Monday, October 13, 2014

On the Ideas Ecosystem

Why does one care for new ideas?

Because new ideas are central to economic growth. And, without growth, we will have no modern economy. Because one essential part of the modern economy is credit, which rests on the assumption that we will have more than we have today. If the economies stop growing indefinitely, credit will disappear and there will be no 'modern' economy. The mere hint of no-growth will be the economic equivalent of an armageddon.

Ideas, in a way, are the protean agents that mine the future for the present. Think of ideas as a tool that is curving out bits of the future for the present day, doing in the real economy which the financial mechanics of credit creation is doing in the money economy. One can call them therefore the lifeblood of the economy, because without these new ideas, we won't have a view of the future, no optimism and therefore, no economy.

And, yet, idea is a painful thing. To be really successful in what an idea does, one needs to look far into the future. In short, one really has to be ahead of its time: Only then, it really contributes to the creation of that future, of growth and effectively, of credit. But an idea ahead of its time is painful to its beholder, because she must give herself to it first. And, the further into future the scope of our ideas go - and it must as the near-field of the future gets well-explored - the slower its pace of adaptation may look. And, the riskier it looks, it will be supported with less credit. In theory, at some point, we will reach the limit of bankable ideas, and therefore, the limits of growth.

Many economies have jumped into the innovation bandwagon, but without an understanding how central ideas are to the economic structures. It is often a fad, to be seen to be entrepreneurial. Government officials get an extra kick in talking up the incubation centres they are building. But these economies, and the officials, put too much faith on self-sacrificing entrepreneurs pushing the cause of ideas: Indeed, the future is not created without 'venturesome consumption', as Amar Bhide puts it, without the demand side of ideas. In short, a conservative society does not usually produce a groundswell of new ideas, regardless of how much money is poured into it.

In fact, the death rate of ideas, if such a thing could be measured, would have been great yardstick how quickly an economy is destroying its future. Though extremely useful, such a self-deprecating measurement may not be expected out of any government. Yet,  not recognising that it takes everything to get the future going is a big mistake. Ideas, entrepreneurs, faith in the future, social mobility and churn, credit. Let's call this the innovation ecosystem, so there are some elements which are really outside the control of the individual agents. Entrepreneurship, and policy-making about entrepreneurship, should not be about just incubation and tax exemption for venture capital.

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