1. Is there a Creative Sector?
Alan Freeman
GLA Economics
LSE 15 December 2003
2. Culture, creation and intervention
Commodification has redefined ‘culture’
– ‘Creative Sector’ is treated as ‘Culture that makes Money’
– Provoked search for evidence to inform policy
– But: one policy, many policies – or no policy?
– Is there in fact a single ‘thing to intervene in’?
DCMS uses ‘standard’ economic classification systems
– Standard Occupational Classification: what the workers do
– Standard Industrial Classification: where they do it
What does ‘Sector’ mean?
– No-one distinguishes it from ‘industry’
– So we will study the two terms interchangeably
– Unfortunately, ‘industry’ is no better defined than ‘sector’ …
3. Where are we in the research cycle?
Analysis
Data
Action/
Observation
Hypothesis: a new phase of cultural
commodification
Use standard classifications to
study commodity-producing
activities (Art, Fashion, software)
They have something in common: but what?
4. Thesis
There is no such thing as a ‘science sector’
There is no such thing as a ‘knowledge sector’
But there may be a ‘creative sector’, with
– common market
– common processes of production
– (a?) common supply factor(s?)
And moreover
– agglomeration externalities (clustering)
– and extensive market interconnection
5. What weknow,1: a stable,qualitative, domestic and global, across the
board rise in demand
5%
7%
9%
11%
13%
15%
17%
19%
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Leisure goodsand servicesasshare of household expenditure
Advertising share of service exports
Audio-visual share of service exports
10. The Standard Classification: a
conceptual geology
In theory, analytical categories evolve. But do they?
The standard taxonomy has accumulated over time
and each age deposits a stratum
– Agriculture - Physiocrats
– Manufacturing – Industrial and classical Economists
– Services - Financial Economists
A fossil record: strata are buried, not reconstituted
Eg: where does GM food ‘fit’?
– SIC makes it a branch of agriculture
– Pragmatically, it is a branch of pharmaceuticals
11. Principles used in constructing NACE and followed in SIC 2003
(from the manual)
1. The main criteria employed in delineating divisions and
groups (the two and three digit categories, respectively) of
NACE concern the characteristics of the activities of the
producing units. The major aspects of the activities are:
(i) the character of the goods and services produced,
(ii) the uses to which the goods and services are put, and
(iii) the inputs, the process, and the technology of
production.
11. An activity is said to take place when resources such as
equipment, labour, manufacturing techniques, information
networks or products are combined, leading to the creation of
specific goods or services. An activity is characterised by an
input of products (goods or services), a production process
and an output of products.
12. Ceci n’estpas une pipe:
A health warning about Hierarchical Classification
8%
28%
36% tractors
52% is in Section D
but…
and…
largest share of D
Is food machines
21%
therefore…
Classified as 29.53, manufacturer of food machinery
13. Where did industrial classification
come from?
Physiocrats – physical reproduction
Marx – social reproduction
Marshall – origin of products
Leontieff – industrial reproduction
14. Leontieff on industry
‘any national economy can be described as a
system of mutually interrelated industries or – if one
prefers a more abstract term - interdependent
economic activities…
‘the whole system has been subdivided into 50
sectors comprising
– agriculture,
– various extractive and manufacturing industries,
– electric public utilities,
– three kinds of transportation,
– trade
– and other types of service industries.’
15. Some problems
Why?
– Is agriculture one industry? (manufacturing is many industries,
so are utilities – so why not landed production?)
– Are there ‘three kinds’ of transportation? (Do cars have more in
common with trains and horses than aeroplanes and ships?)
And what about?
– Wood (construction, materials, or agriculture?)
– Moonboots and slippers – one product?
– Chemicals - one process?
– Services – is banking really the same as communication?
Yet
– Leontieff was pragmatic and close to what he described
– His classification ‘worked’ in practice
– USA fastest-ever mobilisation and demobilisation (cf Kennedy)
16. Other agendas, other taxonomies
Complexity and production runs (Woodward)
Innovation and the use of science (Pavitt, National
Systems of Innovation)
‘Knowledge’ industries (OECD, etc)
Socio-economic paradigms (Perez)
Agglomeration externalities (Porter)
‘Creative class’ (Florida)
17. Caution: why isn’t there a science
industry?
Science is a component of everything
– So is land
– So are buildings
– So is power
– So what?
Science is not commercialised as a product
– ‘Tacit’ knowledge
– Public goods
– Not abstractly transferrable
There are few if any ‘science factories’
– Research lab is typically either public or subsidiary
18. Guidelines for cautious classifiers
History matters
– The past worked, or we wouldn’t be here
– Trends matter
– History repeats, but each time it’s different
It may not be perfect but it’s there
– Don’t knock pragmatism
– Observe what is really going on
– Don’t expect one scheme to fit all
Follow the money
– The bottom line: an industry is an organised system for buying
something and selling something else
– New industries present themselves (Steel existed for 2,000
years but Bessemer made it an industry)
20. An attempted escape: ‘innovation’ as a
modern universal (Pavitt)
‘Science-intensive’ firms are now found in all ‘sectors’
– GM (agriculture)
– Bioscience, nanotechnology (manufacturing)
– Tropical fish and fresh flowers (retailing)
– Electronic money (finance)
‘Industry-based’ classification cannot capture this
– Need ‘cross-cutting’ taxonomy
– Suggested ‘reconstruction’ of existing taxonomy
– But in practice this seems to be a supplementary classification
Two possible deductions
– Industrial classification may be outmoded, or
– ‘Innovation’ may not be a ‘sector’
21. Actually-existing industry
K-waves as creative destructors
New ‘core’ industries as they actually arrive are…
– centres of innovation
– drivers of productivity
– attractors of capital
– and inputs to all other industries
…and they therefore
– transform the organisation of work
– transform the organisation of society
and so create new universal concepts
– The Age of Manufacturing = ‘the factory’
– The Age of Steam and Railways ‘technology’
– The Age of Steel and Electricity ‘power’
– The Age of Computing – ‘information’
22. A new technological paradigm?
● Small runs, big bucks: mass producing difference
The end of the market in sameness
What matters: on spec, and on time
● Birth of a new industrial structure
Capital flows into optimising small unit production
Flexible manufacturing becomes a universal technique
Design becomes a universal factor of production
23. Redefining production
Redefining the city
– Economies of scale no longer a property of the unit
– Agglomeration as such is the source of economy
– The city is the new location for agglomeration economies
Redefining human capital
– ‘Knowledge’ and ‘information’ imply once-for-all transfer
– If so they cannot be a ‘factor’ of production
– Creativity is ever present in production because each
project is new
– Capacity to ‘transform to a vision’
(produce to an incomplete spec)
24. Summary: what the Creative Sector
might be
New market, both domestic and global
High value-added, short-run, differentiated consumer services
and products
New production paradigm
Flexibly specialised hi-tech delivery of services, or products
which are close substitutes for a service (eg films, videos)
New factor of production
Creative capacity
Organised through specialist productive units
–Using the new factor of production
–in the new production paradigm
–to produce commodities to the new market