BUSINESS BOOKS IN BRIEF
THE FUTURE OF CAPITALISM; HOW TODAY'S ECONOMIC FORCES SHAPE TOMORROW'S WORLD, by Lester C. Thurow (William Morrow, 385 pp., $25). In a way, Lester Thurow's latest book is a hodgepodge: It deals with what he terms "five economic tectonic plates" and their impact on world affairs. These plates are the end of communism, a technological shift to an era dominated by man-made brainpower industries, a demography never before seen (the population is growing, moving, and getting older), a global economy, and a time when there is no dominant economic, political, or military power.
Thurow, an economics professor at the Massachusetts Institute of Technology and a columnist on economic topics, uses geologic imagery to hold together essays on a wide range of topics. They include, for example, growing inequity in incomes in the United States, China's economic advance, the end of quasi-socialism in third-world countries, America's trade deficit, Japan's economic troubles, and ethnic separatism. The book has the flavor of a series of magazine articles - or expanded newspaper columns.
In this "period of punctuated equilibrium" in the world, Thurow sees a danger of stagnation, rather than collapse, for capitalism. Capitalism "will have to undergo a profound metamorphosis," he writes, though not spelling out details. But he does say economic success will depend on making long-run investments in skills, education, knowledge, and infrastructure.
- David R. Francis
POP INTERNATIONALISM, by Paul Krugman (MIT Press, 221 pp., $22.50). Do you think America's economy is increasingly driven by forces of global competition? That huge numbers of US jobs are being lost to low-wage workers overseas?
Then think again, says Paul Krugman, a respected Stanford University economist. He argues that current public discussion of issues such as trade deficits and international "competitiveness" is long on political heat and short on economic light.
This book, a group of essays written for publications including Foreign Affairs and Scientific American, aims to set forth basic economics in layman's terms. Krugman hopes not only to help Americans understand difficult issues, but also to defend his oft-maligned profession - both by debunking politicized, half-baked economics and by refuting charges that economics is irrelevant.
Among Krugman's interesting conclusions: The US economy is about 90 percent a domestic one - structured not too differently from a century ago, except for the rising prominence of the service sector. Exports account for just 10 percent of national output. Taking issue with economist/columnist Lester Thurow, he says that even if 1 million manufacturing jobs were lost to foreign competition in the Reagan-Bush years (a figure Krugman doubts), the lower wages those workers would be getting on average in service-sector jobs account for only 1/20th of the 6 percent decline in real US wages during those years. He also finds that trade has played only a slight role in manufacturing's declining share of the American economy. The world economy is not a "zero-sum" game where one nation's gain is another's loss, he concludes.
The book does not dismiss the importance of trade issues or the validity of considering government policies to foster the growth of strategic industries. But the articles help to put these issues in perspective.
Particularly interesting are essays on the North American Free Trade Agreement (he sees it having little economic impact), the "conventional wisdom" that prevails among economic policymakers (he sees it changing every few years, based more on fad than fact), and the "localization of the world economy."
- Mark Trumbull
THE WITCH DOCTOR OF WALL STREET, by Robert H. Parks (Prometheus Books, 454 pp., $25.95). Noted Wall Street economist Robert Parks, a professor of finance at Pace University in New York, is legendary for (a) frequently forecasting economic downturns before they occur, and (b), "telling it like it is" - that is, challenging orthodox views of the economy, no matter how many feathers he ruffles. Guess what? Parks ruffles feathers again, this time with a book.
Parks insists that "self-deception reigns supreme," both within Wall Street and among official policymakers in Washington. The "parrots" of Wall Street, says Parks, are financial experts who blithely talk of investment/economic affairs without really understanding what they're talking about. Parks includes several prominent Nobel prizewinning economists among his rogue's gallery. And there are more dangerous folks too, he says: government officials and investment-house mavens who deliberately distort statistics to sell products or promote ideological economic policies. Beware of economists, Parks says.
Parks's message has merit - although it may be a bit of a stretch to argue that many economists deliberately mislead. Part of the challenge about forecasting is that financial processes that once took months and years to play out are now accelerated in this era of global electronic linkups and instant computerized-trading.
The book will be most valued by fellow academics. Average readers may find much of it confusing, given its scattershot arrangement of subjects and complex charts. Still, it has a helpful glossary and is always provocative - not unappealing in a discussion of "the dismal science."
- Guy Halverson