Mass flourishing / Edmund Phelps
Princeton, US: Princeton Univ. Press, 2013. 378 p

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; 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.

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Beyond mechanical markets: Asset price swings, risk and the role of the state / Roman Frydman and Michael D. Goldberg
Princeton: Princeton University Press, 2011. 285 p.

The year 2008 saw not only financial failure but the failure of an idea, the economic theory in which financial markets are mechanically determined to settle at equilibrium and economically efficient prices. So why did standard models in financial economics not see the crisis coming? What can be done to keep a repeat of this crisis from happening? These are the questions at the heart of Roman Frydman and Michael D. Goldberg’s book. The authors not only show the insufficiency of current theory, they also present an alternative, “Imperfect Knowledge Economics”, that aims to address these issues and give very different policy recommendations from the ones considered en vogue now. What’s more, Beyond Mechanical Markets gives us a doctor’s prescription for dampening – and possible even avoiding altogether – the next economic crisis.

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Beyond the invisible hand / Kaushik Basu
Princeton, Princeton Univ. Press: 2011. 273 p.

One of the central tenets of mainstream economics is Adam Smith's proposition that, given certain conditions, self-interested behavior by individuals leads them to the social good, almost as if orchestrated by an invisible hand. This deep insight has, over the past two centuries, been taken out of context, contorted, and used as the cornerstone of free-market orthodoxy. In Beyond the Invisible Hand, Kaushik Basu argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be. Comparing this view of the invisible hand with the vision described by Kafka - in which individuals pursuing their atomistic interests, devoid of moral compunction, end up creating a world that is mean and miserable - Basu argues for collective action and the need to shift our focus from the efficient society to one that is also fair.
Using analytic tools from mainstream economics, the book challenges some of the precepts and propositions of mainstream economics. It maintains that, by ignoring the role of culture and custom, traditional economics promotes the view that the current system is the only viable one, thereby serving the interests of those who do well by this system. Beyond the Invisible Hand challenges readers to fundamentally rethink the assumptions underlying modern economic thought and proves that a more equitable society is both possible and sustainable, and hence worth striving for.
By scrutinizing Adam Smith's theory, this impassioned critique of contemporary mainstream economics debunks traditional beliefs regarding best economic practices, self-interest, and the social good.

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