On Knowledge and Power
The engine of economic growth is the product of the creative and enterprising mind. No society is able to sustain itself without economic growth and while the engine of economic growth is human creativity, it wasn't always thought to be so. In fact, classical economists believed human creativity and innovation were limited, leaving economies largely in a static state, requiring government intervention to manage and often redistribute incomes and wealth.
Human beings, however, proved to be quite innovative and their innovation is not limited by the distribution of wealth or knowledge, but by the distribution of power. That is, the means by which ideas can be brought to reality. For, it is precisely the lack of creativity that leads to failure of societies and entire cultures.
The question should always have been, what are the necessary conditions for creativity to flourish and once understood, how can those conditions be harnessed into organizing principles of society? Conversely, it must also be understood how and under which conditions creativity is suppressed. It is the latter that has been so destructive to societies throughout history. Interestingly enough, the answer to those questions are contained in the principles of the American Founding and free market capitalism.
Knowledge without any power is powerless to create, and power without knowledge is too dumb to create
The ideal, or the equilibrium position is that balance between power and knowledge which allows for the most creativity. Realizing this equilibrium means we must first understand two, often separate things:
- who holds the power?
- who holds the knowledge?
Knowledge, being a function of the human mind is dispersed among all living people. Knowledge is perfectly decentralized. There is no collective brain or center of knowledge. Knowledge is resident in every living, conscious person.
Power, on the other hand, is not. In societies, power tends toward centralization. The American Founders recognized this and ordered a society and government that was the least centralized it could be and still hold a union together.
As power becomes concentrated into the hands of fewer and fewer people, creativity and innovation necessarily decline simply because fewer and fewer people have the power to turn an innovative idea into something tangible. Despite the Founders attempts, centralization of power is inexorable, but resistance to that centralization has ofttimes been wanting.
Today, we live in a country where the move toward the further centralization of power has accelerated, stifling economic growth and giving much of the public a sense of stagnation and decline.
A Simple Example of the Effect of Power on Innovation
Consider for a moment, the brilliant young man with what he thinks is a great idea, entirely the creation of his mind. Without any power to bring his idea into reality, or even attempt it, the economy will not realize any growth, or if the idea fails, it will not realize the new information regarding the failure of the idea. Understanding failure is also important because with failure comes information valuable to successive creators. Information necessary to avoid taking failed pathways. The young man, however, needs to be empowered in some way to simply attempt his creation. But if power is strictly centralized, beyond the reach of the creative, both power and knowledge are wasted.
It is in this model, that we can understand why central governments never seem to work and how societies run in such a manner, have crippling economic conditions. When power is so centralized as to be walled off from the creative minds, economic retardation results, creativity disappears and government does things that appear to be stupid, nonsensical and even tyrannical.
The United States of America, just prior to the Industrial Revolution, was in a state of near perfect equilibrium between knowledge and power. With power so decentralized, in a constitutional republic, where laws and rules were infinitely more predictable than today, creativity exploded and more people were moved out of grinding poverty than at any time in human history. This equilibrium was upset once more when the successes of the Industrial Revolution, ironically, altered the power structure, which has never really been properly addressed since then.
RE-ESTABLISHING THE BALANCE WILL LEAD TO AN EXPLOSION OF GROWTH
Ultimately, if America is to be a prosperous nation again, it will require great leadership. Leadership with the kind of courage we don't have now and from the kind of people who don't run our government today. We need to disempower central government, repeal many thousands of laws and regulations. In other words, we need to re-establish, as close as we can, the conditions nearest equilibrium between power and knowledge. If we can even come close, it will lead to still another great economic boom for America and the world once again.
THE IMPORTANCE OF THE INTERNET
Everyone can understand how the balance between power and knowledge fuels economic growth, simply by looking at the internet. The internet gives us a head start in re-establishing the balance between power and knowledge. The internet has democratized power in a way never achievable at any point in human history. Through the internet, the creativity and ingenuity of the human mind now has a vehicle through which ideas can be tested, proven and realized.
Were it not for the democratizing influence on power resulting from the internet, it is difficult to imagine how a Steve Jobs would have revolutionized the music industry with iTunes, iPods and Apple. It's hard to imagine how the innovative genius of Mark Zuckerberg could have resulted in Facebook, or how the simple addressing of the need for news and information could have led to the overwhelming popularity of Matt Drudge and his Drudge Report. Those giants are only several of the most prominent beneficiaries of the true influence of the internet: as a tool of democratized economic power available to anyone, limited only by their own ability to be innovative and creative.
The internet, however, is but one realm of the economy. Yet it provides a stark, modern day example of explosive economic growth possible when knowledge and power are in equilibrium.
Our policy makers and representatives ought to be lobbied to bring that same equilibrium to every single aspect of the world economy. The benefits waiting for the entire human race are immeasurable.