---
type: claim
id: products-are-crystals-of-imagination-embodying-knowledge-beyond-creators
title: "Products are physical embodiments of knowledge and imagination that propagate human capabilities beyond the creators presence and lifetime"
status: published
confidence: established
description: "Hidalgo's information theory of value: a Ferrari and its wreckage contain identical atoms, the difference is entirely informational"
domain: mechanisms
importance: null
source: "Hidalgo 2015 Why Information Grows"
created: 2026-04-21
related:
  - personbyte-limit-constrains-product-complexity-to-network-size
  - economic-path-dependence-early-technological-choices-compound
  - doubly-unstable-value-prices-and-relevance-shift-independently
tags:
  - information-theory
  - knowledge
  - economic-development
  - complexity
---

Cesar Hidalgo argues that in a fundamental sense, the only thing our economy produces is information — physical order imposed on matter. A Ferrari and the wreckage of a Ferrari contain identical atoms. The difference is entirely informational: the arrangement of those atoms embodies knowledge about aerodynamics, combustion, metallurgy, and ergonomics that took thousands of specialists decades to accumulate. Destroying that arrangement destroys the information, and with it the value.

Products are unique among physical objects because they must be conceptualized before they can be created. Every other complex structure in nature — organisms, ecosystems, geological formations — evolves through trial and error without prior imagination. Products are dreamed up in minds before they exist in matter. Hidalgo calls them "crystals of imagination" to capture this: they are the solidification of human thought into physical form.

The economic consequence is that products function as capability amplifiers. Planes give you flight, ovens give you cooking, antibiotics give you immune defense — without requiring you to understand aerodynamics, thermodynamics, or microbiology. Markets make us "wiser, not richer" because they give each individual indirect access to the practical knowledge accumulated across the entire species. Every product you use represents thousands of person-years of specialized learning that you benefit from without possessing.

This framing redefines what economic development actually produces: not goods, but increasingly dense packages of embedded knowledge that augment the capabilities of everyone who uses them. The trajectory of economic progress is toward packing more knowledge into each product, which is why a smartphone (crystallizing knowledge from materials science, electromagnetic theory, software engineering, optics, and human-computer interaction) is more valuable than a stone axe despite being made of cheaper materials.

The creation of these crystals requires a specific input: accumulated knowledge and knowhow in individuals and networks. Knowledge (explicit, transferable — "attacking Russia in winter is catastrophic") is distinct from knowhow (tacit, embodied — "the surgeon's steady hand after 10,000 hours"). Both are necessary, and both face fundamental bottlenecks in accumulation and transmission that constrain what any economy can produce.
