Condoleezza Rice on German Reunification

'I Preferred To See It as an Acquisition'

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In a SPIEGEL interview, former United States Secretary of State Condoleezza Rice discusses America's fight for German reunification, Soviet leader Mikhail Gorbachev's woes at the time, Chancellor Helmut Kohl's merits and the later mistakes of his successor, Gerhard Schröder.

SPIEGEL: Madame Secretary, when the Berlin Wall fell in 1989, European nations like Great Britain and France were very worried about the prospect of German unification. America was the only country that didn't appear to be concerned. Why not?

Condoleezza Rice: The United States -- and President George H.W. Bush -- recognized that Germany had gone through a long democratic transition. It had been a good friend, it was a member of NATO. Any issues that had existed in 1945, it seemed perfectly reasonable to lay them to rest. For us, the question wasn't should Germany unify? It was how and under what circumstances? We had no concern about a resurgent Germany, unlike the British or French.

SPIEGEL: Because a unified German was in America's strategic interest?

Rice: If you were going to have a Europe that was whole and free, you couldn't have a Germany that was divided. So, with the possibility that Soviet power was going to be receding from Europe, it made perfectly good sense to try to achieve reunification on terms that nobody would have thought thinkable, even four or five years before.

SPIEGEL: When did you start believing that unification might be possible?

Rice: As soon as I saw the stirrings in Eastern Europe in August or September of 1989. We were in Poland and Hungary in July of that year, and it was pretty clear that Communist power was done. We felt that it was eventually going to collapse in East Germany, too.

SPIEGEL: Not very many Germans were even thinking about the possibility of reunification at that early stage.

Rice: I went to Germany in October (shortly before the fall of the wall) for a trans-Atlantic conference, one of these dull affairs that were usually taken up with debates on short-range nuclear missiles. But all of a sudden, this conference was now Germans talking to Germans about the prospects for Germany moving forward, and you could just feel in the air that something fundamental had changed. This was about three weeks before the fall of the wall.

SPIEGEL: Aren't you overstating the early US enthusiasm for the unification project? President Bush openly admitted he was rather indifferent to the question of unification.

Rice: We advisers were trying to push the president to really say something about unification, because as events were unfolding in Eastern Europe it was clear something was going to happen.

SPIEGEL: But he remained silent.

Rice: President Bush Senior was and is a cautious man. He did not want to provoke a response from the Soviet Union.

SPIEGEL: Bush made no official statements about the prospect of a united Germany, not even after the Berlin Wall came down. What did he say in private?

Rice: He was very clear that we Americans were going to stand for unification. In those first comments to press people in the Oval Office, the day the wall fell, he was cautious not out of any view that Germany shouldn't unify but that this was not the time for the American president to make bold statements. In internal deliberations, however, the president never tried in any way to prevent German unification. He was quite comfortable with it.

SPIEGEL: But Americans insisted on full NATO membership for the unified Germany. It was very unlikely that Gorbachev would swallow this. Weren't the Americans trying to block reunification this way?

Rice: No. But we couldn't afford in the end game of the Cold War to make a bad misstep. And a really bad misstep would have been to pull Germany out of NATO, which would have collapsed the most important platform for the American presence in Europe.

SPIEGEL: But who could really believe that the Russians would ever agree to that?

Rice: There were debates in the American foreign policy establishment that maybe both the Warsaw Pact and NATO should go away. But we at the White House never considered the possibility of unifying Germany outside of NATO. It would have meant that at the last minute, with everything going our way, the United States capitulated on the essential thing in terms of the American presence in Europe.

SPIEGEL: Were you concerned that Chancellor Kohl might not agree to German NATO membership?

Rice: The president knew that the one thing he had to do was to get Chancellor Kohl to go out and say that Germany would unify in NATO. After a meeting with him at Camp David in February of 1990, Bush knew that Kohl would agree to this.

SPIEGEL: Did the chancellor have a choice?

Rice: It wasn't explicit that the United States would not support German unification unless Germany were unified in NATO. But we left no doubt in the minds of our German colleagues that we expected Germany to be unified in NATO. As to whether the Soviet Union would accept it, you had to slowly but surely bring the Russians to that perspective.

SPIEGEL: So how could you force the Germans to become a NATO member? Could they not have decided to remain neutral?

Rice: We believed Helmut Kohl did not want to remain neutral. We believed that he wanted to be a member of NATO.

SPIEGEL: But you didn't give him any choice.

Rice: As a foreign policy actor, you have to have a view of your interest and you have to try to pursue it. America's interests were that Germany would be united in NATO.

SPIEGEL: So national interests trump the peoples' right to self-determination?

Rice: No. If the Germans had come and said, "We don't want to be a part of NATO," I guess we would have had to accept that.

SPIEGEL: And what would have happened then?

Rice: Fortunately, we didn't have to accept that.

SPIEGEL: But you must have had a Plan B.

Rice: No, there was no Plan B. It was to make Plan A work. We also believed that it was a way to make the French and the British less concerned about German unification, because what was the original purpose of NATO? It was to defend against the Soviet Union, but it was also to give the democracies of Europe a collective security umbrella. No one in the White House was planning for anything but the unification of Germany within NATO.

SPIEGEL: How could you be sure that Gorbachev would agree in the end?

Rice: We couldn't. We had to just work to make it possible for him to accept it. When he came to Washington in May 1990, we actually mentioned the right to self-determination to him. We said the Germans had chosen to become NATO members and should he not accept this?

SPIEGEL: He suddenly did. Did that surprise you?

Rice: I couldn't believe it when Gorbachev made that statement. Right after it happened, during the meeting at the White House, we advisers passed a note to President Bush that said, "Get him to say it again." So President Bush said, and I'm paraphrasing here, "Let me just be sure that we both understand. You have said that under the Helsinki Accords, countries have the right to self-determination concerning your alliances." And Gorbachev said yes again.

SPIEGEL: What do you think caused his change of mind?

Rice: That to me is the most remarkable question. We weren't sure whether Gorbachev wasn't prepared for that particular line of argument and just restated what's true in Helsinki without thinking about its implications for Germany -- or whether he decided he wasn't going to be able to stop it and now was the time to show flexibility. Even his aides were taken aback.

SPIEGEL: Were you concerned he might try to take the statement back?

Rice: That night I went to the Soviet ambassador in Washington and said that in the press conference tomorrow morning President Bush is going to say that President Gorbachev and he agree that countries have the right to self-determination in terms of their alliances. I basically told him, "Call us if you have a problem with that." And I waited all night for them to call and say "No, that's not what he said." They never did. President Bush said the line in the press conference. Gorbachev just stood there.

SPIEGEL: Was he in so much trouble domestically that he just gave up?

Rice: So much was going against the Russians. There is a conversation in 1989 between Egon Krenz (the last East German Communist leader) and Gorbachev that I came across. Krenz says to Gorbachev, "So when are you going to defend the German Democratic Republic?" He calls Gorbachev to inform him that they owe West Germany billions of deutsche marks and they had not known it until now. Basically, it's a request for a bailout. And Gorbachev effectively says to him: I now have to worry about the Soviet Union; you're on your own.

Part 2: Gorbachev's Biggest Mistake: 'He Was a True Believer in the Soviet Union'

SPIEGEL: Kohl's point was always that the NATO problem could be solved by throwing money at the Russians.

Rice: I never believed that. Gorbachev is a complex man, but his biggest mistake was that he was a true believer in the Soviet Union. He was really convinced that if you got rid of Stalinism and you got rid of coercion, then it would emerge as the modern communist state. I think he could not be bought.

SPIEGEL: Did Moscow even follow any kind of strategy during the negotiations over reunification?

Rice: The Soviet Union was so disoriented that they couldn't define where their interests really were. We had an arms control discussion with the Russians about a month after this May meeting, and the general staff was holding to questions about intermediate range cruise missiles. I remember thinking: your power has been completely destroyed in Europe. The Warsaw Pact has collapsed. Germany is about to unify. And you're worried about the 600-kilometer range of cruise missiles?

SPIEGEL: But you did not want to provoke the Russians.

Rice: Definitely not. We were trying to avoid confrontation with the Soviet Union and any triumphalism. We did not want to put Gorbachev in a position where he had to say no.

SPIEGEL: Kohl wanted to quickly push through an economic and social union. At the end of 1989, then-US Secretary of State James Baker also traveled to East Berlin and seemed to warn against a rushed reunification process. Did the speed with which Kohl acted worry you?

Rice: I don't think we were worried that Chancellor Kohl was pushing too fast. As a matter of fact, by the time the wall fell, I felt we had to go as fast as possible because the window was a very narrow one. The Soviet Union had to be strong enough to sign away its powers and rights but not strong enough to stop it. If you just do the thought experiment and you think a year later when effectively the Soviet Union collapses, would you have been able to do German unification under those terms? We felt it should move very, very fast.

SPIEGEL: Still, you were not happy that Kohl did not consult with you before presenting his 10-Point Plan in the Bundestag in November 1989.

Rice: The problem with the 10 points was we didn't know they were coming.

SPIEGEL: Not even President Bush knew about them in advance?

Rice: No, I don't think anybody knew.

SPIEGEL: What was your reaction when you heard about it?

Rice: I don't think the 10 points were particularly troubing in substance, but we were unhappy. We felt that this was going to have to be very carefully choreographed between the United States and Germany. We didn't know that the chancellor was going to do 10 points and that left us in an untenable position.

SPIEGEL: Did the White House call Kohl to ask him to come to his senses?

Rice: I think that Bush's National Security Advisor Brent Scowcroft phoned his German counterpart Horst Teltschik and said: "How could this appear without us knowing?" I think the Germans said they had consulted somehow and they'd let us know, but nobody that I know remembers having been consulted.

SPIEGEL: Was that the only time in the whole process that you weren't informed about something important?

Rice: Yes. Going forward we never had that problem again.

SPIEGEL: Were you concerned that Chancellor Kohl might not get reelected in the parliamentary elections for a reunited Germany in 1990?

Rice: We definitely wanted Helmut Kohl to win again.

SPIEGEL: Because you were afraid of a potential chancellor Oskar Lafontaine?

Rice: We were pretty clear about where Helmut Kohl stood. And that was important. Germany was about to unify. That seemed unthinkable for so long -- and you sure don't want anything to go wrong with a German chancellor who suddenly might decide that maybe Germany ought to unify more slowly or in some kind of transitional way. The details mattered. Membership in NATO mattered. The speed mattered.

SPIEGEL: And that would have been jeopardized under a Chancellor Lafontaine?

Rice: It's inconceivable that any German chancellor could have said, "I don't want Germany to unify." But it is conceivable that you could have had some long transition or a scenario where West Germany is not the surviving state and East Germany goes away, which was how we viewed unification. We had similar concerns about German Foreign Minister Hans-Dietrich Genscher, who also seemed to think of the unification process as more of a merger. I preferred to see it as an acquisition.

SPIEGEL: Did you consider Helmut Kohl to be a weak chancellor at the time?

Rice: I know there were questions about him in Germany, but sometimes if you act like a strong chancellor, you are a strong chancellor. He acted very strong in the face of what was happening.

SPIEGEL: Overall, how would you characterize his role?

Rice: I think it was dynamic, and it was visionary, and it was both politically risky and politically correct what he did -- right down to the question about the one-for-one exchange rate between the deutsche mark (in West Germany) and the ostmark (in East Germany). I know many financial and economic experts have criticized that move. But I think Chancellor Kohl saw it politically. The "Allianz für Deutschland" in the East had to win that first election in East Germany so that the Allianz and the CDU/CSU could outline the terms of German unification. I actually think that the one-for-one exchange was politically one of the most brilliant strokes in the whole period.

SPIEGEL: In retrospect, what would you have done differently during the negiations about the unification process?

Rice: I'm sure there were small tactical things that could have been done differently, but how could it have come out better? Germany fully integrated and united with its democratic institutions intact, integrated in Europe, integrated in NATO and the American presence is secure in Europe.

SPIEGEL: But the economic price was steep. Did anyone foresee the miserable shape of the East German economy?

Rice: No. I was an East Europeanist, and the GDR was always held up as the most successful of the East European states. It looks like the East Germans themselves didn't know how bad the situation was and how much money they owed.

SPIEGEL: Could the relationship with Russia have been handled differently? Twenty years later, Moscow still appears resentful over the outcome.

Rice: I think the Russian frustration dates more to the collapse of the Soviet Union and the period in the early 1990s when many Russians saw the privatization of the Boris Yeltsin years as deprivation and humiliation and chaos. It is a troubled country and it has not found a sustainable post-imperial identity.

SPIEGEL: As George W. Bush's national security advisor, you expressed frustration with then-Chancellor Gerhard Schröder's opposition to the Iraq war. Did you perceive the Germans as being ungrateful?

Rice: Allies have a right to disagree. My only disappointment about Iraq was the picture of the German chancellor standing with the French president and the Russian president to protest the war. I have no problem with Germany disagreeing, but the Russian president should not have been standing there, given our history. Friends disagree, but symbols matter.

SPIEGEL: Did the united Germany turn out to be the US ally that you hoped it to be?

Rice: Germany is a terrific ally and an ally whose role is still evolving. I find it remarkable what Germany has done in Afghanistan. I understand the debate about caveats, etc. -- but given where Germany was even 10 years ago, it is amazing that Germany's role has evolved that much. No, I think Germany is a really good ally.

SPIEGEL: Madame Secretary, we thank you for this conversation.

Interview conducted by Marc Hujer and Gregor Peter Schmitz

China's Next Leap Forward

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The jump from middle-income to rich status is much harder to achieve than the ascent from poverty. But there are plenty of reasons to believe China's growth prospects remain strong.

By GARY S. BECKER WSY

I just spent two weeks lecturing in China and Hong Kong, and discussing China's economic development with many economists, businessmen and government officials. China's progress since my first trip there in 1981 has been truly remarkable, and I expect considerable growth during the next decade. Nevertheless, China still faces many challenges if it is to move beyond middle-level income status into the exclusive club of high per capita income countries.

No country in the modern world has managed persistent economic growth without considerable reliance on private enterprise and decentralized private markets. All centrally planned economies failed to achieve sustained development, including the Soviet Union before its collapse, China before market reforms began in the late 1970s, and Cuba since Castro's revolution in the late 1950s.

China's private sector has led its dominance in textiles, electronics, and other consumer and producer goods. It's followed the model of the "Asian Tigers"—Hong Kong, Singapore, South Korea and Taiwan—and relied heavily on exports produced with cheap labor. In the process, China has accumulated enormous reserves, as Taiwan, Japan and other rapidly growing Asian economies did in past decades.

Poorer countries like China need not get everything "right" to grow rapidly through exports to richer countries. They need only have some strong sectors that use world markets to fuel overall growth. Japan's rapid growth from the 1960s-1980s was led by a highly efficient manufacturing sector. Yet at the same time Japan also had a large and inefficient service sector, and an agricultural sector that was riddled with subsidies and inefficient incentives.

Similarly, China's economy still has a glut of state-owned enterprises (SOEs) with excessive employment and low productivity. Their importance has fallen over time, but Chinese economists estimate that they still control about half of nonagricultural GDP. One crucial example is the state-controlled financial sector that makes cheap loans to other large, inefficient and unprofitable state enterprises. China's economy also suffers from extensive price controls, restrictions on migration, and many other structural barriers to efficient growth.

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David Gothard

Some democracies, like postwar Japan, have made the economic reforms needed for sustained economic progress. India, for example, experienced rapid growth after it began in 1991 to shed a socialist orientation and encourage private investment and private initiative. But economic progress has been swift under autocratic rule as well, including in Chile under Augusto Pinochet, Singapore under Lee Kuan Yew, and Taiwan under Chang Kai-shek. Usually, however, personal freedom has grown along with rapid economic progress in autocratic governments. Chile, Taiwan and South Korea, for example, all became vibrant democracies after they'd grown rapidly for a number of years.

Something related has happened in China. The degree of personal freedom in China today is enormously greater than in 1981, when the vast majority of the population had essentially no personal freedoms. The Internet, in particular, has given hundreds of millions of Chinese access to all kinds of information, including what happens in democracies, and various criticisms of their government's policies. The government actively tries to censor the Internet, but these censors are easily bypassed. Students and others say they readily "climb the wall" by using cheap software (appropriately, made in America) that gives them direct access to the Internet in Hong Kong and hence avoids the censors.

I do not know how soon China will evolve into a political system with competing parties, or whether China will continue to have effective leadership under its single-party structure. But as the economy continues to develop it will be impossible to prevent personal freedoms from expanding, including the freedom to criticize economic and social policies.

Global markets allow poor countries to grow rapidly for a while, but it is far more difficult to grow beyond middle-income levels. Much has been made of the fact that a month ago China's aggregate GDP surpassed that of Japan. But all that means is China's per capita income is about 10% of Japan's, since China's population is about 10 times that of Japan. Despite its great economic advances, China still has a long way to go to become a rich country.

China's locally owned government enterprises have been more efficient than national enterprises. This is mainly because local government enterprises have to compete against each other, whereas national enterprises often receive monopoly positions. But competition among government enterprises is a partial substitute for competition among privately owned enterprises. If China wants to continue to grow rapidly it will have to reduce the scope of the SOEs, especially the national ones, and greatly expand the private sector in finance, telecommunications and many other fields.

Developing countries improve their technological base by importing technologies and knowledge developed in advanced countries. China has encouraged direct foreign investment in part to get access to the technologies of Japan, the U.S., Germany and other nations. Using technologies developed by others is still important after countries advance to middle-income levels, but these countries must then also develop more of their own technologies to advance much further.

To accomplish this transition, China has been promoting university enrollments and a growing R&D sector. University attendance in China has grown greatly since the late 1990s, propelled by rapid increases in the earnings of individuals with higher education. China is innovating more, but it is still a long way behind the U.S., Japan and other rich countries.

As for China's currency, it's true that the yuan is considerably undervalued due to Beijing's continued intervention in foreign-exchange markets. But the undervalued yuan is a gift to American and other consumers outside China because it makes goods produced in China much cheaper.

In effect, China sells goods cheaply to the rest of the world and receives in return U.S. and other paper assets that pay almost no interest, and will depreciate in value when inflation rates increase in the U.S. These are the main reasons why China should move toward floating the yuan.

Many Chinese officials believe that substantial yuan appreciation will make the SOEs even less competitive, thereby increasing unemployment and social unrest as these enterprises contract. Yet an undervalued currency not only leads to a further accumulation of paper assets but also weakens the incentives of Chinese companies to cater to domestic consumption—which is remarkably weak—and to upgrade their exports to higher quality products.

There is tremendous pride and enthusiasm among Chinese regarding their economic achievements, and a growing confidence that China is returning to its great-country status of centuries ago. This is reflected in the enormous energy of its professionals, entrepreneurs and workers. It is also reflected less attractively in the more aggressive stance of China toward Japan and other neighbors.

Yet with some enlightened leadership, along with greater faith in competition and private markets, China's prospects for continued growth—and for rapid improvements in the circumstances of the children and grandchildren of the present generation—are strong.

Mr. Becker, the 1992 Nobel economics laureate, is professor of economics at the University of Chicago and senior fellow at the Hoover Institution.

The Genius of the Tinkerer- The secret to innovation is combining odds and ends,

By STEVEN JOHNSON - WSJ

In the year following the 2004 tsunami, the Indonesian city of Meulaboh received eight neonatal incubators from international relief organizations. Several years later, when an MIT fellow named Timothy Prestero visited the local hospital, all eight were out of order, the victim of power surges and tropical humidity, along with the hospital staff's inability to read the English repair manual.

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nerdbots.net

Nerdbots are assembled from found objects. Like ideas, they're random pieces connected to create something new.

Mr. Prestero and the organization he cofounded, Design That Matters, had been working for several years on a more reliable, and less expensive, incubator for the developing world. In 2008, they introduced a prototype called the NeoNurture. It looked like a streamlined modern incubator, but its guts were automotive. Sealed-beam headlights supplied the crucial warmth; dashboard fans provided filtered air circulation; door chimes sounded alarms. You could power the device with an adapted cigarette lighter or a standard-issue motorcycle battery. Building the NeoNurture out of car parts was doubly efficient, because it tapped both the local supply of parts and the local knowledge of automobile repair. You didn't have to be a trained medical technician to fix the NeoNurture; you just needed to know how to replace a broken headlight.

For the Wall Street Journal's 10th annual Tech Innovation Awards, Taiwan's Industrial Technology Research Institute received the Gold award for its technology to make paper-thin computer screens with a twist. The company beat out nearly 600 entries for its top ranking, along with Silver-award-winner Zoom Focus and Bronze-winner Counsyl of Silicon Valley.

The NeoNurture incubator is a fitting metaphor for the way that good ideas usually come into the world. They are, inevitably, constrained by the parts and skills that surround them. We have a natural tendency to romanticize breakthrough innovations, imagining momentous ideas transcending their surroundings, a gifted mind somehow seeing over the detritus of old ideas and ossified tradition.

But ideas are works of bricolage. They are, almost inevitably, networks of other ideas. We take the ideas we've inherited or stumbled across, and we jigger them together into some new shape. We like to think of our ideas as a $40,000 incubator, shipped direct from the factory, but in reality they've been cobbled together with spare parts that happened to be sitting in the garage.

The Genius of the Tinkerer

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Graver

As a tribute to human ingenuity, the evolutionary biologist Stephen Jay Gould maintained an odd collection of sandals made from recycled automobile tires, purchased during his travels through the developing world. But he also saw them as a metaphor for the patterns of innovation in the biological world. Nature's innovations, too, rely on spare parts.

Evolution advances by taking available resources and cobbling them together to create new uses. The evolutionary theorist Francois Jacob captured this in his concept of evolution as a "tinkerer," not an engineer; our bodies are also works of bricolage, old parts strung together to form something radically new. "The tires-to-sandals principle works at all scales and times," Mr. Gould wrote, "permitting odd and unpredictable initiatives at any moment—to make nature as inventive as the cleverest person who ever pondered the potential of a junkyard in Nairobi."

You can see this process at work in the primordial innovation of life itself. Before life emerged on Earth, the planet was dominated by a handful of basic molecules: ammonia, methane, water, carbon dioxide, a smattering of amino acids and other simple organic compounds. Each of these molecules was capable of a finite series of transformations and exchanges with other molecules in the primordial soup: methane and oxygen recombining to form formaldehyde and water, for instance.

Think of all those initial molecules, and then imagine all the potential new combinations that they could form spontaneously, simply by colliding with each other (or perhaps prodded along by the extra energy of a propitious lightning strike). If you could play God and trigger all those combinations, you would end up with most of the building blocks of life: the proteins that form the boundaries of cells; sugar molecules crucial to the nucleic acids of our DNA. But you would not be able to trigger chemical reactions that would build a mosquito, or a sunflower, or a human brain. Formaldehyde is a first-order combination: You can create it directly from the molecules in the primordial soup. Creating a sunflower, however, relies on a whole series of subsequent innovations: chloroplasts to capture the sun's energy, vascular tissues to circulate resources through the plant, DNA molecules to pass on instructions to the next generation.

INSPIRATION POINT

Big new ideas more often result from recycling and combining old ideas than from eureka moments. Consider the origins of some familiar innovations.

Double-entry accounting

One of the essential instruments of modern capitalism appears to have been developed collectively in Renaissance Italy. Now the cornerstone of bookkeeping, double-entry's innovation of recording every financial event in two ledgers (one for debit, one for credit) allowed merchants to accurately track the health of their businesses. It was first codified by the Franciscan friar Luca Pacioli in 1494, but it had been used for at least two centuries by Italian bankers and merchants.

Gutenberg press

The printing press is a classic combinatorial innovation. Each of its key elements—the movable type, the ink, the paper and the press itself—had been developed separately well before Johannes Gutenberg printed his first Bible in the 15th century. Movable type, for instance, had been independently conceived by a Chinese blacksmith named Pi Sheng four centuries earlier. The press itself was adapted from a screw press that was being used in Germany for the mass production of wine.

Air conditioning

AC counts as a rare instance of innovation through sheer individual insight. After summer heat waves in 1900 and 1901, the owners of a printing company asked the heating-systems specialist Buffalo Forge Co. for a way to make the air in its press rooms less humid. The project fell to a 25-year-old electrical engineer named Willis Carrier, who built a system that cooled the air to a temperature that would produce 55% humidity. His idea ultimately rearranged the social and political map of America.

The scientist Stuart Kauffman has a suggestive name for the set of all those first-order combinations: "the adjacent possible." The phrase captures both the limits and the creative potential of change and innovation. In the case of prebiotic chemistry, the adjacent possible defines all those molecular reactions that were directly achievable in the primordial soup. Sunflowers and mosquitoes and brains exist outside that circle of possibility. The adjacent possible is a kind of shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself.

The strange and beautiful truth about the adjacent possible is that its boundaries grow as you explore them. Each new combination opens up the possibility of other new combinations. Think of it as a house that magically expands with each door you open. You begin in a room with four doors, each leading to a new room that you haven't visited yet. Once you open one of those doors and stroll into that room, three new doors appear, each leading to a brand-new room that you couldn't have reached from your original starting point. Keep opening new doors and eventually you'll have built a palace.

Basic fatty acids will naturally self-organize into spheres lined with a dual layer of molecules, very similar to the membranes that define the boundaries of modern cells. Once the fatty acids combine to form those bounded spheres, a new wing of the adjacent possible opens up, because those molecules implicitly create a fundamental division between the inside and outside of the sphere. This division is the very essence of a cell. Once you have an "inside," you can put things there: food, organelles, genetic code.

The march of cultural innovation follows the same combinatorial pattern: Johannes Gutenberg, for instance, took the older technology of the screw press, designed originally for making wine, and reconfigured it with metal type to invent the printing press.

More recently, a graduate student named Brent Constantz, working on a Ph.D. that explored the techniques that coral polyps use to build amazingly durable reefs, realized that those same techniques could be harnessed to heal human bones. Several IPOs later, the cements that Mr. Constantz created are employed in most orthopedic operating rooms throughout the U.S. and Europe.

Mr. Constantz's cements point to something particularly inspiring in Mr. Kauffman's notion of the adjacent possible: the continuum between natural and man-made systems. Four billion years ago, if you were a carbon atom, there were a few hundred molecular configurations you could stumble into. Today that same carbon atom can help build a sperm whale or a giant redwood or an H1N1 virus, along with every single object on the planet made of plastic.

The premise that innovation prospers when ideas can serendipitously connect and recombine with other ideas may seem logical enough, but the strange fact is that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas. Ironically, those walls have been erected with the explicit aim of encouraging innovation. They go by many names: intellectual property, trade secrets, proprietary technology, top-secret R&D labs. But they share a founding assumption: that in the long run, innovation will increase if you put restrictions on the spread of new ideas, because those restrictions will allow the creators to collect large financial rewards from their inventions. And those rewards will then attract other innovators to follow in their path.

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Circa 1450, Johannes Gutenberg (1400 - 1468) inventor of printing examines a page from his first printing press. (Photo by Rischgitz/Getty Images)

The problem with these closed environments is that they make it more difficult to explore the adjacent possible, because they reduce the overall network of minds that can potentially engage with a problem, and they reduce the unplanned collisions between ideas originating in different fields. This is why a growing number of large organizations—businesses, nonprofits, schools, government agencies—have begun experimenting with more open models of idea exchange.

Organizations like IBM and Procter & Gamble, who have a long history of profiting from patented, closed-door innovations, have embraced open innovation platforms over the past decade, sharing their leading-edge research with universities, partners, suppliers and customers. Modeled on the success of services like Twitter and Flickr, new Web startups now routinely make their software accessible to programmers who are not on their payroll, allowing these outsiders to expand on and remix the core product in surprising new ways.

Earlier this year, Nike announced a new Web-based marketplace it calls the GreenXchange, where it has publicly released more than 400 of its patents that involve environmentally friendly materials or technologies. The marketplace is a kind of hybrid of commercial self-interest and civic good. This makes it possible for outside firms to improve on those innovations, creating new value that Nike might ultimately be able to put to use itself in its own products.

In a sense, Nike is widening the network of minds who are actively thinking about how to make its ideas more useful, without adding any more employees. But some of its innovations might well turn out to be advantageous to industries or markets in which it has no competitive involvement whatsoever. By keeping its eco-friendly ideas behind a veil of secrecy, Nike was holding back ideas that might, in another context, contribute to a sustainable future—without any real commercial justification.

A hypothetical scenario invoked by the company at the launch of the GreenXchange would have warmed the heart of Stephen Jay Gould: perhaps an environmentally-sound rubber originally invented for use in running shoes could be adapted by a mountain bike company to create more sustainable tires. Apparently, Gould's tires-to-sandals principle works both ways. Sometimes you make footwear by putting tires to new use, and sometimes you make tires by putting footwear to new use.

There is a famous moment in the story of the near-catastrophic Apollo 13 mission—wonderfully captured in the Ron Howard film—in which the mission control engineers realize they need to create an improvised carbon dioxide filter, or the astronauts will poison the lunar module atmosphere with their own exhalations before they return to Earth. The astronauts have plenty of carbon "scrubbers" onboard, but these filters were designed for the original, damaged spacecraft and don't fit the ventilation system of the lunar module they are using as a lifeboat to return home. Mission control quickly assembles a "tiger team" of engineers to hack their way through the problem.

In the movie, Deke Slayton, head of flight crew operations, tosses a jumbled pile of gear on a conference table: hoses, canisters, stowage bags, duct tape and other assorted gadgets. He holds up the carbon scrubbers. "We gotta find a way to make this fit into a hole for this," he says, and then points to the spare parts on the table, "using nothing but that."

The space gear on the table defines the adjacent possible for the problem of building a working carbon scrubber on a lunar module. (The device they eventually concocted, dubbed the "mailbox," performed beautifully.) The canisters and nozzles are like the ammonia and methane molecules of the early Earth, or those Toyota parts heating an incubator: They are the building blocks that create—and limit—the space of possibility for a specific problem. The trick to having good ideas is not to sit around in glorious isolation and try to think big thoughts. The trick is to get more parts on the table.

—Steven Johnson is the author of seven books, including "The Invention of Air." This essay is adapted from "Where Good Ideas Come From: The Natural History of Innovation" by Steven Johnson, to be published by Riverhead Hardcover on Oct. 5. Copyright © by Steven Johnson.