Charles Babbage: Compound Cash
on Thursday, December 26, 2019Charles Babbage Money Quote saying gaining a store of knowledge can be more valuable than gaining accumulation of cash and produces greater gains. Charles Babbage said:
“Remember that accumulated knowledge, like accumulated capital, increases at compound interest: but it differs from the accumulation of capital in this; that the increase of knowledge produces a more rapid rate of progress, whilst the accumulation of capital leads to a lower rate of interest. Capital thus checks it own accumulation: knowledge thus accelerates its own advance” — Charles Babbage
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Charles Babbage is highlighting how knowledge and capital accumulate differently over time. He notes that as knowledge accumulates, the rate of progress accelerates, meaning new discoveries and innovations build upon past knowledge at an ever-faster pace.
In contrast, as capital accumulates, the rate of interest decreases. So the accumulation of capital itself leads to a slowing of future accumulation. In other words, knowledge begets more knowledge in a compounding way, while capital constrains its own growth.
By pointing this out, Babbage seems to be emphasizing the importance of continual learning and knowledge advancement as a driver of long-term social and economic progress.
A little more about Charles Babbage:
Charles Babbage was a British mathematician, philosopher, inventor and mechanical engineer who originated the concept of a programmable computer.
In the early 1800s, he designed the “Analytical Engine,” which had the core components of a modern computer – memory, arithmetic logic, and control.
While it was never completed in his lifetime, the Analytical Engine is considered a pioneering achievement that laid the foundations for later developments in computer engineering.
Babbage is thus widely regarded as a father of the computer, for conceptualizing how algorithms could be processed by a mechanical machine.