| Title | Towards a London Economic Consensus: an introduction |
|---|---|
| Contributor | Timothy Besley(author) |
| Andrés Velasco(author) | |
| DOI | https://doi.org/10.31389/lsepress.tlc.a |
| Landing page | https://doi.org/10.31389/lsepress.tlc.a |
| License | https://creativecommons.org/licenses/by-nc/4.0/ |
| Copyright | Author(s) |
| Publisher | LSE Press |
| Published on | 2025-10-16 |
| Short abstract | This chapter explains the main ideas underpinning the Schumpeterian growth paradigm and how it provides a new lens to look at the determinants and effects of the growth process. Schumpeter was pessimistic about the future of capitalism. Indeed, his belief was that capitalism was doomed because in his view it was impossible to prevent incumbent firms from barring new innovations, either directly or by exploiting political connections with government authorities. The chapter uses the lenses of the Schumpeterian paradigm to revisit growth policy debates and also to rethink capitalism and its ability to reconcile the promise of sustained prosperity with the quest for greener and more inclusive growth. We argue that the proper functioning of an economy of innovation and creative destruction rests on the triangle between firms that innovate, the state, which is meant to regulate and invest, and civil society, which serves as a watchdog to induce firms and the state to do the right things. This chapter includes responses to Philippe Aghion and John Van Reenan by Diane Coyle and Timo Boppart. |
| Long abstract | This chapter explains the main ideas underpinning the Schumpeterian growth paradigm and how it provides a new lens to look at the determinants and effects of the growth process. Schumpeter was pessimistic about the future of capitalism. Indeed, his belief was that capitalism was doomed because in his view it was impossible to prevent incumbent firms from barring new innovations, either directly or by exploiting political connections with government authorities. The chapter uses the lenses of the Schumpeterian paradigm to revisit growth policy debates and also to rethink capitalism and its ability to reconcile the promise of sustained prosperity with the quest for greener and more inclusive growth. We argue that the proper functioning of an economy of innovation and creative destruction rests on the triangle between firms that innovate, the state, which is meant to regulate and invest, and civil society, which serves as a watchdog to induce firms and the state to do the right things. This chapter includes responses to Philippe Aghion and John Van Reenan by Diane Coyle and Timo Boppart. |
| Language | English (Original) |
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Tim Besley is School Professor of Economics and Political Science and W. Arthur Lewis Professor of Development Economics at the London School of Economics (LSE). His main research interests are in studying how governments can more effectively design and deliver economic policies. He has extensive policy experience advising the World Bank, International Monetary Fund (IMF) and European Bank for Reconstruction and Development, and, from 2006 to 2009, he served on the Bank of England Monetary Policy Committee. He is also a member of the UK’s National Infrastructure Commission and was an academic convenor of the Oxford-LSE Commission on State Fragility, Growth and Development, and joint Chair of the LSE Growth Commission. He is a past President of the European Economic Association (EEA), Econometric Society and Royal Economic Society (RES).
Andrés Velasco is Professor of Public Policy and Dean of the School of Public Policy at LSE. Between 2006 and 2010 he served as Minister of Finance of Chile. He is also an Associate Fellow at Chatham House, the Royal Institute of International Affairs, and a Research Fellow at the Centre for Economic Policy Research (CEPR). In 2023–24 he served on the Task Force on Fiscal Policy for Health; during 2021–23 he was part of the High-Level Advisory Group to the IMF and the World Bank; in 2017–18 he was a member of the G20 Eminent Persons Group on Financial Governance; during 2015–16 he co-chaired the Global Panel on the Future of the Multilateral Lending Institutions; in 2013–16 he was a member of the Global Oceans Commission. Before coming to LSE, he held professorial appointments at the Harvard Kennedy School (HKS), Columbia School of International Public and Affairs (SIPA) and the New York University Economics Department. His research has been published in leading academic journals including the American Economic Review, the Journal of Political Economy, the Quarterly Journal of Economics and the Journal of Economic Theory. In 2006 he received the InterAmerican Development Bank Award for Excellence in Economic Research.