Why Information Grows — Notes

Sohil Gupta

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Jul 7, 2020

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1. The universe is made of energy, matter, and information, but information is what makes the universe interesting. Without information, the universe would be an amorphous soup. It would lack the shapes, structures, aperiodic orders, and fractal arrangements that give the universe both its beauty and its complexity.
2. Yet information is rare. It hides in pockets as it battles the universe’s perennial march to disorder: the growth of entropy.
3. The mechanisms that help information win small battles, prevailing stoically in our universe’s only true war: the war between order and disorder; between entropy and information.

INTRODUCTION: FROM ATOMS TO PEOPLE TO ECONOMIES

1. Meaning is derived from context and prior knowledge.
2. Meaning is the interpretation that a knowledge agent, such as a human, gives to a message, but it is different from the physical order that carries the message, and different from the message itself. Meaning emerges when a message reaches a life-form or a machine with the ability to process information.
3. The natural sciences have focused on describing our universe from atoms to people, connecting the simplicity of the atom with the complexity of life. The social sciences have focused on the links among people, society, and economies, recasting humans as a fundamental unit — a social and economic atom.
4. It is the arrow of complexity — the growth of information — that marks the history of our universe and species.
5. To battle disorder and allow information to grow, our universe has a few tricks up its sleeve. The mechanisms supporting this growth of information lie around three main pillars: out-of-equilibrium system, accumulation of information in solids and ability of matter to compute.

PART I Bits in Atoms

1. The Secret to Time Travel

1. The difference between the world where babies are born today and the world of early hominids resides not in the physicality of matter but in the way in which matter is arranged. That physical order is information.
2. A baby’s nighttime delivery is facilitated not by objects, but by the information embodied in these objects and by the practical uses of knowledge and knowhow that these objects implicitly carry.
3. The difference between us, humans, and all other species is that we are able to create physical instantiations of the objects we imagine, while other species are stuck with nature’s inventory.
4. A baby is born into a nonfictional world that, although tangible, is made of fiction.
5. Objects embody information and imagination may seem obvious.
6. The replication of DNA and RNA is not the replication of matter but the replication of the information that is embodied in matter. Living organisms are highly organized structures that process and produce information.
7. Humans are special animals when it comes to information, because unlike other species, we have developed an enormous ability to encode large volumes of information outside our bodies.
8. Simple tasks can be learned easily through observation and imitation, while the production of complex objects involves nuances that are communicated much more effectively among individuals who share a language.
9. Our ability to crystallize imagination largely predates our ability to write about it
10. To explain the order that pervades our modern society, we will need to go beyond physics and explore the social and economic processes that allow groups of people to produce information. These processes involve the formation of the social and professional networks in which the capacity to socially process information resides. This capacity involves the accumulation of knowledge and knowhow.
11. Knowledge and knowhow are two fundamental capacities that relate to computation, and both are crucial for the accumulation of information in the economy and society.
12. Knowledge involves relationships or linkages between entities. These relationships are often used to predict the outcomes of events without having to act them out.
13. A knowledge representation is most fundamentally a surrogate, a substitute for the thing itself, that is used to enable an entity to determine consequences by thinking rather than acting, that is, by reasoning about the world rather than taking action in it.
14. Knowhow is different from knowledge because it involves the capacity to perform actions, which is tacit.
15. Knowhow is the tacit computational capacity that allows us to perform actions, and it is accumulated at both the individual and collective levels.
16. The finiteness of humans and of the networks we form limits our ability to accumulate and transmit knowledge and knowhow, leading to spatial accumulations of knowledge and knowhow that result in global inequality.

2. The Body of the Meaningless

1. To invent, you need a good imagination and a pile of junk. — T HOMAS A. EDISON
2. It is worth noting that entropy, even though commonly associated with disorder, is not exactly a measure of disorder. Entropy measures the multiplicity of a state (the number of states that are equivalent). It so happens, however, that disordered states tend to have high multiplicity, so in practice high-entropy states are extremely likely to be disordered. That is why equating disorder with entropy is not such a bad simplification. Yet entropy can increase without increasing disorder.
3. “Entropy refers to an average of (physical) states, information to a particular (physical) state.”
4. There are fewer paths leading a system from disorder to order than from order to disorder. In a system whose evolution is affected by chance (like in a statistical physics system), getting a series of consecutive moves right is not easy.

3. The Eternal Anomaly

1. The irreversibility of time is the mechanism that brings order out of chaos. — I LYA P RIGOGINE
2. The second law of thermodynamics states that the entropy of closed physical systems always tends to increase, meaning that systems march from order to disorder.
3. It moves from an information-rich state to an information-poor state. As time goes by, the universe moves from rare configurations to common ones, and Boltzmann’s theory explained that perfectly.
4. Free energy is a technical concept defined as the energy of a system that can be used to produce work.
5. information emerges naturally in the steady states of physical systems that are out of equilibrium
6. the steady states that matter reaches in systems that are out of equilibrium tend to be organized. After chaos there is information.
7. Many steady states minimize or maximize other quantities (for example, a gas sitting quietly in a box maximizes entropy)
8. the steady state of out-of-equilibrium systems minimizes the production of entropy. What this means is that out-of-equilibrium systems self-organize into steady states in which order emerges spontaneously, minimizing the destruction of information.
9. The statistical properties of non-equilibrium systems can help us understand the nonhuman origins of information but not its endurance. Yet it is the endurance of information that allows information to be recombined and allows life and the economy to emerge. The endurance of information is therefore as important as its origin, since without it the recombinations we need for information to beget more information cannot take place.

4. Out of Our Heads!

1. Economic value comes not from those involved in extractive activities but from the imagination of others who are usually detached from the extractive processes.
2. Copper is to Chile what natural gas is to Bolivia, tea and flowers are to Kenya, radioactive minerals are to Namibia, soybeans are to Argentina, diamonds are to Sierra Leone and Botswana, and oil is to Nigeria, Saudi Arabia, Angola, Congo, Kazakhstan, Algeria, Equatorial Guinea, Russia, Venezuela, and many others.
3. Economic development is not the ability to buy but the ability to make.
4. Complex products are not just arrangements of atoms that perform functions; rather, they are ordered arrangements of atoms that originated as imagination.

PART III The Quantization of Knowhow

6. This Time, It’s Personal

1. At the individual level, accumulating knowledge is difficult because learning is experiential.
2. Knowhow typically involves a kind of tacit knowledge that is difficult to codify.
3. Getting knowledge inside a human’s nervous system (Knowhow) is not easy because learning is both experiential and social.
4. To say that learning is social means that people learn from people: children learn from their parents and employees learn from their coworkers (I hope). The social nature of learning makes the accumulation of knowledge and knowhow geographically biased.
5. Knowhow, in particular, resides primarily in humans’ nervous systems.
6. Strictly speaking, learning by having access to the same facilities, or environment, is not a form of social learning, but context-based learning.
7. The experiential and social nature of learning not only limits the knowledge and knowhow that individuals can achieve but also biases the accumulation of knowledge and knowhow toward what is already available in the places where these individuals reside. This implies that the accumulation of knowledge and knowhow is geographically biased.
8. Accumulating the knowledge and knowhow needed to have a successful band — let’s say of four people — is harder than accumulating the knowledge and knowhow required for four single musicians to play individually.
9. At the individual level, the experiential and social nature of learning slows down the accumulation of knowledge and knowhow.
10. Genetics can modulate the ability of an individual to accumulate knowhow
11. John Von Neumann: Computers are built on transistors, which take two inputs to produce one output, while brains are built on neurons, which can take up to tens of thousands of inputs to produce a single output. These differences are important, since the frequency of the brain, which he noted to be about 100 Hz, needs to be scaled by a factor that considers such multiplicity of inputs.
12. Storage capacity of brain: 10¹⁰ neurons and 10¹⁴ synapses (10000synapses/neuron). Assuming one synapse as one bit~100 terabytes. If we consider each of the existing synapses as 1’s and the possible but not materialized synapses as 0’s. If we assume that each of the 10,000 synapses of a neuron are chosen from a set of 100,000 possible synapses, then the information storage capacity of the brain would be estimated at 1,000 terabytes or one petabyte.

7. Links Are Not Free

1. The idea of scale economies is that the per-unit cost of items decreases as we make more of them.
2. Division of labor implies that it is more efficient to have each worker focus on a small part of the construction of a pin or a car than to have each worker attempt to build that pin or car from start to finish. But
3. Transaction cost theory, or new institutional economics, is the branch of economics that studies the costs of transactions and the institutions that people develop to govern them. In simpler terms, it is the branch studying the cost of economic links and the ways in which people organize to deal with commercial interactions.
4. “The economy was not a collection of fluid and frictionless market transactions but a set of islands of conscious power, shielded from each other and from the dynamics of the price mechanisms. Firms are hierarchical, and the interactions between a firm’s workers are often political. Hiring a worker was a form of contract in which a person was hired to do a task that had not yet been specified, since what a worker will be asked to do a few months down the road is rarely known when she is hired. This is known as transaction cost theory of firm” — Ronald Coase
5. When the external transactions become less costly than the internal transactions, firms stop growing, since it is better for them to buy things from the market than to produce these internally.
6. There are fundamental forces that limit the size of the networks we know as firms, and hence that there is a limit to the knowledge and knowhow these networks can accumulate.
7. There is a fundamental relationship between the cost of the links and the size of these networks: the cheaper the link, the larger the network.
8. Computers are constructed by networks of firms rather than firms.
9. Cheaper links give rise to larger networks, and the personbyte theory tells us that we need larger networks to accumulate more knowledge and knowhow.
10. Twelve thousand years ago, humans spoke an estimated twelve thousand languages.
11. Our ability to weave denser networks of domestic and international firms has been enhanced by improvements in communication and transportation technologies and also by the proliferation of standards in both language and technology. Market Links
12. The intellectual romance of the interaction between two research firms may be lost in the negotiation of an interaction “prenup” that is more concerned about the potential of a divorce than about the fertility of the interaction.

8. In Links We Trust

1. A society built entirely out of rational individuals who come together on the basis of a social contract for the sake of the satisfaction of their wants cannot form a society that would be viable over any length of time. — FRANCIS FUKUYAMA
2. Trust, by which I mean the confidence that others will do the “right” thing despite a clear balance of incentives to the contrary, emerges, if it does, in the context of a social network. — MARK GRANOVETTER
3. The basics of social network formation is based on three simple ideas: shared social foci, triadic closure, and homophily.
4. Yet social networks and social institutions do not only affect networks by driving the labor market. In fact, social institutions, such as the family and a society’s level of trust, also play an important role in the formation of professional networks, affecting the size and composition of firms in an economy. — Granovetter
5. Familial societies are societies where people don’t trust strangers but do trust deeply the individuals in their own families
6. By contrast, in high-trust societies people don’t have a strong preference for trusting their kin and are more likely to develop firms that are professionally run.
7. professionally run businesses that evolve in high-trust societies are more likely to result in networks of all sizes, including large ones. In contrast, familial societies are characterized by a large number of small businesses and a few dominant families controlling a few large conglomerates.
8. Larger networks are needed to produce products of higher complexity and, in turn, for societies to achieve higher levels of prosperity.
9. “Industrial structure tells an intriguing story about a country’s culture. Societies that have very strong families but relatively weak bonds of trust among people unrelated to one another will tend to be dominated by small, family-owned and managed business. On the other hand, countries that have vigorous private nonprofit organizations like schools, hospitals, churches, and charities, are also likely to develop strong private economic institutions that go beyond the family.”
10. Large networks can accumulate more personbytes of productive knowledge, and the societies having the trust that favors the proliferation of large networks, such as Japan, the United States, and Germany, will gravitate toward activities that require large networks, such as the production of pharmaceuticals and aircraft.
11. Bonding social capital is the one taking place within densely connected networks, where people look out for each other, while bridging social capital is that by which people can easily reach distant parts of the network. “Bonding social capital constitutes a kind of sociological superglue, whereas bridging social capital provides a sociological WD-40.” — Putnam
12. The recurring social interactions that take place at work and in civil associations can reinforce trust.
13. “Certain societies can save substantially on transaction costs because economic agents trust one another in their interactions and therefore can be more efficient than low trust societies, which require detailed contracts and enforcement mechanisms.” — Fukuyama
14. Trust provides a noncontractual, informal, yet highly efficient mechanism to deter malfeasance and enable otherwise risky commercial interactions.
15. trust is a more efficient channel for the formation of economic networks than formal institutions are, since it works without the burden of costly paperwork and enforcement procedures. By making links cheaper, trust enables the formation of larger networks that can accumulate more personbytes of knowledge.