Appearing on the shelves tomorrow is Standing on the Sun, from Christopher Meyer and Julia Kirby. The title is attributable to a quote from MIT physicist Richard Morley: "In order to see the solar system as it is, Copernicus had to be standing on the sun."
The book is about the underpinnings of capitalism and the forthcoming evolution the system will see as developing economies (the so called BRICs--Brazil, Russia, India, and China) mature. The authors critically assess the modern system of capitalism in developed economies, arguing too much emphasis is placed on production margins--return on equity--and competition, and rather it is overall value and innovation are the most important factors to consider. Financial returns are not the only outcome society values; competition should not be mistaken as a proxy for innovation. For example, how do successful open source initiatives like Linux and Wikipedia make sense on the criteria of financial returns and competition? They don't, but start to look a lot less like outliers when you consider them as pursuits towards innovation and value as a whole.
Just as debtors were first jailed before bankruptcy laws were developed, and the 19th century and 20th century capitalism evolved to first witness and later combat monopolies and trusts, so will capitalism undergo an evolution as information rather than financial capital becomes the dominant productive resource. The authors posit these developments will take place primarily in developing economies, which are not burdened by an existing system (hence the Morley quote), but that the lessons learned will be applicable to economies worldwide.
I am pleased to see an assessment of capitalism that does not fall in the camp of overreacting to the recent financial crisis, and one that expounds innovation as key for promoting economic success. I hope to witness an evolution and improvement upon (which remains to be seen), not a destruction of the current system. I am unsure if economies like that of the U.S. will be taught lessons from developing economies or learn them on their own. I personally am inclined to believe it will be easier for those developing economies, which as the authors say have the metaphorical clean slate to start from.
But ultimately, where the lessons learned originate is largely immaterial. It is putting them into practice that matters. The Kauffman Foundation has expended a lot of effort on researching to improve the current system to be more amicable towards entrepreneurship and innovation, recently culminating in a set of policy prescriptions we have grouped under the Startup Act. It will be interesting to see what we can learn from other economies as they develop and hopefully embrace innovation and entrepreneurship.
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