Putting the creativity back in creative capitalism

by John Q on July 31, 2008

Although the conversation here takes place under the banner of ‘creative capitalism’ there has been relatively little discussion of creativity in the ordinary sense of the term. Yet the relationship between creativity and capitalism has rarely been more complex and interesting than it is today.

The central technical innovation of the past twenty years or so has been the rise of the Internet, and particularly the various incarnations of the World Wide Web. Without the Internet and the Web it is unlikely that we would have seen any significant recovery from the productivity growth slowdown of the 1970s and 1980s.

Yet neither the Internet nor the Web was a product of the market economy, and even now the relationship between market incentives and the social contribution made by Internet-related activities is tenuous at best.

Both the Internet and the Web developed as non-commercial activities, outstripping or absorbing a variety of commercial competitors (Genie, Delphi, AOL and so on) before being opened up to commercial use in the mid-1990s. And even since large-scale commercial involvement began, most of the exciting innovation continues to come from noncommercial users (blogs and wikis, for example) or from non-commercial content producers (YouTube, Flickr and so on). By contrast, heavily funded commercial innovations such as push technology and portals have failed or declined into insignificance.

The dominant driver of the Internet economy is not profit-seeking innovation but individual and collective creativity. Creativity is, and always has been, driven by a wide range of motives, some altruistic and others, like the desire to display superior skill, rather less so. Trying to tie all of these motives to direct monetary rewards is futile and, if pushed too far, counterproductive (More on this from me and Dan Hunter here, with discussion here and here).

Of course, corporations still have a large role to play in the economy of the Internet. A company like Google, for example, provides services that cannot easily be replicated by users acting either individually or collectively. But Google depends crucially and directly on the content created by users and more generally on the goodwill of the Internet community.

If these assets were lost, Google would be vulnerable to displacement; Microsoft’s loss of its seemingly unassailable dominance of both personal computing and the Internet software market is an illustration. Google’s slogan ‘don’t be evil’ and its sensitivity to criticism, for example over its compliance with Chinese censorship laws, illustrates the point. Equally, so do the many products Google creates and gives away, with no obvious path to future profit.

So, more than in the past, it makes sense for corporations to cultivate diffuse goodwill, rather than focusing solely on profit, perhaps modified by the need to buy off powerful interests. In the context of an economy where creative collaboration is central, this can’t be done through a neat separation of targets and instruments, with a charitable PR-oriented effort bolted on to a profit-maximising corporation.

Extending all of this to the challenge of helping poor countries develop creates further challenges. Companies will need to do more than bring corporate expertise to bear on the problem. They will also need to mobilise contributions of skills and resources from outside the company. If such contributors are not to feel exploited and abused, the project can’t be directly tied to the goal of profit maximisation. All this may yet be a bridge too far.

Richard Posner recognises much of this but argues that corporate managers should instead adopt a hypocritical pose of general concern until they have secured a userbase large enough to be locked in, then exploit it to maximise profits. There are a several problems here. First, sincerity is not as easy to fake as all that, particularly in an organisation where you can’t let everyone in on the joke. Second, setting up a monopoly by stealth, then extracting the maximum rent is a trick that can be pulled off at most once. Finally, if the managers of a company are chosen to be capable of successfully conning the public in the interests of shareholders, why would anyone expect them to forgo the chance to enrich themselves at shareholders’ expense.



ben wolfson 07.31.08 at 11:28 pm

Second, setting up a monopoly by stealth, then extracting the maximum rent is a trick that can be pulled off at most once.



felix culpa 07.31.08 at 11:43 pm

Dangerously radical!

You’re suggesting human beings enjoy having a sense of purpose beyond that of an economic cipher? That social Darwinism isn’t the sole driver of national well-being? That utility reaches beyond the utilitarian?
That gaining the world is nor worth one’s, or a culture’s, soul?
How perniciously absurd.

May you live long and thrive creatively.


gmoke 07.31.08 at 11:48 pm

My observation from the dotcom boom is that there was a rising tidal wave of innovation that was almost immediately frozen by the injection of money into the equation. Investment froze things because investments have to be amortized (note the inclusion of “mort” in that term).

Money can kill innovation.

Of course, money can also spur innovation but it is most definitely a double-edged sword.


derrida derider 08.01.08 at 1:00 am

Then there is Bill Gates’ argument that he was very good at turning money into more money for himself and mediocre at directly helping those with no money. Hence there was a very large gain from trade for him to concentrate on just accumulating as much money as he could and then turn it over to those who were good at helping the poor. It seems a reasonable argument to me.


abb1 08.01.08 at 7:31 am

It’s no good to make any generalizations using examples like Google and Microsoft. These are freaks, natural abnormalities. It’s like studying normal human anatomy on Siamese twins.

Adopting a “hypocritical pose of general concern” is the most natural and common thing civilized people do. There is no need to fake anything, since it is, quite openly, only a pose of general concern.

It’s like when you say “how are you?”, “nice to meet you” (or, for that matter, “g’day, mate”) – that’s often a ‘hypocritical pose of concern’, but there’s absolutely no problem with faking it, it’s expected. And people do think you’re a nicer guy than if you had told them what you really think.


JK 08.01.08 at 8:40 am

‘The central technical innovation of the past twenty years or so has been the rise of the Internet, and particularly the various incarnations of the World Wide Web.’

… says an academic whose business is documents and ideas writing on a blog post.

You really should get out more.

It doesn’t go to your point about whether innovation is driven by the market economy, but saying it’s all about the web is too narrow.

Even staying close to the web, it would not have been possible without semiconductors (Moore’s law keeps on going), fibre optics, hard disks, batteries, display technology, satellites, etc.

But staying close to the web is itself short sighted. I think the waves of the future will be biotechnology, both agriculture and medicine (yeah, just like they said in the 80s) and energy. The foundations for that innovation has been laid in the last 20 years.


seth edenbaum 08.01.08 at 5:16 pm

Quiggen is still describing communication as a subset of commerce.
Fast Company and Grant McCracken represent creative capitalism. The poetry of instrumentalism.
“Of course, corporations still have a large role to play in the economy of the Internet.” Hilarious. Of course, corporations still have a large role to play in the economy of highways.
And as to “Don’t be Evil” Why not: “Trust us”
They mean the same thing.


Jake 08.01.08 at 5:36 pm

“Don’t be Evil” is at least theoretically directed towards Google’s employees; “Trust us” would be directed to the world at large.

I’m also very curious to hear how YouTube and Flickr are non-commercial or content producers.


seth edenbaum 08.01.08 at 7:10 pm

“Don’t be Evil” is at least theoretically directed towards Google’s employees”
It’s a commandment [number 11 I guess] spoken by Google’s chiefs to themselves and their employees. ” ‘Trust us…’ to follow it.”
Hegemony is not democracy.
If civil society were still considered something separate from corporate life then claims of creative capitalism would be laughed at.


seth edenbaum 08.02.08 at 1:04 am

More creative capitalism. Not social democracy but benign monarchy

“You get a lot of criticism for preventing unions from organizing your workers. Are these sort of employee-friendly processes ones that you really couldn’t implement with unions?”
“They’d be much more difficult to implement with unions. First of all, it’s a lie that Whole Foods somehow prevents unions from organizing. That’s against the law. We can’t prevent anybody from organizing a union; if our team members want a union, we can’t stop them. Our team members can have unions, but they don’t want unions because they create this adversarial relationship in the workplace. “

Or maybe not so benign after all.
Benign in or not, it’s never a model.


galt galton 08.03.08 at 9:48 pm


I think you’re overlooking the real drivers behind the Internet and information technology in general: Moore’s Law and the analog exponential laws for storage and bandwidth. Invisible to most casual observers of the Internet, but far more crucial than some crappy software written by MSFT or Open Source coalitions (compare Linux to flavors of unix that have existed for 30 years or more — not a big improvement).

Who is behind the Moore’s Law and associated exponential growth curves? Hard core technologists in physics and electrical engineering, with some basic research funded by government grants (including, uh oh, defense spending), but, crucially, the bulk of it funded by for-profit companies like IBM, Intel, AMD, Applied Materials, Fujitsu, NEC, etc.

Imagine what the Web/Internet would look like today if CPUs and memory had not improved drastically since 1995. (Remember the 486 and megabytes of hard drive space?)

It’s these advances that are largely responsible for the productivity boom, not blogs, wikis or open source projects.

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