Dynamism, by Edmund Phelps | Financial Times

A new book by economics Nobel laureate Edmund Phelps and his team of collaborators offers a fresh breath of air to stale debates about how to restore long-term growth in advanced economies — although it does so less by the persuasiveness of the answers it gives than by the convincing nature of the questions it wants us to pose.

Dynamism is bookended by Phelps’s own essays, which reprise his longstanding interest in innovation as both a constituent and consequence of social and economic modernity. His thesis includes two thought-provoking points. First, that innovation is not simply a matter of developing commercial applications from “exogenous” scientific discoveries as the Schumpeterian tradition — and much of standard economic theory — would have it, but rather the “bottom-up” consequence of creative individuals seeking and finding better ways of doing things as they actively seek change in their own lives. Second, that their ability to do so is influenced by culture, values and institutions, with the most “modern” values and attitudes most conducive to innovation.

The first claim is an antidote to the pessimistic view that we have run out of important discoveries, associated with economist Robert Gordon’s analysis of the secular productivity decline. The…

Read The Full Article