The Origin of Wealth

Imagine sitting with a Maasai elder in a remote village, surrounded by a simple hunter-gatherer economy measured in cattle. For millennia, this was the extent of human wealth—limited, tangible, and rooted in nature. Yet, as you peer out beyond the village, the world today dazzles with an unimaginable variety of goods and services. The journey from that sparse economic landscape to the bustling complexity of modern cities is not just a story of accumulating money but a profound explosion in economic complexity.

For nearly 2.5 million years, human economic activity grew at a glacial pace. The first stone tools marked the dawn of our economic journey, and for most of this time, societies resembled the Yanomamö tribe—simple, with limited products and services. The average income then was around $90 per person per year, with economies offering only a few hundred stock keeping units (SKUs), the measure of product variety.

Contrast this with the modern economy, where an average New Yorker enjoys an income many hundreds of times greater and access to tens of billions of SKUs. This is an explosion in economic diversity by a factor of one hundred million, a testament to the intricate web of innovation, trade, and organization that defines modern life.

This vast growth in complexity did not happen smoothly. For most of human history, economic growth was incremental at best. But in the last 250 years, coinciding with the Industrial Revolution, wealth and complexity soared almost vertically. This rapid leap reflects how new technologies, social structures, and business models have coalesced to create unprecedented prosperity.

The economy is humanity’s most complex creation. Every moment, trillions of decisions—by producers, consumers, governments, and institutions—interact in a self-organized dance without any central planner. This system coordinates itself, adapting and evolving, producing the goods and services that sustain billions. Understanding this complexity is key to grasping how wealth originates and grows.

Economic growth is less about accumulating money and more about the explosion of economic complexity that transforms societies. This insight sets the stage for exploring how traditional economic theories fall short and why a new perspective is essential. Let us now delve into how the classical equilibrium view of economics shaped our understanding and where it begins to falter.