Lester C. Thurow

The future of capitalism

In discussion with Bruce Lloyd, Lester Thurow, Professor of Management and Economics at The Massachusetts Institute of Technology, talks about his new book The Future of Capitalism. Despite the end of communism, or perhaps because of it, Thurow argues that capitalism will be under considerable pressure in the years ahead. These challenges arise from demographic factors, including increased trends for more global mobility; as well as the impact on the global economy of the new knowledge‐based industries, which are going to create both new opportunities for inequality at the same time as reinforcing old inequalities. Thurow argues strongly that we need to combine an understanding of these pressures and trends, with a willingness, and ability, to intervene effectively, if we are to be optimistic about the economic development of the world as a whole in the years ahead.

The Income Distribution as a Pure Public Good

I. The optimum income distribution from a voluntary theory of exchange, 329. — II. A complication, 333. — III. The mathematics, 333. — IV. Conclusions, 335.

A weakness in process technology.

Although the United States seems to be neither behind when it comes to research and development on new products or the willingness of its consumers to buy new products, the evidence clearly shows that it is behind when it comes to process technologies. Often Americans, even when a correction is made for wage differences, cannot produce goods at the price or quality levels achieved abroad. There is no one overriding reason for this lag in process technologies. An undereducated and trained labor force, too little savings and investment, a failure to see production as a central task, and a number of other factors have all contributed to the problem.

Globalization: The Product of a Knowledge-Based Economy

The shift to an era of man-made brain-power industries is creating the technologies that are creating a global economy. Leaving behind the role of regulator or the function of controlling their national economies, governments are becoming platform builders that invest in infrastructure, education, and research and development to allow their citizens to have the opportunity to earn world-class standards of living. Countries themselves are being put into play, and inequality is rising. The rest of the world sees an invasion of the American system, but in reality, it is a brand-new global system. Intellectual property rights become a central and contentious unresolved issue.

Equity Concepts and the World of Work

For a decade or more, governmental manpower efforts have focused on equalizing the distribution of earnings. Blacks are to catch up with whites; women are to be paid the same as men; the poor are to escape from poverty. While there has been some limited progress toward all of these goals, the distribution of earnings has been remarkedly resistant to change. Explicit manpower programs and enormous changes in educational attainment of the labor force have made almost no dent in the

The Income Distribution as a Pure Public Good: A Response

I. Brown, Fane, and Medoff, 316. — II. Canterbery and Tuckman, 317. — III. Hochman, Rodgers, and Tullock, 318.

The Political Economy of Income Redistribution Policies

During the decade of the 1960s, a variety of public policies were adopted to alter the American distribution of income. A history of these policies begins with the man power programs of the early Kennedy administration and ends with President Nixons 1974 budget. An examination of the economic and political history of these programs reveals a vari ety of reasons for their publicly proclaimed failure. Means and ends were never sufficiently distinguished; no consistent decision was ever made about the aspects of the income distri bution to be altered; the political process wanted to pretend that income could be redistributed without reducing anyones economic position; funds could never be concentrated enough to have a visible impact; and the public was simply unwilling to make investments of the size that would have been neces sary to solve the problem. The elimination of poverty may be a good investment socially; financially, it is a bad invest ment. Increases in productivity do not cover the costs of the necessary programs. The Family Assistance Plan was a rad ical departure from previous attempts to alter the distribution of income, but it was fatally flawed by internal contradic tions. Eventually, it proved to be a political liability for pol iticians of all parties.