January 25, 2011

Innovation as the Modern Differentiator

Justin Katz

In another (sadly) subscription-only National Review article, James Bennett reviews a book by Deirdre McCloskey in which innovation takes center stage in the explanation of the modern West:

Her thesis is that, in the decades prior to England's rapid takeoff into the Industrial Revolution, there was a revolution in attitudes, which she prefers to characterize as a revolution in rhetoric, using the term in its broader, classical sense: the language of discourse, and the attitudes it embodies. This change in rhetoric, she argues, shifted the prevailing culture from one of aristocratic values based on honor and status to one of bourgeois values based on thrift, prudence, trust, etc. This brought dignity to the town-dwelling merchant class and fostered innovation in business practice. In fact, she argues that the term capitalism is inappropriate to the current system, as all economic systems fundamentally are built on capital, but only the system that arose in England and spread throughout the West (and, subsequently, elsewhere) was founded on innovation. She considers calling the system innovism; recognizing, however, that such a tag is unlikely to catch on, she settles for calling it innovation.

There is much to like in this. I have long dislike Marx's coinage and the many wrong ideas that are packed into it. I have tended to use the term market economy, in preference, but as McCloskey rightly points out, market economies with many of the mechanisms we consider definitive have also been presented since ancient times. A system that expects, encourages, and takes advantage of innovation is the genuinely new thing of our times, and it may make sense to adopt that term for our system.

The notion of innovation is the core of the broad range of principles that facilitate it (secure family structures, freedom, belief in larger truths, free markets, and so on) is certainly attractive as the defining factor for modernity. It does, however, elide the question of whether the core is necessarily the cause. It would probably be most accurate to conclude that modernity developed over millennia, with mutually reinforcing causes that evolved over the generations.

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The notion of innovation is the core of the broad range of principles that facilitate it (secure family structures, freedom, belief in larger truths, free markets, and so on)...

You reactionary types just have the principles wrong. In fact, that's a list that seems more aligned with a return to the 1950s than a prescription for the next big thing.

I'll admit to needing to do more reading on the subject but have you considered Richard Florida's ideas on the subject (warning - I think he may have a PhD)? Florida says what's important is "talent, technology and tolerance." Here's Wikipedia's take...

Florida's theory asserts that metropolitan regions with high concentrations of technology workers, artists, musicians, lesbians and gay men, and a group he describes as "high bohemians", exhibit a higher level of economic development. Florida refers to these groups collectively as the "creative class." He posits that the creative class fosters an open, dynamic, personal and professional urban environment. This environment, in turn, attracts more creative people, as well as businesses and capital. He suggests that attracting and retaining high-quality talent versus a singular focus on projects such as sports stadiums, iconic buildings, and shopping centers, would be a better primary use of a city's regeneration of resources for long-term prosperity. He has devised his own ranking systems that rate cities by a "Bohemian index," a "Gay index," a "diversity index" and similar criteria.

The Knowledge Economy Does Not Offset a Bad Economy? Not so fast!

Posted by: Russ at January 25, 2011 3:34 PM


Los Angeles is North America's most bohemian metro, followed by New York, Vancouver, Toronto, and greater Washington, D.C. Rounding out the top 10 are Nashville, Salt Lake City (which may come as a surprise to some), Minneapolis-St. Paul, San Francisco, and Montréal. Several other metros -- Seattle, Portland, Oregon, Kansas City, and Las Vegas -- have Boho Index scores of 1.2 or greater. And, Boston, Cincinnati, San Diego, Providence, Ottawa, Milwaukee, Rochester, Orlando, Miami, and Calgary all have Boho Index scores above the North American norm. [my emphasis]

Posted by: Russ at January 25, 2011 3:49 PM
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