Viewpoints : THE MIND AS WEALTH : In the world’s new economic order, power and riches flow not from concrete, material things, but from knowledge.

I n his latest book, journalist, supply-side economic philosopher and Republican speech writer George Gilder traces the origins of the microelectronics revolution and draws parallels between the laws of quantum physics that govern microcircuitry and a new economic order.

Gilder passionately argues in “Microcosm: The Quantum Revolution in Economics and Technology” that this new economic era is guided by the same principles that govern the workings of matter at its most elementary level, an invisible world of electrons that he calls “the microcosm.”

According to Gilder, the foundation of these laws is the “simple truth” that all traditional notions of matter, whether drawn from Isaac Newton’s laws of physics or Adam Smith’s capitalist theory, are all destined to fail.

In the new order that Gilder sees, trade deficits don’t matter. And land, labor and capital become irrelevant. He maintains that power flows from knowledge rather than concrete, material “things.” In other words, this is an economic and technological era of “mind over matter,” an era in which the mind is the source of wealth.

Gilder says that the United States is well poised to outshine its competitors in this new era of science and economics because its economic and cultural system, which he contends has long favored the individual and entrepreneurs over the state and big business, is most in tune with microcircuit technology.

He elaborated on his views in the following question and answer interview with Times staff writer Carla Lazzareschi:

Question: Can you trace the evolution of your economic views and tell us how you came to see common underpinnings for both the silicon microcircuit and the world economy?

Answer: The notion springs from an intuition I had about 10 years ago that if you could fully and fundamentally understand the integrated circuit--its physics, chemistry, evolution and mechanics, you could discover something fundamental about the world’s economy.

I believe that the silicon chip is not the product of the evolution of conventional industrial technology. The chip is a radical new machine, and it teaches us radically new truths.

For a long time, people imagined that the first computers were just other machines. But there’s no relation between the early computers and the assembly of hundreds of transistors on something the size of a tip of a pin.

We need a new economic model because the computer has become the most important fundamental economic force. We have got to recognize this.

In the past, economics was a study and science of scarcity and the physical notions and properties that governed its technology: friction, entropy, land, labor, etc. But all of a sudden the world broke away from this into an entirely new arena.

Q: Your theories seem metaphysical. Is there any “there” to the notions that you’re describing?

A: Absolutely! My detractors will try to argue that what I’m espousing borders on a religion. But quite to the contrary.

What I am saying is quite specific.

The reality of the microcosm that I’m describing has become the most important reality in the world economy: Materialism and all the forces that flow from it have become radically less important.

In the old reality, materials, machines and related matters came first. Ideas were second. The order of the microcosm reverses this. What really generates wealth has nothing do do with natural resources; it has to do with imagination and creativity. You only have to compare, say, South Africa, Brazil and Nigeria to Hong Kong to see how true this is.

Q: What does this mean to the future economy and to microelectronics?

A: Information technology is often considered an abstract or secondary pursuit and is treated as though it weren’t real. Many people consider companies focusing on communicating information to be moving away from the guts of true economic forces and fundamental economic reality. But information technology isn’t any less real that manufacturing steel ingots.

Q: Was this new economic order possible before the discovery and understanding of quantum physics?

A: No. But we were slow in coming to terms with this reality. Quantum theory was discovered in 1906, but we still fought World War II out of notions of territoriality and nationalism.

Today there is an increasing pursuit of the microcosm throughout the world and in the United States. But at the same time, industrial leaders haven’t thought deeply about the implications of microelectronics on the world and the logic of the microcosm and what it means to their own business.

For example, IBM is still trying to use mainframe computers to control terminals. But the logic of the microcosm dictates the supremacy of powerful individual computers and networks of these computers rather than a hierarchy of computers. The master-slave computer systems are going to fail. The same is true of central broadcasting systems and slave television terminals.

Even though industrial leaders understand the nature of technology and the microcosm, they do not understand the larger laws being expressed in these laws, and they imagine that they can control their markets through building larger machines.

Q: It would appear that you believe all is well with the U.S. economic system, because its entrepreneurial and individualistic roots are closely aligned with what you say are the operations of the electronic world. Why do you think this?

A: All isn’t well. Our schools are pathetic. Our family structure is hurting. Schools and families are critical to the new economic ideas and unless we nurture these, we are doomed. Our resources are our thinking.

The Japanese don’t have a hedonistic view of life. They understand that life is about overcoming obstacles, not accumulating pleasures.

Still, we have many advantages over the Japanese. Our entrepreneurial culture, our openness to immigrants, our venture capital movement and the emancipation of the individual’s creativity are all values that have been and will continue to be critical to our success. But they can be readily squandered by excluding immigrants from entering the country and by teaching such things as sex education, driver’s education and Indian rights instead of calculus and physics. This is frivolous stuff that you don’t need to teach in high school.