MR. DRISCOLL: George, we should probably start with the title of the book. What is the information theory of capitalism and who pioneered it?
MR. GILDER: Well, I — I pioneered it. But information theory was developed by Claude Shannon to explain networks, to define information, so it was possible to gauge the capacity of infor — of channels or networks or telecommunications systems to bear information. And Shannon defined information as unexpected bits, as surprise, essentially.
And ever since I wrote Wealth and Poverty, years ago, I’ve been looking for a way to incorporate entrepreneurial creativity, which always comes as a surprise to us, into economic models. And writing about telecommunications technology and about the Internet, I discovered Claude Shannon’s works and saw that he defined information as surprise. And so what we have is this vast theory that underlies all the most productive industries in our economy, all the information tools that enrich our lives in so many ways, that that very same theory also is perfectly aligned with a capitalist economy.
MR. DRISCOLL: For those who haven’t heard of him, can you talk a little bit about who Claude Shannon was?
MR. GILDER: Well, Claude Shannon is one of the great figures of our history. He was an engineer at MIT and Bell Labs. And his job was to explain how you can build vast networks to transmit information around the globe in the face of noise and interference and other obstacles to communication.
And essentially what I do is take Claude Shannon’s theory and apply it not to transmission of information across wires and across the electromagnetic spectrum and wireless devices, but across the world, entrepreneurial ideas… More.