Economies, Sources of Wealth, and the Third Wave
by Van Plexico, borrowing heavily from many others
 

Part 1:  Economies

First, a little background:  there are three main types of economies in the world.  All still exist in the world today, but the more advanced societies and nations have moved from the first through the second to the third.  The US was the first country to become predominantly a Service economy.

Three main types of economies:

First (Primary) -- Extraction & agriculture. (mining, logging, etc)

Second (Secondary) -- Manufacturing (heavy industry)

Third (Tertiary) -- Service (banking, medical care, insurance, entertainment—nothing physical is produced.)
 

Part 2:  Sources of Wealth
What you must control in order to control the wealth of a society, corresponding to each type of economy above:

First Wave: Control of Land is the source of wealth. (Farming, mining, logging, etc. Feudal societies.)

Second Wave: Control of Capital is the source of wealth. (Ownership of industrial machinery —Marx called it “the means of production.”) This era produced communism—a desire by the mostly poor, exploited workers to control the means of production, rather than it being controlled by a few very wealthy owners – “capitalists”—thus the “dictatorship of the proletariat” and the desire of communists to destroy capitalism.

Third Wave: Control of Information becomes the fundamental source of wealth and power. Computers, the Internet, and scientific, medical and technological advances become the most valuable commodities. 

The impact of the Third Wave was never fully envisioned by Marxists, who based their views of human society on a Second Wave model of heavy manufacturing by industrial labor. Thus the communist Soviet Union could be a superpower in a Second Wave world but not in a Third Wave world—that form of economic organization was good at the heavy manufacture of tanks and bombs, but not at high-tech weapons and technology. Look at the US military today to see the effects of various advances on military power— as one observer noted, “The US military today is in the 2010s while everyone else’s militaries are in a 1980s stage or earlier.”

China is a special case—it is attempting to preserve a communist system within a new Third Wave world, via various economic reforms that have nearly given them a capitalist economic system, while retaining communist social and political elements so as to maintain order and control of the vast population. And so—they cheat economically, engaging in such practices as slave labor.

Update:  Jasper Becker, writing in the British Spectator periodical (others have presented similar arguments), makes an excellent case that China today is in actuality a fascist state, resembling nothing so much as Mussolini’s Italy of the 1930s-1940s.  When one considers the near-complete abandonment by China of the old “Internationalist” ideal of communism, and its replacement with a fervent Chinese nationalism (formerly the bitter foe of internationalist communism), the case would seem extremely persuasive.  Thus China has become, or has been made by its leaders into, a fascist political state with a mixed capitalist economy and the rigid social controls common to both fascism and communism.
 http://www.spectator.co.uk/article.php3?table=old&section=current&issue=2002-11-23&id=2518
 

Part 3:  Opportunity and Exploitation

In a Second Wave society, the working class (or physical laborers) have little opportunity for advancement. They face two choices: Marx’s model—overthrow the wealthy capitalists and establish a dictatorship of the proletariat (workers), or, follow the British/American model—have some degree of social(ist) reform imposed by the government (maximum hours, minimum wage, child labor age limits, worker safety, etc).

The New Deal in the United States in the 1930s was a massive infusion of socialism into our capitalist system. It was radical at the time. Since then, however, the debate in the US (Republicans vs. Democrats) has simply been over how much socialism we should have—what we have now, or slightly more, or slightly less.  The American people seem to like the amount of socialism we have now, for the most part, and very few want to eliminate drastically those programs.

In a Third Wave society, the mind replaces the body as workers’ key attribute or tool. This creates opportunity—anyone has the opportunity to excel—though the people still must gain access to education and information. Those with little access to either—those who are not empowered and are under-educated—have the potential for violence and revolution, often simply because they feel they have nothing to lose. Examples of this include people in the Middle East, Africa, South Asia, and Latin America.

Repressive societies control information and thus limit the power of their own people, either by brute force (Nazis, Saddam’s Iraq, North Korea, other dictatorships in the Third World) or by support for fundamentalist religions that control the thoughts, actions, and attitudes of their people (Iran, Afghanistan under the Taliban, etc.) and generally stress hostility to outsiders.

India—enormous success with computers/Internet—working via Internet (remote, non-physical presence) overcomes class/caste social barriers.

Robert Reich:  Secretary of Labor in the Clinton Administration.  Wrote The Work of Nations, which examines the government's role in retraining workers for a Third Wave economy.  In this book, Reich argues that the nation’s economic health and overall security now depend on the quality of the workers it possesses; thus the government has a critical stake in the quality of its workers, and a role in retraining former “Manufacturing” workers to become productive “Service” workers.  This is accomplished by partial federal funding of worker retraining programs.

 
Part 4:  The Lexus and the Olive Tree

Thomas Friedman: In his book, The Lexus and the Olive Tree, Friedman argues to a large degree that globalization cures all. As states embrace globalization –free market economies/capitalism and democracy—hostility gives way to good competition. “Two countries that both have McDonalds in them don’t go to war with each other.”

 
Part 5:  The World on Fire

Amy Chua: In her book, World on Fire, Chua argues that Friedman is wrong about globalization curing everything. Many Third World countries have ethnic/national majorities that are very poor, and that are exploited by a wealthy ethnic minority (whites in South Africa, Chinese in Philippines and SE Asia, Lebanese in W. Africa, Indians (?) in E. Africa –even Americans as a minority within the entire world’s population, resented by everyone else). Thus ethnic hatreds lead to violence and revolution in the developing world—Filipinos hate the Chinese who seem to control their wealth and land—and hatred of Americans by many in the rest of the world. The arrival of democracy and of free enterprise/capitalism in a country does not immediately benefit the same groups in that country. Capitalism benefits the ethnic minorities who already control the wealth, making them more powerful and more resented by the masses.  Democracy empowers the poor masses, who often take the opportunity to lash out with violence against the ethnic minority. This can result in such tragedies as huge violence in Africa with hundreds of thousands in one tribe killed by another.  This concept of Americans as a “disproportionately powerful” minority in the world population also partially explains some of the hatred that leads to events such as  radical Muslims attacking the US on 9-11-01.

Part 6:  Some General Conclusions

One of the major questions facing societies today, and especially the most advanced Third Wave societies like that of the United States, is this:  Whose responsibility is it to move the nation's workers from a Second Wave to a Third Wave work force?  Better trained, better paid workers are far more productive than poorly trained, low-paid workers-- often by several degrees of magnitude.  The more rapidly a society can move its workers to this level, the more productive, efficient, and successful that society and its economy will be.  Liberals will argue that the government must play a role in this movement, while conservatives will argue that market forces alone will prompt the change by themselves. 

In terms of the developing world (the Third World), the spread of free markets and the growth of democracy abroad bring with them great opportunities for the improvement of the condition of so many of the world's people.  But, as we're seeing in Iraq and have seen elsewhere, the infrastructure of democracy and capitalism-- the rule of law and the respect for it-- must be in place first.  Democracy and free markets seem natural to Americans and other Westerners because we've had generations to become accustomed to them, and because our legal and enforcement systems are respected and generally obeyed.  Before we can drop this "software" on developing nations, though, we must be sure the underlying "hardware" is in place, and that the result won't be catastrophic violence or horrendous economic exploitation of the many by the few.  In too many cases already, that has been the case.