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Unlimited Wealth: The Theory and Practice of Economic Alchemy.

Unlimited Wealth: The Theory and Practice of Economic Alchemy

Upon opening a book written by a Texas-based real estate operator, especially a book bearing a title like Unlimited Wealth, one must struggle to suppress the instinct to guard one's wallet. In fact, this isn't that sort of book. Paul Zane Pilzer isn't promoting Houston office tower investments as a contrarian an path to instant riches. What he's selling instead--with a great deal of earnestness, a certain amount of flair, and a limited portion of persuasiveness--is what he calls "the alchemic view of the world." This view boils down to the proposition that "we live in a world of effectively unlimited resources--a world of unlimited wealth," because the only resource that really matters is information, and information is becoming so plentiful that it's vanishingly close to free.

There is much to like in Unlimited Wealth. It recounts how technological leaps, particularly in computing and communications, have quickened the pace of economic change. It draws welcome attention to some specific consequences of technical transformations, such as the heightened vulnerability of people and nations whose prosperity rests on commodities subject to creative substitution; the diminished appeal of wars of conquest (though the Kuwaitis might quibble with this one); and, in particular, the ever-increasing importance of education and training. Pilzer's arguments are refreshingly unrooted in any single ideological camp. And his style is upbeat and affirmative. He would be an engaging seatmate on a long flight and probably a wonderful neighbor or business associate. But as a combination Keynes, Schumpeter, and Newton for the 1990s, which is the role he sets for himself, he falls short.

Beyond th e irritating neologisms, catchphrases, and unremarkable propositions dressed up as Capital-Letter Laws, there are a number of more substantial failures in this grand enterprise. One of the less serious but more bizarre problems is Pilzer's obsessive drumbeat of attacks on economists and their trade, coupled with a near-total ignorance of contemporary economic thinking. He charges that "conventional economists [regard] the struggle for prosperity as a zero-sum game," that "traditional economics has always treated technology as a constant," and that while "an Alchemist creates wealth, an economist merely moves it around." To be sure, it can be great fun to throw rocks at economists, but Pilzer scornfully dismisses the whole discipline, and strids off to explore on his own a vast expanse of well-mapped terrain.

In fact, Pilzer's central contention--that ingenuity and enterprise defy limits and expand possibilities--is the hear of economic logic. He also makes what turns out to be a tactical error for a book published in early 1991 when he rests his case for the Theory of Alchemy's superiority on the failure of economists to recognize that the boom that began in 1982 was fated to go on and on and on.

Most of what Pilzer trumpets as paradigm-shattering insight is close to commonplace, while much of what's novel in his book is simply wrong. He claims that shipping technology has stagnated while production technology has surged ahead, ignoring containerization and other advances. He wildly overestimates the net effect on the American economy of investments from abroad and--ironically, in light of his abhorence for zero-sum reasoning--suggests that whatever the host country gains from such investments, the home country loses. And as he salues the brave new world, he displays a certain confusion about what sort of world it is. At one point he declares that "marketing philosophy has been turned on its head, for today the product often precedes the need. In the alchemic world, new products create their own demand by changing the way people behave." A hundred pages later, he assures us that "the process of innovation has been turned on its head. It used to be that an inventor would come up with some new invention and then consumers would figure out whether or not they could use it. Nowadays, we decide in advance what we could use and then we tell the scientists and engineers to invent it." Watch your head, Mr. Pilzer.

Unlimited Wealth is, at base, a celebration of the spirit, style, and values of the 1980s. In an extended hymn to consumption, composed of several Laws of Demand-Side Alchemy, Pilzer urges us to believe that the chief advantage of Americans in the world economy is their virtuosity as consumers. The Japanese, conversely, are sure to stumble unless they overcome their quaintly bounded appetites for material goods. The book outlines a vision of a society dedicated to endlessly escalating desire and acquisition as consumer demand and technology's productive capacity leapfrog each other ever onward. In The Affluent Society, John Kenneth Galbraith told this tale as a combination of farce and moral fable. Pilzer tells it as heroic epic, and it is ultimately repellent.

There is a contradiction at the core of Pilzer's alchemic approach, revealed by his assertion that "technology itself is perhaps the only store of value." He's right that technological knowledge is increasingly abundant. But it's also diminishingly proprietary. Pilzer contends that Japan is rich and the Soviet Union poor because of their relative endowments in technology. But what Russia lacks is not so much blueprints, formulas, and hardware as the institutional and cultural infrastructure for putting technology to work. As information becomes cheap and ubiquitous, what determines relative prosperity is a people's ability to work together smoothly and efficiently, and to organize a sustainably fair pattern of distribution--in short, its capacity for community.
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Author:Donahue, John D.
Publication:Washington Monthly
Article Type:Book Review
Date:Jan 1, 1991
Words:908
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