In this article that was first published in MIT-The Tech in 2002, Odilim Enwegbara, highlights the rules of the economic game
Great warriors had coup d’oeil in abundance. Great warriors used it to predict what the opponents would do. Alexander the Great called it his “hope,” Caesar called it his “luck,” and Napoleon called it his “star.”
Coup d’oeil, literally translated as “stroke of the eye,” is the ability to assess a situation at a glance, which enabled these great leaders to look over the battlefield and take immediate advantage of the terrain and the opponents.
These great warriors, having the genius of war, looked first at the environment in which war occurred, then matched the environmental factors with personality characteristics.
They knew that warfare always involved danger, physical efforts, uncertainties, and changes. And that is why Napoleon concluded that “if the art of war consisted merely in not taking risks, glory would be at the mercy of very mediocre talent;” and Machiavelli advised his Prince, “even when your domain was at peace, act as if it were at war.”
But who are the economic warriors of tomorrow? Are they going to come like the Barbarians, who defeated Imperial Rome? Where will their surprises come from? Or will these new economic warriors defeat opponents because theirs is a battle of survival at all costs?
Which will be their unique gift: their great ingenuity or curiosity? Will their excessive wondering why certain problems remain unresolved force them to see things beyond the ridge of hills?
Will their indomitable courage take them to go where no man has ever ventured before? How far will their burning desire and dogged ambition conquer and build a world different from we all see it and live in it?
Prophecy, they say, is a risky business. Nobody can predict the future, including the experts. In fact, Socrates believed only an utter fool would desire to even try to do so. The reason by that surprises and knock-outs will emerge from the least expected.
It happened to the British, when their great trading machine in the mid-Nineteenth Century was halted in the oil-rich Niger Delta, not by Germany or France as usual, but surprisingly King Jaja of Opobo, a former Igbo slave boy, who outsmarted Queen Victoria’s best-trained trading warriors.
Although it is true that nobody can predict the future, Lester Thurow, as one of 20th century’s foremost economic thinkers, decoded those forces that will shape the future particularly in the 21st century.
Through his books: “The Zero-Sum Society;” “The Future of Capitalism;” “Building Wealth;” and “Fortune Favors the Bold;” he gave the thinking world such a rare privilege to understand tomorrow’s game rules to win the economic war.
According him, the rules of this game are as follows:
Rule one: Nobody has ever become very rich by saving his money. The rich see opportunities to work and invest in situations where large disequilibriums exist. This was as true for John D. Rockefeller as it was for Bill Gates.
In both cases their lifetime savings constitute a small fraction of their total wealth. Carefully saving one’s money and investing in normal equilibrium situations can make one comfortable in one’s old age but never really wealthy.
Rule two: Because great success forces one to hold tight and for so long one’s success, successful businesses to remain ahead in the game of success must be willing to cannibalize themselves to save themselves.
In other words, they must be willing to destroy what made them successful while they are still successfully ahead. They must build the next future successful things before opponents do. Should they live so long in their success, certainly opponents surprises will destroy them and force them become losers in the game.
Rule three: Businesses that would grow rapidly with high profit margins must take advantage of technological disequilibriums, exploit developmental disequilibriums, or create sociological disequilibriums. All those activities that lead to slow-growths and low-rate-of-returns are mere commodity businesses.
Rule four: Understanding, recognising, and accepting the limits imposed by their genetic weaknesses, is the beginning of wisdom for all businesses. However, the secret here is the gift of finding places to employ one’s resources where those weaknesses are irrelevant.
Rule five: Humans have discovered how to operate successful capitalist economies in the midst of modest inflation, but not how to operate them in the midst of even mild deflation. Given a choice between the same rate of inflation or deflation, inflation should be preferred all the time.
Rule six: There are no institutional substitutes for individual entrepreneurial agents. The entrepreneur winners of the game become wealthy and powerful, but without entrepreneurs, economies become poor and weak.
The old will not exit; the new cannot enter. Nations that encourage new at the expense of the old will be always prosperous, whereas those nations where old ideas dominate or destroy new ones will remain poor and losers.
Rule seven: Any society that values order above all else will not be creative and innovative. But without the right degree of order, creativity in itself will disappear as if into a black hole.
Rule eight: The economic payoff from social investment in basic research is as clear as anything is ever going to be in economics.
Rule nine: Knowledge-based capitalism isn’t going to work without a new system for determining who owns or controls intellectual property rights. Capitalism requires clear, easy-to-enforce ownership right.
Rule ten: The biggest unknown for the individual in a knowledge-based economy is how to have a career in a system where there are no careers.
Rule twelve: Economic progress and environmental progress are synonyms, not antonyms.
Rule Thirteen: Luck is necessary because talent, drive, and persistence by themselves aren’t on their own enough to get one wealthy.
Even mere intelligence will not be enough. After all, Sir Isaac Newton, who was successful at discovering the motion of the planets, failed woefully as an investor during the South Sea Bubble.
Those who are in the old industrial economy educational system are only doing a great damage to those who are going to inherit the mantle in future. This especially, in a global economy where mind games and manipulation are the stock-in-trade.
Even going to the best elite school is no longer adequate. After all, whatever is learned there is already known to many. In fact, if information technology is capable of changing the game, in this “new knowledge revolution,” the game becomes changing the game itself.