by Imposing order requires energy, and so we have the three components of fundamental economic analysis: information, the natural resources of the environment, and energy. I have argued that these three are more useful to us than the standard capital and labor because they elevate information onto center stage, which is where it belongs. Besides if you think defining information is difficult try parsing out exactly what we mean by either capital or labor. Shannon’s dictum about the variety of definitions applies equally well, if not more, to them.For those of you skeptical of this consider a typical product you use. Imagine it being broken. Imagine, as an example, a motor car after a major accident. The car is unusable. It has lost considerable value. Perhaps it can be repaired, but in its
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Imposing order requires energy, and so we have the three components of fundamental economic analysis: information, the natural resources of the environment, and energy. I have argued that these three are more useful to us than the standard capital and labor because they elevate information onto center stage, which is where it belongs. Besides if you think defining information is difficult try parsing out exactly what we mean by either capital or labor. Shannon’s dictum about the variety of definitions applies equally well, if not more, to them.For those of you skeptical of this consider a typical product you use. Imagine it being broken. Imagine, as an example, a motor car after a major accident. The car is unusable. It has lost considerable value. Perhaps it can be repaired, but in its damaged state it is worth a lot less. Why? The metal and other natural resources of the car still exist. They have not been lost. So it is not the resource base of the car that is the core of value. We will need to consume more energy to fix the car, so there’s a source of loss. But what is that energy doing? It is allowing us to re-order the material of the car to re-capture its design. It is the design of the far where the largest value resides. And design is information....