There Are Only So Many Notes, What Matters is The Arrangement

|Peter Boettke|

Peter Klein recently discussed a paper dealing with innovation. The argument presented is straightforward --- there are only so many ideas, creativity isn't really about thinking thoughts that nobody has ever thought about before, but in taking existing ideas and arranging them in combinations that hadn't been done before or for that particular purpose.  New ideas in science, technology, commerce, culture are largely a result of intellectual arbitrage -- Steve Jobs draws on his knowledge of calligraphy to solve a problem with fonts; Ray Kroc didn't invent the cheeseburger, milk-shake, or french fries, but he reconfigured the way they were distributed and the customer experience; the Beatles didn't invest popular rock music, but Lennon and McCartney figured out a way to produce hit after hit from the radio songs of 2:30 to the concept album such as Sgt. Pepper's through the genius of arrangement.

What guides the combinational thinking?  Perhaps a penchant among humans for problem solving.  Necessity is the mother of invention as the English proverb goes.  But what guides the combinational and recombinational thinking in the various human endeavors we mentioned above?

The ability to engage in economic calculation --- the sorting out from among the wide array of technologically feasible projects those which are economically viable from those that are --- is essential for the coordination of economic activities through time.  Without calculation there is no coordination of economic plans --- the consumption demands of some will not mesh with the production plans of others.

Understanding the relationship between calculation, coordination, creativity and the role of entrepreneurial activity in working through these relationships entails an appreciation of human purposes and plans, of the institutional framework within which human actors interact with each other and with nature, the heterogeneous and multiple-specific use nature of capital goods that must be arranged into a structure of production, the nature of money, and the mechanisms of intertemporal coordination.  Once you think through these and reflect on their meaning for understanding the economic process, the unique and brilliant contributions of Mises and Hayek in the socialist calculation debate and in the macroeconomic management debates becomes evident. And this also highlights the methodological issues because if a certain scientific methodology in the sciences of man force us to be blind to these issues, and these issues are critical to understanding the complexity of the economic system, then that methodology must be countered aggressively.  Hayek's intellectual moves mid-20th century reflected in The Counter-Revolution of Science as well as The Road to Serfdom, The Constitution of Liberty, and Law, Legislation and Liberty were not moves away from economics, but instead reflect an intellectual move to focus scholarly attention on the appropriate methodology of economics science (and the sciences of man), and the institutional framework required for a working and vibrant market economy to operate to produce sustainable and generalized prosperity.

Combinational thinking is perhaps the key to creative thinking, but progress in science, technology, art, sports, culture, commerce, etc. is about creativity within discipline.  Commerce is guided by economic calculation and the institutions that enable actors to engage in these calculations.  Commerce without calculation is chaos.  Outside of the commercial realm, there must be institutional proxies that attempt to mimic the incentives, information and feedback that economic calculation provides in the price system and the market economy.

Among modern works in Austrian economics, Peter Lewin's Capital in Disequilibrium (1999) discusses these issues associated with combinations and recombinations guided by economic calculation.

Comments

[Msreekan]

Very coherently expressed, thanks.

Indeed at the individual level it's about how can we creatively combine our existing ideas to act in manners which adds value.

At the societal level it seems to be about discovering the scientific nature of institutions which will allow the best practices to evolve from a multitude of human actions.

F.A.Hayek explained how emergence of various phenomenons can be eventually attributed to properties already immanent in the system, otherwise the idea of evolution itself is falsified.

"The theory as such, as is true of all theories, describes merely a range of possibilities. In doing this it excludes other conceivable courses of events and thus can be falsified. Its empirical content consists in what it forbids. If a sequence of events should be observed which cannot be fitted into its pattern, such as, e.g., that horses suddenly should begin to give birth to young with wings, or that the cutting off of a hind-paw in successive generations of dogs should result in dogs being born without that hind-paw, we should regard the theory as refuted."

Actually we can also interpret electrical/computer science engineering in the same light. It's mostly about organizing already existing abstract logical blocks in various ways, but based on some scientific principles and for catering to some economic ends.

http://tekrants.me/2014/11/30/computer-science-engineering/