TOC

1. Beyond Utopia
2. New Frontiers of Social Change
3. The Obsolete Monetary system
4. Resource-Based Economy
5. Motivation, Incentive & Creativity
6. The Human Aspect
7. The Venus Project

“Traditional models [of innovation] based on a distinction between publicly funded pure research and commercial development based on patents and other forms of intellectual property no longer appear relevant to the needs of a networked economy depending heavily on amateur production.”

“The 19th century model of cultural innovation“: The individual inventive genius (Faraday).

“The 20th century model of technical innovation“: Large scale research institutions (universities) + (private) industrial research laboratories.

The 21st century model of innovation: amateur collaborative innovation

“In most sectors of the economy, the rate of technological progress has slowed substantially [in the 21st century].” (Boeing 747, fridge)

“motives [for amateur collaborative innovation] like these do not co-exist well with a profit motive.”

“amateur innovation is unlikely to be promoted by policies that sharpen financial incentives. On the contrary, the greater the potential for well-informed market participants to extract profits from a given activity, the less willing amateurs will be to make uncompensated contributions.”

“Any correlation between the capacity of a site to capture AdSense revenue and the value of the site to its users is indirect and tangential at best.”

“innovation in a network economy typically requires contributions from widely distributed sources and yields benefits that are diffuse and hard to capture. There is no easy way of relating the rewards of innovation to the value of individual contributions.”

“The vast majority of market returns from internet services are tied to advertising.”

“Amateurs have little or nothing to gain from intellectual property rights and are correspondingly unwilling, and often unable, to pay others for the right to use patented or copyright items that derive much of their value from the collective contributions that make up the network.”

First step in policy for networked innovation: “it is necessary to encourage creativity in all its forms. Since the outcomes of creativity cannot be prescribed in advance, policies to encourage creativity must rely on providing space for creativity, including access to the necessary resources, free time for creative workers to pursue their own projects and the communications networks necessary to facilitate creative collaborations.”

“technical and cultural innovations are increasingly intertwined”

13
“The question is then: how is such ‘creative destruction’ occurring in media industries, if at all?”
“In spite of the success of a few media enterprises, creative industries in China are fragile when compared with the corporate structures and production relations of Hollywood. In developed economies the mass media are dominated by highly concentrated forms of organization.”
“In China, the options for development of audiovisual industries are still uncertain and subject to vagaries in national media policy. Media organizations may expand provincially; they may aspire to horizontal integration; but the bottom line is likely to remain a lack of capital, which forces them to seek out low-cost ways of competing in a crowded media industry.”

14
“In television industries for instance financial returns on program development and production are extended across, and within new territories. In cinema co-productions and runaway productions are a means of ensuring cost savings.”

15
“Globalization by franchising provides a very different model of development, one that is flexible, post-Fordist, and subject to user innovation.”
“Within the context of globalization, [...] there are four levels of economic activity: economic specialization, de-territorialized production (production of goods in lowest cost locations), partially traded or non-traded services, and routine manufacturing and services.”

economic specialization

“These blockbusters and global brand services are often incubated in ‘export-oriented, specialized industrial clusters’. Hollywood and Silicon Valley, which are result of institutionally embedded know-how, produce continuous learning and innovation. The output of these centres targets world markets.”

de-territorialized production

16
“Outsourced productions in cinema are the most noteworthy example of how international producers seek to minimize costs.”

partially tradable or non-tradable services

“The internationalized services as such need to partner up with local knowledge, in turn creating mutual benefits and cultural technology transfer.”

routine manufacturing and services

“it is possible to make products and services at any location in the globe.”

16f
“The demand for innovation drives the imperative to constantly examine the international market for opportunities.”

17
“This leads back to the conundrum of creativity: how do developing countries compete? If it is easier to compete in the cultural economy by making local versions of global products—or by acting as a low-cost location for footloose multinationals—then the specificity of culture is ultimately eroded. On the other hand, a focus on the national can have the effect of marginalizing the cultural product and ensuring that it fits only into a niche culture market, as illustrated by national cinema and world music. The dilemma for producers, moreover, is making a leap into high-value markets: independents located in developing countries do not have the resources to incubate, produce, and market so as to produce ‘winner-takes-all’ branded products and services. In many instances, new artists are discovered in the margins and expediency drives them or their agents into to the arms of international financiers, often handing over the valuable IP rents in the process.”
“Over-bureaucratization is endemic to the cultural sector and works against implementation of long-term business models.”

17f
“These factors, in combination with existing conventions within the marketplace, notably a propensity to rely on relationships make it difficult for cultural enterprises to generate start-up capital. Product innovation is therefore more likely to be incremental and imitation is favoured over innovation. The focus on imitation has led to the success of Japanese and Korean creative industries. Whereas these countries have managed to move to the next stage (innovation), China remains locked into a cycle of dependency.”
“The principal financiers of the Chinese film industry are government: direct support for approved films as well as indirect support for co-productions via tax breaks and reductions of expensive red tape; foreign investors: particular in co-productions and joint-venture arrangements; major business enterprises: through revenue-sharing arrangements and product endorsements in film; advertising companies: often through brokering of services such as post-production; and state-owned enterprises: many of these such as the People’s Liberation Army, are in fact highly profitable enterprises with interests in communications.”
“In 2003 80 percent of revenue from box office receipts came from the 20 imported blockbusters (Hua 2004). According to official statistics copyright earnings on imported films were 10 times more than those received from domestic productions.”

18f
“The politicization of film content, erratic censorship regimes, and the necessity of managing scripts to appease officials, impacts on production investment in two ways. First, it discourages domestic investors who are unwilling to sink their capital into scripts that are politically doctored; and second, it opens up a private investment market for the more adventurous producers. Since 1997 the partial privatization of China’s leading film studios (Beijing Forbidden City Film Corporation, Xian Film Corporation, Ermei Film Corporation, and Shanghai Film Corporation) has stimulated private investment and co-productions. Most of the capital investment has come from Hong Kong, Taiwan and Japan. While the majority of films in 2003 were still produced by the state-funded studios, there was a significant increase in the number of films (Ibid, 32) produced by privately invested companies. Some of the more notable independent production and investment houses are Beijing New Vista, Huayi Brothers and Taihe Film Investment Company, and Century Hero Audio-visual Investment Company (Yin 2004).”

19
“The success of China’s film industry and the capacity to create exportable content is contingent on unleashing creativity as much as stimulating finance.”
“Tarantino has undoubtedly been impressed by the willingness of the Chinese to work enthusiastically for low salaries in contrast to the spiralling costs in other international locations.”
“With a population of more than 1.3 billion China’s cinema box office revenue is just 25 percent of that of Korea, whose population is 47 million.”
“The success of the Korean new wave has seen film financing models going on-line, allowing ordinary people to buy into the movie-business (Kim 2003). Netizen funds are a way by which (mostly) young Koreans invest in film projects for a return based on the movie’s success after release.”

19f
“International connections are important in order to break out of the cycle of dependency on state funding. In 2003 more than half of the 140 feature films made in China received substantial investment from government but less than half the number of films legitimately screened in Chinese cinemas in 2003 were profitable, and as mentioned above, the heavy grossing films were international ‘blockbusters’.”

20
“the average cost of production was only rmb 3 million (USD362,000), or 0.5 percent of the average cost of production in the U.S.”
“Cellphone received investment finance from a number of sources with major contributions coming from Motorola, China Mobile, BMW, and Mtone (a Chinese internet content provider). Motorola invested rmb 4 million (USD484,000), China Mobile rmb 800,000 (USD97,000), while BMW contributed rmb 1.2 million (USD145,000). Sponsors received product placement and visible recognition in the film promotional messages. For instance, the protagonist of the film—a successful TV talk host who inadvertently left a message from a lover on his new Motorola cellphone—also drives a BMW. In addition, Motorola and BMW’s logo were displayed prominently on advertising billboards. Music copyright delivered a further rmb 8 million (US$968,000) (Meng 2004). In addition to securing financial support, the production company (Huayi Brothers and Taihe Film Investment Company), which is incidentally the advertising agent for China Mobile, sought to ensure returns on investment by working with a Guangdong-based DVD maker to produce cheaper legitimate versions in efforts to limit piracy (Shanghai Daily Jan 21, 2004).”
“Television is an industry that employs an army of people in China. The flow of investment is more dynamic than cinema as the market is shaped by domestic consumption and broadly supported by advertising.”
“Television stations are still technically owned by the state but they are now allowed to apply for licenses to operate as corporate entities responsible for their profits and losses.”

21
“This is not straightforward philanthropy, however, but investment based on guanxi (reciprocal) relationships.”
“In China cable television is ubiquitous but the business model remains low value because subscription to the 30 or so channels is under priced.”
“the mass audience for television – some 900 million — is shared among some several hundred stations. The bulk of income for television stations, and for producers, now comes from advertising.”

23
“Digital content industries provide new challenges for investment in the creative industries.”
“Chinese government is investing heavily in video games production in Shanghai and an animation centre in Beijing. These are joint public-private ventures that draw upon government largesse towards new industry/new economy development in the wake of Korea and Japan’s video games exports. The government recognizes that digital content industries are growth industries and that they have global impact; that is, products and applications developed in China can be marketed globally, in comparison to television and film, which is hampered by being nationally specific. In addition, digital content is invariably produced with the intent of repurposing in multiple platforms: cable, free-to-air, Internet, mobile phone etc.”
“Until recently oligopoly structures have not existed in China due to the need to control information.”
“Digital media is especially relevant to user-led innovation. There is a need to respond quickly to consumer demand and this gives China an advantage in that it has a large consumer base to test new products and applications.”

24
“while ideas may be generated in developing countries, finance to commercialize still comes primarily from multinational investors.”
“In order to avoid becoming a low cost location for media production (Miller et al 2001), China needs to further develop its own industrial base and to recognize the importance of intellectual property protection in developing local creativity. The synergy between creative enterprise and financial inputs into core creativity, R&D, incubation, and marketing now becomes central to meet the challenge of developing export content.” Not sure about that.
“how do countries move from a low national production base into competitive export markets? The transition encompasses a five-stage process.

1. low-cost outsourcing,
2. isomorphism and cloning practices,
3. legitimate co-productions and franchising agreements,
4. niche markets and regional breakthroughs,
5. cultural/ industrial milieu and local clusters can be produced to target high-value exports.”

“These media capitals (Curtin 2003) bring with them economies of scale and scope, the attraction of foreign investment, the certainty of rights management, and greater network and distribution complementarities.”

25
“Successful exports of Chinese film and television, moreover, are ultimately contingent on institutional reforms within China, which will bring these five growth stages into synergistic alignment in order to generate greater value and industry confidence.”

483
It is difficult to pinpoint “how many people are affected by runaway production because of the locomotive nature of the industry.”
“Entertainment executives counter the unions’ argument that the decline in production jobs is due to runaway production, saying that the decline is due to a decrease in the number of films made per year and other efforts to cut costs as above-the-line production costs rise while profit margins fall.”

483f
“Proponents of a petition filed with the Commerce Department in late 2001 supported regulations compelling tariffs equal to the amount of the Canadian subsidy of a particular film or television production to be paid in order for it to be distributed in the United States.”

484
“Other labor groups such as the MPAA, DGA, the International Alliance of Theatrical State Employees (IATSE), and the American Federation of Television and Radio Artists (AFTRA) opposed countervailing tariffs because a possible trade war could result in the loss of thousands of jobs.”
“The petition was withdrawn in January 2002 without prejudice.”

485
“One of the historical benefits of working with a union is that the producing company is assured a certain standard of work and experience, without having to bargain about the workers’ rates and benefits.”

486
“Co-productions are beneficial because they decrease the costs for all parties; foreign entities view them as a “vehicle for collaboration with Americans who excel in technical and creative expertise” and, as a result, better equip them to compete with Hollywood.”
“partnerships generally permit filmmakers greater creative control than if a major studio were the backer of the film or program.”
“From the corporate point-of-view, producing in the United States is no longer cost efficient.”

486f
“While a higher percentage of Canadian workers are unionized than their United States counterparts, the average wage for below-the-line workers is less than in the United States. Further, the “costs related to the acquisition and production of a movie prior to its release,” so-called “negative costs,” doubled between 1990 and 1999, as did the average distribution costs. Entertainment conglomerates dealt with this reality in the 1990s via vertical integration, layoffs, co-productions and other joint ventures, and by conducting more aggressive market research prior to production and distribution.”

487
“”We don’t want to do a TV show in Canada called ‘Pasadena,’ but we can’t justify to our parent company the extra $200,000 per episode it costs to shoot here.”"
“Production revenues in British Columbia, where the popular production city of Vancouver is located, were about $1.2 billion in 2000, compared to $43 billion in revenue for California, furthering the Canadians’ argument that their industry is infinitesimal compared to that of the United States.”

491
“The concept of tax credits for labor expenditures has been gaining support amongst legislators and within the entertainment industry.”
“Ever since the 1920s [...] the entertainment industry has been largely self-regulated.”

495
“North Carolina has consistently ranked as the third highest production center in the country since the mid-1980s.”

498
“From the signing of the Declaration of Independence, capitalism has ruled the federal government’s approach to the arts.”
“The U.S. government should be cautious in its approach, however, not to favor independent or television productions over high-budget feature films, since in the aggregate, high-budget productions do the most damage when they flee U.S. shores. Federal involvement through retraining and displaced worker assistance programs is the least intrusive option.”
“Accepting that runaway production will occur and dealing with the consequences may be a more prudent approach than trying to direct the economics of the entertainment industry from the outset of production.”

499
“In a competitive international marketplace it is neither realistic nor economically practical to completely halt runaway production.“

1960s

• Australia needs identity
• Less connection between Australia and Britain
• Cultural nationalism
• High ratio of Australian productions on pay TV

1980s

• 10BA

Today

• Free trade agreements all around
• Lure foreign film production to Australia
• Low ratio of Australian productions on pay TV
• PayTV probably overtakes free-to-air TV
• Policy embraces internationalism

Australian film and TV industry (AFTI) drifts gradually from cultural nationalism to internationalism.

“Australian film and television policy is a case of incremental change through ‘layering’ and ‘drift.’”

80
“The hearts and minds of the new generation are set against copyright. The copyright industries are losing the war.”

37
IP allowed specific kinds of businesses to flourish.

38f
“As Alford (1995) discusses, China possessed no indigenous equivalent to concepts of “intellectual property”. Notions of individual creativity and ownership of ideas were not easily reconciled with Confucian concepts of creativity, knowledge and learning (Alford, 1995, p. 9). For these and various other reasons, the PRC remained without a copyright law until 1990.”
“The business models that dominated the global recorded music industry in the second half of the twentieth century were based around record labels providing artists with access to recording equipment, mass production and distribution channels, marketing and promotion services, and remunerating them on a royalty basis.
Legally enforceable intellectual property rights and physical technologies that made controlled mass production and distribution of music possible (Bettig, 1996) were key factors in the rise of a handful of highly integrated, transnational music corporations that accounted for 90% of gross sales of recorded music in 1994 (Burnett, 1995, p. 2). Although developments in physical technology, such as cassette tapes and recorders, presented challenges to the industry’s ability to control copying, these changes occurred after markets, industry structures, professional organizations and group collection infrastructures had become established. As a result, the industry was generally able to respond in a systematic way and incremental developments in analogue technologies of copying did little to disrupt its overall structure (Frith, 2002).
In China, on the other hand, technologies for mass reproduction and consumption of recorded music became available in the absence of copyright law, an organized domestic music industry, or clear legitimate channels for the distribution of most foreign content.”

39
“Not only are new technologies being adopted with enormous speed across the country, they are being embraced fastest by groups traditionally considered most likely to pay for music in other markets. Young, educated city-dwellers with relatively high disposable incomes are now the group most likely to have access to broadband connections, cheap MP3 players and next-generation mobile devices.”
“So [record labels] have gone from the frying pan into the fire. They hadn’t even put a dent in pirate physical copies before P2P and MP3 downloading came along.” Kaiser Kuo quoted by Montgomery.

40
“The dominance of a few developed nations in global trades in culture has led many to question the fairness of expanding global intellectual property system. According to UNESCO, developing countries account for less than 1% share of exports of cultural goods.”

41
“While the traditional record label model isn’t exactly going through a golden age in the west, it never even had a golden age in the Middle Kingdom.” originally from The Register ~ Music in China (04.12.2009)
“While major international labels have been unwilling to invest heavily in the promotion of international artists in a market where mass-scale returns are difficult to secure, local artists and labels have been actively working to develop business strategies capable of generating income in spite of very high levels of piracy. One strategy for doing this has been to rely on personal appearances by artists, which cannot be replicated. As a result, there is less emphasis on producing popular albums, and more emphasis on gaining popularity and profile through single hits that lead to lucrative product endorsement and live appearance or performance deals”

42
“In contrast to Western markets, where artist management and music are generally separate, in China assigning a record label with management rights is considered one of the most important aspects of an artist’s contract, forming a vital income source for domestic labels.”
“However, even for Chinese labels, relying on personal appearance and advertising revenue presents practical problems. Personal appearances have limited scalability. Neither advertising nor personal appearance fit well with the “long tail” approach, which, in other markets, allows back-catalogues to continue generating revenue for labels and artists long after the artist has been eclipsed by the latest trend.”
“China’s own capacity to capture commercial opportunities associated with music is increasing as media commercialization becomes more entrenched.”
“It is extremely difficult to make money by licensing copyright in China and gaining access to the market is expensive and difficult, so Western labels have devoted few resources to promoting their products to Chinese audiences.”

43
“In China [...] unauthorized networks for the distribution of physical copies of music are well established, independent monitoring agencies do not exist and users have demonstrated low levels of willingness to pay a premium for “legitimate” content.”

44
“Unlike ring-tones, which are generally stored on individual mobile phones, CRBT [caller ring-back-tones] services are managed centrally, through mobile service providers.”

45
“[Mobile phone] service providers, distributors, labels and music publishers share an initial ‘‘sign-up fee’’ when a subscriber first signs on to a CRBT package. After the initial sign-up fee has been divided between these parties, subsequent full monthly subscription fees are kept solely by China Mobile.”
“[Music] labels are in a position to connect artists with mobile operators, manage advertising deals and to ensure that publishing and performance licences are obtained – all key components of the music business in today’s China.” But very different from the western model of a music label.
“Although there have been some amazing stories of amateur musicians who have produced a hit ring-tone from their bedroom and made millions, commercial spaces are quickly being filled by large, vertically integrated content providers.”

46
“In the case of the music industry, it appears that cultural policies that make it harder to publish foreign content, strict regulations governing foreign investment in content industries, and low levels of copyright enforcement have worked together to provide Chinese media businesses with space to develop effectively.”
“the success of new music distribution technologies and a growing capacity to provide local content in forms that satisfy the demands of local consumers, in spite of very high levels of unauthorized copying and distribution of physical media, suggests that copyright has not been the key impediment to the success of international artists and labels in the Chinese market.”
“Rather than falling victim to globally dominant exporters of intellectual property, China’s domestic music industry is successfully developing a market for local content, alongside its own capacity to provide the content and services demanded by Chinese consumers.”
“Unwillingness to adapt to an environment where ownership of intellectual property rights cannot guarantee control over how music is used and distributed, and reluctance to explore alternative approaches to music distribution and licensing have [...] contributed to [the] lack of success [of major international record labels].”
“The apparent association between this distribution bottleneck and the growth of an organized, profitable commercial music industry in China highlights the continuing role of monopoly structures in the commercialization of culture in a digital age.” It’s true but I don’t like that.

409
“The recognition of individual proprietary rights in creative works marked a historic shift – on paper at least – away from notions of sharing, distribution and collaborative production, emphasizing instead the role of the individual author and his or her right to dictate the terms on which a work can be modified or distributed.”

411
“Reduced levels of government funding [since the early 1990s], combined with new opportunities provided by the market economy, are placing film-makers and musicians under heavy pressure to find new sources of funding and to build commercially sustain- able businesses. Complicating matters is the fact that levels of piracy in China mean that the royalty-based business models that dominate other markets are simply not yet viable in China.”

411f
Some companies are enforcing copyright legally, with some success.

412f
Huayi Brothers make extensive use of product placement.

413
“advertisers whose products appear in Huayi Brothers films do not really care whether the films featuring their product are distributed legally or illegally. As long as people watch Huayi’s films and are exposed to the products being displayed within them, companies that have paid money to help develop a brand profile are satisfied. As in other markets, this strategy helps take pressure off royalty payments as the only source of income for film producers.”

413f
Mp3 downloading sites are fairly easy to fight in China, because the Internet is so strictly controlled. P2P, however, might change this entirely.

414
“The paltry income that can be derived from these sources [CDs and the Internet] leaves them with artist management and live events as their most significant sources of revenue.”

415
FLOSS (Free Libre Open Source Software) and Creative Commons “help reduce enforcement costs and refocus copyright management on creativity and distribution, rather than control.”

416
“At present, pressure for enforcement of copyright in China is still driven to a large extent by foreign governments and corporations that wish to see their intellectual property protected. Once this motivation is more directly related to China’s own creative sector it might be expected that copyright law and enforcement will be more closely scrutinized and invested in by government and local businesses.”
“the demand for creative products – particularly by emerging upwardly mobile urban middle classes – and the successes in extracting income from content experienced by music copyright owners in relation to mobile phone ringtones, suggest that with a combination of pricing, local product, technology and legal enforcement, such a cultural shift [such changes in copyright practices] may not be impossible.”

71f
“The barriers in business are social as well as economic, and those who feel their interests threatened will battle fiercely against innovation.”

73
“The foundation of capitalism, both economically and socially, is, therefore, the insatiability of wants that entrepreneurs have managed to induce consumers to see as needs.”

74
Capital = “accumulated wealth reproductively employed.” Oxford English Dictionary
“Credit must be created out of nothing but future expectations, which is a basic reason why capitalism, of all economic systems, is so distinctly oriented toward the future.”
“The important players in this process are entrepreneurs and investment bankers, who generate “new purchasing power out of nothing.” The investment banker is not just a middleman standing between savers and users of capital; he is instead “a producer” of money and credit, “the capitalist par excellence.”"

110
“The crucial element was capitalism’s orientation toward the future; but when the future looked bleak, people were reluctant to take risks.”

164
“change is part and parcel of capitalism itself, and it comes from entrepreneurial behavior within the system.”

254
“Innovating firms do not arise evenly throughout the economy. Instead, groups of these firms emerge just after an organizational or technological breakthrough in a particular industry— either in that same industry or in others allied to it.”

255
“As a result, “the history of capitalism is studded with violent bursts and catastrophes.” It is no gentle process of adjustment but something “more like a series of explosions.” The building of a railroad where none had existed, for example, “upsets all conditions of location, all cost calculations, all production functions within its radius of influence.” Innovation, then, is very much a double-bladed sword.”
“In the real world of business, “nobody ever is an entrepreneur all the time, and nobody can ever be only an entrepreneur.” Particularly in large firms, the entrepreneur often not only innovates but also carries out day-to-day management.”
“Of all economic systems, capitalism alone enables people to become entrepreneurs before they possess the necessary funds to found an enterprise. In the end, “it is leadership rather than ownership that matters.“”
“”Risk bearing is no part of the entrepreneurial function. It is the capitalist who bears the risk. The entrepreneur does so only to the extent to which . . . he is also capitalist, but qua entrepreneur he loses other people’s money.”"

255f
“Schumpeter identifies entrepreneurial profit as the prime motivator—”the premium put upon successful innovation. When other participants in the same industry see the new level of high profit, they quickly try to imitate the innovation. The entrepreneur tries to preserve his high profit for as long as possible, through patents, further innovation, secret processes, and advertising—each move an act of “aggression directed against actual and would-be competitors.” These are forms of what Schumpeter would famously call “creative destruction” in Capitalism, Socialism and Democracy.”

256
“a new firm’s intrusion into an existing industry always entails “warring with an ‘old’ sphere,” which tries to prohibit, discredit, or otherwise restrict the advantage afforded to the new firm by its innovation. But whatever may happen in a particular case, every entrepreneur’s high profit is temporary, because competitors will copy the innovation, causing market prices to fall. This sequence of cutting prices, which Schumpeter calls “competing down,” is observable in all industries except those protected by government monopoly.”

257
“A major theme of Business Cycles is the extreme difficulty of changing traditional ways of doing things.”
“the only way to change them was through overwhelming economic defeat.”
“In response, British entrepreneurs often moved their factories out of guild-dominated towns. Operating in the countryside, they could proceed without the fetters of official repression and with the advantage of cheaper labor—although even here, in the new outposts, innovators had to “fix things” with local authorities.” -> Do entrepreneurs in film innovate far away from the traditional film industry so they don’t get in trouble with them? I think so. For example, shooting digitally is still a big topic/issue in feature films but standard in web series.

258
“Besides innovating in production, entrepreneurs often had to change habits of consumption. Industrialists had to convince reluctant customers that they actually needed the new goods. Here Schumpeter places heavy emphasis on the role of marketing in mass consumption and in economic growth itself. “It was not enough to produce satisfactory soap,” he writes, “it was also necessary to induce people to wash—a social function of advertisement that is often inadequately appreciated.”"
“From the perspective of producers and investors, it did not matter whether new wants were real necessities. “Needs,” says Schumpeter, “whatever they may be, are never more than conditioning factors, and in many cases mere products of entrepreneurial action.”"

259
“”The making of the invention and the carrying out of the corresponding innovation are, economically and sociologically, two entirely different things.” Often the two interact, but they are never the same, and innovations are usually more important than inventions.”

262f
“”The more an innovation becomes established, the more it loses the character of an innovation and the more it begins to follow impulses, instead of giving them.”" The Internet today!

263
Railroadization makes the essential features of the evolutionary process more obvious than any other case: “Hundreds of innovations emerged, both large and small. Great sums of money changed hands, the speed of commerce leapt forward, and a vast array of new products reached national markets.”

264
“Still today, the most important advantages of the corporate form over the partnership are its permanence (it does not die when its founders die) and its limited liability (shareowners risk only their investments in that corporation, not their entire personal wealth).”

265
“From 1897 through 1904, 4,227 American companies merged into 257 large entities.”

266
Corporations “facilitated the “absolute optimum” way to commercialize new technology.”
“Entrepreneurial startups always emerge and grow uninterrupted alongside big businesses.”
To Schumpeter “it remained clear that innovations drove entire national economies forward and that long-term progress far outweighed short-term pain.”
Government regulation is very important, but requires “intelligent civil servants, tuning the engine of capitalism with a careful hand, lest they stifle entrepreneurship.”

267
“”Coincidence of high mortality and high profits ideally expresses this situation.”" Phases of creative destruction are cruel to entrepreneurs (high mortality), but the ones that survive make a lot of money (high profits).

269
“Much of the success enjoyed by individual entrepreneurs came down to their talent for seizing the opportunities of the moment.” Timing is EXTREMELY essential!

270
“”It should not be forgotten that in 1914 there were still above 40 firms fighting the losing fight of the electric automobile.”"
“”Capitalism is essentially a process of (endogenous) [sic] economic change.”" Two important aspects: endogenous + continuous change.
“Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion. The atmosphere of industrial revolutions—of ‘progress’—is the only one in which capitalism can survive.” -> continuous change!
“”stabilized capitalism is a contradiction in terms.”" -> continuous change!

321
“”capitalism is not gentle to the capitalist”" Capitalism is cruel to most entrepreneurs and capitalists, but very rewarding to a few of them, benefiting everybody as an outcome.

345
“”God what suffering ‘writing’ means!”"

352
Definition creative destruction = the “”process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”"
“Since creative destruction is an evolutionary process, the performance of capitalism must be judged “over time, as it unfolds through decades or centuries.”"
“”the problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them.”"
“Creative destruction constantly sweeps out old products, old enterprises, and old organizational forms, replacing them with new ones.”
Schumpeter coined the term and area of business strategey.

353
“”perfect competition is and always has been temporarily suspended whenever anything new is being introduced.”

355
“under modern capitalism, long-run cases of monopoly are almost nonexistent—even rarer than instances of perfect competition. Hence, high entrepreneurial profits are always temporary. And on balance, big business is unquestionably a positive force for innovation and growth.”

356
Entrepreneurship and technological progress are “”essentially one and the same thing,” the first being “the propelling force” of the second.”

356f
“when capitalism began to spread, persons of “supernormal ability and ambition” could now reach a much higher standard of living, provided they would pursue business careers.”

357
Capitalism freed people “to make a mess of their lives.” They now had sufficient “individualist rope” to hang themselves.”

358
“Employees take economic progress for granted, but they have little emotional attachment to the success of their companies, or of the capitalist system as a whole. As replaceable cogs in a large wheel of enterprise, they feel personally insecure.”
“In the larger sense, the emotional feelings of human beings are so complicated that there can be no assurance that people in general are “happier” or “better off” under industrial capitalism than they had been in medieval manors or villages. Economic efficiency is only one of many human goals, and not necessarily the most important to every individual. Thus the future of capitalism cannot be assured on the basis of its superior economic performance alone.”

368
“”democracy is a political method” for arriving at legislative and administrative decisions. Hence democracy is “incapable of being an end in itself . . . and this must be the starting point of any attempt at defining it.”"

369
“The farther removed an issue is from voters’ daily lives, the more remote its rationality be- comes to them. And the greater the distance from rationality, “the greater are the opportunities for groups with an ax to grind” to affect electoral outcomes through “psycho-technics.” Ultimately, the voters’ will is “largely not a genuine but a manufactured will . . . exactly analogous to the ways of commercial advertising.”"

373
“[Schumpeter] understood that multidisciplinary work runs a constant risk of dilettantism. But if the scholar does his or her homework, as Schumpeter always did, this danger can be transcended.”

374
“Above all, Schumpeter knew that at some point partial and general syntheses of the insights from all relevant disciplines become essential if people are going to make mature sense of the world.”

388
“big companies [lie] near the heart of advanced capitalist success.”

399
“He had learned, as all authors do, that books have unpredictable lives of their own.”

433
“capitalism is a continuous evolutionary process without an end-point.”
“On the issue of present enjoyment versus long-term economic growth, it was obvious to Schumpeter (as well as to Keynes and all other competent economists) that growth requires investment, and therefore some degree of deferred gratification. [...] laissez-faire economies solved this tradeoff in one way, socialism in another. But for in- between systems such as amphibial states, explicit policies were essential to discourage conspicuous consumption and steer resources toward investment.”
“Modern capitalism had become so productive that it was even possible to guarantee all citizens “a certain minimum annual income.”"

436
“capitalism was not an easy system to sustain. There was constant temptation to lay even more straws on the camel’s back, and real danger that the camel might collapse altogether. If this happened, then the socialist alternative would appear attractive even to those who had opposed it in the past.”

441
“the preservation of the American way of life (and of the British, French, German, Japanese, and all others operating under mixed economies) depended as heavily on government as on business.”

455
“all fundamental explanation must run” on the analysis of human feelings.
“psychology [moved implicitly] toward the center of economic thinking. Yet, he noted with regret, economists generally did not consult or work with professional psychologists. Instead, they preferred to invent their own assumptions about the mental processes of producers, consumers, and people in general.”
“all human beings grow up having subconsciously developed a sense of how the world works. Everyone who writes on any subject, he says, has experienced “a preanalytic cognitive act that supplies the raw material for the analytic effort. In this book, this preanalytic cognitive act will be called Vision.”"
“Schumpeter says that all analysis begins with a distinct intuition that is almost inherently ideological. “It embodies the picture of things as we see them,” and usually our way of seeing them “can hardly be distinguished from the way in which we wish to see them.” This is a dangerous situation for researchers, because it tends to limit the generality of their conclusions.”
“On the other hand, the rules of scholarship typically correct almost all errors deriving from ideology. Different researchers begin with different visions and ideologies, and conflicting conclusions tend to cancel each other out.”

456
“”The first thing a man will do for his ideals is lie.“”
The classical economists “vision became a real obstacle to progress, because it offered no explanation at all of the process of change, which Schumpeter regarded as the essence of capitalism.”
“The pessimists [such as Thomas Malthus, David Ricardo, and James Mill, father of John Stuart Mill] dwelled on limits to growth imposed by the pressures of increasing population and decreasing returns to agriculture. From these premises they inferred “falling net returns to industry, more or less constant real wages, and ever increasing (absolutely and relatively) rents of land.”"
“the touchstone of Schumpeter’s own theories of entrepreneurship and creative destruction” is the “”the element of personal initiative.”"

457
“First, the accuracy of an economic vision is not always commensurate with the analytical ability of those who hold it. Second, pessimistic visions about almost anything usually strike the public as more erudite than optimistic ones.”

458
“Today, in the twenty-first century, many economists add entrepreneurship to the three factors of production as traditionally conceived: land, labor, and capital.”
“Entrepreneurship is very difficult to measure, and virtually impossible to express mathematically. It therefore does not easily fit into formal models. As Schumpeter noted, entrepreneurial gains do not tend “toward equalization” because they “are not permanent returns at all.” Instead, they emerge whenever an individual entrepreneur innovates in some important way—and then disappear as the innovation spreads. Meanwhile, they have contributed to general economic growth.”
“They have also made the entrepreneur rich, because “entrepreneurs’ gains will practically always bear some relation to monopolistic pricing. Whatever it is that produces these gains, it must of necessity be something that, for the moment at least, competitors cannot parallel.” The best example is the offering of a new product or a new brand. And temporarily, at least, “there are means available to the successful entrepreneur—patents, ‘strategy,’ and so on for pro- longing the life of his monopolistic or quasi-monopolistic position and for rendering it more difficult for competitors to close up on him.”"
The essence of strategy is “to affect the behavior of other firms or even their own industry.”

466
“Short-run inequity is the price that must be paid by the masses for the rising living standards that capitalism can achieve.”
“Schumpeter regretted that capitalism distributed its fruits so disproportionately—but in much the same way that he regretted that everyone has to die. He simply thought it an inevitable concurrent of capitalism’s efficiency over the long run.”
“one of the commonest errors of economic thinking by masses of people “is the belief that the majority of people is poor because a minority is rich.”"

467
“”Keynes’s influence not only encouraged governments to take a short-run point of view, but it helped to free them from the major traditional restraints on short-run action.”"

468
“Compared to Keynes, Schumpeter had no reason to think that life was something a person could expect to enjoy automatically. It was one thing to grow up in Britain—stable, prosperous, and ever-victorious in its many wars— and quite another to be a child of the vanquished, and now vanished, Austria of Schumpeter’s youth.”
“Schumpeter was one of the greatest intellectual innovators in the history of social science.”

474
“if an economy, an industry, or a firm reacts to a significant change in its environment by merely adjusting its existing practice, “we shall speak of adaptive response. And whenever the economy or an industry or some firms in an industry do something … outside of the range of existing practice, we shall speak of creative response.”
A creative response, which can never be predicted and is therefore indeterminate, shapes long-run outcomes in a country, industry, or firm. It often depends on the leadership of specific individuals, and, Schumpeter argued, it “changes social and economic situations for good.” It creates new conditions that would never have developed without it. “This is why creative response is an essential element in the historical process: no deterministic credo avails against this.”"

474f
“”I believe that there is an incessant give and take between historical and theoretical analysis and that, though for the investigation of individual questions it may be necessary to sail for a time on one tack only, yet on principle the two should never lose sight of each other.” The combination of narrative, numbers, and theory could exercise a power that none of the three could do alone. Theories are stylized stories; but without real stories and statistics to back them up, they lose much of their force. Schumpeter concluded one of his papers with a sentence that has often been quoted and still resonates in academic life to this day: “Economic historians and economic theorists can make an important and socially valuable journey together, if they will.”"
=> That’s what I have to do!

475
“Because of time and chance, no “deterministic credo,” as Schumpeter called it, could ever be correct.”

476
Schumpeter wanted to create “exact economics” (referenced everywhere throughout the book), but finally understood that it’s impossible.
“And over the next generation, “Science and Ideology” became a famous statement of a fundamental truth that characterizes all social sciences, including economics, no matter how “scientific” its pretensions.”
All our research is always based on our basic ideological bias.

477
“Model building “consists in picking out certain facts rather than others,” then working to refine the chosen facts, to adjust them in light of opposing evidence, and to place them all in a theoretical framework.” -> And we chose the facts based on our “vision” which is based on our ideology.

483
“”And so—though we proceed slowly because of our ideologies, we might not proceed at all without them.“” Ideologies are what makes us do what we do -> I love film -> that’s why I do what I do -> without my ideology I wouldn’t do it and EAs might never come into existence and the world wouldn’t change how I hope it will.

488
“One of the few lucky events of Joseph Schumpeter’s life was the manner of his leaving it. As he had written at the time of Franklin Roosevelt’s death, which also came suddenly from a cerebral hemorrhage, “lucky man: to die in fullness of power.”"
“In 1950 Schumpeter was the most illustrious economist in the world—more famous at the time of his death than at any other period in his life, and at a moment when he probably cared least about his own celebrity.”

495f
“Schumpeter’s signature legacy is his insight that innovation in the form of creative destruction is the driving force not only of capitalism but of material progress in general. Almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail—and almost always because they failed to innovate. Competitors are relentlessly striving to overtake the leader, no matter how big the lead. Responsible businesspeople know that they ignore this lesson at their peril. Every day they feel themselves, as Schumpeter put it in Capitalism, Socialism and Democracy, “in a situation that is sure to change presently.” They are “standing on ground that is crumbling beneath their feet.””

496
Only through innovation and entrepreneurship can any business except a government-sponsored monopoly survive over the long term. Schumpeter, of course, is the chief proponent and popularizer of the word “entrepreneur,” which appeared in the 1934 English edition of his Theory of Economic Development. (In the original German edition of 1911, he had used the German Unternehmer, which never caught on, partly because its literal meaning is “undertaker.”)”
“Beginning in the late 1920s Schumpeter made it clear that entrepreneurship could occur within large and medium-sized firms as well as in small ones, despite bureaucratic obstacles. By the mid-twentieth century, he was arguing that innovation “within the shell of existing corporations offers a much more convenient access to the entrepreneurial functions than existed in the world of owner-managed firms. Many a would-be entrepreneur of today does not found a firm, not because he could not do so but simply because he prefers the other method.”"
“Entrepreneurs were still recognizable personal types, but innovation could also be—and, given the large size of some companies, sometimes had to be—performed by teams of people.”

497
“Schumpeter’s central preoccupations [were] innovation, entrepreneurship, and credit creation”

498
There is a “need for eternal vigilance and timely action by government regulators,” which Schumpeter “persistently underestimated.”

499
“the mixed economy has tended to flatten the business cycle.” Therefore business cycles are a less pressing issue today.

500
“For professors in economics departments at most major universities, particularly in the United States and Britain, a focus on these favorite issues of Schumpeter’s has become a quick ticket out of a job. This development arose from a self-generated isolation of academic economics from history, sociology, and the other social sciences.”
“What is it, for example, that drives innovation? Is it just the prospect of making money? Or, as Schumpeter had argued early in his career, is it something more than “motivation of the hedonist kind”? Schumpeter believed that the innovator-entrepreneur also had a “will to conquer … Our type [a revealing choice of words that seems to include himself] seeks out difficulties, changes in order to change, delights in ventures.“”

501
“capitalism’s creative elements outweigh its destructive ones. Destruction, however painful, is the necessary price of creative progress toward a better material life. But the correct sequence is vital: creative innovation first, then the destruction of obstacles that lie in its way.”

502
“Schumpeter regarded inequality of opportunity as unacceptable, but he also held that the results produced by inequality of effort were deserved.”
“”The importance of inequality within the highest income brackets should be particularly noticed. A single spectacular success may draw far more brains and means into an industry than would be attracted to it by the same sum if more equally divided.“”

502f
“the benefits to society of important innovations, and the lavish profits accruing to winning entrepreneurs, must be measured against the total costs of time and money invested in the same industry by unsuccessful entrepreneurs as well. They receive no return for their efforts, but their competitive pressure spurs the winners to victory—to the great benefit of society. That the winners receive all the rewards is a mere detail—and a temporary one at that, since the “competing-down” element eventually diminishes that profit, as imitators copy the innovation.”

504f
“Perhaps more than any other top economic theorist, Schumpeter humanized his discipline. After a lifelong struggle, he concluded that exact economics can no more be achieved than exact history, because no human story with a foreordained plot can be anything but fiction. Because of the infinite mixture of influences on human behavior, no two real economic situations are ever exactly alike. Thus, economics does not lend itself to deterministic laws or experiments, as the physical sciences do. The best mathematics in the world cannot produce a satisfactory economic proof wholly comparable to those in physics or pure mathematics. There are too many variables, because indeterminate human behavior is always involved. As the Nobel Laureate in Economics Douglass North remarked in 1994, “The price you pay for precision is inability to deal with real-world questions.“”

505
“Often the best alternative for expressing what one knows about the world is not an equation but a narrative—a story with real characters facing some kind of dilemma.“

“Although Asia is extremely prolific, there is still a lack of emphasis on development, which leads to the film funds’ biggest problem. Although they aim to facilitate slate financing, slates have been in short supply.”

“”It’s important the people involved are strong in distribution because it’s no longer good enough to make a good film – it’s all about the opening weekend,” says Shi.” (Shi is Japanese?)

“…the booming South Asian film industry is also shifting its focus towards slate financing and long-term strategic thinking.”

Screen Daily ~ Asian Film Finance 2008 – Asian film funds (01.10.2009)