 | The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism Why has capitalism produced economic growth that so vastly dwarfs the growth record of other economic systems, past and present? Why have living standards in countries from America to Germany to Japan risen exponentially over the past century? William Baumol rejects the conventional view that capitalism benefits society through price competition--that is, products and services become less costly as firms vie for consumers. Where most others have seen this as the driving force behind growth, he sees something different--a compound of systematic innovation activity within the firm, an arms race in which no firm in an innovating industry dares to fall behind the others in new products and processes, and inter-firm collaboration in the creation and use of innovations. William Jack Baumol was born in the South Bronx, New York on February 22, 1922. He served in the Army during World War II and got a job at the Agriculture Department, where he worked on allocating grain supplies to starving countries. He graduated from City College and enrolled in the London School of Economics in 1947, after initially being rejected. Less than six weeks after school started, he was hired to become a member of the faculty. He taught at Princeton University from 1949 until 1970 and then taught at New York University from 1971 until his retirement in 2014. As an economist, he identified Baumol's cost disease, which explains why the cost of services, like haircuts and college educations, rises faster than the cost of goods, like T-shirts. He published dozens of books, hundreds of papers, and several congressional testimonies on entrepreneurs, environmental policy, corporate finance, stock sales, the economics of Broadway theaters, inflation, and competition and monopolies. He died on May 4, 2017 at the age of 95. (Bowker Author Biography) |
