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Evolutionary Economics celebrates
Innovation and Creativity based Economy
Hokky Situngkir [hs@compsoc.bandungfe.net] Dept. Computational Sociology Bandung Fe Institute
Abstract The paper draws issue on the evolutionary economics that open our mind on seeing economy as growing and living organism with any characters of robustness, self-organization, adaptation, and evolution. This has been recognized, as in global picture, we enter the phase in which information and knowledge acquisition rapidly plays a major role in economy. The discussions is presented by demonstrating some qualitative properties and theoretical explorations on long range historical economic growth and development and thus followed by some highlights on innovation, creativity and elaborations regarding to fitness landscapes incorporating memetics, as works related to social and cultural aspects of social system, while talking about economic system in general. The discussions depicts some important notions on market and product diversifications that have been the source of the economic growth in general.
Keywords: evolutionary economics, global economy, creativity, innovation, diversification, memetics.
1. Introduction Recent economic discussions are rainbow of thoughts related to aspects that conventionally and traditionally do not related directly to economics itself, for instance issue on happiness (Johns & Ormerod, 2007), creativity and technology (Towse, 2001), and a lot more issue that seemingly reveals the fact the high complexity of economy and interdisciplinary might be the solution to problems aroused. Some interdisciplinary works are shown though by the emerging of econophysics (Roehner, 2002), evolutionary thoughts on economics as compiled by Foster & Hözl (2004), and even finance (Dowling, 2005). These are trends in economics, seeing economy as a growing and living organism with any characters of robustness, self-organization, adaptation, and evolution.
While the heart of economic growth and improvement is innovation, creativity, information and knowledge acquisitions towards the economic processes, the development of information technology, being part of the development of global economy, has brought us a lot of ideas on the evolution, growth, and cycles in the economy. This is the task that would like to be delivered and demonstrated by the paper. It is more like broaden the economic discussions into the economy with all of its social aspects (be it cultural, political, legal, and all related aspects) in notions and our recent understanding on inductive inference of the emergence of creativity (be it in the microscopic or macroscopic level of society) along with the notions of evolutionary search and adaptability of social living.
The discussions of the paper begin with some symptomatic approach to the brief outline of the historical global economy. This interesting discussions on fascinating recent phenomena in our economy then follows the discussions about the role of innovation and creativity while we observe economic system. Both then be discussed by including some facts of growing creative industry and general economy. The paper ends by concluding some important aspects related to the fitness landscape of economic development, diversification, globalizations, and further conjectures that could celebrates what proposed by the paper is.
2. Evolutionary Landscape: A Brief History of Global Economy The recent growing and global economy has emerged to the importance of the role of information to be put into account – even further, some certain information has now intrinsically has economic value. While the symmetry of information has been an important issue in economics and discussed since long, the growing economy has now included the internet and rapid telecommunication devices into its process (be it production, distribution, and consumption of goods and products). The latest have grown the economy which some particular information have high economic values, be it supportive to the economic processes or even become, let alone, a product itself.
Figure 1. The historical evolutionary plot.
Manufacturing Centered Economy
Hi-Tech Economy
Creativity and Innovation-Based Economy
Industry
Electronics over Industry
Innovation over industry
portrayed by a lot of postmodernist thinkers (e.g.: cf. Kellner, 1995). The industrial gap between the developed and under-developed countries in the high tech economy has let such kind of deterritorialization for the possibility of very-rapid communication and the information traffic from one place to another place (Tomlinson, 1999). Globalization is the face of the emerging world culture. Critical thinking has aroused suspecting global economic order which in turn yield the globalization as a sort of homogenization of the world culture (Hannerz, 1991). This is related to daily cultural artifacts, e.g.: music, fashion and lifestyles.
3. Modeling the Innovation in Economic Evolutionary Processes As we have discussed previously, having an abstraction of innovation in evolution of economic system can be regarded as a challenge of speaking about creativity but not in the sense of the induction of an idea in human mind, individually the first one is in the social landscape and space. This is since both creativity, induction (micro-social, individual) as well as innovation (macro-social, collective individuals) can be seen as the problem of a sequence of symbols emitted by an unknown stochastic source. In the other hand, the discussions of evolutionary perspectives can roughly be recognized as a heuristic search for optimality, be it global or local optima (Gen & Cheng, 1997). This has also inspired the incorporation of the concept of meme as a smallest unit of information (Dawkins, 1975) to the computational sociology of cultural evolution (Situngkir, 2004).
The perspective of evolution to the innovation would urge us to assume the existence of a landscape reflecting the features of economic products in which the fitness of each product would be ruled by the market or the quantities of the adoption of the products by consumers. Kauffman et. al. (2000) exemplified this by demonstrating the model of technology landscape based on the evolutionary NK- Landscape model. Since the concept of memeplex – the sequence of memes – reflects the features of cognitive recognition on products, we could built a face of the evolutionary economics in simple way. The idea of the evolution and innovation here is thus modeled as the heuristic search in a landscape, and creativity thence is regarded as finding higher fitness by the space of memeplexes.
Let us denote a search space S t and a function
f : S t → ℜ (1)
thus the general evolutionary process is to find
a t f ∈
where
a : vector of memeplex reflecting the mental representation of artifacts
f : the objective function, mapping the corresponding artifacts or objects to the fitness value
a *( ) t : global optimum at certain time t , a vector which is the “fittest” among other available
sequences at time t ∈ T.
The variations among artifacts are measured by using the Hamming distances which counts the number if the positions where two sequences differ, mathematically written as,
d : S t^ × S t → ℜ+ ∪ ∞{ } (3)
for which is required that
d x y ( , ) ≥ 0 ;
d x y ( , ) = 0 ⇔ x = y ;
d x z ( , ) ≤ d x y ( , ) + d y z ( , );
∀ x y z , , ∈ St (4)
thus the symmetric distance measure is fulfilled,
d x y ( , ) = d y x ( , ), ∀ x y , ∈ St (5)
Here, the distance between artifacts defines the metric system on the evolutionary changing system on
S t.
Moreover, the metaphor of fitness landscape Lt can be written as a function of Lt =( S t , f , d )
containing both the local and global optimal. In particular case, a vector x ∈ St is recognized to be local
optimum if f ( ) x > f ( y ), while there exists f ( ) z > f ( ), x ∀ x y z , , ∈ St.
As it has been discussed, some particular modeling techniques are incorporating the binary models, thus the fitness function can easily written as
1 2 1
N^ t t i^ i^ i^ i^ ik i
f a f a a a a
N =
= (^) ∑ (6)
Figure 2. The Representation of Memetic Fitness Landscape
the growing quantities of memes over time
Using the above model and incorporating the data yielded in the simulation as presented in Khanafiah & Situngkir (2006), we draw the evolutionary landscape as presented in figure 3. We do the simulation using the diverse possible artifacts represented by randomly generated binary memeplexes. The iterations of the computer simulations are made up from epochs of which some rounds. Differing the dynamical modeling with evolutionary one, we can say that each epoch represent the evolutionary changes while the rounds of iteration the dynamics of the circumstances.
Figure 3 presents the landscape yielded from computational simulation. It is obvious that as time grows the diversity or possibility in the landscape grows. Any newly introduced objects would change other’s acceptance and presenting new faces of the landscape. Apparently this kind of landscape would be revealed on any long term economic system, yet, the information and knowledge based products as we have seen in to day economic trend make the faster evolutionary epoch. The innovation does not have to related directly to the core products. For example, the way of bottling particular kinds of beverage could have change the acceptance of the market, and this lies under the uncertainty of the market. A policy in a place to overcome a problem in particular community does not have to be applicable to other places with the similar problem. The epistatic among meme in the memeplex sequences could come from the endogenously (within the products) and exogenously (market, society).
4. Discussions As the market of information, content, and knowledge based products are opened everywhere from now and then, we have abundant information flowing through our glass-screen of television, LCD’s laptop or even phone handset. The rapid information market has made our perspective on creativity in the market clearer.
Table 1 The Simple Three Epochs in Our Global Evolutionary Economic System Manufacturing Center Economy
High Tech Economy Creative Economy
Product Quantities Scarce Medium Abundance
Information Quantities Scarce^
Medium, localized in academic environment Abundance
Asymmetry to be Equilibrate Political access^ Technology access^ Information
Landscapes Nations (geopolitics) Spaces (borderless) Digital
Considering the new economic trend, the changes have information is to be classified now in categories: whether an info is a message for bulk or really important. Here, a lot of persons have hypothesized the new kind of economy. An information, in which has economic value or not, the heart of this new economy. This is an era of creative economy; an economy in which innovation is the most important. No matter how bad our product, the important is laid upon the innovation came together with the product. Diversity and heterogeneity of products is laid upon features in which a product has. Mainly related to
information and knowledge management issue, we can elaborate the table 1 presenting the three phases of the evolution of economy as previously shown in figure 1.
The tendency to enrich the global landscape is very important similarly with the endeavor to enlarge the market in which adoption of particular products higher. In the earlier section we have discussed about the need of market along with product diversification in the newly economy ruled by the novelties and creativity. A reflection of the both is presented for several countries in figure 4. There is shown how China enjoyed the highest export volumes for arts and crafts which are commonly regarded as the most important in the creative industries. From the datasets, France cherish the highest product diversification which, roughly speaking, diversify products most successful with a lot of interesting innovations. This is contrary with what we found in Indonesia, which recognized to be one of the countries with highest diversities in ethnicities which consequently holding enormous sources of creativity. Indonesia holds country with the highest market diversification but yet, relatively low diversification on products. The innovation for diversification of products from the large sources of diversification i.e.: local geniuses with various and wide aspects of product diversification seemed to fail while the marketing has greatly recognized. This is an important evaluation related to strengthening economy for we know that countries like China which slightly higher product diversification and relatively low market diversification enjoy such great export toll. A slight visionary policies to Indonesian product diversification would have boosted up the income for the people of the countries.
Figure 4. Market and Product Diversification of Craft and Arts in World Markets with size of the bubbles proportional to total country exports (Data: UN, 2008)
Interestingly, creative economy is not merely about arts and crafts. The consequence of our understanding that general economic creativity and innovation is by means of preparing and the never ending processes of searching for alternatives, is that in order to gain in the economic processes one
Overall, it promises a great excitement and fun to see how the evolutionary market governed by limitless creativity and innovations is enabling us to give us an evolutionary understanding of the market in general.
6. Acknowledgement I thank friends in Indonesia Archipelago Culture Initiatives for research-related discussions about this issue and Surya Research International for support in which period the paper is written. 7. References
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