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Discussion of the capability in individuals
Imagination is creating something new out of what already exists. When you think of something that isn't presently being perceived by your senses, the capability of imagining is utilized to make the perception real in your mind. Even if the thing being imagined has been perceived many times over, the mind cannot recall 100% of the details. When the minds eye comes to rest on any missing colors, shapes, patterns, words, emotions, or any of the other infinite details, it will fill it in as best that it can, often leading to a new perception. (something from the "Kluge" reading could be cited here)
Imagining is not just a capability of artists and inventors, it is the rush of mental faculties to fill in what has been recognized as empty space. Just as water flows to the lowest possible point it can reach, imagination rushes into the gaps of perception so we can fully make sense of reality. When any unknown is encountered the mind is unable to leave the space a vacuum. Thus the imagination is a wonderful catalyst into exploring and gathering new information. That way, the next time the mind calls upon its body of knowledge to understand the unknown, the picture is a little more complete. If we think of the gap in knowledge as a square whole, the mind won't automatically recall a square peg to put in it. A round peg or 1,000,000 toothpicks might be the placeholder that the process of imagining fills the knowledge hole with.
In what would seem a rather mundane function the brain developed for creating placeholders as possible solutions for gaps in knowledge, there is a rich and infinite array of possibilities where nothing is off limits and anything goes. It may seem odd that a "good imagination" is so strongly associated with painters, poets, and problem solvers when it is actually a vital function in everyday life. It holds our world together. The problem solving skills inherent to imagination can facilitate progress in individual scenarios such as finding how to communicate more effectively at work or finding the quickest route through traffic. It can also provide the solutions to large scale problems such as creating a sustainable future or creating world-wide equitable access to food and medicine.
So if writing a piece of fiction doesn't usually conjure up the thought of someone doing a lot of problem solving, remember that they are drawing upon this infinite bank of unrealized potential, the same as an engineer trying to figure out how to develop a rain delivery system to arid farms in Africa.
Simply put, imagination is the cultivation of creativity. Creativity leads to innovation. Innovation leads to problem solving. And problem solving leads to resolution.
Other Constituents Associated With Imagination
In the recollection process of filling mental gaps, remembering can be a major factor in determining what picture is created.
Imagining also leads directly to the process of Evaluating
Discussion of the capability in society
How it currently works
In business companies identify new product lines that the perceive some space for in society. When these are new product lines, the company can become a trend setter or influence the development of a new trend (the iPod). Then competitors have a need to expand the emerging trend and develop new ways to refine the new idea. As the product line becomes fully developed through competition and collaboration, new potentials for innovation are recognized and the cycle starts over.
Many community based organizations work to solve problems. They have to imagine a way forward which includes vision for once the problem solved, and how to get there. The effect of colaboration and working in a group, allows for many more ideas to come forward, and this feeds the imagination of the group.