Overview

"Life improves under the economic system often called ""entrepreneurial capitalism"" or ""creative destruction,"" but more accurately called ""innovative dynamism."" Openness to Creative Destruction: Sustaining Innovative Dynamism shows how innovation occurs through the efforts of inventors and innovative entrepreneurs, how workers on balance benefit, and how good policies can encourage innovation. The inventors and innovative entrepreneurs are often cognitively diverse outsiders with the courage and perseverance to see and pursue serendipitous discoveries or slow hunches. Arthur M. Diamond, Jr. shows how economies grow where innovative dynamism through leapfrog competition flourishes, as in the United States from roughly 1830-1930. Consumers vote with their feet for innovative new goods and for process innovations that reduce prices, benefiting ordinary citizens more than the privileged elites. Diamond highlights that because breakthrough inventions are costly and difficult, patents can be fair rewards for invention and can provide funding to enable future inventions. He argues that some fears about adverse effects on labor market are unjustified, since more and better new jobs are created than are destroyed, and that other fears can be mitigated by better policies. The steady growth in regulations, often defended on the basis of the precautionary principle, increases the costs to potential entrepreneurs and thus reduces innovation. The ""Great Fact"" of economic history is that after at least 40,000 years of mostly ""poor, nasty, brutish, and short"" humans in the last 250 years have started to live substantially longer and better lives. Diamond increases understanding of why."

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9780190263706

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Reviews

Read this book and discover what matters most in economics--ideas and knowledge--now summarized in the word 'innovation.' But to fuel innovation resources have to be released from their old incumbent uses and flow into the new and that is the destruction that creates new wealth and opportunity. -- Vernon Smith, Nobel Prize in Economics What are the benefits of innovative dynamism? Arthur Diamond lays out the clearest positive case to date for innovation in this highly readable and historically comprehensive work. -- Tyler Cowen, Professor of Economics, George Mason University Astoundingly rich in ideas and stories, Diamond's sweet and beautiful book is more: an open-handed guide to what really matters in explaining, and sustaining, the Great Enrichment of 3,000 percent per person from 1800 to the present. Diamond assuages the ancient fear of betterment, recently haunting us with spooks of AI and technological unemployment. He shows conclusively that an innovative dynamism enriches us all, materially and spiritually. The poor are bettered. The jobs are bettered. Read the book and be bettered, freed from specious and politically poisonous worries about economic change. -- Deirdre McCloskey, UIC Distinguished Professor of Economics and of History Emerita In Openness to Creative Destruction, Art Diamond tells amazing story after story of entrepreneurs who have made our lives better. Read it and pinch yourself at your luck in being alive in the 21st century. And learn about how, as a citizen, to keep the innovations coming. Hint: Don't give government too much power over us. -- David R. Henderson, Hoover Institution We are told that robots are about to make us superfluous and that the giants of Silicon Valley will swallow the economy. Art Diamond's Openness to Creative Destruction provides a healthy antidote to all this gloom and doom. He gives us the necessary historical perspective: we owe our comfort and even our lives to generations of disruptive innovation. Yet each disruption bred apocalyptic portents like those we hear today. Diamond provides a timely warning against heeding the pessimists of the moment by imposing legal and regulatory shackles on the innovators. -- Sam Peltzman, Professor Emeritus of Economics, University of Chicago

Author Information

Arthur M. Diamond, Jr. is Professor of Economics at the University of Nebraska Omaha. He has published many journal articles on issues in labor economics, economics of technology, and economics of entrepreneurship.

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