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Introduction to Globalization
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- What is Globalization?
- Globalization is the dominant international economic system that, with the collapse of the Cold War, developed into the overarching international system. Its one defining feature is integration. The world has become, and most likely will continue to become, an increasingly interwoven place where, no matter if you are company, country or individual, your opportunities and threats come from who you are connected to, because, unlike during the Cold War, this system is a dynamic ongoing process without absolutes.
- Globalization is the integration of markets, corporations, nation- states and individuals through technology, thereby enabling everyone and everything to reach around the world faster and farther than ever before, with the pace and depth increasing every day.
- In this new system, there are three primary relationships or balances that are constantly affecting all arenas: nation- state to nation- state, nation- state and global markets, and nation- states and individuals.
- How do these relationships affect Globalization?
- These three parties (nation- states, global markets and individuals) have become equal players because of the democratization of technology, finance and information.
Here's How:
1. Democratization of Technology - During the Cold War, huge advances were made in how we communicate. Multiplying every year, this has enabled more people with home computers, modems, cellular phones, cable systems and Internet connections to reach more places and people in less time cheaper. Resulting from several innovations during the 1980s, advances in microchip technology have resulted in computing power doubling approximately every 18 months; advances in compression technology mean that the amount of data stored in a square inch surface have increased by 60% every year since 1991; and most importantly, the cost of that storage has fallen from $5. a megabyte to $.05. This means that the potential for wealth creation becomes geographically dispersed, giving all kinds of previously disconnected people the chance to access and apply knowledge.
2. Democratization of Finance - Beginning in the 1960s with the emergence of the 'commercial paper' market, (bonds that corporations issued directly to the public in order to raise capital) pluralism was introduced into the world of finance, destroying the monopoly of the banks. As this trend has spread to include everyone with a mouse, countries, companies and individuals now have access to capital and control in markers previously only open to a limited few.
One of the reasons Japan has lagged behind economically in the last decade is that their big banks still dominant finance. Unknown upstarts have a much more difficult time raising cash, and banks have pumped capital into companies that are affiliated with them without regard to risk or competitiveness.
3. Democratization of Information - Through much of the Cold war era, television and radio broadcasting was a restricted business, because the spectrums and technologies available for transmission were limited. Therefore, governments either directly ran most television broadcasting or highly regulated it. The irony is that the Cold War drove all parties to be constantly trying to put smaller, stronger and cheaper satellites into orbit, paving the way for transmitting information cheaply with almost no concrete or indestructible barriers.
The other revolution is the Internet. No one owns the internee, it is totally decentralized, so no one can turn it off. The internee also has the potential to reach into every home in the world. Hence, government can only temporarily isolate people from understanding what life is like beyond their borders. Those trying to build higher and thicker walls quickly learn that technology can already or will soon be able to tear those walls down.
These three democratizations have given everyone an equal footing and have changes the dynamics of interaction.
Here's How:
1. Nation- State to Nation- State - Nation-states will always be important as they tend to be the largest community people are bale to maintain their sense of identity and control in. Therefore, traditionally defined power politics between states will continue. Nation- states are also often the main organizations capable of full military conflicts. The development and spread of chemical, biological and nuclear weapons will also strengthen national governments.
2. Nation- States and Global Markets - Global markets are made up of millions of investors moving money around the world with the click of a mouse. The attitudes and actions of the 'electronic herd' can have a huge impact on nation- states today, even to the point of triggering the downfall of a government (ie. Suharto in 1998). While a country can destroy you by dropping bombs, the markets can destroy you by downgrading your bond. The global markets are the entities with the money however, and they reward lavishly those who survive, giving countries the ability to create healthier and better lives for their people.
3. Nation- States and Individuals - With the integration that globalization brings, wired individuals can instantly network, influencing both markets and nation- states. Some of these 'super- empowered individuals' are quite angry, some are quite wonderful - but all of them are now able to act directly on the world stage (ie. Osama bin Laden and Jody Williams).
- Globalization as an Economic System
- As Fukuyama has explained, "... in today's environment there is no evidence of a path available to any country whereby it can cut itself off from the global markets and maintain power," because people's expectations of their lives are more integrated with what they see others have. Unlike during the Cold War, we no longer live in a world with real and sustainable walls. Everything is increasingly open and interactive, making any attempt at fulling turning away from the democratization of technology, finance and information futile at best. A better question would be why a country would join the global economic community and how.
- The democratization of technology, finance and information (the increase in access to most, if not, everyone) gives the potential for wealth creation to everyone, ultimately regardless of geography, race, religion, and increasingly social standing and initial wealth, by allowing everyone access that agrees to 'play' by the rules of a open, capitalist economic system. In terms of economics at a national or regional level, the system allows any willing to 'plug- in' the ability to increase wealth, as an end or a means to increase standards of living and geo- political power. There is an overwhelming source of capital to all for growth. The markets, and all who participate through them reward lavishly those countries (companies and individuals) that play fairly, allowing the most efficient to receive the most rewards.
- The markets are fair as they apply the same rules to all parties (including their own players). They look for transparency of activities and reporting, standards of operation, lack of corruption, a free press (or other forms of independent accountability), regulated bond and stock markets, convertible currencies, and accountability. It's quite easy to declare a system, but quite another to actually establish and enforce the mechanics like evenhanded and equitable laws with policies that protect people and an honest Securities and Exchange Commission.
- In addition, the more open your economic system, the faster problem arise. With proper maintenance, solutions can come just as quickly but the atmosphere is seemly chaotic at times. When trouble arises, everyone looks to blame someone but like the internee itself, there is ultimately no one to blame because no one is in control. One person can not 'turn it off''. The democratization of technology, finance and information will give more countries and individuals a seat in the global markets, which will inevitably ensure that the most productive and least corrupt players usually win, but it will always increase volatility further. Governments therefore must be responsible for providing some miminum layer of a safety net to catch those that fall so they are able to get back into the system.
- Globalization as a Social System
- The very conditions that make this system an ideal environment for business that are willing to adhere to constant competition can inherently make it an extremely difficult environment to live in as most people prefer some measure of security to a life of near constant uncertainty. This is the principle reason that the nation- state is as important as it always has been. Most people will refuse to accept that they have little control over most aspects of their own lives, and the nation- state is their avenue of control.
- Couple this with the currently dominant 'culture' of globalization, commonly known as Westernization or Americanization and a continuing backlash against the system is likely from those who choose to be left behind economically. Few things are more enraging to people than to have their identity or their sense of home stripped away. Without a constant sense of being and belonging, life easily becomes barren and rootless for many. Hence, developing and developed countries have an additional hurdle, reaping the benefits of economic globalization while maintaining their home bases.
- What about Business?
- Business is affected by this as well. Multi- National Corporations (MNC) are the most likely to expand to developing countries and those countries that are open to trade and foreign investment have shown the fastest increases in living standard. As corporations try to expand, consumers have even more influence over corporations' behavior. Don't believe me? Arrogance, greed and hypocrisy can be swiftly punished. Shell was forced to stop the use of its Brent Spar oil platform and other activities in Nigeria by public outrage. Nike was forced to develop an entirely new supply chain after it was accused of running numerous sweatshops. Neither of these are anomalies and the list even includes Coca- Cola. Many corporations now 'advertise' themselves and their products by giving back to the host communities. Why? Brands and their corporations need to 'behave' well to attract consumers and as many agree, if we do not hold them accountable we are essentially lazy and indifferent and deserving of what we get.
- The founders of some of the oldest corporations like Hershey, Disney and Cadbury devoted their profits to social improvement and now that we seem to have come full circle, the only difference need be that consumers, not philanthropists, will dictate the social agenda.
- Globalization as a Political System
- During the Cold War, the world was divided into friends and enemies. During Globalization, the world is filled with competitors. Like individuals, the nation- state can become panicked when it has no theoretical context for the world. Economically the world will continue to become smaller, interconnected and similar. Politically, the world is and will continue to divide into 'us' and 'them', because, like individuals, nation- states largely define themselves by what they are not; who they are not.
When we all increasingly know how each others live, it creates a whole new dynamic to local and world politics. Some atrocity happening in some dark corner of the world is now known and leaders can only choose not to act. And some opportunity being enjoyed in some corner of the world can no longer be censored, leaders only have the choice between delivering it or denying it to their people. In a few years, every person will be able to comparison shop between their country and the one next door or across an ocean. The power is in the hands of the people. They now decide the relevant issues and capable forms of government. No one country will pay another one purely for geo- political reasons, and the global markets, the ones with the real money, won't even think about that.
- Clash of Civilizations
- Because religion and other cultural ties are quite easily labeled, they can be, and generally are, the most influential aspects shaping individuals and communities. They are the fastest way to divide between who is "us" and "them".
- As such, the World is generally dividing itself into the following seven camps:
- Asiatic (possibly currently divided between the two core culture: Sinic/Confucian and Japanese)
- Hindu
- Islamic
- Orthodox Christianity
- Western Christianity
- Latin America
- African (generally defined as Sub- Saharan Africa)
- Due to the system of globalization, these divisions can easily be seen as ideal when in moderation as they maintain individuals roots, creating a community of home. Obviously enough, when taken fanatically, a community of victimization can take root, often erupting into violence.
- Perhaps to some it would seem that violence would be inevitable in a system of division despite it becoming increasingly integrated. Violence between 'civilizations' (and within) is only inevitable when there is a large economic disparity between them, because economically developed countries and regions will have much more to loose than they could possibly gain. Hence, developed countries have fought other developed nations in less than a quarter of all conflicts, while developed countries used economic sanction and military force against the developing and underdeveloped world in the other three- quarters.
- Hence, only while the disparity of wealth is so unevenly distributed and individuals feel that they have lost all control over there lives in violence in the world inevitable.
- Conclusions
- What makes the internee so dangerous for police states is that they must now decide between falling behind economically and authoritarian type control. It is interactive, its alive. It's not radio or television where you listen passively. On the internee people are talking, outreaching, uploading and downloading, buying and selling everything - and doing it in a way that is virtually impossible to control.
Thanks to globalization and the falling costs of communicating by phone, fax, the Internet, radio and television, no wall is indefinitely secure anymore. Governments must deliver economically. But they must also consceniously protect their indigenous customs, religious and secular, so that their country remain 'home'. This is a tight rope but countries must find a way to allow globalization to bring in the money and computers, while leaving McDonald's in the States. This is not only imperative, but will ultimately define international and local politics alike for quite some time.
As long as the West is seen by many as superior, rather than an equal partner, the need to maintain the integrity of other cultures against a western cultural onslaught, globalization in particular regions and countries is in jeopardy, only increasing levels of hostility and disparities between different 'civilizations'. Western leaders allege that those involved in the quasi war against it are a small minority whose use of violence is rejected by the great majority of moderate people. While this is true, the evidence to support it is lacking. The underlying problem for the West is not fundamentalism or extremism, it is completely different civilizations whose people are all convinced of their superiority and are obsessed with the inferiority of their power trying to live together.
Henceforth, countries must make the decision to enter international markets internally. They must preserve themselves throughout the process; do it their own way. While religious fundamentalism does have true religious adherents, most are drawn to these movements by mundane, secular issues like unemployment, corruption, disparities in wealth and brutality in government, In many cases, democratic traditions would make it nearly impossible to wipe out extremism, but even then the root causes must also be confronted. And all of this must be done with the world watching on CNN.
- Necessary Reading:
- The Lexus and the Olive Tree - Thomas Friedman
- The Clash of Civilizations and the Remaking of the World Order - Samuel P. Huntington
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