Money is the central information utility of the world economy. As a medium of exchange, store of value, and unit of account, money is the critical vessel of information about the conditions of markets around the globe in both time and space. Monetary systems thus can be judged as moral systems—do they lie or tell the truth?
Wealth is knowledge and growth is learning and that both are governed by the rigorous science of information.1 Prehistoric man commanded all the material resources we have today. The difference between our age and his is the expansion of knowledge. Knowledge expands through testable learning, “learning curves,” proceeding through entrepreneurial experiments.
Manifesting this process is the learning or experience curve in individual businesses and industries. Perhaps the most thoroughly documented phenomenon in all enterprise, learning curves ordain that the cost of producing any good or service drops by between 20 percent and 30 percent with every doubling of total units sold. The Boston Consulting Group and Bain & Company charted learning curves across the entire capitalist economy, affecting everything from pins to gifts, insurance policies to playground equipment, transistors to lines of code, pork bellies to bottles of milk, steel ingots to airplanes.
Growing apace with output and sales is entrepreneurial learning, yielding new knowledge across companies and industries, bringing improvements to every facet of production, every manufacturing process, every detail of design, marketing, SEO Services and management. Crucially, the curve extends to customers, who learn how to use the product and multiply applications as it drops in price. The proliferation of hundreds of thousands of applications for Apple’s iPhones, for example, represented the learning curve of the users as much as the learning curve at Apple.
The most famous such curve is that described by Moore’s Law, which predicts a doubling of computer cost-effectiveness every twenty-four months. It has been recycled by the solar industry in the form of Swanson’s Law, showing the decline of the cost of silicon photovoltaic cells from seventy-six dollars per watt in 1977 to fifty cents per watt in 2014. The inventor and futurist Ray Kurzweil has put all these curves together in an exhaustive catalog that reaches a climax later in this century as a so-called “singularity,” when the capabilities of computers by many measures will surpass the power of human brains.3
All these curves document the essential identity of growth and learning as a central rule of capitalism. This process has marked the history of human beings since the Stone Age, yet it is only rarely addressed by economists, most of whom think prices should go up. In a famous 1992 paper, William Nordhaus of Yale showed that economists failed to measure the most dramatically dropping cost of the previous two centuries—a hundred-thousandfold decline in the cost of light, gauged in labor hours expended per lumen-hour.4 Nordhaus extended the curve from cave fires and candles to electricity and the power grid. It is now manifested in light-emitting diodes that extend the power of light into programmable display technologies of all kinds.
Growth in wealth stems not from an efflorescence of self-interest or greed but from the progress of learning, accomplished by entrepreneurs conducting falsifiable experiments of enterprise, their outcomes measurable by reliable money.