising, disordered high entropy . To flourish in need of a tidy vehicle. This channel is contractuality and laws , the better the simpler , low and unchanging . If the channel is unpredictable , changing constantly , you can not separate the signal from the noise. We have to distinguish between signal and noise between the word and the cable. Property rights , stability of money, the maintenance of law , order and contractuality and a
very modest and anticipatable role of government (Nxt Platform) to entrepreneurs to launch their ideas through this channel .
For Karl Popper, a proposition is scientific if it is falsifiable , that is, likely to raise test or tests to test it . The result of the experiment, a new company , for example - must be refutable. If the result is predictable and not contribute knowledge. So when the state guarantees results with bank bailouts , guaranteeing mortgages , businesses, etc. . , Knowledge is destroyed because the falsifiability of the experiment is lost, information is lost.
So the famous stimulus packages our politicians do not reduce unemployment and create wealth . Breaking the principle of innovation and creativity and provide no surprise , therefore, not knowledge.
The expansion of the government (centralization) introduces noise into the system.Interest rates are critical . When governments manipulate an important signal for the economic analysis is destroyed. Interest rates become more noise than signal and sent false information to the actors . Knowledge is destroyed.
The regulator central planner does not have all the information to structure the economy.
There is no deterministic scheme which can accommodate entire entrepreneurial entropy , so any planned economy can succeed ( no bureaucrat can know every aspect of the economy ) . Here link with our dear Von Mises theorem and the impossibility of socialism .
Find a balance - entropy - down of markets has led to the current Great Recession. Human nature seems to want to replace by surprise . From Newton , science want to give us accurate predictions , science appears as the elimination of surprise. But creativity, even laissez - faire art - are surprise.
Source :
http://www.juandemariana.org/comentario/6489/capitalismo/teoria/informacion/Excellent, thanks for sharing. Makes perfect sense..
