Mass Flourishing How Grassroots Innovation Created Jobs,.pdfVIP

Book Reviews Mass Flour sh ng: How Grassroots Innovat on Created Jobs, Challenge, and Change Edmund Phelps Princeton, N. .: Princeton University Press, 2013, 378 pp. In his most recent tome, Edmund Phelps, the 2006 Nobel Laureate in Economic Science, addresses a topic crucial to success- ful national capitalist systems: the dynamics of the innovation process. Phelps develops his thesis around three main themes: In part one, he explains the development of the modern economies as they form the core of early–19th century societies in the West; in part two, he explores the lure of socialism and corporatism as com- peting systems to modern capitalism; and, in part three, he reviews post-1960s evidence of decline in dynamism in Western capitalist countries. In the introduction, Phelps reviews available economic data on both output and real wages per worker in England during the era of “mercantile capitalism” (between 1500 and 1800), which emphasized the distribution of products to consumers. He concludes that “the mercantile economies brought strikingly few advances in economic knowledge.” Yet, the 19th century, specifically between 1820 and 1870, saw spectacular growth in two major economic indicators— output per head and average real wages—in America, France, Germany, and Great Britain. Phelps argues that “the explosions of economic knowledge in the 19th century must be the effect of the emergence of an entirely new economy: a system for the generation of endogenous (or ‘indigenous’) innovation.” In part one, Phelps defines a modern economy as one with “a con- siderable degree of dynamism—that is, the will and the capacity and the aspiration to innovate.” Yet the foundation of dynamism is inno- vation, even on an international scale, where conception and devel- opment can originate in one nation whi