Lester Thurow
Head to Head: The Coming Economic Battle Among Japan, Europe and
America (NY: William Morrow & Co., 1992)

"Lester Thurow is the Dean of MIT's Sloan School of Management, and is
a professor of economics there." This book Head to Head is a frank
assessment of the U.S. economy relative to its main competitors done
by a Democrat angling for influence in a new presidential administration.

"While China will always be important politically and militarily, it will
not have a big impact on the world economy in the first half of the twenty-
first century, even if it successfully resumes its progress toward
becoming a market economy. The reasons flow from the numbers. China has
a per capita annual income of $300. Suppose it were to grow 10 percent
per year--a rate equal to the very highest rates achieved in Japan or
Korea. That would amount to $30 per person. Multiply 1.2 billion
Chinese by $30 per person and China would have $36 billion in annual
extra output--most of which would neither be imported nor exported but
used to feed and house its people. But even if all of it were to be
used to buy good from the rest of the world, $36 billion is just 0.7
percent of the American GNP. Until China gets to much higher income levels,
its economic impact on the rest of the world is going to be small."
(pp. 210-11)

Thurow also says that the little dragons are in for a tough time
because the United States cannot continue to serve as a reliable
trading partner. Furthermore, neither EC nor Japan will fill the
gap.

How's that for a twist! The United States is the unreliable trading
partner!

Chinese in the United States can see that the problems the United
States is having internally are going to stop it from being a
dynamic trade partner. It already has a huge trade deficit in addition
to a budget deficit, which is going to cause some serious readjustments.

Today we see all the difficulties that Cuba is having because it
relied on a Soviet Union - based trading bloc. Now Cuba must spend
years just adjusting its economy--its internal division of labor.

Thurow cannot be accused of being any Marxist, but according to him,
prospects for the little dragons are not good. "Moving from a $120
billion deficit to a surplus of $80 billion (the sum necessary
to make interest payments on America's international debt) would
cost the Pacific Rim a minimum of 10 million jobs. (p. 213)

"Between 1981 and 1986, 42 percent of Korea's growth and 74 percent
of Taiwan's growth could be traced to exports to the American market.
While America represents only 23 percent of world GNP, in 1987, it took
48 percent of the manufactured exports from all of the Third World
countries combined. In contrast, the EEC took 29 percent and Japan,
12 percent." (p. 62)

MIM need not take as bleak a view as Thurow does to hold a Marxist
position. It is still clear overall that few countries succeed with
the capitalist system. Even Thurow admits this. According to him,
"Capitalism has its virtues and vices. . . Third World failures
far outnumber First World successes." (p. 17)

He also makes a straightforward and devastating admission regarding
two continents and capitalism's failure: "Some of the countries of
Latin America should be rich; some of them (Argentina and Chile)
once were rich. Some of them have from time to time looked very
promising (Brazil in the 1960s and 1970s; Chile in the last five
years), but what looked promising always turned out to be a mirage
and the promise sooner or later vanished. In Africa, little has
ever even looked promising. In the 1980s real per capita incomes
fell in both regions." (p. 214)

We Maoists understand that Mao was right: The capitalist system
has never provided an opening for China. Only real socialism can
save China (not Deng Xiaoping's social-fascism). China should
return to the socialist road and self-reliance and not adjust to
Western economies the way Cuba adjusted to the Soviet Union. China
should set out to trade with other Third World and socialist countries
(once they are created as inevitably they will be given the failures
of capitalism).

The world capitalist system is like a sweepstakes. There are successes
and failures. The failures are necessary to the successes. Only so
many capitalists can win the "law of the jungle" economic competition.
So it is that only so many countries can be rich within the capitalist
system. Chile and Argentina used to be in the top 20 richest countries
in 1870 (p. 204). They both fell out after decades of imperialist
exploitation.