Jason Potts

The general theory of economic evolution

The first book to chart the development of the field of evolutionary economics, this book provides an integrated generic framework to define the rules of an economic system; how they are coordinated and the causes and consequences of their change. Packed with pedagogical features including essay and tutorial questions, case studies and an extensive bibliography, this book: proposes a new analytic framework for the study of the nature and causes of long run economic growth and development in market systems, analyzes the foundations of the neoclassical tradition, before developing a thesis through micro, meso and macro domains drawing conclusions as to what can be learned from the point of view of policy analysis, focuses on an open-systems analytical framework and successfully formulates and refines the analytical foundations of a new general theory of economic evolution. This volume is essential reading for scholars and students of economic evolution and as well as for anyone who seeks to better understand the complex evolutionary nature of the structure and dynamics of the knowledge-based economy in todays society.

Consumer Co‐creation and Situated Creativity

This paper examines the industrial dynamics of new digital media from the perspective of consumer co‐creation. We find that consumer–producer interactions are an increasingly important source of value‐creation. We conclude that cultural and economic analysis might be usefully united about these themes, and that situated creativity should be construed as analysis of an ongoing co‐evolutionary process between economic and cultural dynamics.

Knowledge and markets

Abstract. An economy is a coordinated system of distributed knowledge. Economic evolution occurs as knowledge grows and the structure of the system changes. This paper is about the role of markets in this process. Traditionally, the theory of markets has not been a central feature of evolutionary economics. This seems to be due to the orthodox view of markets as information-processing mechanisms for finding equilibria. But in economic evolution markets are actually knowledge-structuring mechanisms. What then is the relation between knowledge, information, markets and mechanisms? I argue that an evolutionary theory of markets, in the manner of Loasby (1999), requires a clear formulation of these relations. I suggest that a conception of knowledge and markets in terms of a graphical theory of complex systems furnishes precisely this.

Four models of the creative industries

What is the dynamic value of the creative industries from the economic perspective? This paper seeks to answer this question by proposing four models of the relationship between the creative industries and the whole economy, then examining the evidence for each. We find that growth models fit the data well, but not everywhere. We discuss the methodological and empirical basis for this finding and its implications for economic and cultural policy.

Evolutionary Realism: A New Ontology for Economics

The renaissance in evolutionary economics in the past two decades has brought with it a great deal of theoretical development and interdisciplinary import. Much of this has been useful, but not all of it has been commensurate. In this paper, we make the case for the limits to theoretical developments that lack clearly specified ontological commitments by attempting an inductive synthesis of the ontological content of empirical generalizations in evolutionary economics. We call this ‘evolutionary realism’ and present it in three axioms – (1) all existences are bimodal matter‐energy actualizations of ideas, (2) all existences associate, and (3) all existences are processes. We conclude with discussion of the sort of analytical framework that we might consistently build on these axioms; a three‐level analytical structure of micro, meso and macro domains.

Creative industries and economic evolution

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.

The Innovation Deficit in Public Services: The Curious Problem of Too Much Efficiency and Not Enough Waste and Failure

Abstract It has long been recognized that government and public sector services suffer an innovation deficit compared to private or market-based services. This paper argues that this can be explained as an unintended consequence of the concerted public sector drive toward the elimination of waste through efficiency, accountability and transparency. Yet in an evolving economy this can be a false efficiency, as it also eliminates the`good waste’ that is a necessary cost of experimentation. This results in a systematic trade-off in the public sector between the static efficiency of minimizing the misuse of public resources and the dynamic efficiency of experimentation. This is inherently biased against risk and uncertainty aneZ therein, explains why governments find service innovation so difficult. In the drive to eliminate static inefficiencies, many political systems have subsequently overshot and stifled policy innovation. I propose, instead, the ‘Red Queen’ solution of adaptive economic policy.

Co-Creating Games: A Co-evolutionary Analysis

The phenomenon of consumer co-creation is often framed in terms of whether either economic market forces or socio-cultural non-market forces ultimately dominate. We propose an alternate model of consumer co-creation in terms of co-evolution between markets and non-markets. Our model is based on a recent ethnographic study of a massively multiplayer online game through its development, release and ultimate failure, and is cast in terms of two explanatory models: multiple games and social network markets.We conclude that consumer co-creation is indeed complex, but in ways that relate to both emergent market expectations and the evolution of markets, not to the transcendence of markets.

Public sector innovation research: What’s next?

Abstract This paper introduces the analytic context of public sector innovation studies along with an overview of the nine papers in this volume. But it also seeks to advance a new research agenda in public sector innovation studies from the economic perspective of the incentives to innovation in the public sector. This argues for a practical model of public sector innovation that is less about imitation of the market sector or other public sector best practice and more cognizant of the scientific method of randomised controlled experiments.

Fashion, growth and welfare: an evolutionary approach

The task of this paper is to explore the interplay between fashion, consumer lifestyles and economic growth in the context of a world of technological change in which the menu of possibilities that consumers face is constantly changing and tending to increase in length. Our working definition of ‘fashion’ is simple, namely the tendency or behavioural norm of actors to adopt certain types or styles of customs or commodities nearly simultaneously, only to adopt a different type or style of custom or commodity in future periods. The demand spikes associated with fashion may pertain to newly introduced products or to products that have been around for some time; they may also occur in hybrid cases where a seemingly defunct product or genre is given a brief rebirth by being reincarnated in terms of a new technology.