Review of: "Liberalism Caused the Great Enrichment

2018

Creativit¡ innovation, and the production of wealth Knut Sogner* "Adam Smith did not see the Inclustrial Revolution coming"-so saicl rny undergraduate teacher in econonric history in 1 985. In his serninal book The weitttt of Nation, itll ø7 , S'dth lays so're of the crucial g'oundwork for the modern science of e.onomics, but he does not ryrr.nr.ri.¡Ç adclress innovation. Yec parallel to his writing this treatise, the British procluction ,yrt.,r' b.grn to usher forth profouncl changes in the organization of production anå in the goods p.oauåa. 'while Smith cliscussed efûciency, the Industrial Revolution involved innovative change thar radically shifted what was achievabre in rerms of the production of wealth. During the latter half of the eighteenth century the Industrial Revoiution was in embryonic form, so it is understanclabie that Srnith rnight not have discerned the potential of his very ow' conception, the natural system of liberry. Yet he did write profoundly abour the possibilities of economic change (in particular specialization ancl how specialization night lead to innovation) ancl growth' compared with many modern economists his is a broacl .id hisror.ical approach. Yet economics-with its account of the mechanisms that create balance between what is produced and what is consurned (or, more correctly, berween supply and demand)-is hardly able to grasp the rnany ancl tlessy unclertakings that alter th. r,tppty ,yrtellr, that part of the e conolny that creates and procluces the goods and services under the demand ofconsurners. creativity and innovatio_n heip to increase productivity, thereby changing the way in which people ear' their livelihoocls as well as the goåds and services th.i .njoyl To uncierstand creativiry ancl innovation one tnust move beyond standard models .ápr"y.a by econo'rists. one must consider, for example, the transformative possibilities .ngender.iby ,.i".r.. as weil as the ways in which politics ancl law function to allow, encourage, or incentivize creative acts and beneûcial inreracrions (Fagerberg et al. 2005). over the last quarter century new fields of research have emerged that seek to understand positive change in the economy (Fagerberg et at. 2012). The coñ¡ron agenda is to ûnd out how and why innovation, in the broadest serrse, happens. The scholars who pursue this agencla range from those interestecl in corporate success to those who want to understand why nations ancl societies grow rich. This is, therefore, a vast and heterogenous arena, but this chapter wiil concentrate on what may be termed Schumpeterian i,rnovation, afte¡ the Austrian-American economistJoseph Schumpeter. The chapter will, therefore, focus on processes of creativity and entrepreneurship that have, either through intended purpose or as actual ."rult, .ff".t.á ,.rl the alth iogner* ate teacher L lays some :ematically cem began produced. range that :mbryonic very own ;ibilities of rnovation) approach. iat is prorardly able economy 'in which tand creanists. One ¡¡ell as the e acts and nderstand > ûnc1 out ris agenda ry nations Lapter will American .tiviry and ècted real Creativity, innovation, and the production of wealth changes in the production of goods and services-innovation. These sorts of innovations may arrive in a cluster, accumulating during a cliscrete slice of time, and lead to such radical changes of the economy that we may speak of an "industrial revolution." Schumpeter contributed at least three concepts that guide much research on innovation: the "entrepreneur" as agent of innovation (Schumpeter 7934, but see Hébert and Link 2009 for predecessors); a distinction benveen aclaptive and creative economic behavior (Schumpeter 1947); and the idea that innovations be institutionalized within large corporations (Schumpeter 1943 / 197 6). Schumpeter places these concepts in larger economic landscapes, revealing thereby how processes ofcreativiry and change prove reievant to the whole society. A very irnportant distinction in Schumpeter's definition of innovation is that inveÍrtion and innovation are not the same. A new chemical entity, a new way to produce energy, or a novel food recipe, are inventions until the required processes of commerciaiization turn them into innovations. Indeed, the deûnition of an innovation is the introduction of something new in the economy (even ifthe new entity is but a novel reconfiguration ofold entities). .While Schurnpeter was active in the ûrst part of the twentieth century, his rise to the center stage ofa scholarly enterprise devoted to the study ofinnovation and change is a consequence of the shiÍÌ from postwar growth to crises and volatiliry that occurred from the 1970s onwards (Van der Wee 1986). Innovation has been seen as more than a necessary tool to iolve issues of economic stagnation or to redo old economic structures that contribute to climate change and pollution. In fact, innovation may be regarded as a new tool to achieve economic equaliry. W'hile revolution and redistribution were leftist political goals for centuries, innovation is a new tool to change the society for the better (Phelps 2073; Mazzucato 2074). This chapter offers an historic introduction to the broad field of innovation studies with an eye towards ethical matters. Four fundamental issues are highlighted. In the ûrst section, I delineate how the concept of innovation has little place within the framework of standard economic rnodels, yet innovation is crucial to the total economy. In the second section, I take up some theoretical approaches, ernerging in the 1980s, that construe the phenomena of innovation as occurring within speciûc circumstances. This is the "inte¡active" approach. In rhe subsequent section, I focus on how innovation has been seen, by some, to be institutionalized within the large coqporation or, in other cases, within clusters of small companies or even the nation state,

Mapping Ignorance, 2018

The complexity of the entanglement between economic and socio-cultural areas of our lives manifests itself in a number of different ways. This paper revolves around one aspect of this manifestation, namely the idea of innovation. The concept of innovation implies a demand of newness, for example the creation of new products to ensure a company's market advantage or the creation of new processes to ensure a higher degree of efficiency at a hospital.

Handbook of Management and Creativity, 2014

There is a long-held assumption that Asians are not creative. Books from scholars based in Asia with titles such as Why Asians are Less Creative than Westerners (Ng 2001) and Can Asians Think? (Mahbubani 2002) only seem to reinforce the stereotype that Asians are not as creative as their Western counterparts. This notion, however, has not stopped governments in Asia from investing heavily both financially and through myriad policies to support creativity and innovation across a range of industries within their nations. These initiatives range from promoting creativity through design, as exemplified by the newly established Singapore University of Technology and Design, to the Chinese government stimulating creativity in arts and culture by designating certain cities in China as 'creative centres' (Keane 2007). Other schemes include a variety of nation branding plans that are being implemented by the Ministry of Economy, Trade and Industry in Japan and Korea's highly successful support for local popular culture which has resulted in the so-called Korean Wave in East Asian countries (Chua and Iwabuchi 2008). This drive towards being 'creative' is no doubt due to the belief that creativity is an essential component for any country's economy where the significance of agriculture and manufacturing is in irreversible decline. In today's knowledge economy, creativity has been identified as the 'most potentially successful response for negotiating economic change' and is now credited for everything ranging from 'corporate innovation and technological advancement' to the 'rehabilitation of cities and advancing education and learning' (Banaji et al. 2010: 41, Cherbo et al. 2010: 37). Therefore, creativity is what will allow countries and companies to stay competitive in the knowledge economy in which ideas will spur economic growth. If we are to understand that creativity is playing and will play a large role in driving economic growth, it stands to reason that a perceived lack of creativity in Asia hinders this very growth.

Explorations in Economic History, 2018

In recent years, economists have revived the specter of slow growth and secular stagnation. From the point of view of economic history, what should we make of such doomster prophecies? As economic historians all know, for 97 percent or so of recorded history, the stationary state welldescribes the long-run dynamics of the world economy. Growth was slow, intermittent, and reversible. The Industrial Revolution rang in a period of sustained economic growth. Is that growth sustainable? One way to come to grips with that question is to analyze the brakes on economic growth before the Industrial Revolution and examine how they were released. Once these mechanisms are identified, we can look at the economic history of the past few decades and make an assessment of how likely growth is to continue. The answer I give is simple: there is no technological reason for growth in economic welfare to slow down, although institutions may become in some area a serious concern on the sustainability of growth.

The Handbook of Management and Creativity. Edward Elgar 2013, 2014

Hong Kong Economic Journal, 21 March 2012

Like most people, I believe Hong Kong's long-term economic growth depends critically on the creativity and innovation of its people. The question is whether there is a role for government to promote policies and build institutions to foster creativity and innovation? This article presents the intellectual case for selective intervention towards that end. It proposes a general approach that might have the highest chance of economic success in the Hong Kong context.

2008): Micro-foundations for Innovation Policy. Amsterdam, 2008

Innovation has been essential for economic growth in the last centuries (Mokyr 1990; Baumol 2004). In western economies, the importance of innovation for economic growth has become more pressing given ageing populations, global competition, increasing product variety and shortening product life cycles. Innovation is also needed to solve problems in society such as those concerning climate change, health, and congestion. Innovation also has intrinsic value as a manifestation of creativity. In this volume the focus is on the ...

Education in the Creative Economy: knowledge and learning in the age of innovation, 2010

When the world recession in 2008 began, the economy wars, which had been dormant for two decades, flared again. After thirty years of the culture wars, this came as a bit of a relief. In one corner, we had the followers of John Maynard Keynes(1883-1946), who were filled with a kind of self-belief that we had not seen since the 1960s. They had a few scores to settle. In another corner were the market friendly followers of Friedrich Hayek (1899-1992) and Milton Friedman (1912-2006). They were looking a bit bloodied after having dominated public polity for two decades. Looking on skeptically from outside the ring was another cohort, the admirers of Joseph Schumpeter (1883-1950). These were, as usual, less combative than the other fighters, and had a quizzical eye trained on all of the pugilists. Part of the skepticism of the Schumpeter camp was a wariness of public policy tout court. It did not matter whether this was a policy bent on big government or one in love with small government. Schumpeter had been a student of the great Austro-Hungarian Empire Finance Minister, Eugen von Bohm-Bawerk. Schumpeter himself was the first Minister of Finance of the modern Republic of Austria. He seemed to take away from that unusually intimate experience of public policy a strong sense of the need for economists to look beyond rhe policy cycle and explore the deeper structures and long-run temporalities of economies. Schumpeter was a great economist who at the same time understood the power of history and society in shaping economies. He also appreciated the power of the imagination. He observed that modern capitalist economies were driven as much by creative impulse and imaginative insight, as they were by the more commonplace behaviors that arose out of greed, interest, need or calculation. It was not that societies could not-or should not-control such behaviors or encourage them, depending on prevailing economic philosophy. It was just that some of the most decisive economic outcomes could not be determined by such policy tools. Somewhere beyond them, in a larger social-historical zone, lay the human drive to innovate and create.