There are many dynamically typed languages out there, and lots of projects are actually implemented in them.
When I query my memory for side effect free languages only Haskell comes up. I'm not too deep in the function programming community, so there could be a lot more, actually. But nevertheless I think that the existing code base and current usage is heavily dominated by languages that allow side effects.
So the question with or without side effects is currently more an academic one. It might be the next big question tomorrow, but IMHO it's not yet today.
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