are there economic costs to promoting creativity? again, it is

ADVOCATING CREATIVITY 15

Are There Economic Costs to Promoting Creativity?

Again, it is worthwhile contemplating the possibility that hard creat-ivity, as it is manifest in knowledge innovations broadly defined,might have economic costs as well as economic benefits. It is wellaccepted in the literature on creativity in organisations that there isa tension between the creative individual and the orthodox organ-isational environment. Lizotte (1998) argues that genuine creativitysubverts the status quo because it challenges long-held assumptionsand fosters new ways of doing things. Techniques for encouragingpersonal creativity are often targeted squarely at challenging theconstraints of organisational norms and deadlines. Amabile (1989),for example, finds that effective cognitive mechanisms for fosteringcreativity include breaking out of accepted patterns, habits and‘scripts’, and suspending judgment for as long as possible.

Employee creativity is, therefore, hostile to the very rules andhabits on which an organisation is founded; rules that are borne onan organisational need for stability and intertemporal consistency.Institutional Economics suggests parallels at the macro-level. Amongother things, institutions, as received norms and habits of behaviour(North, 1990), engender ‘significant stability in socioeconomic systems’(Hodgson, 1998: 171). Challenging those institutions with innovationsmeans challenging, by association, the stability that those institutionsbring.

Innovation, or ‘creative destruction’, is, of course, central tohuman betterment. And constant micro-institutional change is,Hodgson (1998: 171) reminds us, central to macro-institutionalstability. But applying a purely rational yardstick to the dynamics ofinstitutions suggests that institutional change, as itself a commodity,might find optimal dynamic equilibrium through the influence of aubiquitous ‘invisible hand’. If so, to artificially stimulate changethrough fostering creative innovation would be to encourage sub-optimality. Of course, there are many reasons to believe that optim-ality may not occur in the institutional dynamic, among them ‘lock-in’ and ‘drift’.14 But this merely strengthens the need to understandand identify with more precision instances where such (‘market’)failures induce bias. Furthermore, as Rampley (1998) points out,hard creativity can itself be rule-driven. The obvious corollary is thatinnovation may itself become a norm and that a rule-based system,such as a society or the institutional economy, can become addicted

011000.fm 5 Wednesday, March 14, 2001 5:03 PM

16 CHRISTOPHER MADDEN AND TARYN BLOOM

to change: excessive change may be ‘locked-in’ as much as excessiveorthodoxy.15 Managers and policy-makers cannot ignore the pos-sibility that artificially stimulating hard creativity may destabilisethe institutional dynamic enough to induce sub-optimality.

Summary of Evidence

The findings of the evidence presented here are summarised inFigure 3. Correlation is denoted by the symbol ⇔, tautology by ≡.

It is not suggested that the evidence discredits the trajectory.Indeed, ‘scientific’ proof may be insufficient in the area of creativity,as entertained by Waddell (1998: 169) with reference to the creativ-ity-mental illness relationship: ‘quantitative scientific standards maybe too reductionist to apply to studies on creativity and mental illness.’An overwhelming acceptance among practitioners of the benefits ofencouraging creativity might in itself be taken as a form of evidence.It might be unwise to allow inconclusive ‘scientific’ evidence to out-weight the conviction of direct professional observation. Sandblom(1982: 16) advocates: ‘I am well satisfied with the humanist’s evidence,namely “the conviction of personal experience”.’

Fortunately, recognising ‘unscientific’ evidence does not renderuseless a rigorous critical review. The insights into creativity gainedfrom an objective analysis are already apparent, and some of theseinsights will be pursued further in the conclusion. First, however,some discussion of market failure and comparative institutionalissues is obligatory.

MARKET FAILURE AND COMPARATIVE INSTITUTIONAL ISSUES

Assume that the causal links in the initial trajectory (Figure 1) hold.The argument would be useful in advocating creativity to businesses

FIGURE 3 Evidence for the trajectory from art to economic benefit.

011000.fm Page 16 Wednesday, March 14, 2001 5:03 PM


and individuals who were unaware of the benefits.16 But the argumentwould not, in economic terms, make for persuasive governmentadvocacy. Common sense and economic theory suggest that indi-viduals and organisations are prone to capture benefit under theirown steam, without the need for paternalistic interference fromgovernment. Interfering in the free process of benefit capture isunnecessary, promotes sub-optimality and runs counter to thecurrent economics ethic. An advocacy argument based simply onthe trajectory in Figure 1 fails to address a crucial policy question: ifcreativity does have economic benefits, why are these benefits notcaptured in the workaday actions of individuals and organisations?The way economics has traditionally explained errant private beha-viour—and in turn justified government intervention—is throughthe notion of ‘market failure’.

Forms of market failure will be most familiar to arts and culturalpolicy from the ‘justification’ arguments of arts economists. Thearguments can become exceedingly complex, as when economistsventure into ‘merit good’ issues. In its simplest form, market failuremight be thought of as occurring when private action has non-private costs and benefits not accounted for by parties involved in theaction.17 It is a persuasive argument. Governments are not prone tointervene to boost corporate profits, such as the profits broughtabout by a creative workforce, but they are prone to intervene ifthere is some reason to believe that businesses and individuals arenot behaving as society would prefer.

Two obvious market failures might be associated with hardcreativity. First, free-riding in the form of imitation acts as a disin-centive to innovate. A non-private cost is manifest as an ‘under-investment’ in innovation. This market failure is addressed bygovernments through patent and copyright laws that assign propertyrights over new or original ideas.

Second, there may be non-private benefits to creativity. Toidentify these benefits it is useful to translate private decision-making on creativity into the economic lexicon by viewing creativityas ‘human capital’. Creativity psychologists have found the conceptof human capital illuminating (Sternberg et al., 1997; Lubart andRunco, 1999), although they have not yet addressed the issue ofmarket failure. There is a strong tradition of market failure in theeconomics of human capital, especially in growth and developmenttheory, despite difficulties in measuring or even describing the formand extent of the failure. The arguments are likely to be even more



difficult to construct for artistic human capital: economic theory haslargely treated human capital as skills and knowledge that havemeasurable returns in the form of wages (DeGregori and Thompson,1997), a framework not fully suited to the analysis and understandingof artistic forms of human capital (see the discussions in Rengersand Madden, pending; Bonetti and Madden, 1996).

Theoretical underdevelopments aside, artistic creativity, as a skillor knowledge, is clearly a form of human capital, and the existenceof market failure might be established by simple association. Thepersuasiveness of advocacy then depends on understanding andclearly articulating the nature of the failure and the benefits availablefrom its correction. Such an articulation is not evident in contem-porary arts advocacy. It may be argued that market failure is implicitin the creativity arguments of arts advocates, but an implicit argu-ment is a weak argument.

Even if artistic creativity is found to possess market failure andthis failure is deemed significant, a number of practical issues—often referred to as ‘comparative institutional’ issues—require con-sideration. First, can government improve outcomes through inter-vention? Second, given that art is only one way of encouragingcreativity, what are its merits relative to alternatives? And third,society already invests in creativity through the education system:educational institutions weigh up the relative costs and benefits ofinvestments in human capital, of which creativity is a component;governments allocate funds to the education system to account formarket failure in human capital acquisition. A ‘rational institutional’benchmark would suggest that these organisations already investoptimally in creativity given limited resources and the weight ofalternatives. Why then does creativity need encouraging through aseparate policy mechanism (i.e. arts policies)?18 It is not possible toinvestigate these issues further here. Frey (1999) addresses anumber of the more crucial issues for ‘hard’ artistic creativity.

CONCLUSION

This paper has critically examined one of the main creativity argu-ments used by arts advocates, that arts has economic benefitsthrough its promotion of creativity and innovation. The examina-tion has suggested that creative potentials may be realised but notexpanded. ‘Hard’ or ‘scientific’ evidence to support the arguments



is inconclusive and at best supports only correlation, not causation.Artistic creativity may or may not be transferable into other spheresof life, such as inventive approaches in the workplace. Inventivenessmay or may not be successfully realised as innovations. Innovationis, nevertheless, pivotal to economic betterment. If the advocacyargument is to be targeted to government, advocates must addressmarket failure and at least be cognisant of comparative institutionalissues.

The critical approach taken here is not intended to suggest thathard evidence should be the ultimate arbiter of public policy. Theevidence does, however, provide fuel both for non-objective advo-cacy and for objective policy analysis and design. Two themes haveemerged in the course of the critical analysis that are particularlysalient: that creativity needs to be fully understood if the persuas-iveness of arts advocacy arguments are to be maximised; and thatthere are analytical and strategic benefits from acknowledging thatcreativity has attendant costs. These two themes will be pursuedbriefly here.

A clear understanding of creativity reveals that art and creativityshould not be taken as synonymous. There are a variety of forms ofcreativity and not all art matches all forms. The distinction betweenhard and soft creativity is a particularly valuable one for arts advo-cacy. Types of market failure associated with each form of creativitymay differ drastically: hard creativity with its market failure analoguefrom human capital theory; soft creativity with its market failureanalogue from, perhaps, health economics. Advocates who fail tomake the distinction, or who focus on only one of either form, mayinadvertently forego opportunities to strengthen or redouble theiradvocacy arguments. If most art is non-inventive, as Anderson(1996) suggests, advocates who focus solely on hard artistic creativityare arguing for a minority of artistic activities. Attention to soft art-istic creativity brings additional arguments to the advocate’s arsenal.

The distinction between hard and soft forms of creativity also hasbroader applications in arts policy analysis and design. Art aimed atinventiveness, such as ‘art of social change’, is significantly differentfrom art aimed at reconfirmation or reproduction, such as ‘art astherapy’ (Whittaker, 1993). Policies to encourage each form willdiffer. Policies aimed at encouraging ‘hard’ creativity might best betargeted at new works and radical artists. Policies aimed at encour-aging ‘soft’ creativity might best be targeted at traditional art formsand at expanding participation in artistic activities. The two creativity



forms have different policy objectives, different optimal deliverystrategies and different performance indicators.

The analysis here also demonstrates the usefulness of consideringthe ‘bads’ as well as the ‘goods’ of artistic creativity. Although onlythe bravest arts advocate would alert governments to the costs ofartistic creativity, knowledge of these costs is crucial in policy evalu-ation. Two types of costs have been particularly evident in this paper.First, art may involve ‘pain’ to the artist. If so, bribing ‘professional’artists to produce more art may be ineffectual, the financial incentivebeing insufficient to outweigh the psychic costs of additional artswork. Policies might be better targeted at artists who work fewerhours at their arts work, whose marginal benefit from artistic workstill outweighs their marginal cost.19 There is some empirical evidenceto support this hypothesis (Rengers and Madden, pending). Paral-lels might be drawn on the demand side in the ‘spectatoritis’ sufferedby the art-viewing public (Czurles, 1976). Second, there is no rulethat artistic creativity be put to useful or benevolent purposes.Gardner (1988: 319) observes that ‘[t]here is a tendency to equatecreativity with positive contributions, and yet a moment’s reflectionreveals that there is nothing inherently moral or positive about acreative individual or product.’ Adolf Hitler once said that ‘artdemands fanaticism’ (Waite, 1977: 63). There can be no betterindicator of the ‘dark side’ of artistic creativity. Not only are art andpathology miserable bedfellows, but the purposes to which art isput are not necessarily good. Although the use of art in sustainingdespotic regimes seems to be on the decline internationally, therole of art in hegemony cannot be ignored, especially art supportedby the state. The analyses in McLaren (1999) and James et al. (1999)demonstrate how recognition of both the costs and benefits of cre-ativity can improve our understanding of creativity and creativitypolicies.

Creative pursuits are becoming increasingly prevalent (Inozemtsev,1999). A fuller understanding of art and creativity will position artsadvocates and arts analysts more favorably to respond to the chal-lenges that this growth represents. Mayer (1999: 459) commentsthat ‘[a]n important challenge for the next 50 years of creativityresearch is to develop a clearer definition of creativity and to use acombination of research methodologies that will move the field fromspeculation to specification.’ The same might hold for creativity inarts analysis and arts policy.



NOTES

1. The Authors are very grateful for the comments and counsel of Merijn Rengers,and for the comments of an anonymous referee. The usual caveats apply.

2. This paper is concerned with art in an aesthetic theoretical sense, not ‘The Arts’,the arts industries which derive from art, nor more broadly conceived ‘culture’(an introduction to definitional issues in arts policy can be found in Quinn,1998). In the policy sphere, the use of the term ‘cultural activities’, as in thequote from Creative New Zealand, typically refers primarily to artistic activities.

3. Few arts organisations enjoy the luxury of being able to afford two separateresearch streams—one for advocacy and one for policy design—so research istypically shared across the two operations. The risk of ‘doubling up’ is noted byModrick (1998: 28), who warns that ‘arts advocates must understand that policyrecommendations based on advocacy materials have the potential to do moreharm than good.’

4. The Kantian view of creativity is simplified here as a variant of hard creativity, asRampley (1998: 266) notes that ‘Kant does not write of creativity as such, but hedevotes considerable space to the question of genius, which is intimately con-nected with creativity’ and that ‘each new creation of genius can be regarded asoriginal [emphasis added].’ See also Hausman (1998).

5. This ‘hard’ emphasis may be attributed to: a classical tradition of viewing creativityas ‘mythical’ (Sternberg and Lubart, 1996); an early popularity for Psychologicalcreativity research to be based on psychobiographical studies of geniuses, whoare more likely to be creative in a ‘hard’ sense; or simply the angle at whichPsychologists approach the creativity riddle, as might be discerned from Runcoand Chand’s (1995: 263) statement that ‘much of the interest in the cognitivesciences concerns how new constructs come into being; and anyone interested inthat is in fact curios about creativity. That is creativity. [first emphasis added]’

6. The task is then to articulate how artistic creativity might encourage generalcreativity. This is not simple. For an example of the difficulties, see Zuo (1998),who argues that cognitive tensions in problem-solving, such as ‘lack of fit’ and‘unbearable tension from the absence of order and harmony’, find both theirgenesis and resolution in ‘aesthetic sense’. Although interesting, the argument isconvoluted and would prove difficult to translate into practical policy discourse.It might be easier and more persuasive to argue that aesthetic sense simplyimproves a person’s ability to conceptualise and express the problem-space andto articulate the problem resolution.

7. Including Woody and Claridge (1977), Gotz and Gotz (1979), and Andreasen(1987).

8. See Richards (1999) and a number of the essays in Runco and Richards (1997). 9. Although the creativity Psychologist has no measure of usefulness quite like the

positive economist’s market test. Without such a test, determining usefulness orvalue in a creative act reduces to subjectivity or even absurdity (Novitz, 1999).

10. Examples are in Oldham and Cummings (1996), McGourty and Dominick(1996), Amabile (1996) and Shalley (1991).

11. Although the importance of advances in knowledge had always been recognisedin the growth theory of less fashionable tributaries of Economics, such Institu-tional and Evolutionary Economics. ‘Maverick’ economist Kenneth Boulding



summarises the marginalised view with characteristic expansiveness: ‘the universeis clearly running down into a very thin brown soup’ and that ‘[i]t is onlyinformation and knowledge processes which in any sense get out from under theiron laws of conservation and decay.’ (Boulding, 1966: 26).

12. Cultural theory reinforces popular preconception that art and culture are inex-tricably linked, art often being a primary channel through which the institutionof culture is examined, re-examined, reconfirmed or challenged: see Anderson(1996), Beatson and Beatson (1993) and Whittaker (1993).

13. That art is inextricably linked with human ‘understanding’ can be derived fromcognitive and communicative functions of art, which proclaim art as a generatorof ‘meaning’ (Beatson and Beatson, 1993). That art is linked with ‘participationin social life’ can be derived from art’s integrative function (Anderson, 1996;Beatson and Beatson, 1993).

14. For an introduction to the mechanisms of evolutionary systems in the socialsciences see Modelski and Poznanski (1996), and in economics, Hodgson (1996;1998).

15. The contemporary visual arts may be an example of a sphere in which newnessand innovation have become the norm. Whether this has been good or bad mayreduce to a matter of personal judgment, but it has caused much controversy ataward-time.

16. If businesses and individuals were aware of any net benefits, they would alreadyhave captured them.

17. Non-private costs and benefits are also referred to as social or public costs andbenefits, or more simply, externalities. The term non-private is adopted here forsimplicity and clarity, after O’Hagan (1998).

18. These are real issues in arts education: see for example Modrick (1998) andBrewer (1998).

19. The assumption is, of course, that budget constraints prevent these artists fromreaching the optimum where marginal cost equals marginal benefit. The lowreturns to arts work evident around the world make this assumption believable.

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are there economic costs to promoting creativity? again, it is

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