Innovation Commons
The Origin of Economic Growth
Published on 13. August 2019
Book
Hardback
280 pages
978-0-19-093749-2 (ISBN)
Description
Innovation is among the most important topics in understanding economic sustained economic growth. Jason Potts argues that the initial stages of innovation require cooperation under uncertainty and draws from insights on the solving of commons problems to shed light on policies and conditions conducive to the creation of new firms and industries.
The problems of innovation commons are overcome, Potts shows, when there are governance institutions that incentivize cooperation, thereby facilitating the pooling of distributed information, knowledge, and other inputs. The entrepreneurial discovery of an economic opportunity is thus an emergent institution resulting from the formation of a cooperative group, under conditions of extreme uncertainty, working toward the mutual purpose of opportunity discovery about a nascent technology or new idea. Among the problems commons address are those of the identity; cooperation; consent; monitoring; punishment; and independence. A commons is efficient compared to the creation of alternative economic institutions that involve extensive contracting and networks, private property rights and price signals, or public goods (i.e. firms, markets, and governments). In other words, the origin of innovation is not entrepreneurial action per se, but the creation of a common pool resource from which entrepreneurs can discover opportunities.
Potts' framework draws on the evolutionary theory of cooperation and institutional theory of the commons. It also has important implications for understanding the origin of firms and industries, and for the design of innovation policy. Beginning with a discussion of problems of knowledge and coordination as well as their implications for common pool environments, the book then explores instances of innovation commons and the lifecycle of innovation, including increased institutionalization and rigidness. Potts also discusses the possible implications of the commons framework for policies to sustain innovation dynamics.
The problems of innovation commons are overcome, Potts shows, when there are governance institutions that incentivize cooperation, thereby facilitating the pooling of distributed information, knowledge, and other inputs. The entrepreneurial discovery of an economic opportunity is thus an emergent institution resulting from the formation of a cooperative group, under conditions of extreme uncertainty, working toward the mutual purpose of opportunity discovery about a nascent technology or new idea. Among the problems commons address are those of the identity; cooperation; consent; monitoring; punishment; and independence. A commons is efficient compared to the creation of alternative economic institutions that involve extensive contracting and networks, private property rights and price signals, or public goods (i.e. firms, markets, and governments). In other words, the origin of innovation is not entrepreneurial action per se, but the creation of a common pool resource from which entrepreneurs can discover opportunities.
Potts' framework draws on the evolutionary theory of cooperation and institutional theory of the commons. It also has important implications for understanding the origin of firms and industries, and for the design of innovation policy. Beginning with a discussion of problems of knowledge and coordination as well as their implications for common pool environments, the book then explores instances of innovation commons and the lifecycle of innovation, including increased institutionalization and rigidness. Potts also discusses the possible implications of the commons framework for policies to sustain innovation dynamics.
Reviews / Votes
The way in which he explains the emergence of new industries by integrating the topic of innovation with a theory of social cooperation structured by rules is masterful. * Erwin Dekker, Journal of Cultural Economics * Everyone agrees that innovation drives the transformation of modern economies. But Jason Potts will ruffle feathers with his fascinating and well-researched account of the origins of innovation itself. Against the statist left he points to the limits of state-led innovation. Against the individualist right, he argues that innovation begins not by heroic individuals alone, but by institutions that govern the cooperative pooling of innovation resources and the coordination of dispersed knowledge. This is a highly innovative account of the sources of innovation, which should be read by everyone working in this field. * Geoffrey M. Hodgson, Professor in Management, Loughborough University London * In this beautifully-written and well-argued book, Potts shows how cooperation and networking are essential to innovation and economic growth. He rightly defines technological change as a social process,and demonstrates how collective action problems involving innovation can be overcome by institutions. Relying on both economic history and theory, his book provides a convincing account based on a fusion of the new institutional economics and the economics of innovation. Highly recommended to all social scientists interested in technological change. * Joel Mokyr, Northwestern University, Author of A Culture of Growth (2016) * Jason Potts` Innovation Commons is a trailblazing contribution to economics. The new theory presented in the lucidly written book holds that innovation begins with an institutional solution to the problem of knowledge pooling and cooperation under uncertainty, eschewing the old view of a heroic entrepreneur. Potts imagination and erudition are deeply impressive. The book not only leaves far behind the conventional wisdom of neoclassical growth theory but also clears the ground for the next generation of evolutionary economists. Shedding light on the eminently social nature of the causes of economic evolution the book leads to a new understanding of the origin of firms and industries, and of the possibilities to design innovation policy. This book will prove invaluable in advancing economic theory in the age of an increasingly more complex digital economy. * Kurt Dopfer, University of St.Gallen, Switzerland *More details
Language
English
Place of publication
New York
United States
Target group
Professional and scholarly
Dimensions
Height: 240 mm
Width: 161 mm
Thickness: 20 mm
Weight
584 gr
ISBN-13
978-0-19-093749-2 (9780190937492)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Other editions
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Book
08/2019
Oxford University Press Inc
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E-Book
07/2019
OUP eBook
€28.99
Available for download
E-Book
07/2019
OUP eBook
€28.99
Available for download
Person
Professor of Economics, School of Economics, Finance & Marketing, RMIT University, Melbourne, Australia
Content
Foreword - Against Prometheus
Acknowledgements
Chapter 1 We innovate together
Introduction
1.1 The origin of innovation
1.2 The commons in the innovation commons
What is a commons?
An innovation commons is a knowledge commons
Common-pooling and peer-production in an innovation commons
1.3 Clunkers and Homebrew
1.4 The Republic of Letters
1.5 Why groups, why cooperation, why open?
Overview of book
Chapter 2 The innovation problem
Introduction
2.1 Trade and new knowledge explain growth
2.2 The innovation problem as economic problem
The Schumpeter-Nelson-Arrow version of the innovation problem
The Hayek version of the innovation problem
2.3 The origin of the innovation trajectory
2.4 The economic problem of innovation
2.5 Innovation problem is a collective action problem
2.6 Innovation happens in groups
Discovery failure
Discovery costs
Conclusion
Chapter 3 Innovation is a knowledge problem
Introduction
3.1 Innovation problem I - Social contract problem (McCloskey)
3.2 Innovation problem II - Distributed knowledge problem (Hayek)
3.3 Innovation problem III - Idiosyncratic risk (Williamson)
3.4 Innovation problem IV - Rules for cooperation (Ostrom)
Conclusion
Chapter 4 Four theories of the innovation commons
Introduction
4.1 Two commons
4.2 Evolution of cooperation
4.3 Defense against enclosure
4.4 Institutional uncertainty
Conclusion
Chapter 5 Origin of the innovation trajectory
Introduction
5.1 The zero-th phase of the innovation trajectory
5.2 The fundamental transformation
5.3 The Proto-Entrepreneur, the Dual-Discovery Problem, and the Two Commons Solution
The Proto-Entrepreneur seeks Non-Price Information
The Proto-Entrepreneur faces a Dual Discovery Problem
The Two Commons Solution
5.4 Modelling the innovation commons
5.5 The innovation commons in institutional space
5.6 The innovation commons as higher-order discovery
Conclusion
Chapter 6 Rules of the Innovation commons
Introduction
6.1 Cooperation behind the veil of ignorance
6.2 An emergent social order
6.3 The use of society in knowledge
6.4 Problems the innovation commons must solve
Identity, Cooperation, Consent, Monitoring, Punishment and conflict, Independence, Economic problems the rules must solve
6.5 Origin of rules
6.6 Core Design Principles
6.7 Can evolution explain the innovation commons?
Evolution of cooperation
Evolution of cooperation in the commons
Is cooperation for innovation the institutional equivalent of war?
The innovation commons as higher-order discovery
Conclusion - We innovate together
Chapter 7 Lifecycle of an innovation commons
Introduction
7.1 Institutions of collective innovation
Institutional varieties of collective innovation
Institutional transformations over an innovation trajectory
7.2 Origin of industry
7.3 The standard model of industry associations
7.4 A new model of industry associations; private governance for discovery of public goods
7.5 Industry associations construct niches
7.6 The demic phase of industry associations
Conclusion
Chapter 8 Theory of Innovation Policy
Introduction
8.1 The innovation commons critique of modern innovation policy
Theory of innovation policy
Mechanisms of innovation policy
Critique of Innovation Policy
Political economy of innovation policy
Rules as policy
Innovation policy as a public and private goods problem
Innovation Policy and its discontents, a summary
8.2 Discovery Failure
8.3 Efficient Institutions of Innovation Policy
The Comparative Institutional Approach
The low social costs (and high private benefits) of innovation commons
8.4 New innovation policy
Diagnosing the innovation problem
Benefits to groups, regions, nations, and the world
This comes from civil society
The innovation economy cannot be planned
Conclusion
Chapter 9 Inclusive Innovation Policy
Introduction
9.1 Two types of innovation policy
9.2 Innovation seen and unseen
9.3 Against innovation: theory
9.4 A better approach to innovation policy
9.5 Inclusive innovation: A new social contract
Chapter 10 Conclusion
10.1 The institutional origin of innovation
10.2 Implications for economic theory
10.3 The innovation sharing economy
References
Index
Figures and Tables
Figure 1.1 Economic goods
Figure 2.1 The innovation commons as the zero-th phase of an innovation trajectory
Figure 3.1 Market (choice) versus governance (contracting) models of innovation economics
Figure 3.2 Comparative institutions of innovation contracting
Figure 7.1 Public and private ordering definitions of industry
Figure 8.1 The Institutional Possibility Frontier (source Djankov et al 2003)
Figure 8.2 Institutional possibilities of innovation policy
Figure 9.1 Two innovation policy approaches
Figure 9.2 Why friends of innovation prefer to engage government
Table 2.1 The innovation problem as market failure vs collective action
Table 2.2 Transformation costs, transaction costs and discovery costs
Table 2.3 Taxonomy of discovery costs
Table 6.1 Design rules
Table 7.1 Institutional varieties of Collective Innovation
Table 8.1 Innovation policy ranged between private and public instruments.
Acknowledgements
Chapter 1 We innovate together
Introduction
1.1 The origin of innovation
1.2 The commons in the innovation commons
What is a commons?
An innovation commons is a knowledge commons
Common-pooling and peer-production in an innovation commons
1.3 Clunkers and Homebrew
1.4 The Republic of Letters
1.5 Why groups, why cooperation, why open?
Overview of book
Chapter 2 The innovation problem
Introduction
2.1 Trade and new knowledge explain growth
2.2 The innovation problem as economic problem
The Schumpeter-Nelson-Arrow version of the innovation problem
The Hayek version of the innovation problem
2.3 The origin of the innovation trajectory
2.4 The economic problem of innovation
2.5 Innovation problem is a collective action problem
2.6 Innovation happens in groups
Discovery failure
Discovery costs
Conclusion
Chapter 3 Innovation is a knowledge problem
Introduction
3.1 Innovation problem I - Social contract problem (McCloskey)
3.2 Innovation problem II - Distributed knowledge problem (Hayek)
3.3 Innovation problem III - Idiosyncratic risk (Williamson)
3.4 Innovation problem IV - Rules for cooperation (Ostrom)
Conclusion
Chapter 4 Four theories of the innovation commons
Introduction
4.1 Two commons
4.2 Evolution of cooperation
4.3 Defense against enclosure
4.4 Institutional uncertainty
Conclusion
Chapter 5 Origin of the innovation trajectory
Introduction
5.1 The zero-th phase of the innovation trajectory
5.2 The fundamental transformation
5.3 The Proto-Entrepreneur, the Dual-Discovery Problem, and the Two Commons Solution
The Proto-Entrepreneur seeks Non-Price Information
The Proto-Entrepreneur faces a Dual Discovery Problem
The Two Commons Solution
5.4 Modelling the innovation commons
5.5 The innovation commons in institutional space
5.6 The innovation commons as higher-order discovery
Conclusion
Chapter 6 Rules of the Innovation commons
Introduction
6.1 Cooperation behind the veil of ignorance
6.2 An emergent social order
6.3 The use of society in knowledge
6.4 Problems the innovation commons must solve
Identity, Cooperation, Consent, Monitoring, Punishment and conflict, Independence, Economic problems the rules must solve
6.5 Origin of rules
6.6 Core Design Principles
6.7 Can evolution explain the innovation commons?
Evolution of cooperation
Evolution of cooperation in the commons
Is cooperation for innovation the institutional equivalent of war?
The innovation commons as higher-order discovery
Conclusion - We innovate together
Chapter 7 Lifecycle of an innovation commons
Introduction
7.1 Institutions of collective innovation
Institutional varieties of collective innovation
Institutional transformations over an innovation trajectory
7.2 Origin of industry
7.3 The standard model of industry associations
7.4 A new model of industry associations; private governance for discovery of public goods
7.5 Industry associations construct niches
7.6 The demic phase of industry associations
Conclusion
Chapter 8 Theory of Innovation Policy
Introduction
8.1 The innovation commons critique of modern innovation policy
Theory of innovation policy
Mechanisms of innovation policy
Critique of Innovation Policy
Political economy of innovation policy
Rules as policy
Innovation policy as a public and private goods problem
Innovation Policy and its discontents, a summary
8.2 Discovery Failure
8.3 Efficient Institutions of Innovation Policy
The Comparative Institutional Approach
The low social costs (and high private benefits) of innovation commons
8.4 New innovation policy
Diagnosing the innovation problem
Benefits to groups, regions, nations, and the world
This comes from civil society
The innovation economy cannot be planned
Conclusion
Chapter 9 Inclusive Innovation Policy
Introduction
9.1 Two types of innovation policy
9.2 Innovation seen and unseen
9.3 Against innovation: theory
9.4 A better approach to innovation policy
9.5 Inclusive innovation: A new social contract
Chapter 10 Conclusion
10.1 The institutional origin of innovation
10.2 Implications for economic theory
10.3 The innovation sharing economy
References
Index
Figures and Tables
Figure 1.1 Economic goods
Figure 2.1 The innovation commons as the zero-th phase of an innovation trajectory
Figure 3.1 Market (choice) versus governance (contracting) models of innovation economics
Figure 3.2 Comparative institutions of innovation contracting
Figure 7.1 Public and private ordering definitions of industry
Figure 8.1 The Institutional Possibility Frontier (source Djankov et al 2003)
Figure 8.2 Institutional possibilities of innovation policy
Figure 9.1 Two innovation policy approaches
Figure 9.2 Why friends of innovation prefer to engage government
Table 2.1 The innovation problem as market failure vs collective action
Table 2.2 Transformation costs, transaction costs and discovery costs
Table 2.3 Taxonomy of discovery costs
Table 6.1 Design rules
Table 7.1 Institutional varieties of Collective Innovation
Table 8.1 Innovation policy ranged between private and public instruments.