The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

by Erik Brynjolfsson

If this recombinant view of innovation is correct, then a problem looms: as the number of building blocks explodes, the main difficulty is knowing which combinations of them will be valuable. In his paper “Recombinant Growth,” the economist Martin Weitzman developed a mathematical model of new growth theory in which the ‘fixed factors’ in an economy—machine tools, trucks, laboratories, and so on—are augmented over time by pieces of knowledge that he calls ‘seed ideas,’ and knowledge itself increases over time as previous seed ideas are recombined into new ones.18 This is an innovation-as-building-block view of the world, where both the knowledge pieces and the seed ideas can be combined and recombined over time. This model has a fascinating result: because combinatorial possibilities explode so quickly there is soon a virtually infinite number of potentially valuable recombinations of the existing knowledge pieces.* The constraint on the economy’s growth then becomes its ability to go through all these potential recombinations to find the truly valuable ones.