Building wealth: the new rules for individuals, companies, and nations in a knowledge-based economy

Abstract

From the Publisher: MIT Economist, Lester C. Thurow's fascinating look at who will win — and why The rise of knowledge-based industries — microelectronics, biotechnology, telecommunications, robotics, and computers — has improved the lives of millions and brought great riches to individuals, companies, and nations. Yet amidst the new prosperity there is great anxiety. In Building Wealth: The New Rules For Individuals, Companies and Nations In A Knowledge-Based Economy MIT economist and bestselling author Lester C. Thurow provides thorough explanations of the causes of the current anxieties and offers solid economic solutions for the future. Focusing on the critical issue of wealth creation, he shows that great wealth is built from economic disequilibrium and that society itself is being reorganized by the changes wrought by the knowledge economy. While the new technologies allow costs to fall faster than prices, creating a new class of billionaires, these great profits undermine traditional economic stability of the majority — the upper-middle and lower-middle classes. Radical technological advances leading to the development of entirely new industries (like biotechnology) and the transformation of old ones (retailing and banking, for example), the blurring of national borders, and the globalization of companies have all played a role in the creation of this economic disequilibrium and in the rise of national, corporate, and personal anxieties. Addressing the vital question of individuals, businesses, and societies generate new wealth when what worked in the twentieth century won't work in the twenty-first, Thurow delineates the building blocks essential to creating and maintaining broad-based prosperity: a stable yet flexible social organization; a business climate that rewards entrepreneurs; the acquisition of basic knowledge and practical skills by the entire workforce; investment in tools that create wealth; and the recognition that technological advances augment, rather than destroy, the environment and natural resources. In-depth discussions of the strengths and weaknesses of the major players in the global economy bring his points to life. For example, America stands out in today's economically unstable world because we, unlike Japan and Europe, have and revere entrepreneurs, the change agents of capitalism, and are willing to close down businesses, which are not part of the new economy. Our failure to adequately train a large portion of the workforce, however, remains a serious flaw in our social and economic fabric. Arguing that part of the world, just by accident, has all the ingredients necessary to build a 21st century wealth pyramid, Thurow outlines the tasks — both general and specific — America, Europe, Japan, and the Third World must undertake in order to survive and thrive in the future. His provocative insights and pace-setting rules for forward-thinking nations, companies, and individuals include: Successful companies must be willing to cannibalize themselves to save themselves. They must be willing to destroy the old while it is still successful if they wish to build the new before it is successful. Humans have discovered how to operate successful economies in the midst of modest inflation, but not in the midst of even mild deflation. Given the choice between the same rate of inflation or deflation, take inflation every time. Knowledge-based capitalism isn't going to work without a new system for determining who owns or controls intellectual property rights. Capitalism requires clear, easy-to-enforce ownership rights. The biggest unknown for the individual in a knowledge-based economy is how to have a career in a system where there are no careers. To get wealthy, luck is necessary. Talent, drive, and persistence by themselves aren't enough. The economic payoff from more social investment in basic research is as clear as anything is ever going to be in economics. The transition to a knowledge-based economy will require the re-evaluation — and sometimes radical modification — of government policies and spending, business practices, workforce training and compensation, and even cultural patterns and beliefs. Building Wealth is a bracing look at how the economic game will be played in the future, from the skills and resources necessary for sustaining a competitive advantage to who will emerge as winners. About the Author: Lester C. Thurow is Lemelson Professor of Management and Economics at MIT's Sloan School of Management in Cambridge, Massachusetts. One of the world's leading economists, he is the author of four New York Times bestsellers, including the classic, The Zero-Sum Society, Head to Head and The Future of Capitalism.