Innovation Needs Decentralization

A primary goal of any local knowledge use system, would be to recapture the earlier spontaneity of innovation. Inventions were once associated with specific individuals, and those innovations often proved capable of benefiting populations as a whole. While today's innovations are geared towards internal procedures and long term profits, earlier inventions tended to reinforce previous gains within broad based settings. Future innovation needs more of that same outward, decentralized focus, as a starting point.

What, exactly, about the earlier innovation dynamic has been lost? After some discussion regarding innovation for public welfare, Diane Coyle provided a number of related links in a recent post and she sums up:

(a) we're a long way from being able to make definitive policy recommendations about how to boost innovation...And (b) there's a lot of work economists need to do on standard welfare economics, which has a dusty 1970s (or earlier) feel to it.

It's hard to miss the fact that governments used to be more capable of contributing research for widely held knowledge. Even though no one expects private enterprise to share closely held secrets with the public, tax funded knowledge use was supposed to be a different story. However, governments no longer have adequate reason to publicly support knowledge, in part because they materially gain from privatized knowledge use. Kemal Davis notes for instance that public/private knowledge capture has created its own inequality, with "$84,000 for a twelve-week course of treatment" for hepatitis C.

Unfortunately, the publicly funded capital firms (sovereign wealth funds) which Dani Rodrik suggests for future innovation, would be quite difficult to enact. Kemal Davis also worried that monopolistic industries such as pharmaceuticals "would contribute to the creation of a new aristocracy that can pass on its wealth through inheritance". However, worrying about this particular inheritance possibility is beside the point. What matters is not so much the distribution of already existing wealth, but the fact that important knowledge use flows have been severely disrupted. After all, this impacts wealth creation as a whole.

Even though governments can't travel " back in time" to more inclusive innovation at national or state levels, citizens can do so locally through the creation of knowledge use systems. This would also be a more effective way to address inequality, than centralized forms of innovation which mostly benefit those who coordinate and invest in large scale projects at the outset. More of that commitment and investment - particularly for innovation in services and asset formation - needs to occur locally.

Fortunately, today's technology opens new paths for production to benefit small scale settings - a factor which can make all the difference for local planning. As Alex Tabarrok and Shruti Rajagopalen noted recently, there is a "delicate dance of top-down and bottom-up planning that cities need to thrive".

This "delicate dance" is a process which domestic summits could capture. Those who have new ideas and concepts for infrastructure, would be able to meet with individuals from all walks of life who wish to take part in the process. Most important, the planning component of domestic summits is only the beginning. Innovation is not just about creating unique settings to live and work in, but what happens through the course of lifetimes in these settings as well.