Ridley Channels Hayek on Human Progress & Trade

Maybe the finest concise piece you will read this week, by Matt Ridley in Saturday’s Wall Street Journal.

Matt Ridley: From Phoenecia to Hayek to the ‘Cloud’ – WSJ.com: “The crowd-sourced, wikinomic cloud is the new, new thing that all management consultants are now telling their clients to embrace. Yet the cloud is not a new thing at all. It has been the source of human invention all along. Human technological advancement depends not on individual intelligence but on collective idea sharing, and it has done so for tens of thousands of years. Human progress waxes and wanes according to how much people connect and exchange.

When the Mediterranean was socially networked by the trading ships of Phoenicians, Greeks, Arabs or Venetians, culture and prosperity advanced. When the network collapsed because of pirates at the end of the second millennium B.C., or in the Dark Ages, or in the 16th century under the Barbary and Ottoman corsairs, culture and prosperity stagnated. When Ming China, or Shogun Japan, or Nehru’s India, or Albania or North Korea turned inward and cut themselves off from the world, the consequence was relative, even absolute decline.

Knowledge is dispersed and shared. Friedrich Hayek was the first to point out, in his famous 1945 essay “The Uses of Knowledge in Society,” that central planning cannot work because it is trying to substitute an individual all-knowing intelligence for a distributed and fragmented system of localized but connected knowledge.

So dispersed is knowledge, that, as Leonard Reed famously observed in his 1958 essay “I, Pencil,” nobody on the planet knows how to make a pencil. The knowledge is dispersed among many thousands of graphite miners, lumberjacks, assembly line workers, ferrule designers, salesmen and so on. This is true of everything that I use in my everyday life, from my laptop to my shirt to my city. Nobody knows how to make it or to run it. Only the cloud knows.”

Additional links:
I, Pencil: My Family Tree as told to Leonard E. Read