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 8: Social Network Markets

John Hartley, Stuart Cunningham and Paul Ormerod

Subjects: economics and finance, evolutionary economics


with John Hartley, Stuart Cunningham and Paul Ormerod1 8.1 INTRODUCTION The concept of creative industries has been a feature of academic and policy literature for over a decade. During this time, the standard definition has not changed much from its initial DCMS (1998) conception – namely, as an extension of the cultural industries definition to incorporate the copyright industries. The creative industries are defined in terms of an industrial classification of what they do, or what they produce and how they do it. And although there have been many grumbles and even dismissive critique of the details of the classifications – too narrow, too broad, too inconsistent with extant classification, too arbitrary and opportunistic – the broad notion that an industrial classification should proceed on industrial lines is seemingly on firm foundation. The creative industries are thus implicitly defined and classified according to industrial sectors. The standard industrial classification system was developed over half a century ago when the economy had a simpler structure that could be categorized more readily than now by the type of industrial activity in which a firm was engaged and the nature of its material inputs and outputs. Since then, the economic system has become considerably more complex and service-oriented. Yet there is a general problem with this standard industrial classification (SIC). Specifically, industries do not actually exist in microeconomic theory: they are not natural categories in themselves. What exists, of course, are agents, prices, commodities, firms, transactions, markets, organizations, technologies and institutions. These are what is economically...

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