Understanding and Maximizing America's Evolutionary Economy

October 2, 2014
| Books

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Understanding and Maximizing America's Evolutionary Economy

In the conventional view, the U.S. economy is a static entity, changing principally only in size (growing in normal times and contracting during recessions). But in reality, our economy is a constantly evolving complex ecosystem. The U.S. economy of 2014 is different, not just larger, than the economy of 2013. Understanding that we are dealing with an evolutionary rather than static economy has significant implications for the conceptualization of both economics and economic policy.

Unfortunately, the two major economic doctrines that guide U.S. policymakers’ thinking—neoclassical economics and neo-Keynesian economics—are rooted in overly simplistic models of how the economy works and therefore generate flawed policy solutions. Because these doctrines emphasize the “economy as machine” model, policymakers have developed a mechanical view of policy; if they pull a lever (e.g., implement a regulation, program, or tax policy), they will get an expected result. In actuality, economies are complex evolutionary systems, which means enabling and ensuring robust rates of evolution requires much more than the standard menu of favored options blessed by the prevailing doctrines: limiting government (for conservatives), protecting worker and “consumer” welfare (for liberals), and smoothing business cycles (for both).

As economies evolve, so too do doctrines and governing systems. After WWII when the United States was shifting from what Michael Lind calls the second republic (the post-Civil War governance system) to the third republic (the post-New-Deal, Great Society governance structure), there was an intense intellectual debate about the economic policy path America should take. In Keynes-Hayek: The Clash That Defined Modern Economics, Nicholas Wapshott described this debate between Keynes (a proponent of the emerging third republic), who articulated the need for a larger and more interventionist state, and Hayek (a defender of the second republic and a smaller state), who worried about state over-reach and loss of freedom.

Today, we are in need of a similar great debate about the future of economic policy for America’s “fourth republic.” Unfortunately, today’s debate is mostly a reprise of the 70-year-old Keynes-Hayek debate between the defenders of the third republic (liberals) and those who would try to resurrect the second republic (conservatives). However, as Lind writes, “it remains to be seen whether the global economic crisis that began in 2008 will mark the end of the Third American Republic and the gradual construction of a fourth republic by the 2020s or 2030s.”

It is in this context that the concept of evolutionary economics can play an important role, as any new economic framework for America’s “fourth republic” needs to be grounded in an evolutionary understanding. In this context, the central task of economic policy is not managing the business cycle—it’s driving a robust rate of economic evolution. It’s not about maximizing freedom or fairness as the right and left want, respectively—it’s about maximizing evolution.

Any new economic framework for America’s “fourth republic” needs to be grounded in an evolutionary understanding.

This report provides an overview of the evolutionary economics framework and the history of evolutionary economics thinking. It then discusses the three main drivers of U.S. economic evolution (geographic shifts in production, technological change, and demographic/cultural/governmental change). Finally, it lays out eight principles for an evolutionary economics-inspired economic policy:

• Support global economic integration based on firms’ market-based choices, rather than governments making political choices.

• At the same time, work to slow traded sector industry rate of loss where it makes sense.

• Don’t impede natural evolutionary loss.

• Limit government barriers to evolution.

• Foster a culture that embraces evolution, including natural evolutionary loss.

• Enact policies to spur organizations to act in ways that drive evolution.

• Support policies to speed economic evolution, especially from technological innovation.

• Develop a deeper understanding of the process of U.S. economic evolution.

Guide to U.S. Economic Policy

July 28, 2014
| Books

Atkinson contributed the chapter “Public Policy, Innovation and New Technologies” to this textbook which seeks to illustrate how government policies are developed to address the economic challenges we face. The book, published by CQ Press, featured essays from 30 experts in macroeconomics, social science, political science and public policy.

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Creating Competitiveness: Entrepreneurship and Innovation Polices for Growth

February 28, 2013
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Robert Atkinson contributed the chapter “Innovation in Cities and Innovation by Cities” for the book Creating Competitiveness: Entrepreneurship and Innovation Polices for Growth. Atkinson highlights why municipalities should care about innovation and the best practices that can enhance implementation. These include understanding the integral link between private sector innovation and public innovation policy in economic development; understanding that innovation comes in many forms and phases of production and development; focusing on new innovation policy approaches instead of tried and true strategies; and creating innovation partnerships between localities and the national government. 

Practicing Sustainability: Chapter 24

October 20, 2012
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In a chapter for the new book Practicing Sustainability, Rob Atkinson wrote about sustainability from an innovation economics perspective, writing that sustainable development means that all people, particularly those in developing nations, be able to achieve the best possible standard of living while emphasizing that environmental sustainability is really only possible through radical technological innovation, especially clean energy innovation. His chapter shows the need to overlook the misguided claims that countries can't afford productivity - at the end of the day what is really not sustainable is low productivity and poverty.

Cybersecurity: Public Sector Threats and Responses

July 20, 2012
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In a chapter titled “U.S. Federal Cybersecurity Policy” in Cybersecurity: Public Sector Threats and Responses, Daniel Castro reviews the history of cybersecurity in the United States, the federal resources and leadership currently being used to combat it, and how to reform and improve current cybersecurity practices. Castro argues that cybersecurity remains uncharted territory and that proper risk management will be a decisive factor that informs future polices. 

Innovation Economics: The Race for Global Advantage

September 3, 2012
| Books

Innovation Economics: The Race for Global Advantage delivers a critical wake-up call: a fierce global race for innovation advantage is under way, and while other nations are making support for technology and innovation a central tenet of their economic strategies and policies, America lacks a robust innovation policy. Unless the United States enacts public policies to reflect this reality, Americans face the relatively lower standards of living associated with a noncompetitive national economy.  The authors explore how a weak innovation economy not only contributed to the Great Recession but is delaying America's recovery from it and how innovation in the United States compares with that in other developed and developing nations.

The book is a detailed, pragmatic road map for America to regain its global innovation advantage by 2020, as well as maximize the global supply of innovation and promote sustainable globalization.

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Innovation Economics: The Race for Global Advantage offers a frank assessment of many of the underlying causes of our economic challenges and helps explain why recovery has remained so elusive. Rob Atkinson and Stephen Ezell have collaborated on a timely call to action: America can compete and win the global economic race, but only if we change our mindset and update many of our policies”—Senator Mark Warner (D, VA)

“The United States is increasingly being left behind in the global competition for high-value production and jobs. While this trend is lowering our standard of living, there are steps government can take to stem this decline, such as making STEM education a national priority and pursuing a 21st century growth agenda that acknowledges the important role that innovation plays. Innovation Economics is an important read for those of us concerned about our nation’s long-term economic challenges but optimistic about solutions to improve our future in our own time.”—Congressman Richard Hanna (R-NY)

Innovation Economics offers the most pragmatic guideposts for American and global economic renewal today. I recommend it for every leader in or out of office.“—Calestous Juma, Harvard Kennedy School

“As a long-time analyst of the trends shaping the global economy, I am struck by the increasing number of economic and political leaders that do not grasp how serious the structural economic problems facing America are. I hope they read Innovation Economics. It “speaks truth power” with candor, reason and wit and offers fresh thinking and a path forward. Rob Atkinson and Stephen Ezell have been making important contributions and better ideas about economic policy for years. Their new book is eye-opening and alarming and arrives at a critical time.” —Lenny Mendonca, McKinsey & Company, McKinsey Global Institute

“Atkinson and Ezell provide the definitive guide to innovation and its impact on economic prosperity. If you care about innovation, you need to read this book.”—Justin Rattner, Chief Technology Officer, Intel Corporation

The Next Digital Decade: Essays on the Future of the Internet

January 19, 2011
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Where’s the Internet in the United States going to be in a decade? In the chapter “Who’s Who in Internet Politics” for the book The Next Digital Decade: Essays on the Future of the Internet, Rob Atkinson emphasizes the important role of public policy in shaping a variety of Internet issues as he attempts to answer this question. A myriad of debates have erupted around Internet policy from copyright, privacy, and Intellectual property to censorship, broadband deployment, and net neutrality. Atkinson characterizes the major players and dividing lines of these internet policy issues as he describes how the implications will shape what the Internet is like a decade down the line. 

Supply-Side Follies: Why Conservative Economics Fails, Liberal Economics Falters, and Innovation Economics is the Answer

October 23, 2006
| Books

The 21st century knowledge economy requires a fundamentally different approach to boosting growth than simply cutting taxes on the richest investors. The alternative is not, however, to resurrect old Keynesian, populist economics as too many Democrats hope to do. Rather, as Rob Atkinson makes clear, our long-term national welfare and prosperity depends on a new economic strategy that fits the realities of the 21st century global, knowledge-based economy: innovation-based growth economics.

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The Past and Future of America's Economy: Long Waves of Innovation that Drive Cycles of Growth

February 28, 2005
| Books

The Past and Future of America’s Economy focuses on how periodic cycles of technological and economic change have fundamentally reordered the way we work, the organization of business and markets, and the role of government. It examines this process of change over the past 150 years and explores the responses of people and institutions. The book then analyzes today’s New Economy, including the new information technology system, and effects on markets, organizations, workers, and governance. Taking into account the historical record, the book discusses the shortcomings of prevailing liberal and conservative economic doctrines and lays out a new growth economics agenda aimed at maximizing the productivity and innovation-enhancing forces of the New Economy.

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Table of Contents


1. Introduction: A New Economy?
Is the New Economy a Flash In the Pan? – The Course Of Productivity Growth – Since it is a New Economy, What Should We Do About it?

2. Technological, Economic and Social Transformation
Technology And Economic Cycles – The Process Of Transformation and Consolidation – Periods In American Economic History

3. Economic Transformations From the 1840s To The 1990s
The Factory-Based Industrial Economy: the Early 1890s to the Early 1940s – The Corporate, Mass Production Economy: the Mid-1940s to the Mid-1970s – The Calm Before the Storm: the Triumph of the System At the End Of the 1960s – The Turbulent Transition to the New Economy: 1974 to 1994

4. Today’s Entrepreneurial, Knowledge-Based Economy
The New Technology System – Industrial And Occupational Change – The Rise Of Globalization – The New Organizational and Market Environment – Social, Political and Spatial Changes

5. The Key To Productivity Revival
The Productivity Boom Of the Old Economy – The Great Productivity Slowdown – The Productivity Paradox: “We See Computers Everywhere but in the Productivity Statistics” – Why Did Productivity Go Up In the 1990s? – IT’s Role in Driving Productivity Growth – The Contours Of the Emerging Digital Economy – Why Is Digital Transformation Taking So Long? – Sources Of Productivity Growth In the Next Economy

6. The New Economy And Its Discontents
Opposition To Past Transformations – Today’s Opponents To Growth and Change – The Politics Of Progress: Modernizers Vs. Preservationists


7. Legacy Economic Policy Frameworks
The Old Economy Policy System – The Liberal Faith In New Deal Economics – The Supply-Side Sidetrack – The Failure of the Left’s and the Right’s Economic Doctrines

8. Growth Economics For the New Economy
The Emerging Field Of Growth Economics

9. Implementing Growth Economics
Stimulate Technological Innovation – Foster Digital Transformation – Foster Higher Skills – Foster Entrepreneurial Innovation and Competition

10. Building A More Humane Economy
Creating More Humane Workplaces – Getting More Time for the Rest of Life – Creating Family-Friendly Capitalism – Creating Livable Communities – Are a Humane Economy and a Productive Economy in Conflict? – The Politics of Creating a Humane Economy


Selected Endorsements

“Rob Atkinson is one of our best analysts of how technology drives local and regional economies, and what to do to take advantage of technological change. In his new book, he fluently articulates the principles of a new ‘growth economics’ that is America’s best hope for a prosperous future leaving no one behind.”
- Rosabeth Moss Kanter, Harvard Business School professor and author of Confidence: How Winning Streaks & Losing Streaks Begin & End.

“Rob Atkinson has produced a powerful and far-reaching look at the underlying mechanism powering today’s New Economy. In particular, he shows how the U.S. is just at the beginning of an innovation wave which is not only boosting productivity, but transforming economic organization and economic policy as well. This book is essential reading for anyone who wants to understand how the U.S economy got to where it is today, and how it can best get to a prosperous and humane future.”
- Dr. Michael Mandel, Chief Economist, Business Week and author of Rational Exuberance: Silencing the Enemies of Growth and Why the Future is Better than You Think.

“Rob Atkinson is one of the most creative thinkers about the American economy. In this fascinating book, he puts the “new economy” spurred by the digital revolution into the context of other historic transformations. By doing so, he shows how we can preserve the gains in productivity and implement policies that will keep the economy growing. Everyone concerned about our economic future should read this.”
- Walter Isaacson, author of Benjamin Franklin: An American Life.

“I couldn’t agree more that the political party that comes closest to supporting humane growth economics should be the leader for the next 25 years. The book is a great vision for the future, and its scholarly but readable mix of history, technology, economics and politics is very persuasive. It’s the sort of stuff that should be taught in economics courses, but almost never is.”
- David Moschella, author of Customer-Driven IT: How Users Are Shaping Technology Industry Growth

“Any person concerned about the future of our economy should read this book. Atkinson offers terrific historical perspective as well as specific policy proposals that would give us the best chance for broad-based economic growth now and for generations to come. It should be mandatory reading for public policy makers.”
- Congressman Adam Smith (D-WA, and co-chair of the House New Democrat Coalition).

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