3/ First, information is physical or more precisely it is physically embodied. Information is not a thing; rather, it is the arrangement of physical things. It is not an amorphous soup of atoms but physical order.
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14/ A tree, in its semi-“frozen” state, is a computer powered by sunlight. While a tree is not conscious, it shares with us a general ability to process information. A tree has knowhow, similarly to the processes our own bodies do without knowing how: digestion, immunity…
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15/ Life is a consequence of the ability of matter to compute. Information helps bridge the gap between the physical and the biological.
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16/ We are born from it and while we interact in social context the reverse is also true: it is born from us. We are small neurons in a vast social and economic universe.
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17/ Crystals of imagination represent ordered arrangements of atoms (ie solid objects) that humans create to accumulate information generated through mental computation. They do not just embody information but also imagination.
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18/ The main difference between apples and Apples is that the apples we eat existed first in the world and then in our heads while the Apples we use to check our email existed first in someone’s head and then in the world.
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19/ Economic development is based not on the ability of a pocket of the economy to consume but on the ability of people to turn their dreams into reality. Economic development is not the ability to buy but the ability to make.
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20/ Our ability to crystallize imagination, to build products give us access to the practical uses of the knowledge and knowhow residing in the nervous systems of other people.
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21/ An electric guitar allows us to “sing” with our hands by embodying knowledge of how the music’s sound waves can be captured using a transducer, and how these sounds can be amplified for many of us to enjoy.
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22/ In a metaphorical sense, the world is populated by ghosts. Faraday’, Tesla and many others live in electrical products.
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23/ It also allows us to transform our ideas into shareable reality. Crystallizing our thoughts into tangible and digital objects is what allows us to share our thoughts with others. It augments us.
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24/ Therefore economy can be seen as a system that amplifies the practical uses of knowledge and knowhow through the physical embodiment of information. It is a sociotechnical system by which humans make information grow.
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25/ A “personbyte” is defined as the maximum knowledge and knowhow carrying capacity of a human. At the individual level, there is a limit to the amount of knowledge and knowhow we can accumulate in our brain and nervous system.
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26/ Therefore, it not only requires that we break up knowledge and knowhow into chunks that are smaller than the ones an individual can hold but also a structure to reconstitute it: a network.
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27/ Our collective ability to accumulate knowledge is therefore limited by both the finite capacity of individuals and the problem of connecting individuals in a network.
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28/ A successful band not only requires each musician to have a deep knowledge of his instrument but also requires musicians to know how to play together. Practice time is required when replacing one of the musician.
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29/ Bonding social capital understood as ability to connect people is as important as human capital defined as knowledge and knowhow that is embodied in humans.
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30/ The basics of social network formation is based on three simple ideas: shared social foci, triadic closure, and homophily.
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31/ A shared social foci means simply that links are more likely to form among people who share a social focus (i.e., classmates, workmates…)
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32/ Triadic closure means that links are more likely to form among people who share friends.
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33/ Homophily, on the other hand, attempts to explain the links that stick—it is the idea that links are more likely to form among people who have similar interests and characteristics.
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34/ An outcome of these tie formation mechanisms is that social networks are composed of clusters of similar people, who often have highly overlapping knowledge and information.
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35/ Social networks help drive the formation of professional networks and tend to bring into a firm people who are similar to the ones already there. Deloitte got 49 percent of its experienced hires from referrals.
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36/ Firms, networks of individuals, developed according to the classical view of Adam Smith’s division of labor and scale economies.
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37/ Simply put, cooking dinner for one is more expensive than cooking for a family of five: cooking for five does not take five times the effort or ingredients than cooking for one.
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38/ Nevertheless, firms don’t grow endlessly and analogously to the “personbyte” have also a quantization limit: the “firmbyte”.
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39/ Transaction cost theory study the cost of economic links and the ways in which people organize to deal with commercial interactions.
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40/ When the external transactions become less costly than the internal transactions, firms stop growing since it is better for them to buy things from the market than to produce these internally: the cheaper the link, the larger the network.
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41/ Williamson’s classifies the links (ie transactions) in two axes: by frequency (recurrent and occasional) and specificity (nonspecific to idiosyncratic).
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42/ Buying coffee is a nonspecific recurrent transaction. Purchasing a home is an occasional and specific interaction. It is easy to understand the difference in term of paperwork and people needed to establish a commercial link.
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43/ During the last decades the cost of market transactions has fallen due to for examples transportation costs but a as well as emergence of standards.
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