jason potts

This paper revisits the welfare economics of fashion from the standpoint of evolutionary economics. Whilst accepting that fashion-focused consumption may have an element of status-seeking behaviour about it, which may be of questionable value in welfare terms, the paper emphasizes that fashion cycles can help enhance well-being via trickle-down effects as durable fashion goods circulate in second-hand markets. In an uncertain and changing world, choice is an experimental activity whether on is seeking to try novel products or make a novel impression in competing for status. Boundedly rational consumers will sometimes make mistakes but the finite nature of fashions means that both those who made socially approved choices and those who made mistakes are given a fresh chance to prove their status and decision-making capabilities each time a new fashion cycle starts.

Viewed from the market failure perspective, the order of the innovation process is a planned rational order-a taxis. However, from the theory of market process, innovation is a spontaneous order-a cosmos. How one understands the order of innovation thus turns on priors of the order of markets. This paper proposes five new arguments for the order of innovation, none of which derive from a theory of markets. All five further develop the spontaneous-order view of innovation. These are: (1) science as a spontaneous order; (2) new business models; (3) co-operation in developing technologies; (4) clusters and innovation externalities; and (5) copying processes and local adaptation.

Analysis of public support for science & innovation should begin with the primary relation, namely economic evolution. Material ‘public support’ is tapped from the wealth of the economic system, and innovation draws upon science to evolve the economy. Public institutions support the economy and economic growth strengthens public institutions. So, the real question here is with the role of the state in economic evolution. How can public support drive economic growth and evolution? This is a big question that deserves a good answer. My submission is this: evolutionary economic theory can provide such analysis and, given that, the Productivity Commission should consider trailing evolutionary economics in its report. Some specific references and analytic suggestions regarding focus and method are hereby offered for consideration.

This paper explores the economic and cultural contribution of the arts and its effect on economic growth and evolution. The crucial connection is supplied by an innovation systems perspective on the creative industries. In this view, the creative industries contribute not just to value-added and jobs, but more importantly, to the evolutionary process by which economic systems grow. This paper thus offers a new view of the economics of the arts and creative industries re-conceptualised as part of the innovation system of an evolving economic order. Analytic and policy implications are then outlined in terms of an evolutionary approach to the economics of the arts.

This paper reviews the theory of intellectual property (IP) in the creative industries (CI) from the open system evolutionary economic perspective. We argue that many current confusions about the nature and role of IP and dysfunctions of extant IP regimes in the CI can be traced to three widely overlooked aspects of the open system growth of knowledge context of IP in the CI: (1) the effect of globalization; (2) the dominating relative economic value of reuse of creative output over monopoly incentives to create input; and (3) the evolution of business models in response to institutional change. We conclude that a substantial weakening of copyright will, in theory, produce positive net public and private gain due to the evolutionary dynamics of all three dimensions.

The authors present an application of their theory of ideas by undertaking an investigation on the origins of the ideas for a broad class of sports. They begin their search in this chapter for the source of the antecedent idea spaces that provided the core ideas of sports. In doing this, the authors take the long view, presenting the evidence for the very first shared idea spaces that likely developed in human history, including hunting and lithic technology. They examine the case for how these idea spaces assumed a crucial role in the overall idea hierarchy for the key ideas across a range of sports.

Blockchains are the distributed ledger technology underpinning cryptocurrencies such as Bitcoin and Ethereum. Blockchains facilitate exchange, provide public goods (security, property rights), map identities, and provide a platform for contracting and the enforcement of contracts. Some applications of blockchains offer the possibility of new forms of ‘corporate’ organisation—such as distributed autonomous organisations. Other applications suggest the possibility of removing public good provision from states to networks—such as property titling and identity. This chapter offers a constitutional political economy perspective on the development of the blockchain ecosystem. We argue that blockchains are constitutional orders—rule-systems in which individuals (or firms, or algorithms) can make economic and political exchanges, and so offer a unique economic environment for institutional discovery and constitutional experimentation.

Abstract Hodgson’s recent book Is there a Future for Heterodox Economics? presents a serious critical analysis of the development of heterodox economics and offers diagnosis of why it has mostly failed to attain its early revolutionary hopes, but instead has become something of an intellectual backwater. Hodgson proposes several possible pathways back into the mainstream. I argue here in support of Hodgson’s diagnosis but propose a specific way forward with heterodox economics as the study of the evolution of economic rules and focused on analysis of a digital economy.

Economics of Cute          There are many ways to study cute: for example, neuro-biology (cute as adaptation); anthropology (cute in culture); political economy (cute industries, how cute exploits consumers); cultural studies (social construction of cute); media theory and politics (representation and identity of cute), and so on. What about economics? At first sight, this might point to a money-capitalism nexus (“the cute economy”), but I want to argue here that the economics of cute actually works through choice interacting with fixed costs and what economists call ”the substitution effect”. Cute, in conjunction with the Internet, affects the trade-offs involved in choices people make. Let me put that more starkly: cute shapes the economy. This can be illustrated with internet animals, which at the time of writing means Grumpy Cat.   I want to explain how that mechanism works – but to do so I will need some abstraction. This is not difficult – a simple application of a well-known ...

Web3, underpinned by blockchain technology, is an evolution of digital infrastructure, whereby protocol-enforced consensus mechanisms facilitate the direct (that is, peer-to-peer) exchange of value between users, removing the need for trusted intermediaries. Existing blockchain experiments seek to create artist-centric business models, dismantling agency-centred business models that brokered and organised connections between artists and their fans or buyers. By enabling the automation of payments, licensing, intellectual property management, contracting and governance, digital content storage and access, blockchain technology also enables artists to set the terms of their market participation. An emerging decentralised ‘internet of value’ has the potential to reshape creative industries business models. The extent to which creative workers and cultural products are transformed by these infrastructures may depend on the adaptive responsiveness of existing institutions (including law, philanthropy and finance) to technological opportunities, although it is also possible that change may occur regardless of institutional efforts. A research agenda for Web3 creative industries would therefore extend upon existing knowledge of creative work, policy and funding models, as well as the consequences of technological change for distribution and access. In this chapter, we discuss case studies from music (Ujo-music and dotblockchain), collectibles (cryptokitties), visual arts (dada.nyc), and storytelling (Cellarius) and the policy and research questions that arise. In addition to offering new methods for the buying and selling of creative works, with implications for how creative production is rewarded, some of these experiments are seeking to destabilise the digital economy more broadly and to create avenues for values-based markets that provide creators with alternatives to commercially-oriented income streams.

The theory of innovation policy widely neglects private uncertainty about optimal matching of an idea to an innovation institution for development. I argue that information pooling in the commons enables private uncertainty to be effectively resolved, prior to subsequent development in private or public innovation institutions. This suggests that the innovation commons may be a crucial institutional component of an innovation system in the early phase of an innovation trajectory, but also that it is likely to be a temporary phase.

An innovation commons is an institutional solution to the innovation problem in which knowledge, information and resources are pooled under defined governance rules to enable a particular community access to those inputs into innovation, often in a context of peer production. This paper examines the economics of why and when the commons is an effective institutional solution to the innovation problem. I set out four basic models of the innovation commons: (1) dual-commons; (2) evolution of cooperation; (3) strategic defence; (4) uncertainty of idea type. I suggest how innovation policy might look like were it were to recognise the contribution of the innovation commons.

For the past century economists have proposed a suite of theories relating to industrial dynamics, technological change and innovation. There has been an implication in these models that the institutional environment is stable. However, a new class of institutional technologies — most notably blockchain technology — lower the cost of institutional entrepreneurship along these margins, propelling a process of institutional evolution. This presents a new type of innovation process, applicable to the formation and development of institutions for economic governance and coordination. This paper develops a replicator dynamic model of institutional innovation and proposes some implications of this innovation for innovation policy. Given the influence of public policies on transaction costs and associated institutional choices, it is indicated that policy settings conductive to the adoption and use of blockchain technology would elicit entrepreneurial experiments in institutional forms harnessing new coordinative possibilities in economic exchange. Conceptualisation of blockchain-related public policy an innovation policy in its own right has significant implications for the operation and understanding of open innovation systems in a globalised context.

This paper introduces the V-form organisation, a new form of firm organisation where vertical integration is outsourced to a decentralized distributed ledger (a blockchain). V-form organisations rely on the coordination of a (trusted) third party. It looks specifically at two instances of V-form organisation being established on the IBM-Linux Foundation Hyperledger permissioned blockchain. The paper concludes with four recommendations for strategic management about how to adjust to a V-form world, and four recommendations for policymakers.

How do people and firms choose to relocate to new cities? We argue that this difficult yet consequential choice is often poorly made, or not made at all, resulting in undermobility and consequent losses in individual utility and aggregate social welfare. We propose a behavioural economic theory of why this happens and the predictable directions in which failure occurs in terms of characteristic biases and heuristics in city choice (including status quo bias, loss aversion, endowment effect, availability heuristics, present bias, social norms, anchoring, elimination heuristics, sunk cost effects, and regret aversion). We examine how cities and their regional context might mitigate this problem by improving information as inputs into choice and by redesigning the choice architecture to embed effective choice heuristics into city search and match databases.

Blockchains are a new digital technology that combines peer-to-peer network computing and cryptography to create an immutable decentralised public ledger. Where the ledger records money, a blockchain is a cryptocurrency, such as Bitcoin; but ledger entries can record any data structure, including property titles, identity and certification, contracts, and so on. We argue that the economics of blockchains extend beyond analysis of a new general purpose technology and its disruptive Schumpeterian consequences to the broader idea that blockchains are an institutional technology. We consider several examples of blockchain-based economic coordination and governance. We claim that blockchains are an instance of institutional evolution.

This supplementary file to the Creative City Index 2012 Report summarises method and tool used to create the index. It contains the following sections: 1. CCI Creative City Index, calculating the index for all six sample cities; 2. Summary and Sensitivity, summarising the eight index components and describing the sensitivity analysis; 3. Research Report and Additional Notes, referencing data sources and methods.

ABSTRACT We propose a stylized and tractable neo-Schumpeterian model of sectorial transformations in which demand-side knowledge constraints inhibit innovation diffusion and industrial change, causing structural instability. Evolutionary competition in the model implies that innovation can overshoot the absorptive capacity of demand, leading to a slowdown in sectorial dynamism and even to structural collapse. Closed-form analytical results prove the existence of a unique stationary state in the dynamic model that is (globally) asymptotically stable. We show how the dynamic paths and the stationary rest-point depend on the trade-off between innovation and demand absorptive capacity parameters. To illustrate the plausibility and relevance of our results, we examine the Australian windsurfing industry in which diminished demand absorptive capacity (in the terms of the model) was a factor underlying sectoral collapse. We discuss how development of absorptive capacity of demand presents a collective action problem for an industry sector, and the role of demand-side factors as constraints in industry and innovation policy.

Drawing on economic transaction cost theory, this paper explores how blockchain and distributed ledger technology could shift the smart city agenda by altering transaction costs with implications for the coordination of infrastructures and resources. Like the smart city the crypto city utilizes data informatics, but can be coordinated through distributed rather than centralized systems. The data infrastructure of the crypto city can enable civil society to run local public goods and services, and facilitate economic and social entrepreneurship.

We present a new evolutionary political economy approach to the study of transition dynamics based on a co-evolutionary model of differential citizen contributions to competing ‘utopias’—market fundamentalism, socialism, and environmentalism. We model sustainability transitions as an outcome of ‘utopia competition’ in which environmentalism manages to coexist with the market, while socialism vanishes. Our simulation-based framework suggests that the individual economic contributions of citizens to the battle of ideas—both the distribution within a utopia, and the interaction between different utopias—are crucial but much overlooked micro-factors in explaining the dynamics of sustainability transitions.

This article is an abbreviated version of a debate between two economists holding somewhat different perspectives on the nature of non-market production in the space of new digital media. While the ostensible focus here is on the role of markets in the innovation of new technologies to create new economic value, this context also serves to highlight the private and public value of digital literacy.

Sports innovation is an emerging research area linking sport to innovation management and practice. Innovation in sport can be seen in new technologies, equipment and clothing, in new strategies and training, in new consumer products and services, in new media and formats, and in the development of new sports. Although the role of sports innovation is widely recognized in global business and media, less attention has centered on it from an academic approach. This special section seeks to deepen our understanding of sports innovation with six papers that discuss issues associated with this emerging theme in innovation management.

The CCI Creative City Index (CCI-CCI) is a new approach to the measurement and ranking of creative global cities. It is constructed over eight principal dimensions, each with multiple distinct elements. Some of these dimensions are familiar from other global city indexes, such as the MORI or GaWC indexes, which account for the size of creative industries, the scale of cultural amenities, or the flows of creative people and global connectedness. In addition to these indicators, the CCI-CCI contributes several new dimensions. These measure the demand side of creative participation, the attention economy, user-created content, and the productivity of socially networked consumers. Global creative cities can often seem alike, in respect of per-capita measures of factors such as public spending on cultural amenities, or the number of hotels and restaurants. This is to be expected when people and capital are relatively free to move, and where economic and political institutions are broadly comparable. However, we find that different cities can register far larger differences at the level of consumer-co-creation and especially digital creative ‘microproductivity’. To explain this finding, we review the logic and rationale of creative and global city index construction and present a review of previous and contemporary indexes. We set out the case for our new model of a creative city index by showing why greater attention to consumer co-creation and microproductivity are important, as well as examining how these factors have been previously overlooked. We show how we have CCI-CCI Creative City Index measured these additional factors and indicate the effect they have on creative and global city indexes. We then present the findings from a pilot study of six cities, two Australian, two German and two from the UK, to indicate how the new index is calculated and applied. Our results indicate much greater variance arising from the new arguments between cities.

ABSTRACT We propose that a general analytic framework for cultural science can be constructed as a generalization of the generic micro meso macro framework proposed by Dopfer and Potts (2008). This paper outlines this argument along with some implications for the creative industries research agenda.

A distinct Australian identity is developing in the west. It comes from the Pilbara as a product of the mining industry, along with iron ore and our ‘comparative advantage'. By propping up Australia's economy in hard times, the mining industry is shaping notions of what this land is good for. It's a strong and masculine image: almost half the population of the Pilbara is employed in mining and construction, and 85 per cent of the workforce is male. That new romantic image of the west was depicted in the cinema success of 2011, partly funded by mining royalties: Red Dog without a master, a wanderer and a loyal mate to homesick miners, misfits and those trying to make an honest buck. This is an Australia where the land is gutted by big machines, where sweat and red dirt paint white men a violent colour. Politicians tell us that this is how Australia survives – it's what keeps us strong while Europe and America teeter on the precipice of financial collapse. The mining companies tell the Traditional Owners that this is the best hope for Indigenous advancement, as though it's this or nothing. When you head north of the Pilbara there is a different rhythm. The Kimberley spans 420,000 square kilometres, most of it strikingly beautiful. Even the mining industry there has a distinctly feminine orientation. Kimberley miners dig for the ingredients of jewellery, not steel – around nine-tenths of the world's pink diamonds come from Kimberley rocks. Pearls are farmed in its oceans, and the land is now turning fragrant. After forty years of unprofitable crop experimentation Kununurra growers discovered sandalwood, which produces a precious base oil used for perfume and incense. Locals joke that a bushfire would kill every mozzie in the Kimberley with the scent. Diamonds, pearls, sandalwood and the supporting industries constitute more than half of the Kimberley's economy. The national narrative is of dirty fuels and brute strength, but the Kimberley thrives on sweetness, beauty and decoration. First publishes in Griffith REVIEW Edition 36: What is Australia For?

Clay Shirky (2008) Here Comes Everybody: The power of organizing without organizations. Allen Lane: New York; ISBN 978-0-7139-9989-1; 336 pp; HC; GBP 20.00.Charles Leadbeater & 257 other people (2008) We Think: Mass innovation, not mass production. Profile Books: London; ISBN 978-1-86179-892-9; 256 pp; PB; GBP 12.99So here comes, we think, two extremely interesting, challenging and important new books by two leading commentators on the effects of the internet on business and society. They both argue that the internet and its emergent communication services and business models are revolutionary and normal: revolutionary in the sense that fundamental parameters have changed, and normal in the sense that these parameters have definitely changed, and the sooner we adapt to these changes the better. Both books seek to explain what has changed and how we might adapt.The books are of course different - Shirky focuses on the new possibilities for innovative organization, whereas Leadbeater focuses on the new possibilities for the organization of innovation. But they both find recourse to the same set of canonical examples and draw the same broad implications: namely that the world has changed (not might change or possibly will change, but has changed) and that the pertinent issue is 'what now?' Both set out coherent, detailed, entertaining, well-researched, rehearsed and occasionally devastatingly lucid examinations of this ordinary (not brave) new world of internet-based organization and innovation.Both are extremely persuasive and thoughtprovoking, such that our own copies of each are now utterly unsaleable due to an accumulated mass and mess of marginalia. Both are very good books that should be read together by anyone interested in - not to put too fine a point on it - the business and socio-cultural possibilities of the internet. And yet these books are not the same. One is definitely better than the other. And this, in the final analysis, was due to one of these books building out of consistent economic thinking, and with the other only arriving at that incidentally. Neither of our authors are economists, yet 'we think' that 'Here Comes Everybody' is, ultimately, the germinal book. This is because Shirky goes systematically further than just description and naming of the changes that are occurring (which Leadbeater does exceptionally well, and reason enough to read 'We Think') toward explication of the microeconomic foundations of what the internet has changed.Shirky's argument is that the effect of the internet is that it has changed the structure of transactions costs. This is a point that Leadbeater ('ranked by Accenture as one of the top management thinkers in the world' according to back cover blurb) has simply overlooked. Shirky's argument, however, is the sort of thing an economist would say, not a management thinker; that is the difference. His is an important, nay seminal, insight into the economics of organizations. Furthermore, the Shirky insight into the internet driven economics of organizations then works to systematically underpin the Leadbeater assertions about the internet organization of innovation.The problem with the Shirky book is that it does not then develop the innovation dimensions that Leadbeater focuses upon. And the problem with the Leadbeater book is that it lacks the Shirky foundations. Perhaps they should collaborate; but we hope not. Both of these books are written for a popular audience through excellent systematic organization of integrative ideas and examples. Both explain a new digital communication and coordination world of business, society, culture and innovation. Still, we like Shirky best because of his ingeniously superior economic analysis. Shirky argues many points, but three stand out.First, he argues that the declining cost of organisation due to internet-based technologies and behaviours has revealed the subterranean structure of the 'Coasian floor' underlying the economics of markets and organizations, upon which modern microeconomics is constructed. …

Innovation policy has developed along two broad fronts: market failure and systems failure. Both focus on investing in innovation (solving a market incentive problem) and building infrastructure for innovation (solving an institutional coordination problem). But an alternative approach to innovation policy, suggested by Juma (2016), is to focus on overcoming latent resistance through inclusive innovation (solving a socio-behavioural resistance problem). We distinguish between innovation policy that seeks to 'help its friends' versus innovation policy based about 'engaging its enemies'. This paper explores what an inclusive innovation policy approach based on engaging with the enemies of innovation might look like and how it would be developed.

In modern innovation economics, the underlying economic problems are market failure in private investment in new ideas, along with the coordination problems and the disruptive consequences of innovation. Innovation policy addresses the innovation problem with government action. Drawing upon the ideas of McCloskey, Hayek, Williamson and Ostrom, we propose a different conception of the innovation problem that emphasizes institutional governance solutions in solving a collective action problem associated with pooling distributed knowledge and other resources in order to discover the value of a new technology.