In the Origin of Wealth, Eric Beinhocker offers a thorough and convincing new way to think about economic growth and business management. The author begins by exploring the roots of modern economic theory and ultimately declares it outmoded and wrong. Instead, he suggests, markets and growth can best be explained by drawing on the emerging field of complexity economics: the study of markets and social systems as complex adaptive systems. Although biological metaphors in business have become familiar (i.e., organizations are living organisms), Beinhocker moves beyond metaphor to explain the revolutions in science that will inevitably change the way we think about economics, competition, and business. The Origin of Wealth raises important questions such as: How can one create strategy in uncertain and fast moving environments? Why is it hard for large organizations to be innovative and how should we organize for better results? What role should governments play in this new era?
Customer Reviews
a new paradigm:
Economics is one of the fields grappling with new paradigms introduced by complexity theorists. Origin of Wealth is an attempt by the author, a McKinsey guy, to put this into a framework and draw lessons that organizations may apply today. As such, it enunciates theory as a basis for practical applications. This is a very well-written book, pitched just about right for the general reader with an interest in business and complexity theory. This is a very dynamic field which for the past 50 years or so has continued to grow and increase its utility. Origin of Wealth is an honest and successful attempt to make these ideas available to those of us who can use them in our own enterprises. Read this one.
Origin of Wealth:
This is an excellent book. It is a comprehensive review of the new directions that economics and other sciences are taking. This book takes the reader on a journey through the great minds of economics and shows where we go from here in addressing some of the most pressing problems of our time. I strongly recommend this book!
Provocative work:
Much has been written in earlier reviews so I won’t repeat it here.
In a nutshell, EB has produced a well done survey of economic ideas. Some of the ideas are highly provocative but intriguing. Excellent read.
Evolution, a recipe for innovation:
The author has carried out a tremendous amount of work to study the latest developments in many different fields clustered around the concept of “complexity economics”. The two most interesting ideas for me were about innovation and strategy development. I was amazed to learn how you can generate new insights and innovations in products , systems and organisation by computer simulations where “agents” compete in the way the evolution works. That is those features, and organisms, survive that successfully adapt to changes in the environment. These “agents” are simplified computer models of human beings, of a system or of a component. The characteristics of these agents change at random, similar to mutations in evolution. The agents compete in a computer. At the end of a simulation round the best performers engage in “computer sex” leading to new generation of more competent “agents”. After many rounds innovations develop “automatically”
The second interesting area is about innovation strategy. Luck remains a factor, but its influence can be reduced by having a portfolio of innovative projects. Microsoft with its Windows strategy is a fascinating example.
The purpose in these simulations is important. On page 280 it says that the goal of a business is making a profit. This is what many people in society at large also think. It is not what the most read management gurus like Peter Drucker, and Jim Collins think. Their view is that profit is a condition for survival and a measure of success. Interestingly on page 411 the first view is corrected where it states that “profitability is not an objective in itself but a fundamental restraint that must be met”. The cause of this contradiction may be the almost total absence in the book of the subjects of ethics, values, corporate citizenship and CSR. May be it is difficult to create synthetic “agents” with values other than greed. That should be possible though and would be a very interesting development.
Modern Classic:
I would classify Eric Beinhocker’s book as an instant classic. Although it is more of a survey of broad spectrum of economic studies, it is extremely well put together and well written. I promised myself that this is a book that requires a more detailed review but since I have not had time to write that yet, I want to at least share the following with the would be readers of this book:
Buy this book! The primary focus of the book is analysis of how emergence (no pun intended) of complex dynamical systems is changing the fundamentals of economics. Book does an excellent job of giving historical account of how mathematical foundations of economics was developed and influenced by the math/physics of the time: math of systems in equilibrium. Afterwords it methodically studies the complex dynamical systems, their impact on agent based modeling of complex phenomenon and how this development in mathematical thinking is already impacting economics. Last couple of chapters also provide ponderings of complex dynamical systems analysis and its impact on policy making and international relations.
Book is clearly written, well researched with excellent bibliography and captures some of the most throught provoking research in the industry in a simple and conherent fashion.
If I get time I promise to write a longer and more deserving review of this book.
