Solitary Economy

Why is creative economy so important?

Because the nature of work has completely changed. Creativity has become present on all levels of business. Very few companies look the same as ten or five years ago, and even more of them will change in the next five years. Increased competition, rapid technological change, and the explosion of the Internet force companies to be increasingly innovative. Besides, in all developed countries creative economy is growing much faster than the entire services sector; and twice as quickly as the manufacturing industries. Let me give the following example: since the late 1990s products based on copyright, such as films, books or music, have become the main American export commodity, overtaking clothes, chemical products, or cars. In the last 20 years, the number of jobs in the US creative sector has grown two and a half times more than in the “normal” economy. And the number of patents has doubled.

Are the reasons for this change mainly technological?

Not quite. People want to express themselves more and more. This is what they expect from their work. This is why creative industries seem so attractive to them. This is a psychological and social change. As Abraham Maslow explained, our needs form a kind of ladder—from physical needs to emotional and spiritual ones. When our physical needs are fulfilled, as it happens in our present world, we focus on self-fulfillment and intellectual needs. For they constitute our next challenge.

Besides, we live in future-oriented societies, rather than based on tradition. What is before us has become most important. And as Walt Disney once said: “The future does not wait to be discovered. It has to be created—first in our minds, then in our actions…”

Before you published The Creative Economy, people were talking about “knowledge society” or “information society.” Today everybody is speaking about “creativity.”

I travel a lot. And it has been long since I last met people who didn’t want to be creative. It can be a bit ridiculous, for every overused word is ridiculous. But we should remember that in the late 20th century people were focused almost exclusively on technology, computer sciences, information technology. I had an impression that it meant foregoing what was the most important, namely the fact that people had ideas. Every innovation is based on creativity. But creativity need not necessarily end in innovation. It may be forgotten or useless.

Everyone wants to be creative. Of course, the problem is that not everyone can be creative. What does it mean in practice?

The emphasis on novelty and ideas makes work more difficult, posing a growing challenge for many people. Some do not like this new world at all. In every European country a significant part of the population has neither the predispositions, nor adequate education to join the creative economy. They want to continue their traditional lifestyle, for their greatest need is stability. And this should not be so surprising. Formerly, you had one professional career in your entire lifetime. Today you should not count on it. Professional life in a creative economy means constant change.

We must be clear about this: creativity is the most difficult kind of economic activity. It involves business risks and psychological risks. It is often solitary: we may not count on anybody’s support, we must motivate ourselves. You have to learn constantly, often until you die. Failure is inherent in our action more than in other sectors of the economy.

Creative economy is much more unstable, more vulnerable to change than traditional economy. To what extent has its growth contributed to today’s crisis?

To a huge extent. Of course, it was not a single event, such as the bursting of the real estate bubble. As you noted, this is connected with the very nature of the creative economy. It is the cause, but it also can be the solution of today’s crisis.

Many features of creative economy, such as our enthusiasm for “creative destruction,” abandoning static institutional hierarchies for short-term projects, domination of informal business models, the focus on novelty from art to the world of finance—for new things bring the largest bonuses—present us with enormous challenges. With legal, economic, social challenges appearing so rapidly that we are absolutely unable to catch up with them. In addition, the engine of capitalism is capitalisation: valuation of assets is based on their potential value in the future. Only in this way you can finance the development of your business: by selling what does not exist yet. For 25 years companies have been capitalising virtually everything: from the value of their brand through business methods and patents to songs. This is a dominant trend. And if you do that with intangible things, you greatly increase the risk. For changes of value are more rapid and even more unpredictable here. If only because “intellectual value” is very difficult to measure. We do not have any reasonable method of measuring it.

You said that we do not catch up with the changes, for they are too fast. But we are not doomed to helplessness…

We can certainly do two things. First, we can change our thinking about the economy. We always think about it in terms of companies— large, medium, and small. But we ignore individuals. And yet the individual is the microcosm of the creative industry. And it need not necessarily be a Hollywood superstar. You should understand that when you design your career: if you do something very well and on your own, it will bring you satisfaction, but it also may bring you quite good money.

And the second thing: our tax system is outdated. The main revenue comes from people who are permanently employed. The number of such people is decreasing. It means that government revenues are dwindling as well. But even more importantly, in the new model, companies increasingly often function online and can register wherever they want. And of course they choose tax havens, which are present even in Europe—we have Luxembourg or Ireland. It is one of the causes of today’s crisis: governments have too little money, since more and more companies do not pay taxes. In this way, the treasuries will always be short of money. And for now we are unable to do anything about it—for any effective solution would require an all-European response, rather than actions of particular countries.

And on top of that, so far the balance is moving in the other direction.

Yes, if only because the growth of the creative economy weakens the position of states. The other reason is that the greatest role in the creative economy is played not by countries, but by cities. National governments are not a good sponsor here, for they usually want to impose their own decisions, they interfere too much. This is why most important things are happening in cities, such as Los Angeles. Besides, people have always settled in cities to discover new ideas, meet other people, learn new things.

Protection of intellectual property rights plays a key role in this new economy. What is your position on this issue? Some people— such as Lawrence Lessig—indicate that too strict law is hampering progress and is harmful to the public. Others point out that in many cases investments are so large that without a tough law the cost of research would never be recovered and no one would undertake it.

There is no single solution here. Copyrights today are too long-lasting and too restrictive, they promote monopolies. But patents are absolutely necessary. People are often shocked, for example when the patent is for a new plant or a genetically modified mouse designed to help in the fight against cancer. But in the last half century longevity has greatly increased, for example by 20 years in Japan. We owe half of it to patents.

So far we basically have two camps—governments which want to turn the screw, for they make money on intellectual property rights; and countries which are catching up economically thanks to violating these rights, such as China, Russia, or Turkey.

Intellectual property is best protected through combining good law with bad technology. By good law I understand a law which is effective and metes out punishments proportional to violations (rather than punishing harshly for an inadvertent making of a single copy). By bad technology I understand technology which makes it difficult to make good illegal copies. I don’t see any other solution.

Is there any good model of creative economy which we could follow, for example the American one?

Every country has a slightly different culture and attitude to business. America is the leader in creative economy. They make the most money on it. However, we also have to remember that Americans are the best in making money on virtually anything.

You have been working in China for years. It is an authoritarian country. And yet creativity needs freedom.

Today’s China has more freedom in the sphere of individual expression. The sense of independence which art people, designers, or Internet innovators possess is completely at odds with certain aspects of government policy. And this will certainly cause tensions. Still, I am an optimist. The Chinese desire freedom, but the social consequences of what they do are the most important for them. Balancing between freedom and social stability is inherent in their culture. Besides, the people I meet in China are full of optimism, extremely ambitious, and work very hard. They have a sense that they are on the right path. And this is extremely helpful, even necessary in the creative sector. You must have confidence in yourself to take the risk. But Europeans do not have any confidence in themselves today. It seems to us that we go from failure to failure: the euro is not working, the economy is in a bad condition, we do not trust politicians at all, and on top of that we have the refugee crisis. This is not an atmosphere to create future in.