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.