Innovation is the driver

I’d like to link to Martin Wolf’s Financial Times column today, but the new subscription-based policy of FT.com makes that impossible. Inspired by William Baumol’s recent book, The Free-Market Innovation Machine, Wolf argues that innovation and not price competition is the central feature of the market. Here’s the nub: “Provided companies are forced to compete, the market will find a way to generate and diffuse an unending stream of innovations.”