CAMBRIDGE: Two views of the world economy exist today. One proclaims a new golden age, akin to the late 19th century when capitalism blossomed. The other says capitalism has run its course, not on its ability to produce but as a socially acceptable process for governing human relations in the market. The first is attractive to an economist for whom the spread of markets foreshadow a pattern of prosperity and progress. The latter view is heard from those who feel that capitalism has won on production but lost on equity; they believe mankind should find a new mode of sharing. An elevating thought, but it is not around the corner. So focus on what is at hand, namely unprecedented scope for capitalism.
The late 19th century ushered in the beginning of freedom of movement for both people and capital. Joseph Schumpeter, whose analysis of capitalist development focused on "creative destruction" recognized that when an old world breaks down, growth potential is mobilized everywhere and new structures emerge that can incite a large, protracted growth spurt.
The world today has moved into such a Schumpeterian opportunity. The immediate reasons are fourfold:
dramatic improvement in technology that brings an overwhelming change in communications possibilities thereby shrinking distances to nothing;