(FORTUNE Magazine) – We all think we know about the computer revolution. But not many of us understand how it happened -- that it resulted from discoveries about the very essence of matter, profound revelations that most people find intensely unsettling. George Gilder, author of Wealth and Poverty (1981), explores this story in Microcosm: The Quantum Revolution in Economics and Technology (Simon & Schuster, $19.95), to be published in September. He also examines how the forces that created the computer will powerfully change business, trade, and national influence. THE CENTRAL EVENT of the 20th century is the overthrow of matter. In technology, economics, and the politics of nations, wealth in the form of physical resources is steadily declining in value and significance. The powers of mind are everywhere ascendant over the brute force of things. This change marks a great historic divide. Dominating previous human history was the movement and manipulation of massive objects against friction and gravity. In the classic image of humanity, Atlas bears the globe on stooped shoulders, or Sisyphus endlessly wrestles a huge rock up a slope. For centuries, humans grew rich chiefly by winning control over territory and treasure, slaves and armies. Even the Industrial Revolution depended on regimented physical labor, natural resources, crude energy sources, and massive transport facilities. Wealth and power came mainly to the possessor of material things or to the ruler of military forces capable of conquering the physical means of production: land, labor, and capital. Today, the ascendant nations and corporations are masters not of land and material resources but of ideas and technologies. Japan and developing Asian countries have become the world's fastest-growing economies. Electronics is among the world's fastest-growing major industries. Computer software, a pure product of mind, is a chief source of added value in world commerce. The global network of telecommunications can carry more valuable goods than all the world's supertankers. Wealth comes not to the rulers of slave labor but to the liberators of human creativity, not to the conquerors of land but to the emancipators of mind. Impelled by an accelerating surge of innovation, this trend will transform man's relations with nature in the 21st century. The overthrow of matter will reach beyond technology and impel the overthrow of matter in business organization. Devaluing large accumulations of fixed physical capital, the change will favor entrepreneurs over large bureaucracies of all kinds. The overthrow of matter in business will reverberate through geopolitics and exalt the nations in command of creative minds over the nations in command of land and resources. Military power will accrue more and more to the masters of information technology. Finally, the overthrow of matter will stultify all materialist philosophy and open new vistas of human imagination and moral revival. The exemplary technology of this era is the microchip -- a computer < inscribed on a tiny piece of processed material. More than any other invention, this device epitomizes the overthrow of matter. Consider a parable of the microchip once told by Gordon Moore, chairman of Intel and a founding father of Silicon Valley: ''We needed a substrate for our chip. So we looked at the substrate of the earth itself. It was mostly sand. So we used that. ''We needed a metal conductor for the wires and switches on the chip. We looked at all the metals in the earth and found aluminum was the most abundant. So we used that. ''We needed an insulator and we saw that the silicon in sand mixed with the oxygen in the air to form silicon dioxide -- a kind of glass. The perfect insulator to protect the chip. So we used that.''

The result was a technology -- metal oxide silicon (MOS), made from metal, sand, and air -- in which materials costs are less than 2% of total expense. Combining millions of components on a single chip, operating in billionths of seconds, these devices transcend most of the previous constraints of matter. The most valuable substance in this, the fundamental product of the era, is the idea for the design. The microchip not only epitomizes but also impels the worldwide shift of the worth of goods from materials to ideas. The rise of mind as the source of wealth spans all industries and reflects the most profound findings of modern physics and philosophy. The overthrow of matter in economics is made possible by the previous overthrow of matter in physics. All the cascading devaluations of matter in the global economy and society originate with the fundamental transfiguration of matter in quantum science. Max Planck, who launched quantum theory in 1900, offered the key when he asserted that the new science entailed a movement from the ''visible and directly controllable to the invisible sphere, from the macrocosm to the microcosm.'' The macrocosm may be defined as the visible domain of matter, ruled by the laws of classical physics. The microcosm is the invisible domain, ruled and revealed by the laws of modern physics. It is understandable that humans resist the microcosm and even rebel against it. Quantum theory is an abstruse and difficult set of ideas. It baffles many of its leading exponents and it perplexed Albert Einstein to his grave. Defying the testimony of the human senses, the new physics is contrary to all human intuition and metaphor. In the quantum domain, conventional analogies of physics -- such as tops, springs, and billiard balls -- are radically misleading. Therefore, we cannot ''understand'' quantum theory in the way we can comprehend classical physics. Quantum theory simply does not make sense. The reason the new physics does not make sense to most humans, however, is that prevailing common sense is wrong. Common sense serves the materialist superstition: the belief that we live in a world of solid phenomena, mechanically interconnected in chains of cause and effect. The common wisdom of mankind has yet to absorb the simple truth that in proportion to the size of its nucleus the average atom in one of our cherished solids is as empty as the solar system. Few ponder the fact that an electron -- a key to physical solidity -- does not occupy any specific position in space; in a famous experiment, a single electron passes simultaneously through two separate holes in a screen. Such quantum images are difficult for human beings to grasp or believe. Humans balk at the basic paradox of a physical theory that defies the testimony of human senses and overthrows matter in the very science of matter itself. SEPARATING the old and new sciences is a nearly unbridgeable gulf. Sir Isaac Newton described matter as ''solid, massy, hard, impenetrable, movable particles . . . even so very hard, as never to wear or break in pieces; no ordinary power being able to divide what God himself made one in the first creation . . . ((to)) compose bodies of one and the same nature and texture in all ages.'' Newton's matter at heart was inert, opaque, and changeless. Just as important, Newton had no problems with common sense. He assumed that matter at its fundamental level behaved like the material objects that we perceive. ''We no other way know ((the characteristics of matter)) than by our senses . . .'' Its impenetrability, for example, ''we gather not from reason but from sensation.'' Today, most sophisticated people imagine that they have transcended Newton and have come to terms with the findings of modern science. But they have not. As an intellectual faith, materialist logic still prevails. Even most theologians and philosophers who spurn materialism in defining the meaning of life accept it as a lesson of science. They still believe that the solid world they see and feel -- governed by determinate chains of cause and effect rooted in Newtonian masses and forces -- is real and in some sense definitive. The atom may not be ultimate, but they assume some other particle is, perhaps the quark. It has become a cliche to call the quark ''the fundamental building block of nature.'' At the foundations of the physical world, so it is supposed, are physical solids -- ''building blocks'' -- that resemble in some way the solids we see. They link in chains of mechanical logic like a set of cogs and levers. These solids are deemed to constitute all matter, from atoms and billiard balls to bricks and the human brain. Since most visible objects and machinery seem to observe the macrocosmic rules most of the time, most human beings are comfortable in a macrocosmic world. Like primitive tribes, they worship things they can see and feel. They think in logic based on the behavior of these things. In all these attitudes they cling to the materialist superstition: the belief that mechanical and mindless interactions of inert and impenetrable matter are the ultimate foundation of reality. They resist the apparently murky and paradoxical message from the microcosm: the overthrow of matter in a quantum world. Understood as episodes in the dismantling of Newtonian matter, however, the historic discoveries of the new physics follow a coherent and powerful logic. The move from macrocosm to microcosm can be seen as a progress from a material world composed of blank and inert particles to a radiant domain rich with sparks of informative energy. This overthrow of matter in science leads plausibly to the ascendancy of information and mind in contemporary technology, and hence in economics as well. MAX PLANCK'S DISCOVERY of the quantum is usually treated as an episode in the study of certain paradoxes in black body radiation -- beams emitted from heated substances such as coal or charcoal that essentially absorb all rays that fall upon them. He discovered, in essence, that the waves emanating from any given atom of such a body were not a continuous function of the energy it received. Rather, the atom would not radiate at all until it had absorbed a precise minimal dose of energy, its quantum. This idea seemed to enhance the concept of quanta as material particles. But the true meaning of Planck's breakthrough was the insufficiency of the existing model of continuously fluctuating waves. In 1905, in a Nobel Prize-winning paper, Albert Einstein used Planck's insight to take a giant step in dethroning matter. Experimenters in the 19th century had shown that light is a wave. Conventional waves need a medium to wave through, and for light this medium was assumed to be ''ether.'' But other experiments, among the most exacting in the history of physics to that day, found no evidence that ether existed. Einstein declared that if there was no ether, light could not be a wave in the usual sense. Extending Planck's insight, he said that light consists of packets of energy that he called photons. Although said to be ''particles,'' photons observed established wave equations. They seemed a cross between a wave and a particle. In terms both of classical physics and of human observation, this wave- particle cross was an impossible contradiction. Conventional waves ripple infinitely forth through a material medium; particles are single points of matter. At once definite and infinite, a particle that is also a wave defies our sensory experience. Newton's universe built of ''solid, massy, hard, impenetrable, movable'' particles was foundering. But by clinging verbally to the material concept of a particle, scientists obscured the true meaning of this collapse of physical solidity in the science of matter. Soon after these troubling discoveries about light came parallel findings about the electron, the basic entity of electronics. Most interested people understand much of what electrons do. But very few have any clear idea of what an electron is, or its implications for the concept of matter and its overthrow in the world economy. From the telephone to the television set to the computer, information mostly flows in the form of electrons. This function of electrons has quantum roots. As in Planck's black body radiation, electrons do not respond to applied energy in a continuous, proportional, or linear way. They are non-linear; they have quantum thresholds and resonances. These quantum functions shape their electrical properties. In order to move through a solid, electrons must be freed from their atoms, jumping from one energy state to a free state across measurable energy ''band gaps'' in strict accordance with quantum rules. These rules give electrons identifiable and controllable features that can be used to convey information. With controlled pulses of electrons down wires, computers can be interconnected around the world. With controlled flows of electrons in and out of tiny capacitors, computer memories can be constantly read, written, and restored. With minute charges of electrons in silicon, computer transistors can be switched on and off. The most studied phenomenon in physics, electrons are constantly measured, manipulated, traced, aimed, and projected. Yet throughout the history of science, the electron has remained a humbling perplexity. Let us listen, and find out what it is telling us about the bizarre abundance of the domains beyond matter. Until the 1920s, the electron was assumed to be simply a particle of matter. But in 1924, Louis de Broglie developed a wave theory of the electron, which Einstein supported. Crossing decisively into the microcosm, Werner Heisenberg declared that these waves were not conventional waves at all. Designated ''probability amplitudes,'' they were waves or fields that defined the statistical likelihood of finding an electron at any particular location. This was a climactic step in the overthrow of materialism in physics. With the electron itself depicted as a wave and the wave depicted as a probability field, the specific particle in this theory had disappeared into a cloud. With it disappeared the last shreds of Newtonian logic and mechanistic solidity. As the Danish physicist Niels Bohr put it, quantum theory required ''a final renunciation of the classical idea of causality and a radical revision of our attitude toward the problem of physical reality.'' These concepts remain full of paradox. But the paradoxes all derive from the materialist superstition. All analysts want to retain the last purchase of solidity, the concept of a particle. But at the most fundamental level, there is no such thing as a particle. What are called elementary particles are neither elementary nor particles. If elementary is taken in the Newtonian sense of indestructible matter, Heisenberg points out, electrons are not elementary because they dissolve on contact with their antimatter twin, the positron. Envisaged as more intense points moving through a wave of probability, electrons do not even retain any particular substance. These non-materialist properties are vital to the workings of computers. In some crucial microelectronic products, from diodes to non-volatile memories, electrons use probability waves to ''tunnel'' through barriers that they are incapable of either penetrating or surmounting as physical particles. The shift between Newton's materialist clockwork and the quantum enigmas -- between Newton's sure embrace of sensory data and the new era's dismissal of common experience -- is a Copernican break in modern history. In the early 16th century, Copernicus displaced the earth from the center of the universe. Early this century, quantum physics displaced the human senses as the central test of reality. THE MICROCOSM will increasingly dominate international reality, subduing all economic and political organization to its logic. As the chip reorganizes industry and commerce, so also will it reorganize the powers of states and nations. The most evident effect is a sharp decline in the value of natural resources. The first Industrial Revolution vastly increased the value of materials. All the dirt, rock, and gunk that had been ignored for centuries suddenly acquired worth in the age of mass manufacturing. The new industrial revolution is a revolution of mind over matter, and it is rapidly returning what used to be called ''precious natural resources'' to their previous natural condition as dirt, rock, and gunk. The use of steel, coal, oil, and other materials is plummeting as a share of value added in the economy. Less than 2% of the cost of a silicon chip is for raw materials. A few pounds of optical glass fiber, made of the same elements as sand (but millions of times purer), will soon carry as much information as a ton of copper. A satellite now displaces many tons of copper wire. When matter plays so small a part in production, there is less material resistance to increased volume. Chip producers build volume not chiefly by processing more silicon but by placing more circuits on a given area, which is almost entirely a function of accumulated knowledge or experience. In the worldwide rivalry in information technology, the American system, for all its flaws, accords best with the inner logic of the microcosm, which enhances the power of individual chips far more than the power of connections between them. Thus the power of the individual commanding a single workstation -- or small network of specialized terminals -- increases far faster than the power of a large bureaucracy. The power of entrepreneurs using dispersed information technology grows far faster than the power of large institutions that attempt to bring information technology to heel. Rather than pushing decisions up through the hierarchy, the power of microelectronics pulls them remorselessly down to the individual. Once seen as a physical system tending toward exhaustion and decline, the world economy has clearly emerged as an intellectual system driven by knowledge, and the key attribute of knowledge is that it accumulates and compounds as it is used. Technological and scientific enterprise, so it turns out in the age of the microcosm, generates gains in new learning and ideas that dwarf the loss of resources and dissipation of energy. To see the world primarily in terms of its waste products is possibly the most perverse vision in the history of science. At the heart of progress in the quantum era is a bold human sacrifice. After centuries of struggle against the elements -- human masses pushing and pulling on massive objects at the behest of armed rulers -- man stopped hoarding gold and jewels, land and labor. He stopped trusting only the things he could touch and feel. He stopped believing only his eyes and ears. Overthrowing the superstitions of materialism -- of classical physics, of national and tribal bigotry -- modern man is injecting the universe with the germ of his intelligence, the spoor of his mind. Sloughing off every layer of macrocosmic apparatus, the computer will ultimately collapse to a pinhead that can respond to the human voice. In this form, human intelligence can be transmitted to any tool or appliance, to any part of our environment. Thus the triumph of the computer does not dehumanize the world; it makes our environment more subject to human will.