Imagination and economics at the crossroads: materials for a dialogue

In the paper the meaning and the functions of imagination in the market are discussed. Does imagination help agents to shape their choice options? Can it contribute to economic change? And if so, how may its roles be conceptualized? As a first step we analyse the contributions offered by Kenneth Boulding and Cornelius Castoriadis. Secondly, we suggest how their insights may be reinterpreted and extended to two contemporary topics, learning and institutions. In the last part of the paper we suggest how the concept of failure may be reconsidered. Traditionally, economic literature has analysed failures that pertain to the market, to the public intervention and to strategic interactions, under the well-known labels of market, nonmarket and coordination failures. We will identify a different kind of failure which affects imagination and generates situations in which creativity and planning abilities are impaired at the individual and/or social level. The lack of inventiveness may have very costly consequences that vary from low productivity to institutional inertia, from the inability to innovate to the difficulty of rethinking economic and organisational structures. Concluding remarks follow.