Although most economists — and most people — would agree that creativity and innovation are central to the workings of a free society and the modern economy, the fact remains that creativity and innovation have not been central to the development and dogma of the field of economics. We can trace many reasons for this, but more important is to define a research program to rectify this state of affairs.
My own research program focuses on developing formal models of how individuals come to be creative. I study creativity as a process of development — what does someone choose to learn, what experiences do they have, what life paths do they follow, what conditions do they find themselves in, that spark ideas and insights? It turns out that to do this requires modeling the knowledge and cultural environment — the conceptual world — within which individuals function. In turn, this increases the complexity of the models, in particular through embedding individuals in fields defined by knowledge structures (often described as lattices), but that suits me fine, since I am committed to the view that every individual has a unique life path and makes a unique contribution to society. With modern computers we can handle the complexity and develop richer models.
Ms. McCloskey is right to allude to the Austrian School of economics as a tradition in which creativity and innovation are recognized as central. I have learned a lot from this tradition. But whereas the Austrian School has generally opposed formal modeling (perhaps on valid grounds of the tendency towards over-simplification) I believe formal modeling is the best approach for its clarity and will raise the standing of creativity and innovation.
I understand Ms. McCloskey as focusing specifically on the values that promote creativity and innovation and their historical emergence. I agree this is important. Indeed as several of the participants have noted, values — many different values — are crucial as underpinnings of modern economic systems. Anyone who works in taxation and public economics as I have knows how important honesty, lack of corruption, and trust are to tax compliance, government operations, and business contractual dealings. Like creativity, values deserve much greater study in economics. Values are best thought of in groups, constellations that fit together to define a cultural order. We really have as yet very little understanding of how this works, for example why certain sets of values are more stable and lead to more productive life, and what tends to destabilize values. Any light Ms. McCloskey can shed on the topic is welcome. Like creativity, our understanding of values gains from formal modeling, and values will gain prominence by being incorporated into formal models.
To appreciate and depict the value of liberty I am convinced requires approaches that model what individuals learn, experience, know, imagine, create, and decide down to a level of individuality and precision beyond what has been standard heretofore in the field of economics.