Economy Guide (Part 6: Volatility & Innovation)

This part looks at volatility, change and innovation in the digital economy.

The Internet Bubble (New York, HarperCollins 99) by Anthony Perkins & Michael Perkins supplied a prescient analysis of why the bubble was going to burst. We forecast further pain for dot com speculators and Amazon.com wannabees as they run out cash over the next four months and the absence of a product or credible business plan becomes obvious to all. Michael Mandel's The Coming Internet Depression: Why The High-Tech Boom Will Go Bust ... (New York, Basic Books 00) is less sensationalist than the title suggests and a useful corrective to assertions by Gilder and others that the business cycle is finito.

Irrational Exuberance (Princeton, Princeton Uni Press 00) by Robert Shiller looks at fast money, investment and speculation over the past decade, questioning traditional academic wisdom about market efficiency and highlighting recurrent announcements last century that a "new economy" changes all the rules. Andrei Schleifer's Inefficient Markets: An Introduction to Behavioural Finance (Oxford, Oxford Uni Press 00) explores the conflict between perceptions and 'fundamentals' in modern financial markets.

John Kenneth Galbraith's A Short History of Financial Euphoria (New York, Viking 93) is a spritzy account of bubbles before the net. There's a more detailed, tho perhaps too sanguine, study of the 'tulip mania' in Peter Garber's Famous First Bubbles: The Fundamentals of Early Manias (Cambridge, MIT Press 00). Edward Chancellor's Devil Take The Hindmost: A History of Financial Speculation (New York, FSG 99) updates Charles Kindleberger's classic Manias, Panics & Crashes: A History of Financial Crashes (New York, Wiley 93).

We've noted Saskia Sassen's Globalization & Its Discontents: Essays On The New Mobility of People & Money (New York, New Press 99) and Susan Strange's Mad Money: When Markets Outgrow Governments (Ann Arbor, Uni of Michigan Press 98) elsewhere in these guides.

Peter Bernstein's Against The Gods: The Remarkable Story of Risk (New York, Wiley 96) and The Fortune Sellers (New York, Wiley 98) by William Sherden offer useful perspectives on global volatility and forecasting. For an academic - and more heavy going - study of thinking about the history probability and risk turn to Ian Hacking's The Taming of Chance (Cambridge, Cambridge Uni Press 90).

James Gleick's Faster (New York, Random House 99) is a quick tour through notions of volatility and change in the 'age of the internet. It's better value than Davis & Meyer's dot com tract Blur - The Speed of Change in the Connected Economy (Oxford, Capstone 99) or Clockspeed: How To Survive & Flourish In The Age Of Temporary Advantage (New York, Little Brown 98) by "corporate geneticist" Charles Fine. They offer prescriptions for success in the age of change and uncertainty .... but strip out the dot com jingles and is fast faster, change quicker, life more volatile than the time of our grandparents? It's unfashionable to say so, but we think not.

We've noted 'death of the state' writings by Kenichi Ohmae and others in preceding parts of this guide.

innovation

Innovation, in particular the interrelationship between discovery and markets, is one of the most contentious areas of economics, history and sociology. From the vast literature we've highlighted some works we found thought provoking and entertaining.

Nathan Rosenberg's Exploring the Black Box: Technology, Economics & History (Cambridge, Cambridge Uni Press 94) and the quirkier Of Bicycles, Bakelites & Bulbs: Toward A Theory of Sociotechnical Change (Cambridge, MIT Press 97) by Wiebe Bijker are useful academic studies.

Joel Mokyr's The Lever of Riches: Technological Creativity & Economic Progress (Oxford, Oxford Uni Press 90) and David Landes' The Wealth & Poverty of Nations (New York, Little Brown 98) offer a broad, multinational historical perspective. The Social Life of Information (Boston, Harvard Business School Press 00) by John Seely Brown & Paul Duguid and Manuel Castell's The Information Society (Oxford, Blackwell 99) are invaluable for considering the adoption of technologies in the information economy.

For local perspectives on innovation and the information economy a useful starting point is Sleepers, Wake! Technology & the Future of Work (Melbourne, Oxford Uni Press rev 98) by Barry Jones and his April 1999 address on The Information Revolution in Australia: Its impact on Politics, the Economy & Society.

The Knowledge Based Economy (KBE) site of the Commonwealth Department of Industry, Science & Resources includes Measuring the Knowledge-Based Economy - How does Australia Compare and the earlier Conceptual Paper on the Knowledge-Based Economy.

Christopher Arup, in Innovation, Policy & Law: Australia & the International High Technology Economy (Cambridge, Cambridge Uni Press 93), makes connections between copyright law, economic development and innovation policy. The Australian National Innovation Summit (NIS), followed by the recent announcement of a "high-level Implementation Group to carry forward the outcomes", was another digital potemkin village strong on rhetoric and ministerial photo opportunities but thin on substance. Curious, isn't it, that we encourage innovation by cutting funding for tertiary sector research and - as importantly - reducing incentives for industry development.

Our guide to copyright considers innovation, business patents and other matters