Every system has a limit that can be surpassed.

There are many variables that determine how society progresses. One variable particularly worth examining is the limit of the systems we live and work in. Software entrepreneur Eli Goldratt came up with this theory of constraints in the 1980s.

According to Goldratt, every system that has a goal also has a limit: a part of the system that restricts growth. So if your factory has two assembly lines that produce 100 units of a product and one that produces only 50, that third line would be the limit.

In order to progress, then, we need to work on this limit. For example, if you have a great product but nobody’s heard of it, you won’t boost sales by improving your product. Here, the limit you need to improve on would be your marketing strategy.

According to systems thinker Ron Davidson, the last three major changes in the Western economy occurred when the limits changed.

Back in fourteenth-century England, the agricultural economy was based on land, and since the Catholic Church owned the lion’s share of it, they controlled the economy. Therefore, the limit was land until the sixteenth century, when Henry VIII appointed himself head of the Anglican Church and revoked Rome’s control over it.

Then, at the dawn of the industrial age in the 1700s, bankers became more powerful than kings, shifting the limit from land to capital, and forcing land-owner and Prussian King Friedrich Wilhelm III to ask bankers for a loan to finance his wars.

Later, in the 1900s, we shifted from a capital economy into a knowledge economy. Knowledge, proliferated by technology, became the new limit, making companies like IBM extremely powerful. This was evident in 1975, when IBM successfully issued a billion dollars in bonds, despite their bankers at Morgan Stanley refusing to cooperate.

Since the early 2000s, though, we’ve seen a weakening of the knowledge economy as a burgeoning entrepreneurial economy gains momentum. Read on to find out why.