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Abstract Branches of the economy that depend strongly on a constant flow of novelty, namely those of the cultural and the creative sector, have played a central role in reversing the trend towards homogenization which, according to Schumpeter, threatened to stifle the innovative process. The particular conditions leading to the production and consumption of novelties are discussed. Most of these goods are information goods that generate affective sensations in their users. As the goods are offered and accepted by a public, valuations of their quality are communicated among amateurs and experts. The combination of surprising information and devices of valuation frames the production process in the creative industries. An economy’s capacity for processes that appreciate and depreciate new contributions, and its capacity to keep the accumulated novelty capital available in material and virtual archives, is decisive for its sustained growth.

1 On Creative Industries In Theorie der wirtschaftlichen Entwicklung (1912), Schumpeter had argued that the flow of new consumption goods, expanded through new methods of production, as well as new market and corporate forms, causes old merchandise markets to wither, while continuously creating new investment opportunities. Thirty years later, in Capitalism, Socialism and Democracy (1942), he saw the same basic process at work, but circumstances had changed drastically: class traditions had disappeared, legal forms, such as contract law, had lost their binding character. Therefore, the economic processes “congeal” into large industrial production M. Hutter (*) Berlin Social Science Center, Berlin, Germany Technische Universita¨t Berlin, Berlin, Germany e-mail: [email protected] G. Buenstorf et al. (eds.), The Two Sides of Innovation, Economic Complexity and Evolution, DOI 10.1007/978-3-319-01496-8_8, © Springer International Publishing Switzerland 2013

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systems, supplemented by routinized innovation systems. In this environment, the investment opportunities diminish, and Marx’s prediction of the falling rate of profit appears to enjoy a late confirmation. Schumpeter had culled his empirical evidence from the research for Business Cycles (1938), which he had just completed before he wrote Capitalism, Socialism and Democracy. The post- war spread of large scale factories in all branches of the economy, from the agricultural industry to automobile manufacturing, appeared to confirm the thesis of the self-destructing decentralized economy. Since the 1970s, however, tendencies that turned the trend toward the mechanization and socialization of production processes into its opposite have asserted themselves. Of central importance were innovations in the communication technologies—semiconductors, computers with rapidly increasing memory and computing capacities, digitalized transmission networks, and, finally, mobile telephones and other devices that make communication easier. The new products gained an increasing portion of total market share. In addition, their full