How “independent” capitalism will replace our stagnant economic system

An excerpt from Creative IntelligenceCreative Intelligence

by Bruce Nussbaum

The need to reconnect creativity to capitalism has never been greater.

Efficient market theory has fostered an economic system that over the past two decades has generated little innovation among most businesses, weakened the middle class, widened inequality, and led to the relative decline of the United States. We need to trade an economy of efficiency for an economy of creativity. We should move away from an economic model based on the “culture of control” towards a new model which embraces a “culture of chance”.

Which begs the question: what do we need instead? What model can replace financial capitalism?

We are starting to see evidence of what I call independent capitalism. My use of the word “indie” is deliberate. “Indie” reflects an economy that is independent of the dominant orthodoxies of economic theory and big business. It shares many of the distributive and social structures of the independent music scene, which eschews big promoters and labels. And as is the case with many bands, many of today’s successful creative endeavors started out as local phenomena before branching out to new venues and networks.

Independent capitalism is bolstered by a single simple fact: new businesses (those less than five years old) have been responsible for all net new jobs in the United States for the past three decades. We celebrate the entrepreneur (including those within corporations who behave like entrepreneurs) because we value the creativity of the entrepreneur. It is this creativity that we must place at the heart of our economy and our economic thinking.

But going from creativity to creation requires a scale. This scale comes in two forms: capital and markets. Creators on their own generally do not have access to capital or markets.

#### Bruce Nussbaum

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Bruce Nussbaum is Professor of Innovation and Design at Parsons The New School of Design and former Associate Editor of *Businessweek*. Nussbaum is the author of the forthcoming book [*Creative Intelligence*](

Crowdfunding is another way to dramatically increase the number of new businesses, allowing entrepreneurs to bypass the venture capital hierarchy and giving us all a chance to participate directly in forming and scaling ventures. startups. Capitalism is not only a market phenomenon; it exists in a social context. Capitalism is a social movement. Social networks are the building blocks of the economy.

Kickstarter, for example, has changed what it means to be a creator and a capitalist, a maker and a patron. It is a site, and a community, that makes us all potential actors in the creative process and gives us all the potential to become entrepreneurs. At one level, Chen, Strickler, and Adler have built a crowdfunding model. On the other hand, they’ve developed a crowd-building site, because Kickstarter not only raises funds, but also builds an audience – and a uniquely invested audience, at that. The experience is not a simple transaction like buying a work of art in a gallery or an album on iTunes. It’s deeper and richer.

Markets will continue to play a vital role in independent capitalism, but blurring the distinctions between creators, curators, funders and consumers will make it less transactional. People will participate more directly in every step of creation, using social media and making their own choices about designing, funding and consuming the products, services and experiences they want. They will extend their “playlist skills” beyond their music collections and across the spectrum of business, healthcare, education and eventually politics.

If independent capitalism had to have one fundamental principle, it would be this: creativity is the engine of capitalism. Creativity is the source of economic value. Creativity transforms what money can’t buy into what money can buy.

Excerpt from Creative Intelligence by Bruce Nussbaum. Copyright 2013 by Bruce Nussbaum. Reprinted by kind permission of HarperBusiness, an imprint of HarperCollins Publishers.

Homepage image: KK+ / Flickr

Wired Opinion Editor: Sonal Chokshi @smc90

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