At the end of our last video, we asked, “What spurs the growth of new ideas?” To answer that, we’ll tell you two stories. The first is about a man named John Kay.

At the end of our last video, we asked, “What spurs the growth of new ideas?”

To answer that, we’ll tell you two stories.

The first is about a man named John Kay.

He created the flying shuttle, one of the key inventions of the Industrial Revolution. His shuttle improved looms, and made it possible to produce clothes quicker and more cheaply. This allowed larger numbers of people to have new, clean clothes, and it made fashion something that was no longer just for the rich. But what did he get for his efforts?

Well, the weavers who were threatened by his invention broke the improved looms and his house was burned down. He eventually fled to France, fearing for his life, and eventually died there, a poor man.

Our second story paints a completely different picture.

It’s about a man almost everyone knows: Steve Jobs.

Like Kay, Steve Jobs was also an innovator, pioneering products like the iPod, iTunes, iPhone, and the iPad. For his efforts, he earned not only money but recognition as well. Unlike John Kay, Steve Jobs became an icon, celebrated for his achievements in the world.

Why such a stark difference between these two men?

When we examine the differences between John Kay and Steve Jobs, we’re also looking at the thing that either dooms an idea or allows it to prosper. This vital factor is institutions, which serve as the soil where ideas are planted.

Depending on the quality of said soil, the ideas either take root, or they shrivel into nothingness.

To understand how this is, think of the institutions in the United States today.

The US has institutions that encourage the germination and growth of ideas. If you’re an entrepreneur, America has incubators and investors, ready to fund your idea if it’s a good one. In the US, you also have recourse to laws that protect your idea, not to mention a culture that celebrates innovators. And, if your idea’s a good one, the market will handsomely reward you.

To tell you the truth, John Kay could only have dreamed of institutions like the ones we have today.

As you can see, good institutions can mean the difference between an idea withering and an idea thriving.

While it may seem like ideas grow at random, the truth is you need a set of key ingredients, or what we call “institutions.”

In the next video, we’ll see how patents affect the growth of ideas, and we’ll examine the trade-offs between protecting and sharing ideas. Last, we’ll also look at the role the government can play, in providing a stable environment where ideas can flourish.

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