Thus standard growth theory misses an essential feature of this "economic web" of goods and services. Even more important, as we shall explain, it ignores the role that the structure of the economic web itself plays in driving the creation of novelty and the evolution of future wealth.
Here is a simple example. Had a firm invested vast sums of money in 1910 to invent the television remote control—many years before the invention of the television, multiple channels, substantial programming and a substantial viewing audience—the TV remote would not have fit into any niche in the existing economic web. The invention would have been useless and unprofitable; it would have propelled neither investment nor the creation of wealth.
That case in point tells us that the structure and details of the economic web are themselves preconditions of the invention and investment that will effectively drive wealth creation. Furthermore, the novel good that fits into an economic niche thereby extends the economic web in new ways—creating new niches in what we call the "adjacent possible" of the economy and thereby inviting further invention, investment and wealth creation.
We tell a story that we hope is true (but is in any case illustrative). Some engineers were trying to invent the tractor. They knew they would need a massive engine block. So they mounted a massive engine block on a chassis... which promptly broke. They tried a succession of larger chassis, all of which also broke. At last one of the engineers said, "You know, the engine block is so big and rigid that we can make use of that rigidity and hang the rest of the tractor off of it. We can use the engine block itself as the chassis." And, in truth, that is how tractors are made (how formula racing cars used to be made).
The rigidity of the engine block that allowed it to be used as a chassis was the economic equivalent of what Charles Darwin called a "preadaptation" in biology. That is, rigidity was an unused causal feature of engine blocks, suddenly put to a novel functional use. Engine blocks are rigid for reasons that have nothing to do with their potential to become chassis, but because that rigidity existed, it preadapted them for that use. We believe such preadaptations are common in the evolution of the economy.
As another example, consider the modern linkage of computers, first invented to solve projectile trajectories in World War II, into a globe-spanning Internet. No one foresaw the Internet in 1948; the computer was nonetheless preadapted to that novel communications functionality.
The ways goods and services come to be used together in the real economy may not be describable in advance either. Cell phones were first introduced purely for voice communications; then text messaging emerged as a simple additional innovation. In Japan, where text messaging is free, people now write all kinds of documents that way, adding to the gross domestic product. Some best-selling novels there were written on their phones by schoolgirls.
Because it is impossible to identify all the preadaptations and potential economic uses for goods and services, it is impossible to finitely prestate all the possibilities for them. This conclusion has profound significance: it means that predicting future innovations is fundamentally incalculable, even on the basis of probability because no probability distribution can be assessed without knowing the range of possible outcomes. (And beyond economics, this principle may have equally radical consequences for much of the rest of science [see sidebar].)
Decision theory—the tool of management that suggests making optimal choices by summing discounted future values over the probability distribution of all possible outcomes—is of limited usefulness, as are businesses' five-year plans. We cannot deduce our lives; we must live them forward, as the philosopher Soren Kierkegaard said, even when we face unknowable uncertainty. Business, like life in general, is an art wherein we must use reason, intuition, emotion, metaphors, models, case studies and more to guide ourselves. Business is not a calculus. Thus, economics can only partially be a calculus, and a much broader conceptual framework is needed.