Summary

"The first insight, described in chapter 3, is that networks and connections really matter. This is not a surprise to those involved in the growing discipline of complexity and behavioural economics, but it is a fact that does not yet lie at the heart of UK economic policy. We understand that there is value in a cluster, and we support the building of business incubation units in science parks, but we do not fully accept the responsibility of government continually to foster horizontal links between existing institutions in order to create a flat structured national system of innovation in every discipline.

The second insight is that even where the network exists, it takes a nimble, interventionist, knowledge-hungry state to catalyse them into action. If it is in the public interest for innovation to occur, there is a role for the public sector to require it to happen, rather than sitting back and hoping it will happen of its own accord provided the conditions are right. Countries playing economic catch-up are able to do this relatively easily by having government strategies that copy what has happened elsewhere in the world. At the frontiers of knowledge, the role of government is harder to comprehend. This pamphlet draws on the experience of the USA in particular to show that innovation is far more likely to happen when it is commissioned via a multitude of contracts for particular advances or technological solutions, rather than by — for example — providing tax credits for general research and development, or badgering the banks to lend more to certain parts of the economy. This is not so much nudge as necessity. And scale matters. The political danger is that in an era where governments — and to a degree the public — believe the state has got too big, any talk of an interventionist approach in growth policy will be intellectually filed under the same heading as the failed policies of the 1970s. But this is not about hand-outs to unproductive national champions, nor is it Keynesian demand management. It is about looking at what works and making it work for the UK.

The complexity economist W Brian Arthur in his recent book The Nature of Technology talks about technology in a functional way as a means to a purpose, and about innovation as the combination and Darwinian-style evolution of complementary technologies.

Radical change occurs when a new underlying principle is invoked in order to solve the technological problem being considered when more conventional solutions have failed.

We hope that this pamphlet will, in its own way, provoke a radical change in the understanding of the role that government can play in economic policy." (http://www.demos.co.uk/files/Entrepreneurial_State_-_web.pdf)

Entrepreneurial State

Summary

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