Every once in a while, economists and the public in general should re-read some of the classics. I'm thinking of one in particular: The Third Wave, by futurist Alvin Toffler. I didn't ask the publisher's permission to quote the first paragraph, so you'll have to read it on your own. Although it was written more than 20 years ago, you would think it had been written only yesterday.
The book is relevant to what's going on today for two reasons. First, it's always a good idea to revisit the notions of visionaries to see what turned out to be true and what did not. Second, it is important to reconsider the enormous ability of our market system to change over time.
Reviewing authors like Toffler gives fair-minded readers the opportunity to either reinforce their beliefs or reconsider them. Of course, there's always the question of how many fair-minded readers there really are among us. Since determining what went right and what went wrong can be a fairly subjective exercise, I'll move on to the second part — the resiliency of the system over its participants.
We don't need to limit the definition of the “system” to the free market. Rather, we can look at various levels of market control in today's environment to try to understand what the Information Age — aka “The Third Wave” — is doing to that system.
It is important to understand socioeconomic structures not just in terms of how they were originally intended to operate, but also in terms of how they have actually operated.
No system operates as a perfect reflection of its original vision. The U.S. does not have a pure capitalist system, France does not have a pure socialist system and China does not have a pure communist system.
One thing they do have in common, however, is that the Information Age has dramatically altered the structure of their societies and will continue to do so. The U.S. market system has moved from a producer-dominated system to a distribution-dominated system. Just think about the rise of Wal-Mart and the stumbling of General Motors. It's because of the system's resilience that we can undergo such a fundamental structural change without major disruption.
The French social-market system is facing a fundamental change as well. There is no reason to expect that the primary structure will be significantly altered, but the role of the historic controllers of the system will be shifted dramatically. France will undergo significant changes in its agricultural sector, as well as its labor productivity. Internal factors will have to change, and the country's desire to become a major international force will require more accommodation to the new global marketplace.
Remarkably, China has moved forward with a combination of strong central control and some local incentives for development. It remains to be seen, however, whether the dominant political structure can be sustained in the context of different degrees of wealth and opportunity among the different geographic regions. Nevertheless, if the increase in per capita income and in the opportunity to improve one's life is any measure, this system is working better than the previous one.
My purpose in talking about this is to reinforce the notion that while concern over the direction of the economy is worthwhile, there is very little we can do to change the direction it is headed — either here, in France, or in China. The Third Wave, or Information Age, will bring continued pressure to make changes that will result in more efficiency and greater opportunity for those who embrace the change. The strength of our economy is it's very willingness to embrace change.