Chapter 1 The Irish Idea of a Hero
Sitting alone at his table by the bar, Brian Arthur stared out the front window of the tavern and did his best to ignore the young urban professionals drifting in to get an early start on Happy Hour. Outside, in the concrete canyons of the financial district, the typical San Francisco fog was turning into a typical San Francisco drizzle. That was fine by him. On this late afternoon of March 17, 1987, he wasn't in the mood to be impressed with brass fittings, ferns, and stained glass. He wasn't in a mood to celebrate Saint Patrick's Day. And he most definitely wasn't in a mood to carouse with ersatz Irishmen wearing bits of green on their pinstripes. He just wanted to silently sip his beer in frustrated rage. Stanford University Professor William Brian Arthur, native son of Belfast, Northern Ireland, was at rock bottom.
And the day had started so well.
That was the irony of it all. When he'd set out for Berkeley that morning, he'd actually been looking forward to the trip as a kind of triumphal reunion: local boy makes good. He'd really loved his years in Berkeley, back in the early 1970s. Perched on the hillsides north of Oakland, just across the bay from San Francisco, it was a pushy, vital, alive kind of place full of ethnics and street people and outrageous ideas. Berkeley was where he'd gotten his Ph. D. from the University of California, where he'd met and married a tall blonde doctoral student in statistics named Susan Peterson, where he'd spent his first "postdoc" year in the economics department. Berkeley, of all the places he'd lived and worked ever since, was the place he wanted to come home to.
Well now he was coming home, sort of. The event itself wouldn't be a big deal: just lunch with the chairman of the Berkeley economics department and one of his former professors there. But it was the first time he'd come back to his old department in years, and certainly the first time he'd ever done so feeling like an academic equal. He was coming back with twelve years of experience working all over the globe and a major reputation as a scholar of human fertility in the Third World. He was coming back as the occupant of an endowed chair of economics at Stanford -- the sort of thing that rarely gets handed out to anyone under age fifty. At age forty-one, Arthur was coming back as someone who had made it in academia. And who knew? The folks at Berkeley might even start talking about a lob offer.
Oh yes, he'd really been high on himself that morning. So why hadn't he, years ago, just stuck to the mainstream instead of trying to invent a whole new approach to economics? Why hadn't he played it safe instead of trying to get in step with some nebulous, half-imaginary scientific revolution?
Because he couldn't get it out of his head, that's why. Because he could see it almost everywhere he looked. The scientists barely seemed to recognize it themselves, most of the time. But after three hundred years of dissecting everything into molecules and atoms and nuclei and quarks, they finally seemed to be turning that process inside out. Instead of looking for the simplest pieces possible, they were starting to look at how those pieces go together into complex wholes.
He could see it happening in biology, where people had spent the past twenty years laying bare the molecular mechanisms of DNA, and proteins, and all the other components of the cell. Now they were also beginning to grapple with the essential mystery: how can several quadrillion such molecules organize themselves into an entity that moves, that responds, that reproduces, that is alive?
He could see it happening in the brain sciences, where neuroscientists, psychologists, computer scientists, and artificial intelligence researchers were struggling to comprehend the essence of mind: How do those billions of densely interconnected nerve cells inside our skulls give rise to feeling, thought, purpose, and awareness?
He could even see it happening in physics, where the physicists were still trying to come to terms with the mathematical theory of chaos, the intricate beauty of fractals, and the weird inner workings of solids and liquids. There was profound mystery here: Why is it that simple particles obeying simple rules will sometimes engage in the most astonishing, unpredictable behavior? And why is it that simple particles will spontaneously organize themselves into complex structures like stars, galaxies, snowflakes, and hurricanes -- almost as if they were obeying a hidden yearning for organization and order?
The signs were everywhere. Arthur couldn't quite put the feeling into words. Nobody could, so far as he could tell. But somehow, he could sense that all these questions were really the same question. Somehow, the old categories of science were beginning to dissolve. Somehow, a new, unified science was out there waiting to be born. It would be a rigorous science, Arthur was convinced, just as "hard" as physics ever was, and just as thoroughly grounded in natural law. But instead of being a quest for the ultimate particles, it would be about flux, change, and the forming and dissolving of patterns. Instead of ignoring everything that wasn't uniform and predictable, it would have a place for individuality and the accidents of history. Instead of being about simplicity, it would be about -- well, complexity.
And that was precisely where Arthur's new economics came in. Conventional economics, the kind he'd been taught in school, was about as far from this vision of complexity as you could imagine. Theoretical economists endlessly talked about the stability of the marketplace, and the balance of supply and demand. They transcribed the concept into mathematical equations and proved theorems about it. They accepted the gospel according to Adam Smith as the foundation for a kind of state religion. But when it came to instability and change in the economy -- well, they seemed to find the very idea disturbing, something they'd just as soon not talk about.
But Arthur had embraced instability. Look out the window, he'd told his colleagues. Like it or not, the marketplace isn't stable. The world isn't stable. It's full of evolution, upheaval, and surprise. Economics had to take that ferment into account. And now he believed he'd found the way to do that, using a principle known as "increasing returns" -- or in the King James translation, "To them that hath shall be given." Why had high-tech companies scrambled to locate in the Silicon Valley area around Stanford instead of in Ann Arbor or Berkeley? Because a lot of older high-tech companies were already there. Them that has gets. Why did the VHS video system run away with the market, even though Beta was technically a little bit better? Because a few more people happened to buy VHS systems early on, which led to more VHS movies in the video stores, which led to still more people buying VHS players, and so on. Them that has gets.
The examples could be multiplied endlessly. Arthur had convinced himself that increasing returns pointed the way to the future for economics, a future in which he and his colleagues would work alongside the physicists and the biologists to understand the messiness, the upheaval, and the spontaneous self-organization of the world. He'd convinced himself that increasing returns could be the foundation for a new and very different kind of economic science.
Unfortunately, however, he hadn't had much luck convincing anybody else. Outside of his immediate circle at Stanford, most economists thought his ideas were -- strange. Journal editors were telling him that this increasing-returns stuff "wasn't economics." In seminars, a good fraction of the audience reacted with outrage: how dare he suggest that the economy was not in equilibrium! Arthur found the vehemence