Tuesday, October 15, 2013

Macro-Innov 3: Society, economy, technology

As I start on this macro-innovation series, I first want to make a case that we need genuinely macro-notions.
Societies and economies are not separate worlds, they are interlinked but we have become obsessed with the economy. Indeed, while I generally laud the change from a focus on technology to innovation at the firm and industry level, it is now becoming obvious that a key element of the emerging macro puzzle is not coming together in a coherent way. It will be increasingly important, I believe to study technology coherently, like we have studied economics in the past. A good economics degree can bring together various elements of how we think about economic behaviour - history of economic thought and philosophy, the neo-classical rules, policy, behaviour economics and hopefully geography. But technology studies today are scattered across philosophy and communications, business, economics (hopefully though no guarantees), ethnography, engineering schools etc. It is not possible generally to do a degree in technology studies. 

The nature of discipline based research


Every discipline in the natural sciences, engineering and social sciences has and has to develop a particular perspective and a group of methodologies for conducting its analysis. ‘Holistic’ studies are a nice idea but simply impossible. We can do better at finding linkages between them however. Lets look at a few examples.

Earth Processes (geology, biology and ecology) 

For scientists interested in the processes of life on earth there are three inter-related but separate fields of study.  If for example you are simply interested in geology for mining then there is no need to worry about biology, but geology is very important for understanding ecosystem development and evolutionary biology because, as the earth changes through plate tectonics so the terrestrial systems have had to adapt with them.

But for the purposes here I will focus on two disciplines, biology and ecology. Here again there are components that clearly relate to each other but remain distinct. In a sweeping generalisation we can say that biology is interested in the construction and operation of particular animals or plants (individuals, species etc) and how they evolve across aeons   Ecology is interested in how populations of animals and plants in a particular place interact at a particular point in time. All life in a particular location is interdependent on the other biota and the natural resources (including sunlight).

What is fascinating about ecosystems is that the concept is based in geography but it is scaleable. From ecotopes (the smallest ecologically distinct landscape) through to the biosphere – the entirety of life on Earth, there is a myriad of types of ecologies let alone the huge number of individual ecological patches on Earth. What is important for the discussion here is that there are two disciplines which are co-dependant yet focus on different aspects of the animals or plants. Biology is more straightforward and is easier to conduct in a lab. Ecology because of the complexity of data collection has tended in the past to be more theory driven with some very complex modelling. Gradually, more and more empirical studies are appearing but it is slow.


Society [sociology], (sociologists)

For most of our time as a species that could communicate we have understood ourselves as living in societies (families, tribes, language groups, political empires and political nation-states). The idea of society comes very naturally to us we are relational beings, we are dependent on particular people (carers - mothers, grandmothers etc) for a very long time as we grow up. For most of human history humans stayed within very small geographic places for most of their lives. Not surprisingly we have an academic discipline called sociology. It focusses primary on power and relationships. Power is a universal idea. In every organisation of society, in fact anything above hunter and gather societies there will be leaders.  Likewise relationships, is so universal to human identity it needs no explanation.

Economy [economics], (Economists)
In recent decades we have begun to do away with the notion of society and the language has turned more and more towards economics and business. Thatcher once reportedly said there is no society, confusing governments with societies. 

"I think we've been through a period where too many people have been given to understand that if they have a problem, it's the government's job to cope with it. 'I have a problem, I'll get a grant.' 'I'm homeless, the government must house me.' They're casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There's no such thing as entitlement, unless someone has first met an obligation."

In the 2000s there was a small movement with the slogan we live in societies not economies.

The truth is we live in both. Economies have always existed, even in the most ancient of societies there was usually complex trading systems. But, while I do not want to live in a communist economy neither do I want to live is in a pure market society with minimal justice and no compassion.


Economic change [innovation studies], (neo-Schumpeterians, innovationists)

In the early years after WWII, particularly after the OECD was established there was growing interest in how first science and then technology impacted the development of economies. As computerisation grew in the 1970s and 1980s there was growing concern over the positive and negative impacts of change. By the end of the 1980s there was a realisation that innovation as it was progressively called rather than technological change had a geographic element. At that point the term ‘innovation systems’ was coined, and ever since the innovation field has focussed on every aspect of geography (nation-states, cities, regions, clusters, industries etc). But as this has become more methodologically focussed it has become narrower and narrower resulting in the emphasis on business competitiveness. At the same time innovation studies has moved from multi-disciplinary research centres such as SPRU to the business schools.

Although conventional economics does not deal well with innovation there are many economists who study innovation. 

Multi-disciplinarity

The way forward is not generalists researching everything but a university structure that supports a matrix organisational operation. In this way teaching by experts can be utilised to form new teaching units out of the specialisations of the existing disciplinary base.

One area where such capability would be helpful is with technology. The emphasis remains on change but what is happening behind the curve is as much changing as what is happening at the frontier.  


Technology [technosphere], (Techneists)
In the 1960s and 1970s there was great interest in the technological society by sociologists and philosophers but almost all of it was prospective. As the changes were slower and less than expected, there was less and less interest in the topic. Today, as ethnographers have run out of conventional unstudied primitive societies to work on more and more are researching the use of technology (in particular digital technology). 
Kevin Kelly in his book “What Technology Wants” coined the term “The Technium’ to give expression to his idea that technology was the 7th kingdom of life on earth.

Brian Arthur in his book “The Nature of Technology” lays out the following definition of technology.

(1) a means to fulfill a human purpose,
(2) an  assemblage of practices and components(3) a collection of devices and engineering practices available to a culture.  

Arthur seems uncomfortable with the idea of the Technium, yet I think his book lays out an excellent series of reasons why we need to get more serious about the study of technology. The hierarchical  nested, and connected nature of technology is a topic for 21st century exploration.

While I am also uncomfortable with the notion of the Technium, I think there is an itch that is important. We need a biology and ecology of technology.  Just as in biology and ecology there are two disciplines that are closely related it is possible to conceive of two topics innovation studies and technospherics that are different but related. 

Monday, September 23, 2013

Macro-Innov 2: structures of the debate


The point behind this series is that innovation studies has been virtually reduced to a sub-discipline of economics and business. While the growing focus on innovation in all its conventional forms (products, processes, supplies, markets and organisation) is welcomed it reveals an underlying problem - what counts is business / economic success and, in fact, a de facto support of increasing consumerism.

What matters now in innovation studies are flows and turnover. What will be the latest disposable high tech gizmo be? What is the production of new energy technologies? etc etc. The stocks (capital) in the system and the cost of those gizmos is not well accounted for. So:

1. If we rely on the myopic view that innovation only counts at the level of business then there is only limited room for governments to structure innovation and markets in necessary ways to support sustainability;

2. This micro presentation also ignores the growing phenomena of the linkedupness of our technological systems. Discipline of innovation studies needs to be more aware of how connected technological change is to the way we design cities, to way we live etc; and then

3. Innovation policy has concentrated on the production of innovation, we thus need a macro-economic revolution in innovation studies to pay attention to the disruption, adaption and management.


Thus the big themes of this blog series will be.

1. The technosphere;

2. Wealth, growth and Competitiveness;

3. Sustainability; and

4. Innovation policy.


Lets begin ......

Friday, August 30, 2013

Macro-Innovation: 1. An Introduction

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.

Thursday, July 4, 2013

GEM Conference (20-21 June 2013)

Following DRUID, I attended a mall conference sponsored by the Global Entrepreneurship Monitor team in Spain to promote the use of GEM data.

The use of GEM data is clearly evolving. One of the impressive features of conference was the increasing use of pooled data (compiling the data across a number of years and countries) to build impressively large numbers of observations.

Still a number of the papers were naive or misguided in their choice of variables.

The highlight of the day was a keynote by Professor Xavier Sala-i-Martin of Columbia university.  http://www.columbia.edu/~xs23/home.html It was nice to hear an economist focus attention on adoption of innovation not newness per se.

Day 2 brought forth a number of quite interesting papers including one on rent seeking behaviour in MENA countries and another on the role of high tech entrepreneurship across factor driven, efficiency driven and innovation driven economies.

The papers are in early stage development, so I won't reference them.

An interesting conference, but clearly to me GEM is running out of data for interesting academic work, and needs to ask bigger questions like to ones Burton was asking in her DRUID conference talk, see the previous blog for details.

DRUID Day 3 (19 June)


Today the DRUID debate was whether 'innovation systems' was still a promising line of research. Disappointingly, I felt the team arguing for 'innovation systems' gave up without much of a fight. Both teams converged on the micro-foundations of innovation being the way forward.

Watch the debate here http://www.druid.dk/streaming/ds2013/june19/player.html#course=BE101&unit=1&video=3&language=en-US

What profoundly disappointed me was the lack of courage. At a time of global economic crisis and massive industry disruption the innovation scholars are effectively retreating to micro-economics. We know from a century of micro-economics that it does help with macro questions. Economics lacks the unifying 'string theory' and so does innovation. With 50 per cent unemployment in host country for the conference Spain, I personally thought the debate was actually an insult to the populations that pay for academic research.

It doesn't bother me that most of the papers at DRUID were econometrics, that is the standard development of fields of research, it is the development of greater rigour and that is GOOD. BUT when I couldn't see a single paper on unemployment, macro-innovation or industry disruption I am actually angry at the direction of research in my field.

What made it worse, was the presentation by Diane Burton, a labour market economist was brilliant! It highlighted a bunch of issues about our notions of entrepreneurship - big fundamental questions that the previous debate had overlooked. It used to be that Schumpeterian researchers were the ones to ask the tough questions of the patterns of economic development. I think that is true no longer.

Watch the talk here: http://www.druid.dk/streaming/ds2013/june19/player.html#course=BE101&unit=1&video=2&language=en-US

Paper session.

Papers 1: evolutionary pattern of change requests to telecommunications technical standards during the 3G and early 4G development process.

Paper 2: using a classification of service innovation types (ie. that is different to product process etc) the paper mapped the changes through time as a service organisation changed one service which then led to another change etc etc... Seemed interesting and I will probably read the paper.

Paper 3. Entrepreneurship, market novelty, econometrics.

DRUID Day 2 (18 June)

I had intending posting updates as the conference progressed but that didn't happen, still the summaries are worthwhile.

The debate of the first day was on whether financial performance measures lead to poor strategic decisions.
Watch it here. http://www.druid.dk/streaming/ds2013/june17/player.html#course=BE101&unit=1&video=5&language=en-US


The highlight of day 2 was the DRUID debate on scientific fraud. The examples are breathtaking and it seems the situation is getting worse. This is the first time I have opening heard serious criticism of the metrics of academia and how these are probably creating the perverse incentives behind fraud. In some European countries in an effort to get the paper count in A journals up, authors are paid CASH bonuses.

Watch the debate here, it is a vitally important issue. http://www.druid.dk/streaming/ds2013/june18/player.html#course=BE101&unit=1&video=3&language=en-US

The plenary for day 2 was interesting, but I am not that much into exploitation/exploration issues.

Papers. I only attended 1 parallel session.

Paper 1: Entrepreneurship, local knowledge, Italy, Econometrics.
Paper 2: Global (Regional) Entrepreneurship Development Index - uses GEM and other data to map entrepreneurship system in countries or regions.
Paper 3: Structural change, skill cohesion, individuals employed at plants at the municipality level in Sweden (this was my top pick of the conference papers).

Day 2 result - avoided econometrics and 'high technology' papers successfully.

Tuesday, June 18, 2013

DRUID 2013 Day 1

Wes Cohen did the opening address to the conference reviewing the empirical research on the 'economics of innovation' across 50 years (late 1950s ro 2010ish). The term 'the economics of'' is usually meant, as it was here, in a very technical sense - the tools of standard neo-classical economics applied to whatever.

I am always stunned by the narrowness of the topics 'true' economist rather than those who are rather more heterodox and more problem focussed are. The economists start with the topics which seem to cause the most pain for their modelling of the economy. Rather than focussing on the bigger issues within the topic and trying to understand those better.

So economists have spent 50 years looking at firm size and RandD amongst other topics.

However, onto other things. I thought I would keep a tally of the topics and methodologies of the papers I heard.

Paper 1: Pharmaceticals in India, econometrics.
Paper 2: Semi-conductor industry, world, econometrics
Paper 3: U.S. trucking industry, econometrics
Paper 4: Patents, eco-energy, descriptive
Paper 5: establishment data, geography, econometrics
Paper 6: Photovoltaics, patents, Germany, descriptive
Paper 7: Multinational corporations in Portugal, labour market data, econometrics.
paper 8: Knowledge theory /descriptive paper.
Paper 9: Biopharma firms, USA, spatial analysis, econometrics

So the Pharma industry with 2 of 9 papers wins day 1.