Creative Industries and Economic Evolution

Creative Industries and Economic Evolution

New Horizons in Institutional and Evolutionary Economics series

Jason Potts

The creative industries are key drivers of modern economies. While economic analysis has traditionally advanced a market-failure model of arts and culture, this book argues for an evolutionary market dynamics or innovation-based approach. The book explores theoretical and conceptual aspects of an evolutionary economic approach to the study of the creative economy. Topics include creative businesses and labour markets, social networks, innovation processes and systems, institutions, and the role of creative industries in market dynamics and economic growth.

Chapter 5: Creativity under Competition and the Overshooting Problem

Jason Potts

Subjects: economics and finance, evolutionary economics

Extract

with Peter Earl Prolegomena This paper was written in 2009 when Earl audited one of Potts’s lectures on Hyman Minsky’s ‘financial instability hypothesis’ and realized that a similar argument could be made about the competitive organizational dynamics of creativity. This is a truncated version of a longer paper yet to be published. 5.1 INTRODUCTION A widely observed phenomenon in the creative industries is the tendency for creative budgets to blow out and for creative concepts to escalate in complexity as suppliers chase ever-shifting norms of what is hip, cool, hot, or attention arresting. Infamous examples lie in the creative excesses of ‘prog rock’ bands of the 1970s, or in any turn toward debauchery, selfreferential excess or kitsch in modern art. But this phenomenon is, we argue, to be found everywhere creativity and competition meet. It is not a uniquely modern form of decay but a logic of competition with predictable pathways and consequences. Our hypothesis is that creative agents tend to compete by going deeper into their repertoire of ability and talent, which adds further depth, meaning, subtlety and complexity to their creative product, whether an album, a script, or a design concept. But as this happens, the norms of the genre become more complex through further layering of additional depth, meaning and detail. This creative competitive process can thus become an aesthetic ‘arms race’ that will systematically tend to overshoot consumer capabilities and demand (as with Minsky’s (1975) Keynesian monetary dynamics model of debt overshooting). Interestingly, this occurs much...

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