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The Origin of Wealth summary
Eric D. Beinhocker
The Radical Remaking of Economics and What It Means for Business And Society
17 mins
Brief summary
In 'The Origin of Wealth' by Eric D. Beinhocker, the author argues that economic systems are complex, adaptive systems that can be better understood by applying principles from the study of biology and complexity.
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The Origin of Wealth
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Key idea 1 of 8
Traditional economic theories are unrealistic and inadequate.
If you’ve been paying even the slightest attention to the news in recent years then you’ve surely noticed the many economic shocks and crises throughout the world. In an attempt to manage these difficulties, politicians, economists and the media all advocate the traditional economic approach.
This approach is focused on two things:
First, they claim that when you leave the economy to its own devices, it will eventually “correct itself” by finding an equilibrium point at which it once again operates smoothly. If the economy is shocked from the outside – for instance through new government regulation or planning – then it will enter a state of fluctuation before finding a new point of equilibrium.
Think about it like this: If you drop a ball into a bowl, it will bounce and roll around before eventually coming to a comfortable rest. As long as no one shakes the bowl, it will remain peaceful.
Second, traditional economics assumes that humans always act rationally based on their own self-interest. This assumption, however, rests on another: that we don’t make any mistakes when participating in the economy, but instead carefully scrutinize each economic action – from buying a house to opening a savings account – before making the best possible decision.
While this traditional economic approach remains popular with governments and academics, it doesn’t reflect the real world.
For instance, it falsely assumes that all changes and shocks to the economy come from the outside, without recognizing that economic changes are actually driven from within the system itself.
In addition, the traditional approach is also completely undermined by the fact that people are not perfectly rational, self-centred creatures. We make mistakes, act on impulse and sometimes put our own desires on the back burner in order to satisfy someone else’s needs.
Clearly, the old approach is insufficient. In its place, we need a new method – one that can actually make sense of the complexities of our economic lives.
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What is The Origin of Wealth about?
The Origin of Wealth shows us the inadequacies of the economic theories that underpin our understanding of economics. The book argues that economic actors shouldn’t be seen as rational consumers that act on their self-interest. Rather, economics is best understood as a complex system of adaptation, similar to evolution, where products, ideas, and ideology compete for survival.
The Origin of Wealth Review
The Origin of Wealth (2006) explores the complex nature of economic systems and offers a fresh perspective on wealth creation. Here's why this book is worth reading:
- With its intensive research and wide range of examples, it provides a comprehensive understanding of the forces shaping the economy.
- Unlike other books, it goes beyond traditional economic theories and embraces complexity, acknowledging the interconnectedness of different factors in driving economic growth.
- By unpacking the mechanisms behind wealth creation, it challenges conventional wisdom and encourages readers to rethink their assumptions about the economy.
Best quote from The Origin of Wealth
Many of the traditional theories are more than a century old.
—Eric D. Beinhocker
Who should read The Origin of Wealth?
- Students and scholars of economic science
- Anyone interested in economics, social sciences or business
- Business leaders, economists and politicians
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The Origin of Wealth FAQs
What is the main message of The Origin of Wealth?
The main message of The Origin of Wealth is that understanding the complex systems of the economy can lead to sustainable economic growth and prosperity.
How long does it take to read The Origin of Wealth?
The reading time for The Origin of Wealth varies depending on the reader's speed, but it typically takes several hours. However, the Blinkist summary can be read in just 15 minutes.
Is The Origin of Wealth a good book? Is it worth reading?
The Origin of Wealth is an insightful read that provides a fresh perspective on economics. It's definitely worth the time for anyone interested in the subject.
Who is the author of The Origin of Wealth?
The author of The Origin of Wealth is Eric D. Beinhocker.
What to read after The Origin of Wealth?
If you're wondering what to read next after The Origin of Wealth, here are some recommendations we suggest:
- The End of Poverty by Jeffrey Sachs
- Who We Are and How We Got Here by David Reich
- The Omnivore's Dilemma by Michael Pollan
- Cosmos by Carl Sagan
- On the Origin of Species by Charles Darwin
- The Psychology of Money by Morgan Housel
- Orientalism by Edward W. Said
- Empire by Niall Ferguson
- Surrounded by Idiots by Thomas Erikson
- Million Dollar Weekend by Noah Kagan