An Algorithm for the Economy

I've been reading quite a bit of Brian Arthur's writing lately. He's a "complexity economist" from the Santa Fe institute and a pretty interesting all around thinker. Need to put together a bigger writeup of his ideas, but wanted to share his steps on how technology forms the economy around itself from his book Complexity and the Economy:

The steps involved yield the following algorithm for the formation of the economy. 1. A novel technology appears. It is created from particular existing ones, and enters the active collection as a novel element. 2. The novel element becomes available to replace existing technologies and components in existing technologies. 3. The novel element sets up further “needs” or opportunity niches for supporting technologies and organizational arrangements. 4. If old displaced technologies fade from the collective, their ancillary needs are dropped. The opportunity niches they provide disappear with them, and the elements that in turn fill these may become inactive. 5. The novel element becomes available as a potential component in further technologies—further elements. 6. The economy—the pattern of goods and services produced and consumed—readjusts to these steps. Costs and prices (and therefore incentives for novel technologies) change accordingly.