Creativity: The New Industrial Strategy

Sir Vince Cable

Sir Vince Cable is a British politician and former Secretary of State for Business, Innovation and Skills. Prior to entering politics, he served as the Chief Economist for Shell.

A few days ago I visited a medium sized car components manufacturing company in Germany. I toured the apprenticeship training school at the plant (and, this being Germany, there were a lot of apprentices and they had serious training). On the wall was a large slogan, ‘Wissen ist begrenzt; kreativität ist unbegrenzt’ (knowledge is finite; creativity is infinite). These school-leavers were being taught that their jobs, and the company’s future in a competitive world, depended not on their ability to master defined tasks but to think creatively about design, quality improvement, process innovation, and working methods and systems. Failure to do so meant that the company would fail or their jobs would be shipped out to Eastern Europe, Turkey or China.

My own experience in the oil and gas sector, before joining the political world, was similar. Gone were the days when the only things that really mattered were access to owned (equity) oil, refining it and selling it. The future came from value addition through creative management of complex projects, innovative technology and the ability to plan ahead.

And when I put into place in government an ‘industrial strategy’ it was clear that creativity had to be at the heart of it. A rigid approach to sectors based on past stereotypes was not helpful. Some ‘dying’ industries were enjoying resurrection thanks to creativity in design and production methods; for example textiles and garments are on-shoring again albeit on a small scale. Britain lags well behind Germany in mass-manufacture of motor vehicles but is well ahead in Formula 1 creative design and manufacture which has become an important niche specialism.

And at the centre of industrial strategy are creative industries. These can be loosely divided into those concerned with information and communication, from software coding to systems design; telecommunications; the development of ‘z platforms’ and the Internet of  Things and those built around content-advertising, architecture, apps, fashion and design, computer games, music, film, photography, TV, publishing, educational aids. Boundaries are fuzzy and fluid. Creative industries merge into those professional services, such as law, accounting and engineering which at the creative end are internationally traded (especially by the UK) but also have a commoditised component, which increasingly will be subsumed within automated systems.

Developing an ‘industrial strategy’ that has creativity and creative industries at its heart requires a focus on a particular set of policy interventions, which are somewhat different from those that apply to extractive sectors or mass-manufacturing. The first is a strong but flexible regime for intellectual property rights. Patents have, of course, long been important for the manufacturing industry. Copyright is also crucial for creative industries, with an efficient legal system and tough enforcement in the face of theft but also sensible exemptions (e.g. individual rather than industrial copying). Copyright reform was an important element in the UK approach to creative industries and in the attempts to build a digital single market. It is also striking that IP has been a central issue in recent trade negotiations (as in the Uruguay Round that led to the creation of the WTO) and in bilateral commercial arrangements (as with China).

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A second area of importance is skills, including transferable skills. We must recognise that many of today’s skills will be obsolete within a decade and labour demand, then, will be in fields we cannot currently imagine. Creativity is also difficult to teach. It may even be antithetical to traditional pedagogy, which emphasises memory of facts or the mastery of set routines. School curriculum has to incorporate basic literacy and numeracy to a high level. But it must also contain a balance of subjects which allow for lateral thinking, performing arts, the use of emotional intelligence and cross-over disciplines like design which incorporate both ‘art’ and technology. In the UK, creative industries bodies like Creative Skillset were established to promote such principles up to the level of work-based training.

A third area is financing, since industries based around intellectual property may not have physical collateral to pledge to lenders. Moreover, technology is unpredictable and disruptive and the system has to allow for substantial, but healthy, corporate failure. The UK’s concentrated and property-based system of bank lending has been seriously unsuited to this kind of world. Work has had to be done, for example via the British Business Bank, to accelerate peer-to-peer lending and other crowd funding techniques along with ‘fintech’ innovation in general. There is a substantial synergy between successful creative industry and an innovative, sophisticated, financial services sector, if the latter is allowed to develop.

Fourth, there is the issue of how to develop strong creative industries nationally but within a framework of international rules and dispute settlement. As already noted, IP rights have already become a substantial issue in international trade negotiations. We have seen clashes over the film industry (Hollywood versus European language protection) and the emergence of Bollywood and the Chinese equivalent is adding to the market place. The European Digital Single Market is an attempt to deepen integration in the sector. However, even before the British Brexit vote there were serious differences emerging over issues like privacy or whether to treat the big internet platforms, like Google, and new disruptive firms, like Uber, as a threat or an opportunity. And trans-Atlantic cooperation is already being badly dented by arguments over tax, which are inevitable when trade in electrons within companies rich in intangible assets brand value or copyright makes it so easy to manipulate accounts to minimise tax obligations.

There is also a deeper problem: creative industries provide content that is often highly contentious when it involves countries with different cultural norms and different political systems. The globalisation of creativity is crashing up against serious barriers. The new Chinese Great Wall is not primarily designed to create a competitor for Google, though that may be one motive, it is primarily to filter out information and analysis that threatens the Communist Party leadership. Other authoritarian or semi-authoritarian countries North Korea, Iran, Saudi Arabia, Russia, Turkey, the Stans are creating an environment in which it is difficult for independent-minded, educated people to operate creatively. Barriers are going up and conflict is being engendered.

As someone who believes in the merits of an open society and an open economy, and who believes that economic globalisation has been overwhelmingly a force for good, I have to believe that these forces will triumph; but there are some powerful counter-currents right now.