Unleashing the Creative Economic Revolution

Urbanist and Author
The theorist of the "creative class" explains how the economic crisis has provided an "inflection point" that will generate a new class of thinkers.
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TRANSCRIPT

Question: What is the “creative class”?

Richard Florida: It’s sort of the driving force in innovation and economic growth. And before I came up with this idea, I mean, there was a lot of really smart people thinking about this change from an industrial society, you know, an old blue-collar, manufacturing-driven, steel and autos kind of economy, to a post-industrial economy. People like Dan Bell, the great Sociologist at Colombia and then at Harvard wrote a lot about this. And then of course, Peter Drucker, probably the greatest management thinker of all time, kind of dubbed this group of people, him and a guy named Fritz Malchum, in the ‘50’s, dubbed this group of people, “Knowledge Workers.” And the idea was that people work with knowledge they accumulate knowledge, economists talked about developing education and human capital, and I was living in Pittsburgh at the time teaching at Carnegie Mellon. And I was looking at, just like you and others, developments in the internet and technology. And I noted this kind of thing with content and software, and then I began to see the role of arts and music. And I remember going to England one time and this guy asked me a question about software development and bio-tech clusters. And I looked at him and I said, “Who are the richest people in England?” And he said, “Oh, that’s people like Paul McCartney and Mick Jagger.” So, I said, there’s something with arts and music and entertainment, and something with technology and something with knowledge workers. What did they all have in common?

Then one day, I was reading some psychology and they were talking about human creativity. This guy, Rob Sternberg wrote, “If you’re an entrepreneur or a business leader, an artist, or a musician, designer or something like that, you’re a creative person.” I said, “Oh my god.” Maybe it’s not just a knowledge class, or a post-industrial class, maybe this thing that links these people together, like the blue-collar worker used physical labor in the factory, maybe the thing that links these things together is their creativity. So, we went back and we counted them; with a great group of researchers at Carnegie Mellon. And we first counted them across cities, and then we said we were going to go back 100 years and count this group of people.

And what we saw is that over the past 100 years, but certainly since 1980, this group was really expanding. And just to give you folks the numbers: between 1980 and today, even with the crisis, we added 20 million new jobs in the creative sector of the economy, that’s science, technology, arts and entertainment, film making design. And then the knowledge workers, healthcare practitioners, lawyers, those financial people who caused part of this problem, and in the United States, that’s about a third of the workforce, more or less. And this creative class, even though they make up a third of the workforce, if you add up all the wages and salaries we pay in the United States and you divide into three groups, right? The manufacturing working class, the people who do services, lower end services, you know, work, wait on you in restaurants, sell you your clothes, take care of your house, and then the creative class. The creative class already accounts for more than 50%.

And the other thing, just for folks watching, we’ve actually tracked the unemployment situation and it’s quite devastating in some respects. While the overall U.S. unemployment rate is 10% and while manufacturing workers have unemployment rates of 15%, and in some parts, like extraction and construction, 25%, the creative class is about 5%. So, the creative class has never seen great swings. I mean, that’s up from 2% before. But it’s never seen these great volatility and swings that really devastate manufacturing.

And so I think as we come out of this crisis, we’re going to again see that this group is more stable – this group of jobs is more stable and they’re going to grow again.

Question: What is happening to the economy that is enabling this “creative economic revolution”?

Richard Florida: Well I actually think the crisis is the inflection point, or the transformation point. If you look back at the two previous crises, and I’m actually writing a book on this, it’s called “The Great Reset,” hopefully you’ll invite me back to talk about it when it comes out in April or May. But if you look back on previous crises, they’ve always been associated with the rise of new economic systems. So, the crisis of 1873 was associated with the rise of the first industrial revolution, and it gave rise to the second. The crisis of the 1930’s was the rise of the second industrial revolution and these big steel companies and auto companies, and then we figured out how to make the society work. This is really a crisis, not just of the financial markets and wanton spending and too much credit, it’s a tectonic crisis that’s associated with the rise of a new economic order.

And what we’re doing is, because we didn’t know how to invest in it, we were speculating like wild, and money was flowing into real estate. So, the creative economic revolution has really been going on, in my view, since the ‘60’s. And it’s funny because I went back and looked at this, and folks might not know this, but what I really wanted to be in life was a guitar player. So, all my childhood I spent playing the guitar and trying to sound like Jimi Hendrix or Jeff Beck, with some degree of non-success. But in the ‘60’s, we saw all of this creative revolution, and even before that, Jazz in ‘50’s, but the beat revolution, and then the ‘60’s thing happening in New York. And I just read the fabulous book on Worhal and the Velvet Underground. So, you can see this stuff building up as people are tired of, and kind of blanching at the strictures of the old organization man’s society. And it’s kind of our world fascinated by Mad Man, I think. You see this transformation, this kind of pivot point running through as Mad Men develops and this creative thing emerging. But people don’t know what to do.

And so, the one way I kind of view the 1960’s is this giant temper tantrum. Right? Creative people just saying, “I’m not going to take it anymore, mom and dad. I want to grow my hair long, I want to grow a beard, I want to go to California, I want to listen to a new kind of music.” This explosion in art. But was it really hinged to the economy?

In the book, I said that Woodstock wasn’t the signal even of the creative revolution, Silicon Valley is. And so, what I think happened, almost at the same time, is these people who were tired of working in the big companies; innovators, people working at IBM and General Electric, Bell Labs, said, “No. We have all this cool stuff we want to make, all this interesting stuff we want to make. The company is very bureaucratic; it’s not paying any attention to us.” Somehow they found their way out to the San Francisco Bay area and began to build these enterprises that they owned and controlled. Right? They began to devise new structures and new forms. And actually, my entire early research career, well before I came to any ideas of the creative class, was trying to figure out what Silicon Valley was. I wrote a book in 1990 about this called “The Breakthrough Revolution.”

In any event, I think those structures began to take hold and this new group of people who had the ideas began to be seen as more economically valuable. And what’s happened over the past 20 or 30 years as manufacturing has been off shored, and outsourced and moved to the bricks, particularly China. I think in the advanced countries like the United States, or Canada, or Scandinavia, or Northern Europe, this creative input, this idea input, this mental labor, has become more important.

So, I see this shift as big and as fundamental as the shift that Marx wrote about, when we move from the feudal, or the agricultural society to a modern industrial economy and society. I see this shift kind of the same way. We’re moving from an older industrial society where value is created by physical labor and raw materials to a new kind of society and economy where value – more, I mean, raw materials and physical labor and agriculture is still important. We need to eat and drive things, and we need homes. But this mental value added, or this creative labor is becoming more important. So, that’s why I think this is a big revolution on the order of the transformation, or the transformation of the agrarian society to an industrial economy and society.

Recorded on December 14, 2009