I am never that keen to read about economics. I've read certain popular books on the subject, succumbing to their popularity and my FOMO, but generally, when I pick a book, it will never be about economics. I have read a book written by Nobel-winning economist Amartya Sen, but that wasn't on economics. So, when I received the book My Journeys in Economic Theory by Edmund Phelps, who received the Nobel Prize for Economics in 2006, from Netgalley and the publisher in exchange for an honest review, I was travelling into uncharted seas.
My Journeys In Economic theory, as the name indicates, is an account by the renowned economist Edmund Phelps that focus on the highpoints (and a few low ones too) of his illustrious career. Though the book starts with the chronicling of his childhood experiences and schooling in Illinois and New York, it is majorly about his contributions to economic theory. The author also recounts his interactions with other fellow economists who have associated with him at various times. There are also many mentions about his love towards music and art, which I believe, became crucial in his reshaping of economic theory by introducing aspects like innovation and dynamism.
Though he was interested in philosophy, his father suggested him to pursue economics, which he did and found that he really loved the subject. He perceived a gap between macro and micro streams of economics which seemed disconnected at the time. One of his initial interest was to bridge this gap. With this in mind he pursued a rigorous and deep study in economic theory. His paper on the Golden Rule of accumulation suggests an optimum level of national saving that can sustain its steady growth of consumption. He wrote a book at the same period that dealt with public debt and how an excess of it would drive a wedge between wealth and capital. It says that public debt, though it increases the wealth of a nation and increases consumption, contracts capital investment.
Phelps then worked on the relationship between employment, wage setting and inflation, and introduced several important concepts like the role of expectations and imperfect information in wage setting. He was merging the macroeconomics of inflation and employment to the microeconomic decisions of wage setting and hiring. He also wrote a textbook called Political Economy. Phelps went on to work on how altruism, welfare systems and social justice effects economic performance. He argued that this factor also benefits an economy by making it more efficient. His studies on structural slumps was important in understanding why an economy fails to generate investment and employment due to structural issues like ineffective bureaucracy or lack of research and development which cannot be tackled by introducing fiscal stimulus or by monetary easing. He was awarded Nobel in 2006 for his innovative contributions to the analysis of intertemporal tradeoffs in macroeconomic policy, and for his research on the relationship between employment, inflation, and economic growth.
Till then, Phelps felt that all his work was constructed on foundations built by other economists. His desire to work on an economic theory that may open a new frontier resulted in his research on the effects of innovation on economy. He suggested that structural dynamism of a country triggers innovation and thereby benefitting its economic growth tremendously. Phelps has also studied the factors that influence the level of innovation and entrepreneurship in an economy.
My Journeys In Economic Theory is a very interesting book that is short but packed with information. It offers a very concise view into an illustrious career that offered paradigm shifting observations on every area it dealt on. I feel that someone who has a working knowledge on economy will be benefitted hugely by reading this book. For me, who is just a layman as far as economic theories are concerned, it was a bit tough even though rewarding book. I had to refer many other sources to make many points palatable for me and still I will accept that I haven't comprehended it fully. But I am definitely more wiser on economic theories and more inspired after reading about the life of Edmund Phelps.