In the first days October 2024 I got an email from the International Monetary Fund, they were sending me the latest issue of their magazine F&D [Finance and Development]. I am on their mailing list, they used to send me physical copies but now they rely on their electronic publishing – which is fine.

Edmund Phelps had authored an article in the IMF magazine on “mass flourishing” – his concept, and he asks an obviously important question. Just how do we achieve this? How did the Western European nations achieve this? Really no one else in the world achieved this. I had some contact with Mr Phelps 15 years ago, and anyway he has been recognized for his research on “economic development” by the Nobel Committee, so I knew of his important insights and discovery of the truth. They awarded Phelps a Nobel Prize in economic science in 2006.

So I emailed Phelps, asking him if he was willing to do an interview. He replied immediately, suggesting I send him questions. He would reply with his answers. I pretty quickly sent off to him 5 questions, which he said were excellent. I waited a week or so for him to get back to me with his answers. I am very pleased with the result. His answers, which I got this morning, impressed me. His answer to my 5th question was particularly compelling.

There is an obvious interplay between scientists, inventors and engineers and the many “ordinary people” starting up their businesses – this is what creates wealth. The good life, as Phelps argues. The dollar is the world reserve currency mostly because Americans innovate and create better ways of doing things, improving our lives.

Phelps' final words are superb:

“Let me end by offering some thoughts on what sort of economy would offer the good life. History suggests it would be an economy full of entrepreneurial people – people alert to unnoticed opportunities, who search for better ways of doing things and exercise their initiative to try out new things. It would be an economy full of innovative people – people imagining new things, developing new concepts into commercial products and methods, and marketing them to potential. People would have opportunities for work that are interesting, engaging, and fun too. The innovation going on in the enterprise sector would be pervasive – across most industries – and inclusive, from the grassroots of society to the most advantaged. I envision an economy that is, in large part, a sprawling space with myriad studios for creating new things – an economy full of people in the business of creating.”

There is sometimes stagnation. There is always turbulence, to be sure. Human society is and probably will always be occasionally dominated by extraordinary violence, intense competition, and exploding anger and frustration. Phelps has recognized that we must accept the value of hard work and the pursuit of improving the life we live. We must strive to create the new world, a better world, improve our knowledge, and get things done more efficiently. Create wealth!

No one would say this is easy. Ever heard of Joseph Woodland? William Shockley? Probably not. Woodland, with another engineer, invented the barcode. You are probably familiar with the barcode! I publish down below some information about Woodland and his work and life. This is challenging, tough work. This is American innovation and engineering, but as Mr Phelps rightly argues the quest to improve and do better extends to virtually everyone.

And now this is global. Is this exciting or what? So now the Q&A with Professor Phelps. He's done great work, and I count him as a friend.

Thomas Pochari – World Affairs Monthly

October 22, 2024  v2

1 - It is apparently true that in 1300 in Western Europe some 15% of the population was what you might call the professional class, bourgeoisie, dealing in information and knowledge, their income was derived from this, not from farming or agriculture. While the Roman Republic and Empire had no doubt some professionals like this, I would imagine it was much smaller say 1-2%. This is amazing, you agree? Western Europe led the way in creating the foundation for "mass flourishing"... I agree with your thesis, by the way. So this started things. The rest of the world refused or declined to go a similar way, the entire world, really. Today this is still largely the case. Please offer your comment.

I have maintained for years that the source of the rise of indigenous innovation that led to mass flourishing in several Western nations in the 19th century was the rise of modernism that sprung up in southern Europe during the Renaissance. One could argue that the modernist influence began with the great scholar Pico della Mirandola. He openly argued that mankind possesses creativity. The voice of some other figures stirred people to use their creativity – the ambition of Cellini, the individualism of Luther, the vitalism of Cervantes and the personal growth of Montaigne and, later, the need for imagination in Hume and the acceptance of the unknown in Kierkegaard. Some 19th century philosophers, such as Charles Peirce, William James, Friedrich Nietzsche and Henri Bergson embraced uncertainty and relished the new.

At the center of this modernism were modern values such as individualism, vitalism, and a desire for self-expression. Individualism (not to be confused with selfishness) is the desire to have some independence – to make one’s own way. Vitalism is the notion we feel alive when we are “acting on the world” (to use Hegel’s term), when we take a chance and journey into the unknown. Self-expression is the gratification that comes from making use of our imagination and creativity – voicing one’s thoughts or showing one’s talents. In being inspired to imagine and create a new way or new thing people may reveal a part of who they are.

With the rise of modern values late in the 19th century came modern economies. The typical industry had workers, managers, or other employees who hit upon new ideas at one time or another and used their creativity to develop them into viable products or methods. A great many people started their own firms in order to promote the adoption of the new thing they were offering. People were prospering, succeeding in their work: a craftsman’s gratification at seeing his hard-earned mastery result in better terms for the work he does, a merchant’s satisfaction seeing “his ships come in,” or a scholar’s sense of validation from being awarded an honorary degree. People were also flourishing on a widescale: gaining satisfaction from journeying into the unknown, experiencing the thrill of uncertainty and excitement in “acting on the world.” These nonmaterial rewards often leading to one’s personal growth are what made work meaningful and allowed many to experience what I call “the good life.”

It is true that many nations did not follow this trajectory.

2 - The Royal Society was established in 1660, and the French in Paris followed soon after with their science society. What they effectively achieved was this: let's get knowledge, let's investigate the world, the physical world ...."and don't take anyone's word, get evidence"; "Nullius in verba (Latin for "no one's words" or "take nobody's word for it") is the motto of the Royal Society." Again, this is a formalization of what happened spontaneously in 1300 or so. This created the grounds or foundation for mass flourishing, you would agree? Again, the rest of the world rejected the seeking of knowledge. Americans did then follow through, we went to the Moon when I was 11 years old. My father worked for the federal government, NASA and the USAF. We created the internet. Now we are at the crossroads, in my opinion. We must push this forward, but I see resistance. It is appalling. Please offer your comment.

The pursuit of knowledge is essential for mass flourishing – in fostering a culture of modern values that encourage ordinary people, not just scientists, to explore, experiment and make discoveries that could lead to the creation of new products and new methods. (Tremendous innovations have come out of the public sector as you mention. But we can’t forget the importance of innovation in the private sector.)

Many obstacles to mass flourishing have appeared over the last several decades that could be contributing to the resistance you describe. There has been a rise in what philosopher John Dewey called “money culture,” or an obsession with material gains. There has also been a lack of meaningful work opportunities – or jobs that provide people with nonmaterial rewards.

Another problem is businesses that are hierarchical in structure, meaning people at the bottom have little or no chance to share ideas they may have on how to improve a product or method with executives at the top.

We have also seen a rise in corporatist behaviors (once observed in dictators like Mussolini and Franco) within government as well as companies seeking ways to protect themselves from competition which has led to an unprecedented acceptance of monopoly power. In his book, The Decadent Society, Ross Douthat describes the stagnation of economies, of culture, of institutions and of politics that has become pervasive in wealthy societies that have once succeeded.

Anne Case and Angus Deaton, in their book Deaths of Despair, present evidence of a spike in suicide, drug overdose, and alcohol-related liver disease in America. They link these deaths to a combination of factors such as declining social and economic conditions, exploitative pharmaceutical companies, eroded social institutions, and a perceived loss of status.

There is much work to be done to revive the spirit of curiosity and imagination, to spread once again the modern values that once sparked unprecedented growth and flourishing across the West.

3 - Economists like you and I have the job of designing society, the world of work, getting knowledge of how wealth is created. What do you recommend we do to achieve this? Is it enough to write books and outline our ideas and knowledge? Advise the International Monetary Fund etc.

While writing books and advising organizations like the International Monetary Fund are valuable, we must also engage with policymakers and promote frameworks that incentivize entrepreneurship and creativity. This means advocating for educational systems that foster critical and creative thinking, access to resources for aspiring innovators, and environments that encourage competition and risk-taking.

4 - You say that in the 1890s things slowed down, the creation of science and technology virtually stopped. No doubt this is true. There is certainly a limit to how much we can understand and discover -- this seems to be true. This is what appears to be the reality. Our senses and our brains are aided by technology. Yet we probably have yet to discover the physical world which is beyond our capacity to see and detect. This suggests that it is our brains, the power of cognition, which is the limiting variable. I know you do not have expertise in neuroscience but offer your comment.

I think there has been a misunderstanding.

My theory of mass flourishing is in direct contrast to the neoclassical theory of innovation as posited by the German Historical School and one of its members, the Austrian Joseph Schumpeter. Schumpeter proposed in his 1911 book The Theory of Economic Development that innovations are exogenous to the economy, deriving from the discoveries of scientists and explorers. My theory instead proposes that with the emergence of modern economies in the West – first Britain and America in the 1820s and later Germany and France by the 1870s – also came a surge of indigenous innovation, that is innovation springing from within the economy from the imagination and creativity of ordinary people working in businesses. My book Dynamism (an econometric follow-up to Mass Flourishing) presents evidence that this indigenous innovation recorded in several nations of the West beginning around of the early 19th century soon came to dwarf exogenous, or Schumpeterian, innovation.

Nations sufficient in modern values were also sufficient in dynamism – the power and desire to innovate – and able to generate a large flow of indigenous innovation. However, since around the 1970s the West has been inflicted with a slowdown of productivity innovation and thus a loss of indigenous innovation. In my view, the loss of indigenous innovation coincides with a loss of modern values among the people. To rekindle innovation and growth, the societies need to first regain those values that once drove its peoples to create.

5 - We do have ways of testing cognitive power. Richard Lynn did this, globally. IQ tests etc. While these may have shortcomings, they do predict economic performance or the creation of wealth. Much of the world is still suffering in poverty, what do you recommend we do to alleviate this, to create more wealth and again to create the conditions for "mass flourishing"? It is no doubt a function of IQ. Yet we need to build the values, the appreciation of what it takes to create wealth and prosperity. Please offer your comment.

I don’t know much about IQ tests, so I can’t comment on the value of those. However, education is essential in cultivating a society rich in the modern values that fuel economic dynamism.

I would also mention the importance of inclusion and economic participation of a broad range of people from varying backgrounds and life experiences. More inclusion allows for more perspectives and possibilities for new ideas, thus more potential for innovation, more room for growth and flourishing on a greater scale.

Let me end by offering some thoughts on what sort of economy would offer the good life. History suggests it would be an economy full of entrepreneurial people – people alert to unnoticed opportunities, who search for better ways of doing things and exercise their initiative to try out new things. It would be an economy full of innovative people – people imagining new things, developing new concepts into commercial products and methods, and marketing them to potential. People would have opportunities for work that are interesting, engaging, and fun too. The innovation going on in the enterprise sector would be pervasive – across most industries – and inclusive, from the grassroots of society to the most advantaged. I envision an economy that is, in large part, a sprawling space with myriad studios for creating new things – an economy full of people in the business of creating.