The times once again await innovators!
A new challenge of economics breaking through an era of uncertainty
Innovator Economics: Biographies of Innovators Who Have Changed the Flow of the Times is based on lectures on innovation both at universities and in society at large given by Professor Lee Il-young (Division of Global Business, Hanshin University), who has studied alternative economic models for South Korean society. In this work, the author proposes that we overcome this age of uncertainty not through individual competence but through the ability to be organized. However, the “ability to be organized” here does not signify anything like collectivistic cohesion. More precisely, it refers to the ability to organize, or the ability to combine and connect scattered ideas and people. Based on theories transcending mainstream economics and Marxism and supporting cases, Professor Lee presents innovation and new combinations and connections and innovators as the subjects putting these into practice.
In recent years, the South Korean neologism “given-up-three-things generation,” which refers to young generations who have relinquished dating, marriage, and parenthood due to socioeconomic conditions, has evolved to “given-up-five-things generation” (with the addition of home ownership and interpersonal relationships) and “given-up-seven-things generation” (i. e., an indefinite number of things to be relinquished). Nor do youths today think that their current lives, which consist of wandering from one precarious job to another and paying off loans, will improve dramatically in the future. Although everyone agrees that fundamental countermeasures are necessary, no one can say for sure what they are. What must be changed indeed, and how? In this volume, the author presents biographies of six intriguing figures who have changed the flow of an era and sounds out just how innovation will be possible here and now. In fact, history shows that it is possible to find ways for coexistence through innovation even today, when individuals are powerless and the government is directionless.
Innovators as shown by history: People who combine and connect
Though innovation is frequently discussed in business administration, it was not given weight in economics. The figure who first brought innovation into the framework of economics was Joseph Schumpeter (1883-1950). Defining innovation as “new combinations” through acts of “creative destruction,” he discovered in entrepreneurs within the capitalist system innovators who create new combinations. Innovation include, for example, the invention of new products, introduction of new production methods, pioneering of new markets, securement of new sources of materials, and construction of new industrial organizations. When we focus on “new combinations,” Schumpeter’s concept of the innovator can be expanded even beyond capitalism.
For instance, Zhu Xi, a Neo-Confucian scholar of Song China, constructed an ideological system that answered the economic revolution of the 8th-12th centuries. At the time, the development of agricultural technology consecutively led to an increase in agricultural production, expansion of markets, and natural development of commerce and cities. To withstand such dramatic economic development, it was more efficient to manage the peasantry on a provincial level and to grant them more autonomy than to control them strictly on the level of the central government. In other words, economic development brought about the challenge of decentralization to a centralized and autocratic government. Amidst such a climate, Zhu Xi was inspired by new ideas and products introduced from regions including Western Europe and India through the Silk Road and the maritime Silk Route and attempted to synthesize ontology (natural philosophy) and moral theory (ethics) in an unprecedented manner. Arguing that the original or true nature of heaven was found in the hearts and minds of individuals in the form of values and ideologies such as benevolence, righteousness, propriety, and wisdom, he destroyed the autocratic ideology that only the emperor could communicate with heaven. Thus penetrating and combining economic, political, and social changes into a new ideological system, Zhu Xi is a figure who well fit the definition of the innovator presented by Schumpeter.
Another concept that this book focuses on in relation to innovation is that of connections or networks. Hitherto studied more by sociologists than by economists, networks are an organizational form differentiated from both markets and hierarchical organizations such as corporations. Though networks are based on horizontal relations, preferred points or nodes develop with the passage of time, thus generating inequality even within networks. However, when such preferences exceed a certain level, a force that deviates from them is activated, thereby once again maintaining a certain level of horizontality. Because the practice of state-led economic growth continues to remain, South Korean society tends to be strongly vertical and hierarchical. Representative examples are the government’s abuse of official power and conglomerates’ high-handedness. The author of this volume suggests that such characteristics be overcome with a form of networks that are horizontal and decentralized.
A hint can be found also in Jang Bo-go (787-c. 846), a Korean who formed a maritime network in East Asia. The ancient kingdom of Silla (57 BC-935 AD) was a hierarchical society with clear distinctions between the center and the provinces and between aristocrats and commoners. Indeed, a royal decree proclaimed in 834 AD by King Heungdeok states, “As for men, they are high and low in rank, noble and mean in position, different in name and rule, and different even in clothing.” What buttressed such an order was the bone rank system. A provincial, a member of the lower classes, and an outsider active in China, Jang evidently was someone who neither could be acknowledged under nor was incorporated into the bone rank system. Instead, he created an independent network linking people from Silla scattered across Tang China and Japan and displaced subjects of the fallen kingdoms of Goguryeo (37 BC-668 AD) and Baekje (18 BC-660 AD). Subjected to minimal state interference, this network even performed commercial, military, administrative, and diplomatic functions. It goes without saying that the network naturally brought about the exchange of cultures and thoughts as well. This was possible because Jang was an outsider, completely belonging neither to Silla nor to Tang China. In other words, he broke through the thick wall of society, which had seemed utterly impenetrable with individual power, by organizing outsiders—i. e., overseas Koreans—like himself.
“Innovator economics,” an economics project for breaking through a dark age
Innovator Economics develops through Part 2, which theoretically discusses innovations, and Parts 3 and 4, which address examples of representative innovators who accomplished innovations. The work refers to diverse theories on innovation including those of Schumpeter, Peter Drucker, Karl Polanyi, Ronald Coase, and network sociology, and what it arrives at in the end is the innovation of institutions and organizations, or the innovation of systems.
The author ceaselessly poses the following question to everyone around him including students taking his courses, students in the social entrepreneur MBA program, activists, and even his second child: “What kind of a person is an innovator?” Though the respondents provide a variety of answers according to their respective interests and background knowledge, many envision innovators within the scope of entrepreneurs or business founders, in the Schumpeterian manner. Innovation is also further classified into corporate innovation, technological innovation, and social innovation, and, especially in the European tradition, corporate innovation and technological innovation tend to be distinguished from social innovation. Perhaps unsurprisingly, strong for many is the image of innovators as corporate and technological innovators such as Steve Jobs, specific and outstanding individuals in particular.
In contrast, the author of this volume differs somewhat in opinion. The Industrial Revolution of the 19th century is commonly known to have been brought about by the invention of the steam engine by James Watt, an extraordinary figure. However, the view that the steam engine was a product not of the ideas of Watt, an individual, but of collective invention combining diverse elements has won support. In addition, it can be said that the technological innovation of the invention of the steam engine was made possible by institutional innovation that guaranteed ideas for inventions as proprietary rights and led to a series of inventions and inventors afterwards, thereby driving the Industrial Revolution and opening the door to modern society. In other words, social innovation is not contrary to corporate innovation or technological innovation, and countless organizational movements underlie even the bright ideas of a single person who seems to have led social innovation. Innovator Economics is a project for encouraging those who seek sensitively to grasp precisely such movements and to become innovators themselves. The message of “every man for himself” is one for none other than these people.