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The Future Of Capitalism Essay

2232 words - 9 pages

Third World History Book Report

     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 nations will be those economies that change with the times.
     The first plate in Thurow's analysis is the end of communism. As old communist economies make the transition from planned to free economies their portion of world wealth will increase or decrease in the short term (depending on the level of communist entrenchment) but will surely increase in the long run as inefficiencies are eliminated. Thurow considers the cases of both China and the U.S.S.R.; China will have a smoother transition because its economy had fewer large communist production units than its...

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