Why Information Grows: The Evolution of Order, from Atoms to Economies (2015) by Cesar A. Hidalgo is a somewhat interesting book that tries to explain how information explains similarities between statistical physics and economics. Hidalgo is a statistical physicist who now works at MIT’s Media Lab. No doubt he is fantastically clever. Hidalgo has also produced some really interesting visualisations of the complexity of economies.
The book starts by looking at atoms and how complexity and information arises in these circumstances. He points out the interesting idea that we live in a world with incredibly complex organisms despite the fact that entropy always increases. Then Hidalgo suggests that these analogies extend to DNA and then on to economies. He mentions how companies and economies enable people to produce things that are far more complex than one person could possibly manage on their own. He points out the importance of tacit knowledge in firms and how making complex machines requires huge amounts of this. He shows how rich economies usually export a range of items that includes simpler items but that poorer ones rarely export complex items.
The book isn’t bad. It’s worth a read, but the main point it is trying to make isn’t really carried. Analogies between economics and other fields often don’t really work and this is one them. However, the journey provides quite a few rewards.