Creating economic value by design

This paper examines the influence of major economic theories in shaping views of what constitutes value as created by design. It begins by examining Neo-Classical theory, which is dominant in the English-speaking world and underpins the ideology of the so-called “free market” system. Its focus on markets and prices as set by market forces are believed to solve all problems if left free from government interference. The implosion of this system and its emphasis on unrestricted individualism is a crisis of theory as well as practice. There are, however, other economic systems that relate to design in a more positive manner, such as Austrian theory and its belief that users determine value; institutional theory, which examines the influence of contexts and organizations; or New Growth Theory, which asserts the power of ideas as an unlimited resource in economic activity. These offer a window to business activity that enables designers to communicate the value of their work. Moreover, if the practical implications of these theoretical positions are understood by designers, it becomes possible to construct an extension of them that specifically addresses what the economic contribution of design can be in terms that business managers can understand.

[1]  Irén Annus.  Economics as Religion from Samuelson to Chicago and Beyond , 2009 .

[2]  C. P. Goodman,et al.  The Tacit Dimension , 2003 .

[3]  Ronald H. Coase,et al.  The New Institutional Economics , 1998 .

[4]  H. Demsetz,et al.  The Firm in Economic Theory: A Quiet Revolution , 1997 .

[5]  Ken McCormick.  An Essay on the Origin of the Rational Utility Maximization Hypothesis and a Suggested Modification , 1997 .

[6]  H. Demsetz.  The Primacy of Economics: An Explanation of the Comparative Success of Economics in the Social Sciences , 1997 .

[7]  W. Arthur,et al.  Increasing returns and the new world of business. , 1996, Harvard business review.

[8]  P. Klein,et al.  Concepts of Value, Efficiency, and Democracy in Institutional Economics , 1996 .

[9]  P. Romer.  Two Strategies for Economic Development: Using Ideas and Producing Ideas , 1992 .

[10]  P. David.  Knowledge, Property, and the System Dynamics of Technological Change , 1992 .

[11]  D. North.  Institutions, Institutional Change and Economic Performance: Economic performance , 1990 .

[12]  P. Baran.  On Capitalism and Freedom , 1990 .

[13]  F. List.  The National System of Political Economy , 1990 .

[14]  Thorstein Veblen,et al.  The Instinct Of Workmanship And The State Of The Industrial Arts , 1990 .

[15]  P. Drucker.  Innovation and entrepreneurship : practice and principles , 1985 .

[16]  John R. Harris,et al.  Inside the Black Box: Technology and Economics , 1984 .

[17]  Nathan Rosenberg,et al.  Inside the black box , 1983 .

[18]  L. Lachmann.  From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society , 1976 .

[19]  Herbert A. Simon,et al.  The Sciences of the Artificial , 1970 .

[20]  M. Friedman,et al.  Capitalism and Freedom , 1963 .

[21]  L. Mises,et al.  Human Action: A Treatise on Economics , 1949 .

[22]  F. Hayek.  Individualism and Economic Order , 1949 .

[23]  J. Schumpeter.  Capitalism, Socialism and Democracy , 1943 .

[24]  T. Veblen.  The Theory of the Leisure Class , 1901 .

[25]  Friedrich Wieser,et al.  The Austrian School and the Theory of Value , 1891 .

[26]  A. Marshall,et al.  Principles of Economics , 1890 .

[27]  F. E..  Principles of Economics , 1890, Nature.