This is the Cato Daily Podcast for Thursday, December 12, 2013. I'm Caleb Brown.

Creativity creates wealth and the rules that govern how that creativity may express itself is critically important.

So says George Gilder in his new book, Knowledge and Power.

We spoke following a forum for the book held last week.

The focus of the book is on creativity,

which is the source of all the advance of capitalism.

I mean, we have the same material resources

that were commanded by the Neanderol in this cave. Physics tells us that material is

conserved. All the wealth that's been generated that differentiates us from the Stone Age

is the accumulation of knowledge and knowledge accumulates through learning and learning

accumulates through the creation of new information and information is measured as surprise and and that's the

great tie between information theory and capitalism because creativity

always comes as a surprise to us. If it didn't, we wouldn't need it. And socialism would work,

planning would work. But because information itself is surprise,

as Claude Shannon described it in 1948.

Unexpected bits, surprising, and what he called entropy defines information and

Surprisal defines human creativity and entrepreneurial achievement.

The difference here, you're talking about socialism versus capitalism, I guess why does

it matter?

Well it matters that we don't sink back to the Stone Age as centralized systems do.

I mean, if you really have a totalitarian regime,

it can't change, it can only decay.

...