We are entering, techno-boosters breathlessly proclaim, a “third industrial revolution,” that of the “knowledge-based” or “new” economy. Unlike revolutions one and two–the steam engine and then the electric power tools that liberated us from dependence on muscle labor–this time it is the human mind, somehow magnified by dazzling new gadgets and software, that is supposed to generate economic value: Knowledge workers will make heaps of money manipulating data, engineers will create massively automated systems of unprecedented productivity and, meanwhile, scientists will control the structure of matter and even of life itself for our benefit. By contrast, ownership of property and industrial capital are losing their traditional roles as sources of wealth. From the explosion in high-tech stock values to the relentless pace of “development” in computer and telecommunications technologies, self-appointed “smart” observers (for example, the Wired magazine crowd) are quick to point out the signs of this revolution everywhere. The only drawback to this glorious new era, we are informed, is the unavoidable suffering that economic change brings to “redundant” factory workers and middle managers. It’s all about “creative destruction,” the unavoidable prerequisite to the creation of new wealth.
For all its seductive hype–and the cult status of Wired illustrates how extolling the third industrial revolution has become a cottage industry in itself–this vision remains controversial and unproven. In Building Wealth, MIT economist Lester Thurow wants to examine it all by applying a formula he has honed to perfection in previous bestsellers: He articulates, and to a degree analyzes, trends that we find confusing and frightening, tying them together in coherent form. Only this time, while swallowing the fashionable rhetoric of info-revolution whole, he plays a kind of booster who also wants to be a critic. With one foot anchored in the camp of those who fret about the direction of American capitalism, myself included, Thurow paints a disturbing picture of widening income gaps, declining real wages and the disappearance of traditional career paths. However, barely able to contain his enthusiasm for the enormous fortunes being amassed in the name of high technology, Thurow also yearns to run with the techno-boosters, as symbolized by the “glittering eye” atop the “wealth pyramid” on the back of the dollar bill. Thurow repeatedly points out in awe that the net worth of Bill Gates, now approaching $100 billion, equals the combined wealth of the bottom 40 percent of the American population. “Wealth,” Thurow writes, “is the only game to play if you want to prove your mettle…. If you do not play there, by definition you are second rate.” Thus Thurow’s other foot is marching briskly forward. The result is an awkward book that tries to do too many things at one time.
Thurow is at his worst as a techno-booster pundit. Except for some vague references to the growing importance of knowledge in wealth creation, he never clearly defines what is new about the so-called knowledge-based economy. Is it the systematic application of science to business problems? The emergence of new technologies? Or sheer computing power? Rather than address these questions, Thurow presents a series of faintly illustrative anecdotes, such as the use of seismographic tests in the search for oil, which have replaced the old-style wildcatters who simply drilled holes. This leaves a huge gap at the core of the book, allowing Thurow to avoid legitimate questions about whether the revolution exists as of yet (it doesn’t) or whether the Panglossian visions of the Wired crowd simply conceal traditional, extremely conservative economic views (they do). Aggravating this problem are the thirteen “New Rules” of his subtitle, which fail almost comically to add to the text. For example, Rule One states: “No one has ever become very rich by saving their money. The rich see opportunities to work and invest in situations where large disequilibriums exist.” Such observations, which in my opinion are beneath Thurow’s dignity and talent, are sprinkled abruptly throughout the book as if some editor added them to mimic the banality of the Seven Habits of Highly Effective People.