Part I: Bits in Atoms
Charles Darwin Alfred Wallace
Ludwig Boltzmann
“Entropy is the price of structure”
Ilya Prigogine
Erwin Schrรถdinger. What is Life (1944).
Three Ingredients for the Origins of Physical Order Out of equilibrium Statistical Systems
Solids
Capacity of Matter to Compute
USD 2,500,000 or USD 1,300 per kg
13
14
Comparing Apples to Apples
@cesifoti 8
Apple I.
 First in the world, then in our heads. Apple II.
 First in someone's head, then in the world.
9 @cesifoti
Crystallized Imagination @cesifoti 17
18 atlas.media.mit.edu
19 atlas.media.mit.edu
Why do we crystallize imagination?
20
21
Part III: The Quantization of Computation
25
26
(aka Our Society’s Computational Capacity)
Knowledge and Knowhow
People (Networks of Cells) Networks of People
Personbyte
Time
Ronald Coase (1910-2013 - Nobel Prize 1991) Cheaper to buy
Cheaper to produce
market link
internal link
Boundary
 of the firm
28
Ronald Coase (1910-2013 - Nobel Prize 1991)
Size of Networks
Transaction Cost Theory
Cost of Links
29
Mark
 Granovetter Economies are embedded in pre-existing social structure.
The Strength of Weak Ties (1973) Getting a Job (1974) Embeddedness (1985)
Percentage of people who found their job through a friend of kin 58.5% Black Men
52% White Men
51% White
47% White Women
49% Deloitte’s Experienced Hires
43% Black Women
45% Non-entry level jobs at Ernst & Young 42% African American
1978 Panel Study of Income Dynamics
1989 NBER Study of Disadvantaged Youths
2014 New York Times
Francis Fukuyama 32
Size of Networks
Francis Fukuyama
Low
 Trust *but also Granovetter, Coleman, Putnam & Others
Trust*=1/(Cost of Links)
High
 Trust
Familial Societies: -Small Networks of kin. -Gravitate to simpler industries that can be managed by few people (agro, mining, retail). -Expect Government to create socialization efforts. 34
Trust Societies -Large Networks of non-kin. -Gravitate to complex industries (aerospace, 
 microprocessors) that require professional talent. -Self-generate instances to accumulate social capital (i.e. through associations). 35
social ties
finite network
 size
trust
transaction
 costs
Firmbyte Limit
(aka Our Society’s Computational Capacity)
Knowledge and Knowhow
People (Networks of Cells)
Networks of People
Firmbyte
Personbyte
Time
Networks of Firms
38
39
Part IV: The Complexity of the Economy
40
Genotype
Phenotype
41 * �Genotype" is an organism's full hereditary information. "Phenotype" is an organism's actual observed properties.
Fact 1: Economic networks are nested
Hidalgo Hausmann PNAS 2009
Bustos et. al. PLOS ONE 2012
42
Home & Office
Garments
Textiles & Fabrics
Cotton, Rice, Soy
Construction Mat.
Animal Fibers
Inorganic Salts
Cereal & Veg. Oils
Meat & Eggs
Machinery
Coal
Boilers
hemicals & Health
Aircraft
Precious Stones
Fish & Seafood
Tobacco
Fruit
Food Processing
Leather
Misc. Agriculture
Meet & Eggs
Beer. Spirits, & Cigs
Agrochemicals
Other Chemicals
Petrochemicals
Oil
Mining
Metal Products
Ships
Pulp & Paper
Electronics
Tropical Agriculture
Fact 2:
 Economies Diversify towards related varieties.
43 Hidalgo et. al. Science 2007
Adam Smith 44
Robert Adam Smith Solow 45
Paul Romer
Gregory Mankiw 46
Robert Putnam
Francis Fukuyama
Knowledge and Knowhow accumulated collectively by the system (Economic Complexity) Individual Knowledge (Human Capital)
Ability of people to connect (Social Capital, Trust)
Crystal of Imagination (Physical Capital)
ARE
R−squared = 43.14%
GDP per capita
10
10
4
3
USA
CHE NOR CAN SWE DNK KWT FIN JPN AUS NLD FRA DEU AUT SAU GBR NZL ITA OMN SGP HKG IRL ISR GRC ESP IRN VEN ARG IRQ DZA PANMEX PRT KOR CUB ZAF BGR HUN JOR MYS CRI POL BRA URY SYR CHL COL TUR ECU GTM MNG TUN COG PER BOL HND JAM CMR DOM PRY SLV THA AGO CIV EGY NIC LAO ALB PNG ZWE SDN IDN MAR PHL SEN LBR MRT LKA ZMB MOZ IND CAF GHA NGA KEN PAK CHN RWABEN MDG UGA VNM SLE ETH TGO NER BGD BDI BFA TCD MLI MWI NPL
−2
−1.5
−1
−0.5
0
0.5
Economic Complexity
1
1.5
2
Annualized economic growth observed between 1985 and 2000
Fact 3: Economic Complexity Predicts Future Economic Growth KOR IRL PRT HKG JAM CHL DOM SGP ISR JPN CHN ESP GBR TUR SLV ARG THA AUT GRC NOR NLDDNK ITA DEU HUN MEX LKA MAR CRI FRACHE BRA POL COL PER FIN SWE EGY MYS USA AUS ALB NZL VNM PHL TUN CAN BGD PAKPAN PRY IDN NPL GTM VEN IND MLI ZAF BEN HND KEN KWT OMN CUB ARE NGA UGA BFA BOL TGONIC SAU COG PNG ECU SENMRT ZWE ZMB MWI JOR CIV AGO MDG BGR CMR CAF TCD NER SYR RWA GHA SDN DZA MOZ SLE
R−squared = 44.28% 10% 8% 6% 4% 2% 0 −2% −4%
LAO
URY
ETH BDI
LBR
IRN
−6%
IRQ
−2%
0
MNG
2%
4%
6%
8%
Growth Predicted from Mismatch Between Economic Complexity and GDP per capita in 1985
Hidalgo & Hausmann PNAS 2009, and The Atlas of Economic Complexity MIT Press 2014
49
Fact IV: Economic Complexity
 Predicts Income Inequality
50
Hartmann, Jara-Figureoa, Hidalgo (in Preparation)
Pantheon 1.0
Human Accomplishments Pantheon 1.0: 11,334 people with more than 25 language editions in Wikipedia (Macro Connections, May 2013). Human Accomplishments: 4,002 people from the Arts and Sciences compiled by C. Murray in Human Accomplishments (Harper Collins 2003).
Jara-Figueroa, Yu, and Hidalgo. In Preparation (2015)
Writing
Printing
Film & Radio
Television
Jara-Figueroa, Yu, and Hidalgo. In Preparation (2015)
Life
Multicellularity
Humans
Teams
Institutions
Computational Capacity
@cesifoti
On Stores:
 June 2, 2015
Jun 2, 2015: Basic Books US & Penguin UK (English). Hoffman Und Camp (German), CITIC (Chinese)
Questions?
Video by Joe Withers: http://vimeo.com/69993101