At the simplest level, economics can better show us the consequences of our actions. Less simple are cases in which we don't have the knowledge to predict the full consequences. Global warming and climate change are examples.
Edmund PhelpsRead
If every effect of any new products or methods were required to be known before they could be produced and marketed, they would not be true innovations - and thus not represent new knowledge of what people would like, if offered.
Interpretation
What this quote means
True innovations require some uncertainties and unknown effects that cannot be entirely predicted in advance.
In this quote, Edmund Phelps emphasizes that innovation inherently involves risk and uncertainty. If creators were to fully understand every consequence of their new products or methods before they are introduced, they would not be able to innovate truly, as such knowledge would imply the existence of a pre-existing formula rather than the discovery of new possibilities that cater to human desires and needs.
Themes
InnovationUncertaintyRiskNew KnowledgeCreativity
In practice
Example use cases
During a conference on technology, one might use this quote to illustrate the need for embracing uncertainty in innovative processes.
More from Edmund Phelps
All quotes βThe good life, as it is popularly conceived, typically involves acquiring mastery in one's work, thus gaining for oneself better terms - or means to rewards, whether material, like wealth, or nonmaterial - an experience we may call 'prospering.'
Edmund PhelpsRead
The epic story of the West is the development in the 19th century of a mass prosperity the world had never seen and its near-disappearance in one nation after another in the 20th.
Edmund PhelpsRead
Entrepreneurs have only the murkiest picture of the future in which they are making their bets, and also there is ambiguity: they don't know when they push this lever or that lever that the outcome is going to be what they think it is going to be - there is the law of unanticipated consequences.
Edmund PhelpsRead
When the word 'morality' comes up in connection with economics, income distribution and financial stability are usually the issues. Is it moral for rich countries to use such a high proportion of the world's resources or for investment bankers to earn large bonuses?
Edmund PhelpsRead
A nation's economy is more than its markets, tastes, technologies and property rights.
Edmund PhelpsRead
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