This essay uses Edmund Phelps’ new book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Princeton University Press, 2013) as inspiration to discuss innovation and entrepreneurship. The book is laudable for its discussion of what constitutes a “good life”. Phelps argues that true life satisfaction cannot be achieved through a purposeless quest for wealth and material consumption, but rather through adventure, entrepreneurship and creative endeavors. Weaknesses of the book include an overly glossy characterization of the period before WW II, a niggardly evaluation of European innovation and the lack of convincing empirical evidence for the claim that the rate of innovation has slowed.
These flaws are regrettable given the importance of the book´s main message: Innovation and creative entrepreneurship are not merely the keys to economic growth, but to life satisfaction as well. This essay discusses topics in entrepreneurship research linked to the book, including the link between innovation and entrepreneurship, the role of institutions for entrepreneurship, and the tendency of national accounts to under-record the social value of innovation and entrepreneurship. If the measures used do not capture the full social value of innovation, we are likely to underestimate the genuine rate of innovation. Government policy may also be misguided. Finally, the challenge to entrepreneurial capitalism posed by the postmodernist research paradigm is discussed.