MIT Sloan Management Review

Business Ethics and Public Policy, Leadership and Organizational Studies

Who Owns the Twenty-First Century?

By Lester C. Thurow

April 15, 1992

THE FALL OF THE BERLIN WALL IN NOVEMBER OF 1989 MARKED THE END OF THE OLD CONTEST BETWEEN CAPITALISM AND COMMUNISM; THE INTEGRATION OF the European Common Market on 1 January 1993 will mark the beginning of a new economic contest. At that moment, for the first time in more than a century, the United States will become the second largest economy in the world. Japan, Europe, the United States — who will own the twenty-first century? This article is adapted from Thurow’s forthcoming book, Head to Head: Coming Economic Battles among Japan, Europe, and America (William Morrow, 1992).

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In the United States, most of the last half century has been devoted to worrying about the Soviet Union. Democracy and capitalism faced off against dictatorship and communism. Suddenly, the threat disappeared. The Berlin Wall came down; East Germany and West Germany were united; democracy and capitalism arrived in the formerly communist countries of middle Europe and then in Eastern Europe. Democracy and capitalism had won.

In 1945 there were two military superpowers, the United States and the Soviet Union, and one economic superpower, the United States. In 1992 there is one military superpower, the United States, and there are three economic superpowers, the United States, Japan, and Europe (centered on Germany), jousting for economic supremacy. Without a pause, our national challenge has shifted from being military to being economic.

From everyone’s perspective, replacing a military confrontation with an economic one is a step forward. No one gets killed; vast resources don’t have to be devoted to negative-sum activities. The winner builds the world’s best products and enjoys the world’s highest standard of living. The loser gets to buy some of the world’s best products — but not as many as the winner.

However, this shift in focus does create difficulties for the United States. Attempting to be both a military and an economic superpower is ambitious: it requires Spartan self-discipline. Both enterprises call for major investments... To read the complete article, login or sign-up using the form below.

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