- Hardcover: 330 pages
- Publisher: Princeton University Press; illustrated edition edition (8 May 2002)
- Language English
- ISBN-10: 0691096155
- ISBN-13: 978-0691096155
- Product Dimensions: 24.1 x 16.2 x 2.6 cm
- Average Customer Review: 5.0 out of 5 stars See all reviews (2 customer reviews)
- Amazon Bestsellers Rank: 772,339 in Books (See Top 100 in Books)
- See Complete Table of Contents
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Review
Mr. Baumol's contribution is not to emphasize the impact of innovation but to pinpoint how competition forces companies to make innovation routine... The traditional analysis ... says that capitalism blunders at generating innovation over the long run. Mr. Baumol ... reverses this presumption... [He] tells a tale rich in details about the market's use of collaboration to overcome problems of innovation. Along the way he turns standard analysis upside down. -- Michael M. Weinstein New York Times A brilliant book... What makes capitalism uniquely successful is the built-in pressure to generate new products and processes. Provided companies are forced to compete, the market will find a way to generate and diffuse an unending stream of innovations. -- Martin Wolf Financial Times The book could not be more timely. -- David Propson New York Law Journal Over the past 50 years, William Baumol has made groundbreaking contributions to a wide range of economic fields, including antitrust, the study of productivity, and the nature of growth... At 80, and still going strong, he is among the last working members of the great generation of post-World War II economists. Business Week In this fine volume [Baumol] challenges readers to rethink entirely the conventional wisdom concerning the nature and benefits of the capitalist (or free market) system... [It is] readable, challenging, stimulating. Choice For managers looking for a big picture view, this is a useful account. And while it deflates the romantic view of the maverick innovative company, the book justly celebrates the positive results of this routinized 'innovation machine'--the unprecedented growth rates we've had under capitalism. Harvard Business Review You cannot fault Baumol for being unambitious. In this fine volume he challenges readers to rethink entirely the conventional wisdom concerning the nature and benefits of the capitalist (or free market) system... Readable, challenging, stimulating. Choice An important new book. -- David Crane Toronto Star Professor Baumol is a giant in the field of economics... This book displays both his prodigious intellect and the sweep of his scholarship... [T]his is an important book. -- Ashish Arora Journal of Technology Transfer
Review
Mr. Baumol's contribution is not to emphasize the impact of innovation but to pinpoint how competition forces companies to make innovation routine... The traditional analysis ... says that capitalism blunders at generating innovation over the long run. Mr. Baumol ... reverses this presumption... [He] tells a tale rich in details about the market's use of collaboration to overcome problems of innovation. Along the way he turns standard analysis upside down. -- Michael M. Weinstein, New York Times A brilliant book... What makes capitalism uniquely successful is the built-in pressure to generate new products and processes. Provided companies are forced to compete, the market will find a way to generate and diffuse an unending stream of innovations. -- Martin Wolf, Financial Times The book could not be more timely. -- David Propson, New York Law Journal Over the past 50 years, William Baumol has made groundbreaking contributions to a wide range of economic fields, including antitrust, the study of productivity, and the nature of growth... At 80, and still going strong, he is among the last working members of the great generation of post-World War II economists. -- "Business Week In this fine volume [Baumol] challenges readers to rethink entirely the conventional wisdom concerning the nature and benefits of the capitalist (or free market) system... [It is] readable, challenging, stimulating. -- "Choice For managers looking for a big picture view, this is a useful account. And while it deflates the romantic view of the maverick innovative company, the book justly celebrates the positive results of this routinized 'innovation machine'--the unprecedented growth rates we've had under capitalism. -- "Harvard Business Review You cannot fault Baumol for being unambitious. In this fine volume he challenges readers to rethink entirely the conventional wisdom concerning the nature and benefits of the capitalist (or free market) system... Readable, challenging, stimulating. -- "Choice An important new book. -- David Crane, Toronto Star Professor Baumol is a giant in the field of economics... This book displays both his prodigious intellect and the sweep of his scholarship... [T]his is an important book. -- Ashish Arora, Journal of Technology Transfer
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Under capitalism, innovative activity-which in other types of economy is fortuitous and optional-becomes mandatory, a life-and-death matter for the firm. Read the first page
Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
Under capitalism, innovative activity-which in other types of economy is fortuitous and optional-becomes mandatory, a life-and-death matter for the firm. Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
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Customer Reviews
Most Helpful Customer Reviews
11 of 11 people found the following review helpful
Format:Hardcover
Professor Baumol has written the definitive text upon the role of innovation in the economic process. Joseph Schumpeter wrote of waves of creative destruction that reshaped the face of industry - the spark of which is innovation. Clayton Christesen in the "The Innovators Dilemma" and Richard Foster and Sarah Kaplan in "Creative Destruction" built on those themes - in particular the vulnerability of incumbents to attack from outsiders.Baumol advances Schumpeter's cause by demonstrating that innovation rather than price competition is the central feature of the market process. He also highlights the present/future tension inherent in every business in that innovation is in itself a present cost to be weighed against uncertain future benefits. Innovation is, he argues, no longer undertaken as a means of securing extraordinary profits but as a means of preempting competition. In this way innovation becomes the most important condition for industrial survival.
The book is not pitched at the lay reader, nor however is it set in a snow storm of algebra.
The book is not pitched at the lay reader, nor however is it set in a snow storm of algebra.
3 of 3 people found the following review helpful
Format:Hardcover
This book should certainly be on every businessperson's reading list, and every legislator's, and every student's. It is a lucid, well-organized and admirably logical presentation of the role of innovation in capitalism, and the role of capitalism in innovation. Author William J. Baumol accomplishes something rare indeed by spanning the chasm between quantitative and qualitative economic writing. He has the verbal skill to write clearly and accessibly, explaining his points in plain if elevated and austere language, and illustrating them with interesting historical examples. His rigorous mathematical demonstration would satisfy the most demanding academic economist. Baumol's insight that capitalism's great achievement is to make innovation routine distinguishes this book from others on innovation, entrepreneurship and creativity. Although the lone inventor matters, ancient Rome and China had lone inventors and yet those empires did not produce economic growth on the scale that capitalism has produced it. Capitalism is distinctly productive because it makes innovation a self-sustaining and indispensable phenomenon, driving and driven by competition. We find this intriguing thesis well worth serious consideration.
Most Helpful Customer Reviews on Amazon.com (beta)
Amazon.com:
3 reviews
12 of 12 people found the following review helpful
Good Book on Necessity of Institutional Rules
3 Sep 2003
Format:Hardcover
"The thesis of William J. Baumol's latest book is articulated clearly at the start. The free-market growth engine depends ultimately on institutional rules. People may have a natural entrepreuneurial instinct, but that instinct can find outlet in criminal, rent-seeking, or other destructive activities as easily as in productive venues. Economic growth depends, however, on more than just rules and norms that channel such inclinations in the "right" direction. It depends also on rules governing the appropriation of intellectual property and on the precise trade-off a society makes between pricing information at its marginal cost (making it free) and providing incentives for invention and innovation by creating rules to allow appropriobility for fixed periods of time. We call this body of rules patent, copyright, and, in general, intellectual property law (although, as Baumol argues, antitrust is also relevant). The dilemma is that in the absence of such protection there are few private incentives for producing new information or discoveries, but in the presence of such protection we impose monopoly pricing and, consequently, static efficiency losses."
"The first section of the book, devoted to the "capitalist growth mechanism," is the most interesting. Here Baumol develops his vision of a capitalist economy as consisting of competitive price-taking sector and an oligopolistic sector in which competition occurs more often on the innovation margin rather than on the price margin. The pharmaceutical and computer industries are cases in point. This oligopolistic sector is the economy's engine of growth. Firms here must innovate or they die; they also must price discriminate or die because the heavy fixed costs of innovation cannot be covered if everyone pays a price equal to marginal cost. These costs must be recouped in the same way that railroads were forced to price discriminate to cover their fixed costs for rolling stock and permanent way. Baumol cautions antitrust authorities against jumping to the conclusion that departures from marginal-cost pricing are necessarily evident of monopoly power."
"As Baumol's book proceeds, it devotes a generally increasing share of space to formal models...[and] it was somewhat dissapointing...to discover how much of the second half of the book is devoted to model building as opposed to discussion..."
3 of 3 people found the following review helpful
Packed with Knowledge!
19 May 2004
Format:Hardcover
This book should certainly be on every businessperson's reading list, and every legislator's, and every student's. It is a lucid, well-organized and admirably logical presentation of the role of innovation in capitalism, and the role of capitalism in innovation. Author William J. Baumol accomplishes something rare indeed by spanning the chasm between quantitative and qualitative economic writing. He has the verbal skill to write clearly and accessibly, explaining his points in plain if elevated and austere language, and illustrating them with interesting historical examples. His rigorous mathematical demonstration would satisfy the most demanding academic economist. Baumol's insight that capitalism's great achievement is to make innovation routine distinguishes this book from others on innovation, entrepreneurship and creativity. Although the lone inventor matters, ancient Rome and China had lone inventors and yet those empires did not produce economic growth on the scale that capitalism has produced it. Capitalism is distinctly productive because it makes innovation a self-sustaining and indispensable phenomenon, driving and driven by competition. We find this intriguing thesis well worth serious consideration.
2 of 2 people found the following review helpful
Kyle Lear's Review of Baumol's The Free-Market Innovation Machine
1 Jun 2010
Format:Paperback|Amazon Verified Purchase
Kyle Lear's review was made as part of a critical review assignment for the Spring 2010 Economics of Technology seminar at the University of Nebraska at Omaha, taught by Art Diamond. (The course syllabus stated that part of the critical review assignment consisted of the making of a video recording of the review, and the posting of the review to Amazon.)
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