Dynamism

The Values That Drive Innovation, Job Satisfaction, and Economic Growth

Edmund Phelps, Raicho Bojilov, Hian Teck Hoon, Gylfi Zoega

ISBN 9780674244696

Publication date: 05/05/2020

Nobel Laureate Edmund Phelps and an international group of economists argue that economic health depends on the widespread presence of certain values, in particular individualism and self-expression.

Nobel Laureate Edmund Phelps has long argued that the high level of innovation in the lead nations of the West was never a result of scientific discoveries plus entrepreneurship, as Schumpeter thought. Rather, modern values—particularly the individualism, vitalism, and self-expression prevailing among the people—fueled the dynamism needed for widespread, indigenous innovation. Yet finding links between nations’ values and their dynamism was a daunting task. Now, in Dynamism, Phelps and a trio of coauthors take it on.

Phelps, Raicho Bojilov, Hian Teck Hoon, and Gylfi Zoega find evidence that differences in nations’ values matter—and quite a lot. It is no accident that the most innovative countries in the West were rich in values fueling dynamism. Nor is it an accident that economic dynamism in the United States, Britain, and France has suffered as state-centered and communitarian values have moved to the fore.

The authors lay out their argument in three parts. In the first two, they extract from productivity data time series on indigenous innovation, then test the thesis on the link between values and innovation to find which values are positively and which are negatively linked. In the third part, they consider the effects of robots on innovation and wages, arguing that, even though many workers may be replaced rather than helped by robots, the long-term effects may be better than we have feared. Itself a significant display of creativity and innovation, Dynamism will stand as a key statement of the cultural preconditions for a healthy society and rewarding work.

Praise

This book should be read by anyone interested in innovation. Ned Phelps, who is renowned for his original thinking and rigor, together with his colleagues, provide profound analytic insights which reveal the sources of dynamism across countries and time.

—Ian Goldin, Professor of Globalisation and Development, University of Oxford, and coauthor of Age of Discovery
In this important book, Edmund Phelps, along with Raicho Bojilov, Hian Teck Hoon, and Gylfi Zoega, push economics back to its roots of understanding human satisfaction and flourishing. Linking satisfaction to innovation, they highlight entrepreneurship as commercializing the technological frontier. The ultimate payoff of this activity is dynamism, the flywheel of continuous innovation and the engine of mass flourishing. From this magisterial framing the authors tackle case studies of innovation globally, going from careful modeling if growth to reassurances about the effects of robots on our lives. This is a must-read book for any serious student of the economy’s—and our own human—potential.

—Glenn Hubbard, Dean Emeritus and Russell L. Carson Professor of Economics and Finance (Graduate School of Business) and Professor of Economics (Arts and Sciences), Columbia University
Edmund Phelps and his colleagues have further developed his previous work on the sources of a nation’s economic dynamism by delving deeply into the idea of human flourishing. Their findings on the central role of daily work, the knowledge we acquire from doing it, and the innovations we inevitably bring to it are utterly convincing. The authors’ tracing of economic dynamism to the worth people place on their own craftsmanship (there is no better expression for it) is social science at its most sublime.

—Partha Dasgupta, Frank Ramsey Professor Emeritus of Economics, University of Cambridge, and author of Time and the Generations: Population Ethics for a Diminishing Planet
Over the years, Edmund Phelps has developed a deep and important theory explaining why productivity growth in the U.S. increased dramatically in the nineteenth century and has declined in recent decades. This book puts the theory to the empirical test. It is essential reading for those who care about the past and future of capitalism.

—Eric Maskin, Harvard University, Nobel Laureate in Economics
A fresh breath of air to stale debates about how to restore long-term growth in advanced economies…Phelps’s perspective is a necessary complement to the standard intellectual frameworks that tend to guide policy thinking around innovation and productivity growth…His iconoclasm shows by example how economics can benefit from an open-mindedness to broader social thinking.

—Martin Sandbu, Financial Times

Authors

Edmund Phelps won the 2006 Nobel Prize for Economics for deepening our understanding of the relationship between short-run and long-run effects of economic policy. He is Director of the Center on Capitalism and Society at Columbia University and author of many books, including Inflation Policy and Unemployment Theory, Structural Slumps, and Mass Flourishing.
Raicho Bojilov is Assistant Professor in the Faculty of Economics and Business at Pontificia Universidad Católica de Chile.
Hian Teck Hoon is Professor of Economics and Associate Dean of Faculty Matters and Research at Singapore Management University.
Gylfi Zoega is Professor of Economics at the University of Iceland and Birkbeck, University of London, and a member of the Monetary Policy Committee of the Central Bank of Iceland.