# Why Information Grows **César Hidalgo** | [[Numbers]]  --- > "In our universe, there is no past, and no future, but only a present that is being calculated at every instant." The universe is made of energy, matter, and information—but information is what makes it interesting. Without information, everything would be an amorphous soup. Hidalgo asks a deceptively simple question: why does information grow? Why does the universe become more complex rather than less? The answer involves physics, economics, and networks. Out-of-equilibrium systems spontaneously generate order. Solids preserve that order over time. And matter can compute—processing information to create new information. These three tricks let the universe cheat entropy, at least locally. But the real insight is economic: products are "crystals of imagination." They're physical embodiments of knowledge and knowhow that existed first in someone's mind, then in the world. The economy is a system for amplifying the practical uses of knowledge by crystallising it into objects others can use. --- ## Core Ideas ### [[Information as Physical Order]] Information is not meaning. Meaning is what a knowledge agent (like a human) derives from a message, based on context and prior knowledge. But information itself is physical order—uncommon, highly correlated configurations of matter that are difficult to arrive at by chance. > "Humans, and some machines, have the ability to interpret messages and infuse them with meaning. But what travels through the wires or electromagnetic waves is not that meaning. It is simpler. It is just information." This distinction matters because information can exist without interpretation. DNA carries information whether or not anyone reads it. A product embodies information whether or not anyone understands how it was made. ### [[Three Tricks for Growing Information]] The universe has three mechanisms for making information grow despite entropy: **Out-of-equilibrium systems.** Prigogine showed that systems driven away from equilibrium naturally self-organise into information-rich steady states. A whirlpool in a bathtub is order that emerges for free—the steady state minimises entropy production, allowing structure to persist. **Solids preserve information.** Crystals, proteins, DNA—these are aperiodic solids that can store information over time. Schrödinger noted that life requires both aperiodicity (to embody information) and solidity (to make it last). **Matter can compute.** Finding rare but useful states in a continuum of possible configurations is computation. Our universe is constantly calculating—the present is computed from the past at every instant. ### [[Products as Crystals of Imagination]] Products don't just embody information—they embody imagination. The difference between an apple (fruit) and an Apple (computer) is that the fruit existed first in the world and then in our heads, while the computer existed first in someone's head and then in the world. > "Economic development is not the ability to buy but the ability to make." When you buy toothpaste, you're not just buying paste in a tube. You're buying access to the practical uses of the knowledge and knowhow that exists in the nervous systems of people you've never met—the chemists, engineers, and inventors who made it possible. Products are how we share the practical uses of imagination across time and space. ### [[Knowledge and Knowhow Are Heavy]] Information moves easily—in products, books, webpages. But knowledge and knowhow are trapped in people and the networks they form. Knowhow especially: it's the instinctive way a musician plays guitar, the fluidity of an artist's drawing, the dexterity of a truck driver backing up. It's not in books. This is why some countries are net exporters of imagination and others are net importers. Chile exports copper—atoms that have value only because of the crystallised imagination of Faraday, Tesla, and others. The raw materials are less valuable than the knowledge required to use them. ### [[Networks Accumulate Knowledge]] Since individual humans have finite capacity for knowledge and knowhow, the only way to accumulate large volumes is in networks. But forming networks is costly—which is where trust comes in. > "Trust provides a noncontractual, informal, yet highly efficient mechanism to deter malfeasance and enable otherwise risky commercial interactions." High-trust societies can form larger networks with more porous boundaries. Low-trust societies require detailed contracts and enforcement mechanisms, limiting network size. The ability to crystallise complex imagination depends on the social infrastructure for accumulating knowledge across many minds. --- ## Key Insights **The economy is a knowledge amplifier.** It's not primarily about managing resources or creating wealth. It's a system that amplifies the practical uses of knowledge and knowhow through the physical embodiment of information. **Transaction costs shape network boundaries.** Coase explained that firms exist because internal coordination is sometimes cheaper than market transactions. The boundary of the firm is where internal costs equal external costs. This explains why some activities happen inside companies and others in markets. **Standards reduce interaction costs.** Standards are prevalent because they reduce the costs of interactions among firms and people who subscribe to them. They coevolve with markets. **Learning is social and experiential.** People learn from people. This is why knowledge clusters geographically and why knowhow is so hard to transfer across contexts. **Extreme inefficiency requires protected revenue.** Organisations that are wildly inefficient can only survive if their revenue doesn't depend on productive interactions with others—otherwise they'd go broke. --- ## Connects To - [[Making Sense of Chaos]] - complexity economics and emergent order - [[The Fifth Discipline]] - systems thinking and knowledge accumulation in organisations - [[Why Machines Learn]] - information processing and computation - [[Linked]] - network formation and the science of connections - [[The Origins of Efficiency]] - how processes improve and costs decline --- ## Final Thought The economy isn't about money. It's about crystallising imagination into physical form so others can access the practical uses of knowledge they don't possess. Every product you use gives you access to thousands of person-years of accumulated knowhow. Your toothpaste connects you to chemists. Your phone connects you to physicists, engineers, and designers. Countries that can crystallise complex imagination prosper. Those that can only export atoms—holding natural resources hostage—remain dependent on the imagination of others. Economic development is the ability to make, not the ability to buy. Information grows because the universe has tricks for cheating entropy: systems that self-organise, solids that preserve order, and matter that computes. We're part of that process—accumulating knowledge in networks of minds, then crystallising it into products that augment the humans who use them. The universe is calculating, and we're both the processors and the output.