POLY-ECONOMIC NETWORKS PONDERINGS* : COMPREHENSION ESSAY

WHEN ADAM SMITH laid out the foundational principles of trade in the 18th century, he imagined a relatively simple world of binary relationships :
I make cheese, you make wine.

And by specializing in what each of us does best, we both end up better off.

That insight was revolutionary and still underpins our view [ except for President Trump ] that trade can be a win win proposition ].

BUT if Adam Smith were alive now, watching iPhones, mRNA vaccines, electric vehicles or advanced microchips get made, he wouldn't just update his theories - he would have to write a new book.

WHAT'S CHANGED? In a word : COMPLEXITY.

Today's economy is no longer primarily build on bilateral trade of bilateral trade of discrete goods between countries with clear borders and self-contained industries.

Instead, Eric Beinhocker, executive director of the Institute for New Economic Thinking at the Oxford Martin School, another of my tutors, points out that we now operate more and more inside global ecosystems, what he calls dynamic, '' interdependent webs '' of knowledge skills, technology and trust.

That explains why most trade today involves more than two countries. In summarizing a report it released in June, the Organization for Economic Cooperation and Development said, global supply chains now '' account for about 70 percent of international trade, as services, raw materials, parts and components cross borders - often multiple times.''

That weaves a complex web, where products are designed in one country, sourced with components from multiple others, manufactured still in a different place, assembled in yet another country, and tested in one more.

Adam Smith famously identified the division of labor as a huge productivity booster - you can make more pins with fewer workers if you divide up the labor correctly.

'' That was great,'' Beinhocker remarked to me in a column in February. But today, in the Polycene, '' the more powerful engine is the division of Knowledge.''

This Master Comprehension Essay is dedicated to the memory of Adam Smith.

!WOW! thanks Thomas L Friedman for his great writings.