the future of capitalism

Third World History Book Report

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This book report reflects upon the writings of Lester C. Thurow in his 1996 book - "The Future of Capitalism". Thurow is a professor of economics at M.I.T. School of Management and has been a contributing editor to the Newsweek journal. "The Future of Capitalism" is an analytical look at the state of world economics in the late Twentieth Century. Thurow predicts the future of capitalism based upon recent trends in empirical data combined with his own political/economic analysis.

Central to this book is a powerful analogy that Thurow uses to communicate his ideas and thoughts to the reader. The distribution of wealth in the world is likened to the surface of the earth - parts of the earth are characterized by high mountainous regions (areas of wealth) while others are of lesser altitude (areas of poverty). In Geology, it is understood that the earth's surface is constantly in a state of flux, impacted by gradual movements in the tectonic plates that float upon the earth's molten inner core. The five tectonic plates affecting the earth's surface (distribution of wealth) are analogous to the driving forces behind changes in world economics; the molten inner core represents the flowing currents of technology and ideology. Thurow contends that movements in the "plates" caused by ideological and/or technological changes can be gradual, having an imperceptible impact on the world's population or they can be sudden with far greater social consequences. When tectonic plates move suddenly, they cause earthquakes on the earth's surface; the distribution of wealth is changed over a very short period of time. In this analogy, periods of rapid change caused by sudden movements in the plates are equated to times of "punctuated equilibrium". Thurow describes "punctuated equilibrium" as fundamental changes in the state of world economics that redefine what it takes to be successful and thus increase one's wealth. By their very nature, periods of "punctuated equilibrium" threaten the status quo, the Midas touch is weakened, what was successful in the past might not be so in the future. "The Future of Capitalism" asserts that we are living in a time of "punctuated equilibrium" and that successful ...

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...mained unchanged for millennia. For these countries, the "western way" is a formidable threat that must be thwarted at all costs. When a country's culture is synonymous with its religion, a threat to that culture leads to a rise in religious fundamentalism with often-violent consequences. Sadly, Thurow's prediction of rising religious fundamentalism rings true today.

Thurow's book is a rational, well-communicated analysis of world economics. His arguments are based upon sound intuitive reasoning supported with the appropriate empirical analysis. Thurow's use of analogy to communicate his subject is the most impressive aspect of his book. The use of "plate tectonics" accurately reflects the inner workings of world economics; the drivers of change are not obvious to the average bystander. Thurow's book should be mandatory reading for those politicians with an adversity to looking beneath the surface; too many policies target the effect and not the cause. "The Future of Capitalism" stands out because it motivates the reader to look beneath the surface; it provokes a new way of thinking about the world in which we live.