Abraham Lincoln and Charles Darwin were both born on February 12, 1809. Lincoln is still the only president to hold a patent, which is a delightfully appropriate thing for the president who understood the importance of capital and the innovation and progress it could fund.
Key to the success of capital is compound interest. Anyone not properly impressed with the effect of compound interest over time either hasn’t learned to use a spreadsheet or is really hard to impress.
Investments that compound over time are impressive over the course of a 40 year career. They are mind boggling over the course of centuries. If you invest $5,000 a year for 40 years at 5 percent, you will have $640,000. After 250 years, $5,000 to which you added $5,000 and 5 percent each year has turned into $21 billion. Two hundred fifty years is not relevant to a life but is relevant to a country. The simplest explanation of why we are more prosperous than the people living in the US in 1800 is this matter of compound interest, which has been at work since the country’s founding.
Lincoln and the capitalists who were excitedly investing in big capital projects like canals, railroads, and factories realized the power of compound interest as key to creating wealth. They had the vision to see the importance of investing now to transform the future.
Darwin took this vision of compound interest to the next level. Selection was popular among farmers raising crops and animals. Darwin presented the idea that, much as farmers artificially select for certain traits, so does nature select. Natural selection drove evolution. The length and width of a finch’s beak could be naturally selected based on the island they lived on. Darwin studied this difference in the Galápagos Islands and from this drew the conclusion that with enough time, small differences could account for the differences between gorillas and orangutans, or humans and bonobos or bonobos and bananas. Indeed, all of life.
Today’s world is very much shaped by the realization of how differences compound, in finance or biology, Lincoln’s capitalism or Darwin’s evolution. Cumulative, incremental change transforms reality.
We can say that the information economy has brought us to the point where we understand ourselves as code—an expression of DNA. CRISPR technology lets scientists edit genes as they might computer code and promises breakthrough treatment for any number of genetic conditions. Companies are using AI to better understand emergent phenomena that lead to disease and other issues. The hope is that we can debug ourselves as we might an app. The natural selection that took millions of years could give way to something more intentional and much more rapid. For tens of thousands of years after the emergence of modern man, almost no economic progress was made. Then, after capitalists like Lincoln changed politics and policy, we had an acceleration in progress. With innovations like CRISPR, something similar could happen with biological evolution.
Lincoln got how incremental gains over decades could transform economic possibilities and helped to usher in policies to accelerate that. Darwin got how incremental gains over millennia could transform biological possibilities and today technologists are experimenting with ways to accelerate that.
It is Abraham and Charles' birthday. Both were able to see beyond the change of a lifetime to the transformation of continuously compounding, incremental change over generations. Life changing, you might say. Beyond our ability even to imagine.