n the wake of the great financial crash of 2008, pundits rushed to proclaim that a new era was at hand. “Another ideological god has failed”, intoned Martin Wolf, longtime columnist for the Financial Times. “The assumptions that ruled policy and politics over three decades suddenly look as outdated as revolutionary socialism.”1 Nobel Prize-winning economist Joseph Stiglitz added that “the fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism—it tells the world that this way of economic organization turns out not to be sustainable.”2 The Washington Post ran a big-think piece with the interrogative headline, “The End of American Capitalism?”, which was quickly answered by a Newsweek cover story entitled “We Are All Socialists Now.”3
According to this line of thinking, the spectacular implosion of America’s high-flying financial system signaled the beginning of a worldwide shift in political economy away from the generation-long trend toward freer, more competitive markets and toward greater reliance on government mandates and controls. Just as the Great Depression supposedly discredited laissez faire and catalyzed the turn toward more interventionist government, so the Great Recession would do likewise, ending the “neoliberal” era of market-oriented reforms. This thinking was reinforced by the coloration of American politics at the time. Soon after the 2008 presidential election, Time drew out the parallel with the 1930s by putting Barack Obama on the cover dressed as FDR, complete with fedora, eyeglasses and a cigarette in holder rising jauntily from a broad grin. “The New New Deal”, the caption read. Outside the United States the supposedly smart money bet on the rise of the Beijing Consensus, so-called, and the decline of the Washington Consensus.
Of course, the crisis did lead to some changes, and several were in the direction of more government regulation. The healthcare legislation in the United States certainly pointed that way, as did, to a lesser degree, the Dodd-Frank banking bill. But clearly the trend espied back in 2008 has not developed as predicted. A ferocious political backlash has halted the political momentum for more activist government in the United States. Faced with an enormous Federal budget deficit, the primary question has become how to scale government back, not how to expand it.
Meanwhile, in the rest of the world the most dramatic policy responses provoked by the Great Recession have also aimed at leaner government. Fiscal crises in Iceland, Greece, Portugal and Ireland, as well as worries about looming crises in Spain, Italy and elsewhere, have precipitated a continent-wide austerity drive in Europe that has cut government salaries and curtailed social welfare benefits. Among the less developed countries, the more successful ones are on balance quite satisfied with Washington Consensus-inspired economic policies, which have lifted many out of poverty and driven robust growth rates in recent decades.
Notwithstanding the tumultuous events of recent years, there are strong reasons for believing that the dominant movement in world economic policy toward greater reliance on private-sector entrepreneurship and market competition will continue into the foreseeable future. The reason ultimately has little to do with intellectual fads or politically empowered tastes. It is because powerful social forces are changing the very nature of economic growth, the upshot being that growth is now increasingly dependent on new products, new production processes, new industries and the new businesses that are the indispensable agents of such innovation. Economic growth is increasingly taking place at the technological frontier, meaning that growth results more and more from the development of new ideas rather than from the application of existing ones.
The idea that growth stems largely from technological innovation based on new knowledge is, of course, not new. Nor is the idea that market competition stimulates innovation. These concepts formed the core of Joseph Schumpeter’s theory of growth, and a compatible theory earned Robert Solow a Nobel Prize in economics back in 1987. But the idea that there is a progressive and recursive trajectory in the combination of these two ideas is something new. In the new era of “frontier economics”, I argue, older, easier sources of growth are drying up and so the prospects for continued dynamism and prosperity hinge increasingly on the pioneering entrepreneurial upstarts who are exploring and extending the technological frontier. As a consequence, the political imperative to maintain satisfactory economic performance is pressuring national economies to free up markets and knock down barriers to competition. This means that the neoliberal turn in political economy, far from being exhausted, is poised to gather new momentum.
Uncertainty and Competition
he concept of frontier economics relies on a basic hypothesis: that there is a ratchet effect in the relationship between economic development and economic freedom. Specifically, the richer and more advanced a country gets, the more economic freedom it needs for growth to continue. At the most basic level, poor countries need to develop successful market economies in order to grow rich. But once countries become rich, they find themselves ever more dependent on unpredictable entrepreneurial innovation for continued prosperity—and therefore dependent on a broader range of well-functioning, competitive markets. Consequently, as countries develop, they come under increasing pressure to liberalize their markets in order to stave off deteriorating economic performance.
By economic freedom, I don’t mean laissez faire or a bare minimum of taxes and regulations. Rather, the relevant question is whether the economic system considered as a whole is more or less free. Of particular importance are the freedom of new businesses to enter the marketplace and struggling ones to exit, the freedom of businesses to hire and fire workers, the freedom of prices to move up and down in response to supply and demand, and freedom from government interventions that take the form of “picking winners and losers.”
Accordingly, it is important to understand that economic freedom does not equate to small government. To the one side, governments don’t have to spend a lot of money on social programs to be economically oppressive; think Zimbabwe or Syria. To the other side, high levels of government spending can coexist with relatively robust economic freedom; look at the Nordic countries today.
Of course, government spending does have an indirect effect on economic freedom because, in the long run at least, more spending means more taxes, and higher tax rates can blunt and distort incentives in damaging ways. So while the requirements of growth can impose some constraints on how high spending and taxes can climb, economic freedom nevertheless does not impose draconian restrictions on the size of government.
With that bit of throat-clearing out of the way, let’s return to the ratchet effect hypothesis. What is the basis for the foundational claim that economic development leads to greater dependence on markets for continued growth? To understand the underlying dynamics, it is useful to begin with the insights of F.A. Hayek, the Nobel Prize-winning economist who was among the 20th century’s most profound and influential theorists and defenders of competitive markets.
According to Hayek, the chief virtue of the market order is its fertility in discovering and applying socially useful information. First, the system of freely moving prices distills and communicates existing information about consumers’ relative preferences. This information, furthermore, is so widely dispersed and often so tacit and ephemeral that it could never be successfully imparted to or be used by a central planner. In addition, what Hayek called the “discovery procedure” of market competition is constantly generating useful new information—about new products, or product improvements, or new production techniques—through experimentation by competing enterprises and the feedback of profit and loss. In the end, the market order is an ingenious solution to the problem of economic uncertainty—the problem of knowing what people want and how best to give it to them. “Wherever the use of competition can be rationally justified”, wrote Hayek, “it is on the ground that we do not know in advance the facts that determine the actions of competitors.”4
It follows, therefore, that the importance of competition grows as uncertainty deepens. If you know that one chess player is a grandmaster and the other is a novice, there isn’t much point in staging a match between them. But if you have two comparably ranked players, the only way to find out who is better is to let them play. Likewise, if you already have a clear idea of which new investments and new industries are needed to spur economic growth and raise productivity and living standards, then to that extent at least you don’t need to rely on the discovery process of the marketplace and government-directed allocation of resources can provide an adequate substitute. If, however, the path of economic progress is uncertain, there is no good substitute for the marketplace’s encouragement and vetting of rival approaches.
Generally speaking, at least, it follows that the richer a country gets, the more uncertain its economic future becomes. This is because sustained economic development leads to the progressive exhaustion of growth’s “low-hanging fruit”—the most obvious and easily accomplished opportunities for wealth creation. First of all, continued growth becomes increasingly reliant on indigenous innovation as opposed to expansion of existing activities and imitation of advances pioneered elsewhere. Furthermore, the process of innovation becomes ever more unpredictable as affluence deepens and spreads and economies grow increasingly complex.
Imitative versus Innovative Growth
et us now examine how this logic plays out. To begin with it is important to understand that economic growth comes in different forms. For present purposes, the key distinction is between growth as more of the same and growth as something new and different. Specifically, growth as more of the same can come from capital accumulation, the expansion and upgrading of the labor force, and the adoption of ideas developed elsewhere. Or growth can come from innovation—that is, the development of new products and new production processes. The former, or imitative growth, occurs within the existing technological frontier; the latter, or innovative growth, pushes that frontier outward.
When countries are poor and their economies operate well behind the technological frontier, opportunities for imitative growth are relatively plentiful. As a result of their relative backwardness, less developed countries can experience accelerated catch-up growth. All they have to do is shift workers out of low-productivity farming and into modern, organized industry, and get their industries to adopt more advanced production processes and organizational structures already developed elsewhere. Without much in the way of homegrown innovation, they can achieve rapid productivity growth and the fast-rising living standards that go with escalating GDP per capita. Needless to say, not all developing countries achieve significant success within the existing technological frontier, but lack of opportunity is not the main reason.
Exploiting opportunities for imitative, catch-up growth makes for a relatively predictable development process. Policymakers in less developed countries have a fairly clear idea of where future growth is going to come from thanks to the example of more advanced countries. The way ahead has seemed predictable enough that for much of the 20th century the possibility of catch-up growth fostered a widespread belief that markets could be largely or completely dispensed with. In the end, though, the old statist orthodoxy in development economics, one that typically emphasized investment in state-owned industry, proved mistaken. Once one ventures beyond very rudimentary physical development, there is no getting around the need for a vibrant market economy. This is why we have seen such dramatic moves toward liberalization in less developed countries over the past few decades.
Nevertheless, compared to rich countries, less developed countries can thrive with a distinctly different institutional mix between markets and government than that which prevails in more advanced countries. Because of the availability of catch-up growth, poor countries can reserve a larger role for government as both market regulator and market participant and still deliver excellent economic performance. In particular, the government can dominate decision-making over the large-scale allocation of capital—through state-owned enterprises, control over the financial sector, corporatist coordination and industrial policy.
Consider the two great “miracles” of catch-up growth since World War II: first Western Europe and then the ongoing example of East Asia. These two cases testify to the astonishing productive power of market-based economic systems, yet in both, aggressively interventionist governments featured prominently as well. Western Europe’s “mixed economy” or “social market economy” combined large welfare states, state ownership of key industries and corporatist governance structures for industry with strong organized labor movements and indicative government planning of investment. In the so-called “Asian model” pioneered by Japan and later mimicked widely up and down the Pacific Rim, the welfare state was more modest and state ownership less pervasive, but here, too, governments exerted heavy influence over the allocation of resources through industrial policy and mercantilist export promotion.
Notwithstanding their considerable successes (actually, precisely because of them), these systems of political economy eventually ran into trouble. Remember the old joke about what a dog does when it catches the car it’s chasing? Countries face the same riddle when, after a sustained run of economic development, they get rich and approach the technological frontier. What they learn is that the policies and institutions which once worked fine now don’t work so well or even become counterproductive.
In his detailed analysis of postwar Europe’s economic history, Barry Eichengreen explains how pressures for reform grew out of the changing requirements for growth. The early postwar decades, when Europe was playing catch-up with the United States, were a period of “extensive growth”, or “growth based on capital formation and the existing stock of technological knowledge.” By the 1970s, however, Western Europe had entered the period of “intensive growth”, or “growth through innovation.”5 That transition, Eichengreen argues, required fundamental and wrenching changes in the European economic system:
Increasingly, then, the same institutions of coordinated capitalism that had worked to Europe’s advantage in the age of extensive growth now posed obstacles to successful economic performance. . . . In this sense, the continent’s very success at exploiting the opportunities for catch-up and convergence after World War II doomed it to difficulties thereafter.6
Those difficulties have catalyzed far-reaching economic reforms. However halting and often insufficient these efforts have been in some countries, the clear policy trend has been in the direction of privatization, tax-cutting and deregulation. Among the members of the “EU-15”, which is to say the members of the European Union before its post-Cold War expansion, average government investment as a percentage of total investment has fallen from 28.8 percent in 1980 to 11.8 percent in 2007, while the average top marginal income tax rate has dropped from 70.1 percent to 46.5 percent. Between 1995 and 2007, the average score on the World Bank’s rating for the ease of starting a business has improved from 5.7 (on a scale of one to ten) to 9.5. And at least some countries—notably Denmark and the Netherlands—have made impressive strides in improving labor market flexibility, although high unemployment benefits and barriers to firing workers remain the general rule.
Japan hit the same wall a decade or two later. In the 1980s, Japan’s world-beating industries and impressive economic growth led many to proclaim that “Japan, Inc.” would soon replace the United States as the world’s economic superpower. Then came the bursting of the Japanese stock market and real estate bubbles and the ensuing “lost decade” of the 1990s. In 1988, former trade negotiator Clyde Prestowitz made waves with a jeremiad entitled Trading Places: How We Are Giving Our Future to Japan and How to Reclaim It; less than a decade later, he was forced to concede the limitations of the Japanese model. “As a catch-up machine, this model was unparalleled”, Prestowitz wrote in 1997. “But once Japan caught up . . . problems began to arise. While the model was good at concentrating resources to hit targets already set by the pattern of Western development, it performed poorly at selecting new directions.”7
Japan’s prolonged, post-bubble slump has brought mounting pressure for structural reforms. So far this pressure has resulted in the “Big Bang” liberalization of financial markets, efforts to privatize Japan’s massive postal savings system, some unwinding of the keiretsu system of corporate cross-ownership, reform of large-store regulation (designed to protect mom-and-pop retailers from big box competition), and reduced barriers to inward foreign investment. To be sure, the pace of reform has been disappointingly slow, but the overall direction toward a more open economic posture is clear enough.
What about the United States? Like the other advanced countries it leads and the rest of the world as well, it too has moved in the direction of greater economic freedom over the course of recent decades. But why? After all, the United States thrived with distinctly less economic freedom in the quarter-century after World War II, a period now regarded as the “Golden Age” of growth, when it was already well established as the largest and most advanced economy on the planet. Since the United States seems to have been at the technological frontier all this time, what was behind its shift to more entrepreneurial capitalism?
It turns out that, even during the most robust years of its economic progress, there were still ample opportunities for imitative growth. Although the American economy considered as a whole occupied the technological frontier, whole regions of the country remained underdeveloped as the postwar boom began. As of the end of World War II, America’s South and West lagged far behind the industrial heartland of the Northeast and Midwest. Dixie remained rural and backward, while the West was still largely empty. Accordingly, there were significant internal opportunities for catch-up growth. These opportunities corresponded with another burst of imitative growth: the construction of suburbia. Between 1940 and 1970, the suburban population increased by nearly 65 million people, and the homeownership rate soared from 44 percent to 63 percent, a rise that remained stable until the recent housing bubble.
Additional opportunities for imitative growth came as a result of unique historical circumstances. Because the boom followed on the heels of two decades of depression and war, it profited from a big backlog of pent-up demand and supply. Consumers had long wish lists of purchases that they had delayed because of hard times or wartime rationing; meanwhile, for similar reasons, a host of new technologies had been developed but not yet commercialized. Working off this backlog constituted another form of catch-up growth.
The combined effect of all these factors was a temporary lull in economic uncertainty. Building up the South and West, building out suburbia, bringing pent-up supply to market and satisfying both pent-up and new demand—none of these contributors to the postwar boom required any significant extension of the technological frontier. But the lull in uncertainty didn’t last. By the 1970s, the Sunbelt had risen, the migration to suburbia had largely played out and the backlog of pent-up supply and demand had long been exhausted. So it’s no coincidence that, at just the same time, the Golden Age ended: U.S. productivity growth slumped and the economy succumbed to the blight of stagflation.8
The macroeconomic malaise then begat a policy response, for which a ready-made-in-Chicago theory already existed: the wholesale elimination of barriers to competition and entrepreneurship. Price and entry controls in the airline, trucking and railroad industries were phased out. Oil and natural gas prices were deregulated. The AT&T monopoly was broken up, and competition came to long-distance telephone services. Cable and satellite television were allowed to compete with broadcasting. Interest rates were deregulated, limits on branch banking were lifted, the wall between commercial and investment banking was lowered, and brokerage commissions became competitive. Tax rates were slashed, too: The top marginal rate for individuals plummeted from 70 percent in 1980 all the way to 28 percent in 1986, although it has drifted generally upward since then.
A New Frontier
he dwindling of opportunities for robust imitative growth is not the only factor driving the United States and other advanced economies toward a more entrepreneurial version of capitalism. It’s not just that ever more economic activity is taking place at or near the technological frontier; in addition, the very nature of that frontier is changing. Simply put, the changing structure and output of advanced economies are making them progressively less amenable to centralized direction and control.
Modern economic development is commonly divided into two distinct phases. The first is generally known as industrialization or the industrial economy; the second goes by a variety of labels. Some refer to the service economy, others call it the knowledge or information economy, and still others play it close to the vest and speak simply of the postindustrial economy. For present purposes, we will refer to these two phases as the transition to mass affluence, on the one hand, and mass affluence itself, on the other.
During the transition to mass affluence, the central economic challenge is the development and servicing of mass markets for the obvious staples of life: food, clothing, housing (including home furnishings and appliances) and transportation. The focus is on exploiting economies of scale by producing relatively homogeneous goods of middling quality aimed at middling tastes.
As America’s postwar boom began to roar, though, the great transition was largely accomplished, and once mass affluence had arrived, the nature of the economic challenge shifted from mass markets to “market segmentation.” Wendell Smith coined that term in a 1956 article in the Journal of Marketing. The problem for “many companies”, he noted, was that “their core markets have already been developed . . . to the point where additional advertising and selling expenditures [are] yielding diminishing returns.” The solution, he argued, was to start paying “attention to smaller or fringe market segments, which may have small potentials individually but are of crucial importance in the aggregate.”9 What Smith called fringe markets we have since tended to call niche markets.
Whatever the name, that’s the direction advanced capitalism has followed ever since (except that it’s not a single direction, of course, but countless variations on a theme). As product varieties proliferated to suit every taste and social identity, what was being produced and consumed also changed. The richer we get, the more discretionary our purchases become. According to Nobel Prize-winning economic historian Robert Fogel, 74 percent of U.S. consumption went to food, clothing and shelter back in 1875, at the outset of the transition to affluence. By 1995, that share had fallen to 13 percent.
The arrival of mass affluence and the move beyond mass markets made the path of economic progress much less predictable. What new products would people buy? What nuances of function or design or marketing would separate big sellers from duds? During the industrial era, investors could identify mass markets that weren’t yet saturated and know with reasonable certainty that the future would bring their further expansion. Now, however, the future is more obscure than ever.
The advance of the technological frontier heightens uncertainty not only on the demand side but on the supply side as well. Consider what the revolution in information technologies has done to the quantities of raw data at our disposal. According to Peter Lyman and Hal Varian, the total production of new information stored on paper, film and magnetic and optical media in 2002 was roughly five trillion megabytes—or the equivalent of 37,000 book collections as big as the Library of Congress. Furthermore, they found that the volume of new information produced in a year had basically doubled over a three-year period, an annual growth rate of 66 percent.10 What does all of this have to do with economic uncertainty? The explosion of new ideas and new information means an equivalent explosion in new possibilities for economic progress. No one knows which avenues will lead to new products and whole new industries, and which will peter out in dead ends. And the more possible futures we can imagine, the more mysterious the real future becomes.
Deepening uncertainty on the supply side extends not only to new ideas for new products and production processes but also to the identity of the leading producers. Over the course of the transition to mass affluence, large economies of scale figured prominently in shaping the structures of firms and industries. As a consequence, average firm size tended to grow while rates of entrepreneurship fell in the most advanced economies. Barriers to entry created by the high returns to scale led to a relative muting of competitive intensity in a host of leading industries. With the arrival of mass affluence and the emergence of the postindustrial information economy, however, returns to scale—and barriers to entry—began to fall.
Numerous studies have confirmed a general and persistent trend in rich countries: Starting in the 1970s, the average size of firms has shrunk substantially, while self-employment and business ownership rates (proxies for entrepreneurship) have posted gains. Meanwhile, competitive dominance has grown increasingly precarious—at least in the United States. According to one study, the chances that a company in the top 20 percent of firms in an industry (as measured by market capitalization) will fall out of that elite group over the next five years increased fivefold between 1960 and 2000. In a similar vein, the average annual turnover in the Fortune 500 between 1985 and 2005 was over 40 percent higher than that between 1955 and 1975.11
Reduced market barriers to entry make government efforts to direct the course of economic development increasingly problematic. Such efforts typically take the form of funneling resources to existing producers through directed credit, restrictions on competition or outright subsidies. When market conditions are such that the status of leading producers in a given industry is fairly stable even without government intervention, such interventions can be relatively benign. Basically, what government does in these situations is to augment and accelerate investments that would happen anyway.
When, however, the marketplace is considerably more dynamic, there is a greater risk that government intervention will misfire by propping up incumbent firms and thwarting the emergence of new firms with better ways of doing things. The opportunity costs of backing the wrong horse go up as well, as the possible trajectories of industries with and without intervention grow increasingly divergent. As Bentley University economist Scott Sumner says:
If all you have to do is churn out iron and steel and washing machines and apartment buildings, it can be done passably well with central planning . . . [but not] when the decisions were about whether to allocate capital to Google or Genzyme, or whether to build that auto parts plant in Detroit or Mexico or China. It’s no longer about simply mobilizing capital to mass produce clearly defined output of stuff we all know consumers will want.12
Armed with the insights of frontier economics, it is easy to see what went wrong with those bold forecasts in 2008 that the financial crisis would provoke a worldwide shift away from free markets. Quite simply, we’re a long way from the 1930s. Back then, when the world was much poorer and economic policies in many countries were more hands-off, governments could expand significantly their involvement in economic affairs in a way that was consistent with (even if not necessary or good for) the eventual resumption of growth and prosperity. That was certainly the case in the United States, as the postwar boom of the Golden Age testifies.
Things are different now. Because of the ratchet effect in the relationship between economic policies and economic performance, we are much more dependent on innovation to keep growth going and therefore much more dependent on free-market policies that foster the creation of new businesses and the implementation of new ideas. If we are to rise out of the current slump and launch a 21st-century boom, we will do it by moving toward freer, more competitive markets. However well they worked in the past, neither the specific policies nor the general style of governance from the Golden Age are viable options today. The past is gone, and we can never go back.
As the Ratchet Turns
ooking forward, our policy options are constrained by a crucial though still poorly understood fact: The ratchet is turning once again. The issue isn’t the current downturn, but something much more fundamental. Yet another source of imitative growth is drying up, and as a result the United States is facing an unprecedented slowdown in long-term growth.
The problem has to do with demographics. Over the course of the 20th century, U.S. growth rates got a steady and considerable boost from the ongoing rise of women in the workforce. As a result, the American labor force climbed from 56 percent of the adult population in 1900 to 67 percent in 2000. This is a classic form of imitative growth: boosting inputs into the production process as opposed to figuring out how to get more output from a given quantity of inputs. Now this particular type of imitative growth is all but exhausted. The female labor force participation rate peaked in the 1990s and then began dipping well before the Great Recession. Meanwhile, the aging of the population means that the trajectory of participation by men is downward as well.
How much does all this matter? According to a new study by the McKinsey Global Institute, growth in the work force will add only 0.5 percentage points to the overall growth rate between 2010 and 2020, as compared to 2 percent in the 1970s. Because of these unfavorable demographics, McKinsey estimates that productivity growth must increase by almost 25 percent to keep real per capita growth at its long-term historic rate of 1.7 percent a year.13
Achieving anything close to that kind of increase in productivity will require sweeping changes in economic policy. Encrusted barnacles of regulation that hinder the growth of new businesses will have to be chipped away. New rules for the financial system will have to be devised so that the main work of the financial sector is meeting the capital needs of the business sector, not shifting rents around or exploiting regulatory loopholes, as is largely the situation today. And fundamental restructuring will have to come to the large and growing education and healthcare sectors, both of which are dominated by government and, not entirely coincidentally, dogged by systemic inefficiencies.
Making these kinds of changes will not be easy. But even greater political difficulties will confront those trying to defend a status quo that is no longer capable of delivering satisfactory economic performance. Welcome to the era of frontier economics: Out on the frontier, the only choices are hard ones.
1Wolf, “Seeds of Its Own Destruction”, Financial Times, March 8, 2009.
2Nathan Gardels, “Stiglitz: The Fall of Wall Street Is to Market Fundamentalism What the Fall of the Berlin Wall Was to Communism”, Huffington Post, September 16, 2008.
3Anthony Faiola, “The End of American Capitalism?”, Washington Post, October 10, 2008; Newsweek, February 16, 2009.
4Hayek, “Competition as a Discovery Procedure”, New Studies in Philosophy, Politics, Economics and the History of Ideas (University of Chicago Press, 1978), p. 179 (emphasis in original).
5Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton University Press, 2007), p. 6.
6Eichengreen, p. 7.
7Prestowitz, “Retooling Japan Is the Only Way to Rescue Asia Now”, Washington Post, December 14, 1997.
8Other factors also played a role in the economic doldrums of the 1970s. In particular, mistaken monetary policy and energy shocks were major culprits.
9Quoted in Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (Knopf, 2003), p. 295.
10Lyman and Varian, “How Much Information?” (2003), available at www2.sims.berkeley.edu/research/projects/how-much-info-2003/.
11Calculation based on Fortune data performed by the Kauffman Foundation. 12Sumner, “Invisible Martians and Occam’s Razor”, TheMoneyIllusion.com, January 3, 2011.
13McKinsey Global Institute, “Growth and Renewal in the United States: Retooling America’s Economic Engine” (February 2011).