The Limits of the Creative Economy

Snooping around the Interwebs for research on the creative economy, I came across this 2000 BusinessWeek piece called, fittingly enough, "The Creative Economy." The piece sifts through demographics and business trends and tries to envision the next corporate revolution. Some of it sounds a lot like today's prognostication: the promise of an information-based economy, the turn away from industry toward ideas (which might be turning back toward industry with all this talk about manufacturing and exports). Some of it sounds like, well, something that was written 10 years ago, like a quaint moment of praise for America Online's instant-messaging innovation.

This bit sounds fairly prescient:

In the same way that the economy is losing weight--software instead of steel--corporations are getting lighter, too. They're able to generate lots of revenue and profit off a small base of assets and employees.

Despite the merger wave of the 1990s, the most valuable companies in America aren't bigger by employment than the most valuable companies of a decade earlier. Comparing the 100 U.S. companies by market cap in 1989 with the corresponding group in 1999, the number of employees fell 3%, while the collective market cap rose 500%, according to data supplied by The McGraw-Hill Companies' Standard & Poor's. 

Some of these trimmed-down businesses may emerge as more powerful than any corporations ever have been. In the industrial past, there were natural limits to the power of a strategically placed corporation. A corporation was restricted in how many businesses, or customers, or suppliers it could draw into its sphere of influence because there were natural limits on how many could be granted access to its crucial asset--say, a railroad terminal.

The thesis of the piece could be summed up as: Industrial products have three dimensions, but ideas are boundless. In 2000, that made an information economy sound idyllic. But one of the big ideas of 2010 is that we need to build more three-dimensional industrial products. In a balance sheet recession like this one, the economy would benefit most from fresh money in exchange for exports. That's a reason to make more goods to export. But one of the ways corporate leaders have gotten savvy over the last few years is planning new products here, but building them overseas.