Happily, the economist Paul Romer thinks on this scale. His theory is that economies change
for two, and only two, reasons. Developments in technology are the first, changing the
relationships between inputs and outputs, requiring new skills, and perhaps migrating
economic power from one geography to another. (It was a killer for Indonesia when ice
replaced spices as a preservative, and again when synthetic rubber was developed for tires.)
The other changes that reshape economies are those that modify rules. Romer cites the
example of how society changed its treatment of debtors—from throwing them in prison to
restructuring their finances in bankruptcy courts. It was a nonobvious rule change in any
community focused on retributive justice, but it clearly held benefits for all involved: In
response to a sunk cost, it put the focus on moving forward as productively as possible
instead of expending even more of society’s resources on incarceration and allowing no
possibility for repayment.
Romer and Christensen agree: People tend to cling to the rules they grew up with. That’s why
both thinkers advise cultivating change in a green field. For Christensen this means a
skunkworks in a company. Romer is experimenting with what he calls charter cities, taking a
vacant piece of land and founding a new community on the basis of best-practice rules and a
commitment to legal measures to enforce them. Along the same lines, PayPal founder Peter
Thiel has launched the Seasteading Institute to establish floating nation-states that operate
according to their own social, political, and legal systems.
The notion these innovators have independently conceived is a smart approach to effecting
big-system change. But let us point to another set of fields not so artificially created but just as green and much, much larger: the world’s emerging economies.