What do you think?
Rate this book
The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World
The author of The Zero-Sum Society explains how the fall of Communism has changed today's economic picture and created a global economy and how the current economic situation will impact the future. Reprint. Tour.
Paperback
First published January 1, 1996
9 people are currently reading
198 people want to read
About the author
Lester Carl Thurow
34 books9 followersLester Carl Thurow (born 1938) is a former dean of the MIT Sloan School of Management and author of numerous bestsellers on economic topics.
Thurow was born in Livingston, Montana. He received his B.A. in political economy from Williams College in 1960, where he was in Theta Delta Chi and Phi Beta Kappa as a junior, and a Tyng Scholar. Thurow was awarded a Rhodes Scholarship, and went to Balliol College, Oxford to read Philosophy, Politics and Economics, graduating in 1962 with first class honors. He received a Ph.D. in Economics from Harvard University in 1964.
Thurow is on the board of directors of Analog Devices, Grupo Casa Autrey, E-Trade, and Taiwan Semiconductor Manufacturing Corp.. Thurow was also one of the original founders of the Economic Policy Institute in 1986.
Thurow is currently an economics columnist for, among others, the Boston Globe and USA Today. He was previously an economics columnist for and on the editorial board of the New York Times, and was a contributing editor to Newsweek.
Thurow is a longtime advocate of a political and economic system of the Japanese and European type, in which governmental involvement in the direction of the economy is far more extensive than is presently the case in the United States – a model that has come to be known as "Third Way" philosophy.
His best selling book, Head to Head: The Coming Economic Battle Among Japan, Europe and America published in 1993, compares economic growth and living standards among Japan, Europe, and the USA.
His other books include:
Fortune Favors the Bold: What we must do to build a new and lasting global prosperity (2003).
The Future of Capitalism: how today's economic forces shape tomorrow's world (1996).
The Zero-sum Solution: building a world-class American economy (1985).
Dangerous Currents: the state of economics (1983).
The Zero-sum Society: distribution and the possibilities for economic change (1980).
[edit]
Thurow was born in Livingston, Montana. He received his B.A. in political economy from Williams College in 1960, where he was in Theta Delta Chi and Phi Beta Kappa as a junior, and a Tyng Scholar. Thurow was awarded a Rhodes Scholarship, and went to Balliol College, Oxford to read Philosophy, Politics and Economics, graduating in 1962 with first class honors. He received a Ph.D. in Economics from Harvard University in 1964.
Thurow is on the board of directors of Analog Devices, Grupo Casa Autrey, E-Trade, and Taiwan Semiconductor Manufacturing Corp.. Thurow was also one of the original founders of the Economic Policy Institute in 1986.
Thurow is currently an economics columnist for, among others, the Boston Globe and USA Today. He was previously an economics columnist for and on the editorial board of the New York Times, and was a contributing editor to Newsweek.
Thurow is a longtime advocate of a political and economic system of the Japanese and European type, in which governmental involvement in the direction of the economy is far more extensive than is presently the case in the United States – a model that has come to be known as "Third Way" philosophy.
His best selling book, Head to Head: The Coming Economic Battle Among Japan, Europe and America published in 1993, compares economic growth and living standards among Japan, Europe, and the USA.
His other books include:
Fortune Favors the Bold: What we must do to build a new and lasting global prosperity (2003).
The Future of Capitalism: how today's economic forces shape tomorrow's world (1996).
The Zero-sum Solution: building a world-class American economy (1985).
Dangerous Currents: the state of economics (1983).
The Zero-sum Society: distribution and the possibilities for economic change (1980).
[edit]
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 6 of 6 reviews
June 6, 2021
The author of this book discusses important economic and political issues that are still relevant in today's debates. Some of the closing comments are of particular interest:
"Technology and ideology are shaking the foundations of twenty-first-century capitalism. Technology is making skills and knowledge the only sources of sustainable strategic advantage. Abetted by the electronic media, ideology is moving toward a radical form of short-run individual consumption maximization at precisely a time when economic success will depend upon the willingness and ability to make long-run social investments in skills, education, knowledge, and infrastructure. (...). Paradoxically, at precisely the time when capitalism finds itself with no social competitors - (...) - it will have to undergo a profound metamorphosis (p. 326)."
"Technology and ideology are shaking the foundations of twenty-first-century capitalism. Technology is making skills and knowledge the only sources of sustainable strategic advantage. Abetted by the electronic media, ideology is moving toward a radical form of short-run individual consumption maximization at precisely a time when economic success will depend upon the willingness and ability to make long-run social investments in skills, education, knowledge, and infrastructure. (...). Paradoxically, at precisely the time when capitalism finds itself with no social competitors - (...) - it will have to undergo a profound metamorphosis (p. 326)."
June 8, 2021
‘Verities of capitalism – growth, full employment, financial stability, rising real wages – seem to be vanishing. Something has changed to cause these results; something has to change to alter these results.’
This could have been written in 2021 to describe the challenges we face today. In fact it was written in 1997.
The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World , written by Lester Thurow, an American political economist and former dean of the MIT Sloan School of Management, reminds us that we have been grappling with the same or similar economic, social and political challenges for at least a quarter of a century. Growing income inequality, declining real wages, anaemic economic growth, ballooning budget deficits and persistent unemployment dominate the economic headlines today together with the disruptive impact of technology on work and society, a rising Asian economic power house, religious fundamentalism and the emergence of populist politicians.
Thurow’s analysis of the causes of these challenges and of potential solutions remains as relevant in 2021 as it was in 1997, if not more so because of the persistent recurrence of the same issues.
Thurow argues that ‘There is an ideological conflict between the egalitarian foundations of democracy and the inegalitarian reality of capitalism. ‘(p18)
Thurow highlights that in the 1990s income inequality was increasing both within and between groups – industry, occupation, educations, demographic (age, gender, race) and geographic. In the last two decades this has accelerated as the ‘gig’ economy displaces full-time employment and as more roles have been outsourced to developing countries. Despite this, the income share of the elderly doubled in the two decades to the 1990s, a trend that has continued as baby boomers use their voting power to appropriate a disproportionate share of society’s income and wealth to themselves.
By the 1990s, the share of wealth held by the top 1%, at 23%, was double the level of the 1970s. Since then it has grown to over 31% (Q4 2020) (Source: https://fred.stlouisfed.org/series/WF...)
Informatively, Thurow demonstrates that ‘income inequality is bad for economic growth’ and adds that ‘No country not experiencing a revolution or a military defeat with a subsequent occupation has probably ever had as rapid or as widespread an increase in inequality as has occurred in the United States in the last two decades [to the mid 1990s]’ (p42)
At times Thurow’s arguments are ambiguous. He appears to criticise international trade on the basis that the winners do not compensate the losers, and in reluctantly conceding that that international trade ‘could’ generate, ignores the overwhelming evidence (then and now) of substantial benefits for all countries that participate.
Thurow warns that ‘in an era of man-made brainpower industries, individual, corporate and national economic success will all require both new and much more extensive skill sets that have been required in the past.’ He argues that without government investments in education, this will exacerbate growing income and wealth inequality, particularly as even skilled jobs move to cheaper offshore locations, and lead to increasing marginalisation of the unskilled in the first world. (p77)
Thurow was also prescient in forecasting the emergence of an ‘as-yet-unnamed’ industry at the intersection of phones, TV, computer and media. He also warned about the impact of technology and the media on society and democracy: ‘In a TV culture what one believes to be true is often more important that what it actually true’ and that ‘Modern electronic technologies promote radical individualism’ (p84). He could not have imagined the impact of social media and mobile technology in amplifying echo chambers and polarising viewpoints.
Immigration is often a sensitive and polarising issue. Thurow tackles this with facts highlighting that existing citizens provide new citizens with education, infrastructure, plant and equipment, housing and food at a cost of about $250,000 (per person). This significant wealth transfer – what could be called a tax on existing citizens - is the underlying, and unspoken, issue behind much of the debate about levels of immigration. Thurow could have gone further and discussed the impact that immigration has on housing costs (decreasing affordability), wages (depressing them as a result of increased supply), and the environment (increasing total pollution and carbon emissions in a country).
Some of his proposals including one for a high-voltage electrified fence at the Mexican-American border - are downright draconian, but foreshadow America’s recent fascination with wall-building.
Another shibboleth is care for aged which takes up an increasing proportion of the government budget. Thurow wants that this has ‘fundamentally altered our fiscal systems’ (p99)and is not sustainable, cautioning that democracy will ‘meet its ultimate test when it has to confront the economic demands of the elderly.’ (p101) The critical question he poses is insightful and incisive: Can a democracy ‘cut the benefits that go to a majority of its voters? If the answer is no, democracy has no long-run future.’ (p102)
The importance of this question has only been amplified in the last quarter century
Not all of his predictions were accurate. Thurow recoginsed the potential for China’s growth - ‘All of the world will benefit from China’s development. Up close it will look threatening’ – but, as did other economists at the time, underestimated the rate of change. China’s significant investment in infrastructure which Thurow noted criticised as “grossly underutilized” in the 1990s are now looking as prescient long-term planning.
His predictions for a 60% fall in commodity prices by 2020 (p67) failed to allow for the significant demand from China, and to a lesser extent India, as they embarked on rapid industrialisation. While identifying that ‘knowledge and skill now stand alone as the only source of competitive advantage’ (p68) Thurow underestimated the economic impact of technological innovation. In doing this, Thurow fell into the same trap that he was warning his readers about, underestimating the impact of punctuated equilibriums.
There are three areas that Thurow leaves unexplored – understandably as they have only become more prevalent in the economic debate more recently. One is the issue of the economics of platform-based businesses which often have a marginal cost of close to zero and a winner-take-all outcome, overturning economic orthodoxy of supply and demand in competitive markets. The other is the role of externalities where factors such as pollution, water usage and climate change are not included in the price of goods and services resulting in excess demand for the processes that cause them. The third is the impact of behavioural biases on people’s decision making, which overturns the assumption of homo econimus.
Thurow’s comments that “any constituency that is frightened will fall prey to people with easy answers” seem to predict the rise of Trump, Johnson and other nationalistic leaders.
He reminds us that ‘ Leadership means engaging with people in facing up to important problems’ (p161-2), something that sadly seems to be in even shorter supply a quarter of a century later.
These are just some of the –stop-and-make-you-think challenges that Thurow tackles. It is hard to do justice to the breadth of issues he covers in one review. Consistently fact based, Thurow’s narrative is persuasive
For anyone with an interest in the social, political and economic challenges – and with a mindset which reads to understand rather that to confirm pre-existing views, I would rate Thurow’s exploration of The Future of Capitalism as a must read.
This could have been written in 2021 to describe the challenges we face today. In fact it was written in 1997.
The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World , written by Lester Thurow, an American political economist and former dean of the MIT Sloan School of Management, reminds us that we have been grappling with the same or similar economic, social and political challenges for at least a quarter of a century. Growing income inequality, declining real wages, anaemic economic growth, ballooning budget deficits and persistent unemployment dominate the economic headlines today together with the disruptive impact of technology on work and society, a rising Asian economic power house, religious fundamentalism and the emergence of populist politicians.
Thurow’s analysis of the causes of these challenges and of potential solutions remains as relevant in 2021 as it was in 1997, if not more so because of the persistent recurrence of the same issues.
Thurow argues that ‘There is an ideological conflict between the egalitarian foundations of democracy and the inegalitarian reality of capitalism. ‘(p18)
Thurow highlights that in the 1990s income inequality was increasing both within and between groups – industry, occupation, educations, demographic (age, gender, race) and geographic. In the last two decades this has accelerated as the ‘gig’ economy displaces full-time employment and as more roles have been outsourced to developing countries. Despite this, the income share of the elderly doubled in the two decades to the 1990s, a trend that has continued as baby boomers use their voting power to appropriate a disproportionate share of society’s income and wealth to themselves.
By the 1990s, the share of wealth held by the top 1%, at 23%, was double the level of the 1970s. Since then it has grown to over 31% (Q4 2020) (Source: https://fred.stlouisfed.org/series/WF...)
Informatively, Thurow demonstrates that ‘income inequality is bad for economic growth’ and adds that ‘No country not experiencing a revolution or a military defeat with a subsequent occupation has probably ever had as rapid or as widespread an increase in inequality as has occurred in the United States in the last two decades [to the mid 1990s]’ (p42)
At times Thurow’s arguments are ambiguous. He appears to criticise international trade on the basis that the winners do not compensate the losers, and in reluctantly conceding that that international trade ‘could’ generate, ignores the overwhelming evidence (then and now) of substantial benefits for all countries that participate.
Thurow warns that ‘in an era of man-made brainpower industries, individual, corporate and national economic success will all require both new and much more extensive skill sets that have been required in the past.’ He argues that without government investments in education, this will exacerbate growing income and wealth inequality, particularly as even skilled jobs move to cheaper offshore locations, and lead to increasing marginalisation of the unskilled in the first world. (p77)
Thurow was also prescient in forecasting the emergence of an ‘as-yet-unnamed’ industry at the intersection of phones, TV, computer and media. He also warned about the impact of technology and the media on society and democracy: ‘In a TV culture what one believes to be true is often more important that what it actually true’ and that ‘Modern electronic technologies promote radical individualism’ (p84). He could not have imagined the impact of social media and mobile technology in amplifying echo chambers and polarising viewpoints.
Immigration is often a sensitive and polarising issue. Thurow tackles this with facts highlighting that existing citizens provide new citizens with education, infrastructure, plant and equipment, housing and food at a cost of about $250,000 (per person). This significant wealth transfer – what could be called a tax on existing citizens - is the underlying, and unspoken, issue behind much of the debate about levels of immigration. Thurow could have gone further and discussed the impact that immigration has on housing costs (decreasing affordability), wages (depressing them as a result of increased supply), and the environment (increasing total pollution and carbon emissions in a country).
Some of his proposals including one for a high-voltage electrified fence at the Mexican-American border - are downright draconian, but foreshadow America’s recent fascination with wall-building.
Another shibboleth is care for aged which takes up an increasing proportion of the government budget. Thurow wants that this has ‘fundamentally altered our fiscal systems’ (p99)and is not sustainable, cautioning that democracy will ‘meet its ultimate test when it has to confront the economic demands of the elderly.’ (p101) The critical question he poses is insightful and incisive: Can a democracy ‘cut the benefits that go to a majority of its voters? If the answer is no, democracy has no long-run future.’ (p102)
The importance of this question has only been amplified in the last quarter century
Not all of his predictions were accurate. Thurow recoginsed the potential for China’s growth - ‘All of the world will benefit from China’s development. Up close it will look threatening’ – but, as did other economists at the time, underestimated the rate of change. China’s significant investment in infrastructure which Thurow noted criticised as “grossly underutilized” in the 1990s are now looking as prescient long-term planning.
His predictions for a 60% fall in commodity prices by 2020 (p67) failed to allow for the significant demand from China, and to a lesser extent India, as they embarked on rapid industrialisation. While identifying that ‘knowledge and skill now stand alone as the only source of competitive advantage’ (p68) Thurow underestimated the economic impact of technological innovation. In doing this, Thurow fell into the same trap that he was warning his readers about, underestimating the impact of punctuated equilibriums.
There are three areas that Thurow leaves unexplored – understandably as they have only become more prevalent in the economic debate more recently. One is the issue of the economics of platform-based businesses which often have a marginal cost of close to zero and a winner-take-all outcome, overturning economic orthodoxy of supply and demand in competitive markets. The other is the role of externalities where factors such as pollution, water usage and climate change are not included in the price of goods and services resulting in excess demand for the processes that cause them. The third is the impact of behavioural biases on people’s decision making, which overturns the assumption of homo econimus.
Thurow’s comments that “any constituency that is frightened will fall prey to people with easy answers” seem to predict the rise of Trump, Johnson and other nationalistic leaders.
He reminds us that ‘ Leadership means engaging with people in facing up to important problems’ (p161-2), something that sadly seems to be in even shorter supply a quarter of a century later.
These are just some of the –stop-and-make-you-think challenges that Thurow tackles. It is hard to do justice to the breadth of issues he covers in one review. Consistently fact based, Thurow’s narrative is persuasive
For anyone with an interest in the social, political and economic challenges – and with a mindset which reads to understand rather that to confirm pre-existing views, I would rate Thurow’s exploration of The Future of Capitalism as a must read.
May 29, 2019
It is mostly about current state and the history of capitalism and some other economic organisations, mostly communism. It gives some hints on what should be changed in capitalism and what is wrong. The author can not guess what will overthrow the capitalism, as he said, the capitalism only still works because there is nothing better to succeed it.
Read
March 7, 2023Review from the March 1997 issue of the Socialist Standard:
https://socialiststandardmyspace.blog...
https://socialiststandardmyspace.blog...
Read
March 26, 2010The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World by Lester C. Thurow (1996)
November 13, 2016
Excellent
Displaying 1 - 6 of 6 reviews