Earlier this year, I
came to the realisation that practically all innovation policy was either promoting the production of
‘innovation’ or is concerned with the efficiency of its production in the
public sector complex (labs and universities etc). A very small
percentage of innovation policy focuses on the uptake of advanced
technologies. None is concerned with the post-innovation event - understanding the disruptive effects on
employment, industries or government programs and resulting impact on existing policy
structures.
That in turn led to
this thought.
The long run is
a misleading guide to current affairs. In the long run we are all dead.
Economists set themselves too easy, too useless a task if in tempestuous
seasons they can only tell us that when the storm is past the ocean is flat
again. John Maynard Keynes, A Tract on Monetary Reform (1923) Ch.3 English economist (1883 - 1946) http://www.quotationspage.com/quote/38202.html
Neo-Schumpeterians
(innovationists) set themselves too easy a task, too useless a task, if they say that the maximisation of the
production of innovation will be good for growth and competitiveness but can
give no guide to governments on transitions in periods of disruption (Brian
Wixted).
We need an understanding of innovation that goes beyond just economics but which also worries about transitions – that is the destruction in Schumpeter’s creative destruction equation.
I have been increasingly
struggling with conventional notions of ‘technology’, ‘macro-economics’ and
‘innovation’ in the 21st century world. With increasing disruption
to industries, labour markets, together with globalisation, climate change and
resource use, is it possible to begin to simply and logically analyse some of
the issues. Is there a framework like macro-economics has provided for so long that
we can develop to frame the issues for better analyses?
In this forthcoming
series I started with the idea of trying to apply the idea of innovation
systematically to macro-economics and quickly ran into some significant conceptual
problems. So I began to rethink how the
economics of innovations is currently developed as a discourse and came to
conclusion that to get different answers we need to break with some of the
fundamental assumptions. I can promise
that this series will not be a series of completed thoughts in book ready shape
– far from it. But I think that by scratching away at some macro topics,
perhaps I can learn something and you the reader will benefit from the journey.
Along the way I
already know that I will introduce some ideas such the ‘technosphere’ which I
have begun to mud map out.
Secondly, while in a
business we categorise the micro-economics of innovation has extending its
market (new products or new markets), reducing costs (new supplies, processes,
or organisation) or re-arranging internal affairs (organisation, supplies,
markets) to keep fit with changing market environment configurations applying
this to nation-states is not so simple. For starters, companies can externalise
their costs relative to societies. A business needs to downsize, it sacks
people. Hopefully they can find new jobs but if they can’t society needs to
bear the transition costs. Or as another example there is little equivalent in
the economy of a firm for housing booms or busts – unless it is managers over
investing in capital.
Macro-economics is
simply different to micro-economics and macro-innovation is different to
macro-economics.
At the 2013 DRUID
conference they debated the motion that national innovation systems was no longer a
fruitful line of academic research (this succeeded). Instead the future is
framed as the micro-foundations of innovation. You can watch the video here. This just re-enforces the point that
we need a new macro paradigm.
I am not quite sure
how the series will develop except that at the moment there are 2 parts
envisaged.
In Part A, I want to
introduce the idea that part of the problem we face is that in the economics of
innovation we are only interested in the rate of change – the rate of
innovation. This leaves us unable to notice the degree to which there is
significant technological change occurring simply in the way our technological
society works.
In Part B, I want to
analyse the main structures embedded in conventional macro-economics from an
innovation perspective (GDP accounting, input-output structures, land, labour,
capital, and other topics (entrepreneurship?).
So let the games begin.
So let the games begin.
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