Lecture
This lecture explores the impact of innovation on firms' profit, consumers' surplus, and social surplus, leading to better products, processes, and services. It delves into the growth of productivity and standards of living, discussing the measurement of GDP, its limitations, and the drivers of productivity. The lecture emphasizes the importance of innovation in driving productivity growth and improving the standard of living. It also addresses the challenges with GDP as a measure of well-being, highlighting the need to consider the productive base, including natural and human capital. The instructor discusses the relationship between innovation, productivity, and living standards, advocating for 'innovism' as a more accurate term than capitalism to describe the explosive innovation that has transformed economies over the past two centuries.