The core insight is simple. Economic growth is a special case of a broader process – the growth of information. A society’s level of prosperity depends on how well it can build, preserve, and use complex information structures.
Economics is often described as the production of goods and services. This view, however, fails to explain why some countries become rich while others remain poor, even when they have similar resources. Some economies grow without large resource bases. Others stagnate despite abundance.
A different explanation starts with information. Information is a form of order. And the natural state of the world is disorder. Entropy always pushes systems toward decay. This raises a basic question. Why does information grow at all, instead of disappearing?
The answer rests on three key principles.
The first principle is self-organization in systems far from equilibrium. When a system is unstable, simple forms of order can emerge on their own. This is not rare. It is a normal feature of complex systems. Even very small pockets of order matter. They create the foundation for greater complexity.
Self-organization alone is not enough. If information is not stabilized, it quickly fades away. This leads to the second principle – the accumulation of information in stable structures. For information to survive, it must be embedded in matter. It must exist within strong and well-organized atomic arrangements. These structures are not permanent, but they last long enough for information to replicate and grow. At this stage, the world produces molecules, proteins, and basic biological forms. Yet this still does not explain advanced life. Something more is needed.
The third principle is computation. Complex systems must process information. They must read signals from their environment and choose between different possible actions. This ability to compute allows systems to adapt. The exact mechanism is not important. What matters is that without computation, adaptation is impossible.
These three principles apply to all complex systems. They apply to nature. They also apply to the economy.
The economy is a complex system made of people, objects, connections, and knowledge. Its main task is to process vast amounts of scattered information. But it faces a hard limit. The human mind is finite. To describe this limit, the concept of the personbyte is used. A personbyte represents the maximum amount of knowledge and skills a single human nervous system can hold. This limit cannot be removed. It explains why no society can be built on universal experts.
Economic development begins when societies find ways to overcome this constraint. They break knowledge into parts. They distribute it across individuals. Then they reconnect it through networks of cooperation. This is how the division of labor emerges. This is how markets form. The economy becomes a collective information-processing system.
As economies grow more complex, the total amount of knowledge increases. But this knowledge does not sit inside individual minds. It is externalized. It is embedded in objects. Every product is a carrier of information. It contains the knowledge and skills of many people. These objects can be called crystals of imagination. They are not just material things. They are physical expressions of human ideas.
A light bulb “knows” how to produce light. A smartphone “knows” how to send data. The user does not need to understand how they work. The user gains access to someone else’s knowledge.
In this way, the economy expands human capabilities. People operate beyond the limits of their own personbyte. This changes the boundaries of development. Human potential is no longer locked inside individual brains. Yet a deeper challenge remains. Even the simplest product requires the coordination of many pieces of knowledge. These pieces are spread across people and places. The economy must bring them together. This is a problem of computation. The economy is a computing system. It constantly decides who connects with whom, which knowledge combines, which products survive, and which disappear.
As information grows, the system must become more complex. Simple structures cannot support complex economies. Growth in information demands growth in computational capacity. Here lies the central question. The economy does not create information for its own sake. It must create useful information. Most possible combinations of knowledge do not solve real problems. They do not improve lives.
So why do some forms of information survive while others vanish? Without answering this question, any theory of information growth remains incomplete. The economy is a system of selection. It continuously filters out ineffective solutions. This process is not random. At the core of this selection mechanism is monetary calculation. Profit and loss are not just incentives. They are information signals. They show which arrangements work and which do not.
Without monetary calculation, the economy cannot distinguish useful information from waste. It loses its ability to adapt. Another essential figure is the entrepreneur. Entrepreneurs drive change. They notice opportunities others miss. They create new combinations of knowledge. They take risks. Without entrepreneurs, the economy stagnates. Information does not organize itself into progress. New structures do not appear automatically. They are created by human action.
Economic systems do not evolve in leaps. They change step by step. Through trial and error. Through discovery. This process requires freedom and secure property rights. Private ownership of crystals of imagination is critical. It creates incentives to improve them. It allows information to persist and multiply. Without ownership, information dissolves.
In the end, economic development comes down to one question. How well can a society move beyond the limits of individual knowledge? Wealthy societies have learned to do this better than others. They built dense networks. They embedded knowledge into objects. They expanded the economy’s ability to compute. But any explanation that ignores entrepreneurship and monetary calculation remains unfinished. It may explain how information grows. It does not explain why the economy selects the kinds of information that make people richer.
The economy is not simply cooperation. It is a system of free action. It does not follow a single plan. It evolves through millions of individual decisions. The growth of information is the key to understanding the modern world. But this growth is impossible without mechanisms of selection. The economy is not a storage room for knowledge. It is a continuous process of computation, choice, and adaptation.
That is why prosperity depends not on resources alone, but on how well societies organize information.
Sultan Valikhanov, expert of the EconomyKZ.org portal
