Economic Nature of Cultural Enterprise and Creativity as the Generation of Innovation

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Introduction to the book by the editors: Michael A. Peters & Daniel Araya. The Economic Nature of Cultural Enterprise and Creativity as the Generation of Innovation


Excerpts

"In The Creative Economy: A New Definition, a report prepared for the New England Foundation for the Arts (NEFA), Douglas DeNatale and Gregory H. Wassall (2007), writing for the New England Foundation for the Arts (NEFA) note that creative economy research consists of two separate models: “one emphasizes the production of cultural goods and services—however defined—as a valuable contributor to society; the other emphasizes the role of intellectual innovation as an economic driver of particular value during periods of societal transition” (p. 5). They go on to write: “Definitions of the creative economy diverge at the point of whether “creative” should be interpreted as culturally based or ideational in nature, using “creative” as shorthand for cultural expression on the one hand, and intellectual invention on the other” (p. 5).

NEFA’s model identifies three primary and interrelated components: the Creative Cluster (industry), the Creative Workforce (occupation) and Creative Communities (geography). NEFA’s new definition comprises the “cultural core” conceived in concentric circles, surrounded by “cultural periphery” and “creative industries.” The “cultural core” “includes occupations and industries that focus on the production and distribution of cultural goods, services and intellectual property.” The beauty of this definition is that it constitutes an operational definition that allows researchers to use U.S. federal sources of data to list and count industries and occupations according to explicit and standard categories.

As the nexus of innovation increasingly moves from labor-intensive “smokestack” industries to “mind work,” creativity is becoming critical to policy discussions on economic growth. Creativity and knowledge-based innovation are now increasingly seen as powerful engines driving economic growth. In the white paper “Creative Economy Research in New England: A Reexamination,” for example, DeNatale and Wassall (2006) trace New England's regional experience with the creative economy framework to the New England Creative Economy Initiative in 1998, noting that economists have devoted little time to “creative industries.” New England’s initiation of creative economy research is the oldest in the United States, and DeNatale and Wassall acknowledge that the first statewide survey of creative industries dates back to 1973, followed by an arts impact study in 1978 (The Arts and the New England Economy, 1980). These and subsequent studies formed the basis for the NEFA tripartite model. Most of this work was classificatory rather than conceptual or theoretical.

As DeNatale and Wassall (2006) go on to write: “Richard Florida’s 2002 book, The Rise of the Creative Class, brought the concept of a creative economy to a national audience.” Florida’s use of the term “creative economy” is more expansive than many previous approaches, springing from a growing understanding of the way digital production has changed the dissemination and control of intellectual property, rather than simply the economics of the cultural and creative industries. The economics of the cultural enterprise is a strand of economics that began in the early 1970s around the Journal of Cultural Economics, established in 1973, and the Association of Cultural Economics International, informally organized in 1979. This form of analysis tended to be concerned with the economic impact of non-profit cultural organizations such as galleries, theatres, television, and cultural tourism. DeNatale and Wassall (2006) suggest that Richard Caves’s 2000 book, Creative Industries: Contracts Between Art and Commerce is the standard work defining the field.

At the national policy level, the most widely cited definition for the creative economy comes from the UK Government Department for Culture, Media and Sport (DCMS), referring to “those industries which have their origin in individual creativity, skill and talent… through the generation and exploitation of intellectual property” (DCMS 2001, p. 4). These industries include advertising; architecture; art and antiques markets; computer and video games; crafts; design; designer fashion; film and video; music; performing arts; publishing; software; television and radio. More recently, the UN Creative Economy Report 2008 identifies creative industries with “the creation, production and distribution of goods and services that use creativity and intellectual capital as primary inputs [to] produce tangible goods and intangible intellectual or artistic services” (p. 4).

The Creative Industries Task Force (CITF) set up under Tony Blair’s new Labor government identified six core issues underlying creative industries: export promotion; skills and education; access to finance; taxation and regulation; intellectual property rights; and regional issues and commissioned the Creative Industries Mapping Documents 2001 which identified the activities and economic performance of each creative industry; their potential for growth; and the key barrier to growth. The taskforce also initiated a series of mapping exercises.

It is clear that the twin policy imperatives for the UK and New England developed first, and then came the more theoretical and general accounts even if it is the case that the emergence of these policy notions and measurements of the “creative economy” took place within a changing theoretical environment that, in particular, included new understandings such as the “knowledge economy” (OECD, 1996), endogenous growth theory (Romer, 1990), and the “learning economy” (Lundvall & Johnson, 1994). The “creative economy” is in fact a conceptual outgrowth of a changed understanding based on work completed on the “knowledge economy” during the 1990s and early 2000s (Carafa, 2008), as a development of earlier theories in sociology and management concerning the “information society” and “post-industrial society” (Peters et al., 2009; Peters, 2007; Peters & Besley, 2006). In the U.K.’s white paper developed by the Department for Trade and Industry (1998a; see also 1998b) Our Competitive Future: Building the Knowledge Driven Economy, a knowledge-based economy is defined as: “… one in which the generation and the exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge; it is also about the more effective use and exploitation of all types of knowledge in all manner of activity.” It is suggested that knowledge is more than just information, and cites a distinction between codified and tacit knowledge. Codifiable knowledge can be written down and easily transferred to others, whereas tacit knowledge is “often slow to acquire and much more difficult to transfer.” Knowledge was included by the World Bank as a theme in its 1998 World Development Report: “For countries in the vanguard of the world economy, the balance between knowledge and resources has shifted so far towards the former that knowledge has become perhaps the most important factor determining the standard of living. ... Today’s most technologically advanced economies are truly knowledge-based.”

In this white paper, the Department of Trade and Industry (1998) also notes that the OECD has drawn attention to the growing importance of knowledge, indicating that the emergence of knowledge-based economies has significant policy implications for the organization of production and its effect on employment and skill requirements. The report emphasizes “new growth theory,” charting the ways in that education and technology are now viewed as central to economic growth. Neoclassical economics is limited in that it does not specify how knowledge accumulation occurs and thus cannot acknowledge externalities. It also fails to consider human capital, suggesting that education has no direct role. In contrast, new growth theory has highlighted the role of education in the creation of human capital and in the production of new knowledge (see Solow 1956, 1994). On this basis, it has explored the possibilities of education-related externalities. In short, education is important for successful research activities (e.g., by producing scientists and engineers); they, in turn, are important for productivity growth, and education creates human capital; the human capital then directly affects knowledge accumulation and thus productivity growth. Not only do research and development expenditures contribute to productivity growth, but education is also important in explaining the growth of national income.

As Chapter 1 of the UK report Creative Britain (2008) makes clear, new modes of education are critical to this discussion.

The report suggests that “there is a growing recognition of the need to find practical ways of nurturing creativity at every stage in the education system: from the nursery through to secondary school; whether in academic or vocational courses; on apprenticeships or at university.”

There is now widespread agreement among economists, sociologists, and policy analysts that creativity and innovation are at the heart of the global knowledge economy: together creativity and innovation define knowledge capitalism and its ability to continuously reinvent itself. Together and in conjunction with new communications technologies they give expression to the essence of digital capitalism—the “economy of ideas”—and to new architectures of mass collaboration that distinguish it as a new generic form of economy different in nature from industrial capitalism. The fact is that knowledge in its immaterial digitized informational form as sequences and value chains of 1s and 0s—ideas, concepts, functions, and abstractions—approaches the status of pure thought. Unlike other commodities, it operates expansively to defy the law of scarcity that is fundamental to classical and neoclassical economics and to the traditional understanding of markets. A generation of economists have expressed this truth by emphasizing that knowledge is (almost) a global public good: it is non-rivalrous and barely excludable. It is non-rivalrous in the sense that there is little or marginal cost to adding new users. In other words, knowledge and information, especially in digital form, cannot be consumed. My use of knowledge or information as digital goods can be distributed and shared at no extra cost, and the distribution and sharing are likely to add to its value rather than to deplete it or use it up. This concept reflects the essence of the economics of file-sharing; it is also the essence of new forms of distributed creativity, intelligence, and innovation in an age of mass participation and collaboration. Only when knowledge is codified, when it is converted from its immateriality at the ideation stage to become embodied as a physical resource—a book, CD, tape, image, movie, or code—can it easily become a form of property and therefore be bought and owned. Taken together, the ubiquitous presence of digital technologies and the impact of networked collaboration constitute a new mode of information production that is reshaping societies around the world.

In Creativity and the Global Knowledge Economy (Peters, Marginson, & Murphy, 2009), we described this trend using the following vocabulary. Today there is a strong renewal of interest by politicians and policy-makers worldwide in the related notions of creativity and innovation, especially in relation to terms like the creative economy, knowledge economy, enterprise society, entrepreneurship, and national systems of innovation. In its rawest form, the notion of the creative economy emerges from a set of claims that suggests that the Industrial Economy is giving way to the Creative Economy based on the growing power of ideas and virtual value—the turn from steel and hamburgers to software and intellectual property. In this context, policy increasingly latches on to the issues of copyright as an aspect of IP, piracy, distribution systems, network literacy, public service content, the creative industries, new interoperability standards, the WIPO, and the development agenda, WTO and trade, and means to bring creativity and commerce together. At the same time, this focus on creativity has exercised strong appeal to policy-makers who wish to link education more firmly to new forms of capitalism emphasizing how creativity must be taught, how educational theory and research can be used to improve student learning in mathematics, reading, and science, and how different models of intelligence and creativity can inform educational practice. Under the spell of the creative economy discourse, there has been a flourishing of new accelerated learning methodologies together with a focus on giftedness and the design of learning programs for exceptional children. One strand of the emerging literature highlights the role of the creative and expressive arts, of performance, of aesthetics in general, and the significant role of design as an underlying infrastructure for the creative economy.


Rise of the Creative Economy

In the last twenty years, we have moved from the postindustrial economy to the information economy to the digital economy to the knowledge economy to the “creative economy.” The notion of creative economy, pioneered in different ways by Charles Landry, John Howkins, Richard Florida, and Charles Leadbeater early in this decade, increasingly has become associated with postmarket notions of open source public space, democratized creativity, and intellectual property law that has been relativized to the cultural context emphasizing the socio-cultural conditions of creative work. Alongside this development, the notion of entrepreneurship, as interpreted originally by Schumpeter, breaks out of its business origins, becoming a rubric for larger transformation, and a set of infrastructural conditions enabling creative acts. Likewise the endogenous growth theory developed simultaneously by Paul Romer and others in economics has opened a space for the primacy of ideas and installed continuous innovation as mainstream OECD economic policy. These moves have brought to the forefront forms of knowledge production based on the commons and driven by ideas not profitability per se; and have posed the question of not just “knowledge management” but the design of “creative institutions” embodying new patterns of work.


Education in the Creative Economy

We seem to be moving into a different world now; a world in which the raw materials are no longer coal and steel produced by machines but creativity and meaning produced by the human imagination. Beyond conventional discussions on the knowledge economy, many scholars suggest that creative work and a rising “creative class” are fomenting shifts in advanced economies from mass production to creative innovation. Emerging along several paths, Charles Landry, John Howkins, and Richard Florida have been pioneers in understanding these dynamics. The publication of Landry’s The Creative City (2000), Howkin's The Creative Economy (2001) and Florida's The Rise of the Creative Class (2002) have catalyzed a rich discourse on the value and importance of creativity to the global economy. Laying the foundations, John Howkins offered the first account of this new economy, even as Charles Landry explored the possibility of developing benchmarks for stoking creative cities. Most recently, Richard Florida has offered an empirical account of the logic and dynamism of the creative economy. We know that creativity and innovation have become critical to understanding the complex challenges facing us in the twenty-first century. In this volume we examine the contours of the creative economy discourse and consider its implications for education. Bringing together eminent scholars and practitioners from around the world, we consider the need for new modes of education that respond to the growing importance of creativity to a global economy and society.

John Dewey once said that education is the foundation for an ever-evolving economy and culture. This vision has clearly become reality today. Much as the assembly line shifted the key factor of production from labor to capital, computer networks are now shifting the key factor of production from capital to innovation. It seems increasingly clear that information and communications technologies (ICTs) are restructuring global production so that innovation is now anchored to social networks that criss-cross nations, cultures, and peoples. Much as the assembly line shifted the critical factor of production from labor to capital, computer networks are now shifting the critical factor of production from capital to innovation.

In Education in the Creative Economy, we want to explore the need for new modes of education that can effectively tap the collective intelligence that powers these social networks. One of the major questions that we explore through this book is “What systems, policies and structures are most conducive to making it possible for the largest number of people in a society to participate in the creation and development of new cultural forms?” Creativity has become the economic engine of the twenty-first century. No longer the preserve of creative industries, “creative capital”—in the form of innovative thinking, professional skill, and networked collaboration—has become crucial to the global economy. Harnessing these creative capacities is now fundamental to renewing education today. This volume is offered as an initial foray into this new territory."

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