George Gilder, who helped found Discovery Institute 23 years ago and is the author of the recently published Knowledge and Power, foresees a new model of economics based on information theory, representing a force that is transforming many fields. He was interviewed last night at Town Hall, Seattle by Tom Alberg, original managing director of Madrona Venture Group and another influence on the development of Discovery. Audience reactions and a long line of book buyers afterwards indicated that the chemistry between the two old friends was effective in exploring what Gilder identifies as the great challenge to our economy: how to connect the entrepreneurial "high entropy surprise" that creates knowledge--and therefore, progress--with the "low entropy" reliability of predictable power in institutions of government and business.
Gilder said that information theory elucidated 80 years ago by Claude Shannon offers insights not only into the fields of physics and technology, but also into economics, biology, education and even political science.
Gilder's critiques of Keynesian economics are well-known, but his departures from the "incentive" economics described by Adam Smith and monetarists such as Milton Friedman received the most attention last night. An audience of 150, a cross-section of techies, young business people and political activists, followed Gilder and Alberg on an excursion into issues that will decide whether the US economy continues to stagnate or recovers and booms.
Alberg, a pioneer in venture capital funding of high tech start-up companies in the Northwest, published a review of Knowledge and Power at Geekwire.com last week.
Gilder, noted Alberg's review, argues "that the accumulation of too much power by large business bureaucracies is as destructive of economic growth as government bureaucracies. Big businesses and governments tend to work together in a form of 'crony capitalism.' As Gilder recognizes, these institutions deteriorate over time as politicians seek to protect and reward established players and their cronies and retard their often newer and smaller competitors through extensive regulations that only large business issues can afford."
Gilder reminded the Town Hall audience of how hard it is to be right at the right time in anticipating change. He used as an example the pathfinding predictions of former Discovery fellow Lewis Perleman, whose book, School's Out, foresaw the education "bubble" of today--but saw it twenty years ago, before the public was alert to what technology could accomplish in the field.
Gilder speaks Thursday to The Churchill Club's annual conference at the Santa Clara Marriott in Silicon Valley.