Dynamism

Dynamism - "high indigenous innovation derives from the dynamism of its people - their desire and capacity to innovate. And this dynamism, as we confirmed here [in book "Dynamism"] depends on the strength of modern values - values under the headings of individualism, vitalism and self expression - relative to traditional values." Edmund Phelps, "Dynamism"

Nobel Laureate in Economics Edmund Phelps first wrote "Mass Flourishing" which delineated the thesis that "indigenous innovation" in the West had been declining since the early 1970's. Indigenous innovation is that which arises within the economy itself as opposed to scientific discovery, etc. He based the decline thesis on the fact that in the early 1970's Total Factor Productivity (Capital & Labor) began a long decline that continues notwithstanding the leaps made in Silicon Valley. TFP is considered a good proxy for indigenous innovation.

As a part of this thesis, he noted two factors that were/are the cause of the decline in indigenous innovation. The first is corporatism, which at one time was the triangular alliance among big business, big government and big labor. Today, it is more a dual alliance between big business and big government but no less stifling and ossifying.

The second and more powerful factor in this thesis was a decline in the modern values that were the drivers of the explosion in indigenous innovation from the early/mid 1800's through the 1960's. These modern values include Individualism, Vitalism (taking initiative, seeking adventure, love of competition, etc.) and Self Expression.

In 2020 Phelps published the "sequel" to "Mass Flourishing," entitled "Dynamism." In this book the proof of his thesis was detailed with special emphasis on the modern values and their impact. Reread the quote re Dynamism above and think about the profound implication of this and its import for our national economy, individual companies and overall well being. And, as these values are continuing to decline, the critical question then becomes, what can be done to reverse the long slide away from dynamism.