Now that the economic machine has come to a full stop in yen-currency Japan and euro-currency Germany, is slowing down rapidly in the rest of euro-currency Europe and shows early signs of the same trend in dollar-currency America and England (mostly a dollar-currency country as regards trade), then perhaps governments ought to become seriously worried about the lack of Status Goods in the pipeline on which the affluent Initiatory Class will start spending their money again.

Or perhaps not. A panel of 46 eminent economists in America apparently agreed recently (July 2003) that economic growth in America will resume of its own accord later this year (which is now almost upon us, of course). However, they've been generally saying this for the last two years and, indeed, enthusiastically so all through the decade before this (when we were into an era of the "new economy" apparently), so I think we can reasonably disregard this groundless optimism unless they can find some tangible reasons.

It may be the case that the Initiatory middle class no longer has the personal free time, or energy, or space in which to buy and use the next Status Good. But, assuming that we might not be at this stage yet, let us consider the ways in which new products are created. One of our number, Karen Watters Cole, has quoted from a new book on innovation, "How Breakthroughs Happen" (Harvard Business School Press, 2003) by Andrew Hargadon.

Andrew Hargadon writes:

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The raw materials for the next breakthrough technology may already be here, but they are certainly not in a nice box with a big label, a plastic window, and assembly instructions. Those technologies do exist, but we see them coming for decades before they hit the market the integrated cellphone/PDA/camera/MP3 player, the affordable flat-screen television, the downloadable movie, the flying car. No, the raw materials for breakthrough technologies will come in unexpected forms -- the people, the ideas, and the objects will come dressed in other uses, other meanings, and other relationships.

Untangling these existing resources from their current context and putting them together in new ways requires thinking by analogy. It means constantly asking how things are the same. It's easy to point out how things are different; we do it every day in order to decide where to focus our attention and energy. Who we talk to and who we do not, which articles we read and which we ignore -- these are difference-driven choices. And difference-driven choices are, by nature, defensive. It would take two hours to read the paper every morning (and why stop at just one paper?). But every time a manager dismisses an idea that works somewhere else because it's a different industry, a different customer, a different material -- that's also a difference-driven choice. The best ideas won't come looking like they're just right. Fred Stratton, the CEO of Briggs & Stratton, once said that genius lay in the ability to see how two things that nobody else sees as related *are* related. This ability to make distant analogies unlocks a world of potential. And it's all a matter of looking for how things are the same, not for how they are different.

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The first two sentences above agree very much with the views of one of America's most eminent economists, William Baumol. He has also written on the subject recently in his book, "The Free-Market Innovation Machine" (Princeton University Press 2002). In this, he says that the vast majority of new ideas and products originate in the research departments of large firms, and seldom in the famed garage or garden shed. He's right, of course. Most of the next generation of Status Goods (if they exist) are to be found in embryo in one multinational corporation or another. However, quite beside the problem of whether the Initiatory Class have any more appetite for more, there's the other problem of trying to guess which one(s) of the many proto-inventions in R&D will survive gestation and appear in the marketplace.

Andrew Hargadon quotes Fred Stratton, the CEO of Briggs & Stratton, who says that genius lies in the ability to see how two things that nobody else sees as related *are* related. I am not so sure that geniuses are necessary for the invention of new consumer products but, nevertheless, Stratton was echoing the view of Arthur Koestler in his famous book, "The Act of Creation", first published in the 60s, that new ideas (and humour, and a great deal else besides) lie in the act of 'bisociating' two quite separate items by finding similar elements and then combining them.

The whole point of today's screed actually is to say that the creation of new ideas is not the problem. Nor, in the case of large firms, are the other two vital correlates -- sufficient investment, and a sufficiently competent management team to carry out the idea. New ideas, and sometimes brilliant ones, are being created in their thousands in developed countries every day. The point is: Which of them will actually be interpreted by a potential consumer as enhancing his or her status (in addition, of course, to being moderately enjoyable or useful)? together with the other proviso: Will I have the time or opportunity to flaunt it socially? And these ideas, in these hectic days for the Initiatory Class, are very rare indeed. The latest candidates I can identify at the moment, SUVs and DVDs, are really only embellished versions of previous Status Goods and are being manufactured by some firms that are on their beam ends. I don't think SUVs and DVDs will make it as fully fledged products that will sweep the whole market and kickstart the economy.

KH