The Nobel Prize-winning economist explains his view on the values which have helped modern economies thriveby Prospect Team / October 16, 2013 / Leave a comment
In 2006, when the American economist Edmund Phelps was awarded the Nobel Prize in Economics, the Nobel committee declared that he had helped to “deepen our understanding of the relation between short-run and long-run effects of economic policy”. Not long after that award, Phelps’s fellow Nobel laureate Amartya Sen paid tribute to his interest, rarer among academic macroeconomists than one might think, in the question of why economics is “such an important subject for the lives of human beings”. Phelps, Sen said, had always kept in view the “human interests” that lie behind “macro investigations”.
That concern with fundamental human interests is very much to the fore in Phelps’s latest book, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Princeton University Press, £19.95). In it he examines the birth of modern capitalist economies in Britain, the United States and elsewhere in the early 19th century and asks: “What happened … that caused people in some countries to have—for the first time in human history—unboundead growth of their wages, expansion of employment in the market economy, and widespread with their work?”
Phelps sketched out his answer to that question in a roundtable discussion hosted by Prospect, together with our partner BNY Mellon, on 15th October. Responding to Phelps’s presentation, BNY Mellon Executive Vice-Chairman Michael Cole-Fontayn said that he and his colleagues were trying to absorb some of the lessons of his work on the role that innovation plays in fostering economic growth and prosperity. “So much of what you’ve talked about its what we struggle with daily as a large global financial corporation—a bank and investments company. And as our regulators and societies want us to be more controlled, we want to create a culture that is more collaborative, is more creative and more competitive. We need our staff to be active, enquiring, imaginative, and full of ideas and curiosity in order to create innovation.”
Another of the guests, the economic historian Robert Skidelsky, who has himself written about the economics of the good life, wondered what role leisure plays in Phelps’s account. “To you, mass flourishing depends on continuous grassroots innovation,” Skidelsky said. “An important measure that you mention is job satisfaction. In my conception, there is a contrary view, in which mass flourishing depends…