Understanding the Creative Economy and the Future of Employment ||

The motivation of this book is simple, yet fundamental: No complete understanding of the modern economy is possible without a thorough grounding in the field of innovation as an economic activity. The book, as its title emphasizes, aims at helping readers to gain a comprehension of two inextricably linked issues: challenging innovation and the future of human work. To this end, the book integrates a triad of topics: innovation as an economic activity, modus operandi of an innovation-driven economy, and the persistent progression toward automation of human jobs. The main message conveyed by this book is that a creative economy will converge to an economy governed by smart machines aka robots, but will produce benefits if addressed in a rational manner. As to the salient features of this book, Accessibility: Accessible to readers with only cursory knowledge (if any) in economics Style: Adherence to a discursive, non-mathematical style Brevity: Covers material in a succinct, easily understandable manner, drawing upon real world examples Appendices: Each chapter is supplemented with appendices that elaborate upon pertinent real world examples and applications Self-contained: All the key concepts are defined and exemplified within the book Applicability: Uses examples that resonate with a wide audience of readers concerned about the advance of robots Non-mathematical diagrams: Provides accessible and readily understandable figures/graphs Protective stance: Contains a rational response to the march of the robots which is useful for workers of all ages Preface Acknowledgements Introduction Chapter 1 A Bird ́s-Eye View of the Economy and Economics Chapter 2 What a Creative Economy Is and How It Works Chapter 3 Creativity and Intellectual Property Chapter 4 Innovation Environment Chapter 5 Microeconomic Aspects of Innovation Chapter 6 Looking to the Near Future Chapter 7 Looking to the Distant Future Appendices Appendices to Chapter 1 Appendices to Chapter 2 Appendices to Chapter 3 Appendix to Chapter 4 Appendix to Chapter 5 Appendix to Chapter 6 Appendices to Chapter 7 Afterthought Contents About the Authors Chapter 1: A Bird ́s-eye View of the Economy and Economics 1.1 What Is an Economy? 1.1.1 Economic Agents, Prices and Profits 1.1.2 Performance, Strong Economy, Weak Economy 1.1.3 Scarcity and Choice 1.1.4 The Economy as a Complex Variable System 1.1.5 Time Travelling 1.1.5.1 First Industrial Revolution 1.1.5.2 Second Industrial Revolution 1.1.5.3 Third Industrial Revolution 1.1.5.4 Fourth Industrial Revolution 1.1.6 Technological Progress and the Profit Motive 1.2 What Is Economics? 1.2.1 Macroeconomics and Microeconomics 1.2.2 Thinking in General 1.2.3 Thinking Like an Economist 1.2.4 Economic Models 1.2.5 Selecting Tools 1.2.6 Two Different Kinds of Models 1.2.6.1 Two Types of Imaginary Humans 1.2.7 Progress in Economics 1.3 Guiding Insights 1.3.1 Insight : Economies Are Complex and Evolving Systems 1.3.2 Insight : Models Are Necessary 1.3.3 Insight : Material Incentives Matter 1.3.4 Insight : Prices and Profits Decide the Allocation of Resources 1.3.5 Insight : Innovation Is a Prime Mover of the Modern Economy 1.4 Economic Predictions 1.5 Chapter Summary Appendices Appendix A: Innovation as a Problem Area of Economics Pitfalls with the Standard Definition of Economics A Working Definition of Economics Innovation as a Problem Area: Logical Justification Innovation and Mainstream Economics List of Problem Areas: Incomplete and Open Appendix B: The Invisible Hand and Innovation Physiocrats Adam Smith Wealth of Nations Invisible Hand Passage Invisible Hand: Context and Individuals Alluded Reasonable Income Distribution: Not Guaranteed Darwinism and the Invisible Hand Summary Curious Interpretation Selected References Chapter 2: What a Creative Economy Is and How It Works 2.1 Introduction 2.2 Defining Characteristics of a Creative Economy 2.2.1 Creative Economy 2.2.2 Creative Society 2.3 A Narrative Model of Economic Evolution 2.3.1 Stylized Economies 2.3.2 Porter Development Path 2.4 Innovation as an Economic Activity: Background Model 2.4.1 Dimension 1: Creativity 2.4.2 Dimension 2: Intellectual Property 2.4.3 Dimension 3: Innovation Environment 2.5 The Essentials of a Creative Economy: Ideas and Human Capital 2.5.1 Ideas and Human Capital 2.5.2 Ideas with Economic Value 2.5.3 Profitable New Ideas 2.6 The Mechanics of a Creative Economy: Basic Model 2.6.1 Perpetual Innovation 2.6.2 Basic Model of a Creative Economy 2.6.3 Concluding Comment 2.7 Chapter Summary Appendices Appendix C: Ideas and Human Capital as Economic Products Classification of Products # 1: Rivalness Classification of Products # 2: Excludability Two-Way Classification of Products Appendix D: The Creative Economy and Endogenous Growth Theory Concluding Remark Selected References Chapter 3: Creativity and Intellectual Propery 3.1 Introduction 3.2 Creative Thinking 3.2.1 Logical Thinking 3.2.2 Lateral Thinking 3.2.3 Imaginary Thinking 3.2.4 Critical Thinking 3.2.5 Concluding Remarks on Creative Thinking 3.3 Intellectual Property 3.3.1 Patents 3.3.1.1 First Patent System: Venice 1474 3.3.1.2 Discoveries and Inventions 3.3.1.3 Patentability Guidelines 3.3.1.4 Eligibility Conditions 3.3.1.5 Bogus Patents 3.3.1.6 Licensing 3.3.1.7 Expiring Patents 3.3.1.8 Enforcing Patent Rights 3.3.1.9 Portfolio of Patents and Patent Trolls 3.3.2 Copyrights 3.3.2.1 Term of a Copyright 3.3.2.2 Smiley Face: A Sad Lesson 3.3.2.3 Warning 3.3.2.4 Copyright Infringements 3.3.2.5 Copyrights and Moral Rights 3.3.3 Trade Secrets 3.3.4 Trade Secrets Thefts 3.3.5 Trademarks 3.3.5.1 Trademarks and Packaging 3.4 Chapter Summary Appendices Appendix E: Further Aspects on Creative Thinking Logical Inference and Mathematics Lateral Thinking and Schizophrenic Thinking Critical Thinking and Previous Knowledge Sudden and Rapid Breakthroughs? Edison ́s Rule The Photocopier Harry Potter Atlassian Appendix F: Further Aspects on Intellectual Property Patents and Partial Excludability Knowledge Spillovers Externalities Software Protection Protecting Magic Tricks: ``Shadows ́ ́ Selected References Chapter 4: Innovation Environment 4.1 Introduction 4.2 Innovation Infrastructure 4.3 Clusters 4.3.1 Anatomy of a Cluster 4.3.1.1 Resource Endowments 4.3.1.2 Home Demand 4.3.1.3 Related and Supporting Industries 4.3.1.4 Context for Local Competition 4.3.1.5 Government Factor 4.3.1.6 Chance Events 4.3.2 Linkages Between Integral Parts 4.4 Competitive Advantage: Domestic and International 4.4.1 T-entrepreneurs 4.5 Venture Capital 4.5.1 Adverse Selection and Moral Hazard 4.5.2 Innovation Life Cycle 4.5.3 Filing the Financial Void 4.5.4 Pattern of Behaviour of Venture Capitalists 4.5.5 Profile of the Ideal Innovator 4.5.6 Venture Capital Market 4.5.7 Angel Investors 4.6 Chapter Summary Appendix G: Miscellaneous Points on the Innovation Environment Incentives Regime 2015 Australian Innovation Agenda: Generalities 2015 Australian Innovation Agenda: Criticisms Venture Capitalist-Innovator Relationship Principal-Agent Problem Innovators Behaving Badly Avoiding Principal-Agent Problems Selected References Chapter 5: Microeconomic Aspects of Innovation 5.1 Introduction 5.2 Innovation Process and Related Terminology 5.2.1 Inputs and Outputs 5.2.2 Research and Development 5.2.3 Profit-Seeking R&D 5.2.4 Factors Influencing R&D Undertakings 5.2.5 Classifying Innovation Outputs: Technological and Organizational Innovations 5.2.6 First Risk 5.2.7 Second Risk 5.2.8 Third Risk 5.2.9 Innovation Costs 5.2.10 Successful Innovation and Commoditization 5.3 The Innovator ́s Dilemma 5.3.1 Sustaining and Disruptive Innovations 5.3.2 Examples of Disruptive Innovations 5.3.3 Innovation and Market Power 5.3.4 Statement and Solution of the Innovator ́s Dilemma 5.3.5 Incumbents Disrupting Themselves 5.4 Fast Innovation Approach 5.4.1 Fast Innovation 5.4.2 Creative Economy: Boon or Bone? 5.5 Chapter Summary Appendix H: Business Innovation and Social Innovation Bifocal Innovations Pure Social Innovations Anticipatory Shipping Facebook Clean Up the World Putting Them Altogether Concluding Comment Selected References Chapter 6: Looking to the Near Future 6.1 Introduction 6.2 Historical Perspective 6.2.1 Luddites 6.2.2 The Machinery Question: Ricardo 6.2.3 Marx: Wrong Prediction 6.2.4 Marshall: Two Penetrating Insights 6.2.5 Marshall Decomposition Formula 6.2.6 Keynes-Schumpeter 6.2.7 The Return of the Machinery Question 6.3 Key Terminology 6.3.1 Human Replacement 6.3.2 Enabling Products 6.3.3 Enabling Firms- Recipient Firms 6.3.4 Robots, a Terminological Decision 6.3.5 Robots and Task Content of Production 6.3.6 Robot-Based Enabling Products 6.3.7 Examples 6.3.8 Section Summary 6.3.9 Marshall Decomposition Formula, Revisited 6.4 Robots: Friends or Foes? 6.4.1 Technology Enthusiasts 6.4.2 Technology Sceptics 6.4.3 Resolving the Controversy: Preliminary Remarks 6.4.4 Resolving the Controversy: Not Possible, Time Will Tell 6.4.5 Two Predictions About the Next Economy 6.4.6 Robotize or Perish 6.5 The Future of Employment: Anticipation Exercises 6.5.1 Occupation-Based Approach 6.5.2 Task-Based Approach 6.5.3 Predicting New Occupations 6.6 Rational Response to the March of the Robots 6.6.1 T-shaped Knowledge Workers 6.6.2 Classifying Tasks 6.6.3 Mapping Skills to Tasks 6.6.4 Skill-biased Technological Progress 6.6.5 Two Types of Automation Technologies 6.6.6 Investment in Human Capital 6.6.7 Components of the Protective Belt 6.6.8 Australia ́s Chief Scientist 6.7 Chapter Summary 6.8 Concluding Comment Appendix I: Expert Opinions on the Impact of Automation Australian Poll Comparison of Responses Overview of the Australian Poll by Borland and Potts Delloite Report: The Panglossian Economy is Attainable Selected References Chapter 7: Looking to the Distant Future 7.1 Introduction 7.2 Technological Unemployment Revisited 7.2.1 Hypothetical Example 7.2.1.1 Tables 7.2.1.2 Diagrams Derived from Tables 7.2.1.3 Computing Changes 7.2.1.4 Detecting Technological Unemployment 7.2.1.5 Superimposing Diagrams 7.3 Demarcating the Notion of a Robot Economy 7.3.1 No Generally Agreed Definition 7.3.2 Whatls.com Definition 7.3.3 Proffered Definition of Robot Economy 7.3.4 Hypothetical Example (Cont.) 7.4 Is the Robot Economy Near? 7.5 The Robot Economy Paradox 7.5.1 Increasing Returns 7.5.2 The Paradox, Stated 7.5.3 Norbert Wiener: A Forerunner of the Paradox 7.5.4 Resolving the Paradox 7.5.4.1 Tentative Solution # 1: Introduce a Universal Basic Income 7.5.4.2 Tentative Solution # 2: Tax Robots 7.5.4.3 Tentative Solution # 3: Replace Mindset 7.6 Schumpeter ́s Famous Prophecy 7.7 Arthur ́s Prophecy 7.8 Chapter Summary Appendices Appendix J: Technological Progress in the Twenty-First Century Technological Progress: Digital Digitized Economy Numerical Example Metcalfe ́s Law Technological Progress: Exponential Moore ́s Law Technological Progress: Combinatorial Digression: Exponential Growth and Chess First-Half of the chessboard Second-Half of the Chessboard Wrapping Up: Exponential Versus Combinatorial Growth Appendix K: Robots, Artificial Intelligence, and Technological Singularity Robots: Origin of the Term and Rules of Behaviour Artificial Intelligence: Definition and a Small Sample of Successes Technological Singularity References Afterthoughts Index of Names Subject Index