6 ideas
New technologies are built by combining existing technologies as components, so the set of possible new technologies grows with the number of existing ones. This makes technology self-creating: each new element becomes a building block for further combinations, and the collective grows out of itself the way a coral reef builds on its own past.
At its core every technology captures and exploits some natural effect, such as the fact that certain crystals oscillate at a fixed frequency or that fuel burns and releases energy, and puts it to use for a purpose. Discovering new phenomena, often through science, opens families of technologies that could not have existed before, which makes the stock of known phenomena a binding constraint on what can be built.
A technology is made up of assemblies and subassemblies that are themselves technologies, each built around its own principle and its own phenomena, all the way down to basic elements. A jet engine contains compressors, turbines, and fuel systems, and each of these is a technology with its own components, so the same logic of design, improvement, and evolution applies at every level of the hierarchy.
Invention is the process of finding a principle, meaning a base concept of using some effect, that can meet a given need, and then solving the subproblems that principle creates through a recursive chain of further solutions. Radical novelty comes from a new principle rather than a better component, and the inventor's advantage lies in a deep repertoire of known effects and functional solutions to draw on.
Technologies cluster into domains such as electronics, biotech, or digital computation, which are toolboxes of mutually compatible components and practices that designers 'speak' like a language. Major economic change comes less from single inventions than from redomaining, where existing activities get re-expressed in a new domain's vocabulary, as when banking and commerce were rebuilt in digital form.
The economy is not a container into which technologies are placed but the set of arrangements and activities that its technologies make possible, so it forms out of its technologies and changes as they change. Each new technology creates problems and opportunities that call forth further technologies, which keeps the economy perpetually open, restructuring, and never settled into equilibrium.