Must-read.
Congrats to Paul Romer.
Lars P. Syll's Blog
Paul Romer gets the 2012 Nobel Prize in economicsLars Syll | Professor, Malmo University
The most important understanding here is the difference between diminishing returns in deploying physical resources and increasing returns in deploying knowledge resources with respect to scalability. Ray Kurzweil develops this in his concept of <a href="http://www.kurzweilai.net/the-law-of-accelerating-returns">accelerating returns</a>
Also, that which is physically limited and particular is rival, whereas what is not limited physically and is universal is non-rival — unless legislated as rival through intellectual property rights, the current push being toward privatizing new knowledge that can be monetized. This is evoking huge push-back globally and is unlikely to be successful without an extension of imperialism.
This similar to what I have alluded to previously, e.g., Bucky Fuller's distinction between physical and metaphysical resource, the physical being limited and particular, and the second virtually unlimited and universal. The physical is scalable only with significant expenditure of physical energy and transaction cost, whereas the metaphysical is easily scale with low energy requirements and transaction cost.
Even though rationality is bounded, the boundaries are unknown and, given the present state of human knowledge, unknowable. As Aquinas observed, knowledge is in terms of the mode of knowing of the knower.
Thus, the question becomes whether it is possible to expand the container of knowledge in addition to the contents. There is reason to believe there is.