Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change

by Edmund S. Phelps

In this book, Nobel Prize-winning economist Edmund Phelps draws on a lifetime of thinking to make a sweeping new argument about what makes nations prosper--and why the sources of that prosperity are under threat today. Why did prosperity explode in some nations between the 1820s and 1960s, creating not just unprecedented material wealth but "flourishing"--meaningful work, self-expression, and personal growth for more people than ever before? Phelps makes the case that the wellspring of this flourishing was modern values such as the desire to create, explore, and meet challenges. These values fueled the grassroots dynamism that was necessary for widespread, indigenous innovation. Most innovation wasn't driven by a few isolated visionaries like Henry Ford and Steve Jobs; rather, it was driven by millions of people empowered to think of, develop, and market innumerable new products and processes, and improvements to existing ones. Mass flourishing--a combination of material well-being and the "good life" in a broader sense--was created by this mass innovation.


Yet indigenous innovation and flourishing weakened decades ago. In America, evidence indicates that innovation and job satisfaction have decreased since the late 1960s, while postwar Europe has never recaptured its former dynamism. The reason, Phelps argues, is that the modern values underlying the modern economy are under threat by a resurgence of traditional, corporatist values that put the community and state over the individual. The ultimate fate of modern values is now the most pressing question for the West: will Western nations recommit themselves to modernity, grassroots dynamism, indigenous innovation, and widespread personal fulfillment, or will we go on with a narrowed innovation that limits flourishing to a few?


A book of immense practical and intellectual importance, Mass Flourishing is essential reading for anyone who cares about the sources of prosperity and the future of the West.

Genres: Economics, History, Business, Nonfiction, International Affairs, Politics

392 pages, Paperback

First published January 1, 2013

Reviews

[Fred Johnson]

The central premise of this book, if not particularly novel, is that innovation is the driver of economic growth. The surge in economic growth since the early 1800’s is a result of modern values to “create, explore and meet challenges”. I had thought that was generally accepted, but perhaps not yet in the economics literature.

The book has two major failings. First, the author inadequately explains why innovation took off. To stress the significance of a shift to “modern values” calls for a discussion of “traditional values” and how this shift in values came to be.

As is clear from the sources that he cites, he is informed by what other economists have written, and has an accordingly narrow world view. I do not question his premise that values shifted; he simply does not provide the historical understanding of the very different way of thinking, as well as of circumstances, that prevailed in the middle ages. A theory that posits a significant change in values and behavior and yet fails to explain the nature and reason for the change is hollow.

He veers half-heartedly to explaining the change by discussing the works of Karl Marx and Max Weber. He grudgingly dismisses Marx’s view of the historical inevitability of social change. He curtly dismisses Weber’s insights by noting they do not seem to apply to modern-day Italy. He then notes with approval scholars who have discussed the role of city formation for innovation and that is as close as he gets to a reason for the development of “modern values”. Yet what of ancient cities, from Chimu to Tenochtitlan to Babylon, that did not spawn his “modern dynamism?”

The second failing is that he never really defines innovation, although innovation is at the heart of his thesis. To him, “all innovations have an accidental or random element” (p 33) and innovators “are driven by an inner need to demonstrate… the superiority of their understanding” (p 32). Innovations are “not determinate from current knowledge, thus they are not foreseeable” (p 32). The best I can make of this is that innovations are the accidental products of supremely egotistic people. Not included are the clever but intentional solutions to demanding problems (the development of the cavity magnetron during WWII enabled packaging radar in planes), continuous improvements, either in products (increased capacity of computer hard drives over the past three decades) or on the factory floor, nor new products that meet known needs (tampons).

Minor flaws permeate the book. On one hand, he will belabor the obvious or the inconsequential, citing myriad economic studies and opinions. Yet he will make rather grand and seemingly important statements with no support. For example, “… large companies… are apt to fare worse in the hands of a manager who is not a founder and not a controlling shareholder – in short, a professional manager, or hired gun.” (p 243) Curiously, just before this grand pronouncement, and for which he provides no support, the author lauded “the visionary founder, Mark Zuckerberg” who “was canny enough to hire a chief operating officer, Sheryl Sandberg.”

There are also strange, extraneous statements. “They did not stop William II from taxing the politically weak and economically poor farmers, which the outraged Robin Hood sought to redress.” (p 86) The telling of the Robin Hood story usually places him at the time of King John, more than a century later, and the closest historians can find to an actual Robin Hood is in the early 1300’s. Even casual asides should bear a greater resemblance to the known facts.

And my favorite: “Hayek said that no state could create a system for economic efficiency – though Lenin came pretty close.” (p 316) Probably a good reason that no support is attempted for this eye-opener.

Phelps gives himself ample credit for his insights “… the perspective of this book, which is new in its focus on grass roots innovation” and then proceeds with the de rigeur policy recommendations, which consist mainly of training politicians in his theory of economic dynamism, with “a system encouraging them to read and discuss by themselves”, replete with a starting reading list (not surprisingly, this book is on it). Ah, the hubris!

[Drtaxsacto]

I wanted to like this book. Phelps is a prolific researcher who won the Nobel in 2008. His contributions to the field of economics are broad and deep. This book was supposed to give us insight about how the economy could revitalize - in part seemingly a response to the papers of the Secular Stagnation writers like Robert Gordon.

But the book has three major flaws. First, the definition of what constitutes "mass flourishing" is brought up several times but never completely answered. Of course it is the configuration of the right institutions, regulatory regimes and culture. But that is about as far as he goes. I kept thinking back to Potter Stewart's definition of pornography - you know it when you see it.

Second, the book can be divided into a couple of parts - not intentional parts - but parts none-the-less. Phelps has a tendency to write a good deal of his prose densely. There were several parts where I wanted to go back and re-read a paragraph because he often gets caught up in obscure references (footnoted) that interfere with the main idea. There are some minor but annoying factual errors - the EITC that Reagan championed was a part of the 1986 Tax Reform Act.

His discussions of the destructive forces of regulations and bureaucratic structures is well documented and interesting. He presents some real numbers on the comparative growth of what he calls "social wealth"(transfer payments) to "private wealth." He won the Nobel for a reason - he is a careful and prolific researcher so a good deal of the book is worth going through if for nothing else all the good data.

There are some long sections on what the declaration called the "pursuit of happiness" which goes back to Aristotle. It is interesting although I have read clearer discussions of the issues.

Third, after slogging through all the dense prose you finally get to his "How to Restore Flourishing" chapter. But you are presented with some just plain stupid ideas. For example, he suggests that legislators (future and possibly current) do internships in business to be able to understand the impact of their actions. Really! Were this not a serious proposal it would be high satire. He also seems to have forgotten or ignored the literature on "Rent Seeking" - which a lot of the regulatory overburden is conditioned upon.

I can't believe that Phelps did not at least encounter "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" by University of Chicago economist Luis Zingales which came out a year before Phelps work. It is just a shorter, clearer alternative to Phelps' book.

[Emmanuel Daniel]

The writing does not quite reach the promise in the title

Although Edmund Phelps is a nobel prize winner, his writing style seems to be one of traveling through a lot of ground for no apparent reason except fill the number of words. He uses philosophies and histories and cites the famous academics but never quite arrives at the emphatical reasons to make his points.

[Richard Marney]

A brilliant, well-written book!

What drives a country to encourage and sustain individual development, creativity, risk-taking, and ultimately a society characterized by the “flourishing” in production and commerce that positions the economy as modern in its focus on the new and the uncharted? Positive, supportive institutions are a necessary condition, but the essential “extra” (the “secret sauce, if you will) is found at the individual level where men and women are inspired to explore the boundaries of knowledge and practice in economic life, questioning tradition and striving courageously for constructive change, even in the face of potential downside. From this mindset comes “indigenous innovation”, the source of mass flourishing, the key to modern economic development.

😀😀

[Brian Gatz]

So we've got an author here who's concerned with vitality. Here's how to see it: 1. every person has a moral right to seek his or her fulfillment 2. a real life comes only through one's own endeavors 3. individual enterprise should trump rent-seeking 4. imagination springs from observation and ideas. --These four ideas form the crux of the Enlightenment; the value of which lets an economy becomes what it's supposed to become.

Conservatism, in the form of socialism or corporatism, the kind that protects powerful people (or protects any sort of upset), the kind that keeps people in unfulfilled lives (protected by certain sorts of unions), or the kind that forces entrepreneurs to go through the state rather than the public -- this sort of conservatism defeats innovation before it can begin. Conservatism within which you've got the ability of established business to play against the state. For example: wages that should rise with productivity, wages that should be used to entice and keep workers, that should be used to fuel a common market, are translated into savings by the rich. In turn, the government builds entitlements to replace wages -- rewarding poor work (both in habit and in kind), leaving workers to await their benefits, and letting the rich dictate the trade-off (taking both power and dignity).

There's something attractive in thinking that countries can build off of the risks taken by small organizations, by individuals with ideas. I wonder at what Phelps would do with people who's risks don't pay out -- whether those eggs would need to be cracked and all of that. Also, I wonder if vitality is the result of amorphous chaos, then what stability matters -- off of what stability should one build? I'm most skeptical, though, of the neat way in which works of art stand as examples of philosophy, as images of vital aspects: freedom, individualism, selfishness; and the ways in which Phelps uses Romantics, Modernists, Classicists to propagate his Enlightenment (which seems to be Voltaire's Enlightenment -- Voltaire the propagandist versus Leibniz the careful thinker).

In short: this is the sort of book a free-thinking intellectual with ambition and desire should use to nurse a wounded ego. The system as it exists is not theirs. It belongs to close-minded communities of power and their enabling politicians. That feels so right to me that I'm almost certain it's wrong.

[Steve]

Great book, I think both the right and the left will find something to hate here.

[Nathan Albright]

Whenever one reads about innovation and creativity, and there are a lot of books about the subject, you have to know what the agenda of the person writing the book is.  There is always an agenda.  Almost always, that agenda is distinctly hostile to traditional morality, and that is generally the case here, although the author does concede at least some limited role for traditional values that increase trustworthiness as being important for the general well-being of others.  Once one is aware that this book is a neo-Austrian economic book from someone who (somehow) won a Nobel Prize, then one can account for its own particular bias and the way that it views innovation and creativity as being connected to the decline of corporatist ideals within society as a whole.  If you ever wanted to read someone give a positive account of the "dark Satanic mills" of the early industrial revolution, this book will certainly strike your interest.  The author's point, though, is somewhat harmed by the way that his thesis about "grassroots innovation" is beneath the level of knowledge about the historical record, though, which does make his argument a bit tautological at some points.

This roughly 300 page book is divided into three parts and twelve chapters bookended by an introduction and epilogue that proclaim the advent of modern economies and discuss how they can be regained, respectively.  The first part of the book contains four chapters on the experience of the modern economy (I), in how they became dynamic (1), what their material effects was on the wages and lifestyle of the people of the time (2), the experience of modern life (3), and how modern economies formed (4).  The second part of the book then discusses the 20th century hostility to the modern economy (II) in the form of socialism (5), the third way of left or right-wing corporatism (6), an attempt by the author to weigh the rivals on their terms (7), and the satisfaction of nations (8).  After that the third part of the book contains four chapters on the decay and the author's desire to refound the modern economy (III), with discussions of the post-1960's decline in innovation (9), understanding this decline (10), the contrast between the views of the good life between today's people and that of ancient philosophy (11), and the relationship between the good and the just (12).  After that the book has a timeline of modernism and modernity as well as a bibliography, acknowledgments, and index.

My own thoughts and feelings about this particular book are deeply mixed.  The author has an obvious agenda and an obvious ax to grind against socialism and corporatism that severely slants his arguments.  At times the author's hostility towards traditional morality blinds him to the way in which virtuous behavior undergirds the trust that people have in an economic system to deliver them, at least eventually, the rise of a good standard of living that such systems promise.  Moreover, the author simply does not have a granular enough understanding of what it is that lifted the economies of Western Europe and North America during the course of the late 18th and 19th centuries to be able to profitably advise nations on what they need to do to get their lost mojo back.  While it is obvious that economies are becoming less robust and less generous to those who are not well off, what needs to be done about it is less obvious.  And if the author is quick to give some recommendations about how ripping up the social net and setting businesses free from burdensome regulations will cause a rebirth in innovativeness around the world, it is not obvious that contemporary business leaders are willing to give up the lure of crony capitalism to accept the possibility of their own failure.

[Jeremy]

An author who tries to account for the entire history of the world's economic and social changes from ancient Greece to the Enlightenment to the societal overhauls of the 20th Century inter-war years to Ronald Reagan to the Great Plague to the founding and development of the Italian city states to the inner thoughts of Otto von Bismarck to the betrayal of the Russian Revolution to the earliest trade unions to immigration policy to minor recessions of the early 1990s to Germany's post-war economic boom to the development of the steam engine to the improvement of child labour laws to the spreading of female enfranchisement.

And all in the first 30 pages!

The scope is just too broad. Too many concepts are brought up in too short a time. Too many self-righteous and obvious conclusions are made with a very inadequate amount of data to back it up. At the end of it, the message is "wouldn't it be better if we innovated more?" Probably, yes, I guess.

Economists really shouldn't be allowed to write books if this is what the Nobel prize winners come up with. Glaringly obvious points dressed up in impenetrable prose because the author wants to appear in a "school of thought" a century from now.

[Michael Prokopchuk]

Tedious writing without much payoff, questionable logical leaps on any subject besides pure economics and some history, but it features a couple good critiques of modern economic systems. Maybe my expectations were wrong coming into a book promising "mass flourishing," and I admit my economics background is insufficient to fully contextualize parts of the book. But in the areas where my understanding is on more equal ground, I was underwhelmed. Phelps' explanation and arguments for the "the good life" read like a Freshman essay for philosophy 101 and he leans hard on classical Western philosophy without much awareness of the axioms it assumes or their alternatives from other cultures and societies, modern and classical. Nobel laureate in economics, no doubt, but outside of that, not so much.

[Benji]

In Europe there is a failure to grasp that most innovation, as in the past, must be indigenous either in Europe or America, or both - little of it will be Schumpeterian manna from heaven or the state. They fail too to grasp that Europeans would have more engaging economies if they stopped depending on America to make their innovations for them.

[Thomas Keller]

A bit annoying for its relentless optimism for the market. But a very good read to understand what is wrong with the "not so free market" today.

[Peter Foley]

I missed a lecture by Edmund Philps at Rotman and committed to read his book. I liked the idea of grassroots innovation creating jobs, challenge and change, as he puts it.

Mass Flourishing is well structured in positioning economic dynamism as the context for innovation and resulting overall wage growth that occurred remarkably in the late 19th century and into the mid 20th century. And, that has experienced stagnation, if not decline, in the last forty years.

Phelps proposes that the “good life” is experience through challenges, personal expression, and gaining of knowledge. And that a wide swath of individuals engaged in various economic activities at the grassroots level are integral to a vibrant economy.

The start and growth of the Modern economy is presented as the start of a dynamism that has transformed out society, and is presented as still the best possible way to organize ourselves economically.

Our current economic position is critiqued for its failure to establish effective policies to deal with the loss of dynamism. This book looks primarily backwards with a detailed analysis. A mention is made of the potential for an emergent type of economy, not identifiable as capitalist, corporatist, or socialist, but this is giving only brief comment. The goal of a return to dynamism is presented as an ideal, but noted that policy alone would be insufficient, and the culture and institutions, both private and public, would need to change. It is unclear how this change would occur. Policy appears to be our primary mechanism.

The recent resurgent value in community and family life is noted as being a detriment to overall economic dynamism. That these traditional values are antithetical to modern values. Grouped in with the challenge of traditional values were a new stakeholderism where anyone with a stake in a new enterprise (employees, environment, special interests groups…), can now lay claim to any profit or gain resulting from innovation. These views were presented as a serious challenge to a return to dynamism.

I was left wanting for a vision of how dynamism could re-emerge, but was left thinking more that our current context needs a new dynamic, not one based on a certain historical context.

[Patrdr]

This is a stimulating work about the rot causes of slower growth in the 'western' world. My own pessimistic favourite, that convergence by the rapidly emerging economies partly takes the form of some losers emerging among the advanced economies' industries, does not come into play.

Modernism, which features a relentless request to innovate, to seek the new, to try something different, whether in busines or art or whatever endeavour, is contrasted with traditionalism and with socialism and corporatism.

Phelps shows that both socialism and corporatism failed to produce better outcomes than free-market capitalism, the most succesful form of modernism. Yet corporatism, especially, worms its way back into political life. Each time there are losers from change (and there always are to some degree) of a systemic blow to the macroeconomy, capitalism is described as the culprit, in need of bridling, if not elimination.

Phelps has interesting thoughts on rising inequality. He sees value in work in and of itself. Standard economics views work or jobs as a cost, and if we can produce the same volume with fewer jobs, then that is clearly a good thing. Inequality can be redressd through the tax and transfer system but Phelps, if I understand him right sees spending power coming without effort as demoralizing, damaging to the overall performance and quality of society. So he advocates subsidies for low productivity labour.

Phelps finds what he sees as the reappearance of traditional values repugnant. This seems to him to be a barrier to individual freedeom and self-expression and therefore to a flourishing economy. Perhaps. Many people work in the modern economy and strive to do more and to do better but still love and live by the values of their traditions. I am not sure the opposition is as categorical as Phelps would have it.

[Derrick Trimble]

I started this book shortly after I began working as marketing manager at ICEX. In fairness, it was the subtitle that caught my attention. In my excitement to read "how grassroots innovation created jobs, challenge, and change" I completely missed Edmund Phelps' author tag. Had I been more cautious, I may have thought twice before starting a book by a Nobel Laureate in Economics.

But if I had, I would have missed out a a great book.

Without a doubt Phelps insightful guided tour to modern economics reads more like a text book than a casual read. Reinforced with platforms of philosophical approaches to the 'good life' Phelps connects thought and action to demonstrate historical precedents that shape our global economic state.

Although it took a long time to get there, eventually Phelps arrived at the core issues holding back innovation and the creativity that fuels a healthy society. Societies that stimulate innovation and growth, rather than stifle, crush, or slowly starve a nation's greatest source of wealth.

I feel emboldened with vitalist values to seek out challenges instead of being subject to the pragmatists approach to obstacles. At at time when I am rethinking my approach to the next actions, looking to take the 'hard road' defines my person. I know that...and I am comfortable with that.

This book is not an easy read. But man.....will you be challenged!

[Robert Giambo]

An economics book by nobel winner, discusses why some cultures flourish and others don't. I found some chapters very interesting and informative - others were just boring. Also focus was very America/Europe focused. For example, no discussion of how China was able to change their economy so relatively quickly. Such a discussion might either support or contradict the main arguments of the author.

[Steve Stanton]

This is a detailed and somewhat dry history of economic philosophy by a Nobel laureate that will be of value to students in the field. Misguided ideas and harmful policies have led to a continuing worldwide slowdown in growth, as the steadily increasing burden of social entitlement outstrips gainful employment. Edmund Phelps points to the need for a new economic model that will provide both dynamism and social justice.

[Theodore Kinni]

In this forthcoming book, Nobel Prize-winning economist Edmund Phelps makes an interesting argument that the only vibrant economy is one in which innovation is widespread and exists at every level. He says that this can only happen if societal values support innovation - it's the corporate culture argument expanded to nations.

[Walker Wright]

****1/2