Globalization—In the Name of Which Freedom?
I consider four waves of globalization. The first is Commercial Capitalism (1500-1800), following the voyages of Columbus and Da Gama. The second is Industrial Capitalism (1800-1950), following the industrial revolution led by the steam engine and mechanization. The third is the Era of Convergence (1950-Present), following the end of the European empires after World War II. The fourth is the New Globalization (Present-2100) marked by three decisive trends: the relative rise of Asia, the Information Revolution, and the stark crises of Planetary Boundaries. I argue that modern globalization must urgently establish a new moral basis and the cultivation of virtues in order to achieve Sustainable Development.
KeywordsGlobalization Convergence Sustainable development Planetary boundaries
Thank you very much for the high honor of the Lifetime Achievement Award of the Humanistic Management Network. I am deeply grateful for the beautiful plaque engraved with Leonardo da Vinci’s Vitruvian Man. We are about 500 years from Da Vinci’s time, a good starting point for my comments today. Da Vinci produced the Vitruvian Man in 1490. Two years later Christopher Columbus sailed to the new world. And 6 years after that, in 1498, Vasco da Gama sailed from Europe to Asia and back. Globalization had begun, and the world would never be the same.
Early Capitalism and Globalization
I have been studying Thomas More’s Utopia on the 500th anniversary of the publication of that great work in 1516. It is no accident that Utopia followed quickly upon the momentous discoveries of da Vinci, Columbus, and da Gama. Man’s intellectual horizons were fundamentally altered, and expanded by the discovery of the vastness of the world, and the changes wrought by early globalization. And the new printing press meant that the new speculations could reach thousands of readers across Europe and thereby promote further breakthroughs in understanding.
Indeed, I might hazard the judgement that the 1510’s was the single greatest decade of intellectual speculation in all of modern history. In 1513, Copernicus produced the first draft of the Heliocentric Universe. In 1514, Machiavelli wrote The Prince. In 1516, More published Utopia. And in 1517, Luther published his 95 Theses, launching the Reformation. That’s not at all bad for 4 years of book publication! And one could add in the outpourings of Bramante, Michelangelo, Rafael, Titian, and other masters producing their eternal masterpieces in these years.
Adam Smith, writing in the Wealth of Nations in 1776, had this to say about the years just before 1500. “The discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind.” That is a very strong statement, and also quite a remarkable statement. Most importantly, it stands the test of time.
Their consequences have already been very great; but, in the short period of between two and three centuries which have elapsed since these discoveries were made, it is impossible that the whole extent of their consequences can have been seen. What benefits, or what misfortunes to mankind may hereafter result from those great events, no human wisdom can foresee. By uniting, in some measure, the most distant parts of the world, by enabling them to relieve one another’s wants, to increase one another’s enjoyments, and to encourage one another’s industry, their general tendency would seem to be beneficial.
To the natives, however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned. These misfortunes, however, seem to have arisen rather from accident than from anything in the nature of those events themselves. At the particular time when these discoveries were made, the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries. Hereafter, perhaps, the natives of those countries may grow stronger, or those of Europe may grow weaker, and the inhabitants of all the different quarters of the world may arrive at that equality of courage and force which, by inspiring mutual fear, can alone overawe the injustice of independent nations into some sort of respect for the rights of one another. But nothing seems more likely to establish this equality of force than that mutual communication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries naturally, or rather necessarily, carries along with it.” (Smith, Wealth of Nations, Book IV)
If I had to choose one scrap of wisdom about human history, I would choose this one from The Wealth of Nations. Everything about Smith’s statement is wonderful. First, Smith recognized the fundamentally transformative nature of the globalization that began with the voyages of 1492 and 1498. Second, Smith recognized that globalization would have potentially hugely beneficial implications, by enabling each part of the world “to relieve one another’s wants.” This is of course is Smith’s basic theory of the gains from trade. Yet third, Smith recognized that the gains were in fact not shared equally, and that in fact while Europe gained massively, the native inhabitants of the East and West Indies actually suffered horrendously from the impunity and abuses of the more powerful Europeans. (Smith was unaware that the native inhabitants also suffered from the pathogens brought by the Europeans, as it was only one century after Smith that Pasteur and Koch developed the germ theory of disease.)
It is a mark of Smith’s greatness, as well as the greatness of the Scottish Enlightenment overall, that Smith bemoaned the inequality of the exchange. Smith was Scottish, but his outlook was global. That’s why Smith looked forward to the day when the native inhabitants would acquire sufficient power to rebalance the books, and achieve an “equality of courage and force” with the Europeans. How would this happen, according to Smith? Through trade itself, which would lead to “the mutual communication of knowledge and of all sorts of improvements” that trade brings about.
My theme today is that we are living in the “Smith moment” in our own generation. We are living at the moment, after several waves of globalization that I will soon discuss, in which an equality of courage and force across the world is finally taking hold. This is seen most vividly in the recent economic rise of the great powers of Asia, including China and India. These Asian giants are no longer under the domineering sway of European or American power.
We must ask ourselves about the kind of world that will emerge in a world of more disbursed power. Smith, interestingly, asserts a balance-of-power view, one that modern International Relations (IR) specialists would label “realism.” Smith believed that an equality of force would inspire “mutual fear,” which “can alone overawe the injustice of independent nations.” Smith’s is the logic of realism, of achieving global peace through the balance of power among independent nations.
We should also look to another great thinker who wrote on the same subject just 17 years after Smith. Immanuel Kant had different hopes for geopolitics, which he called “perpetual peace.” Kant believed that when the nations of the world assumed a “republican” form of government, meaning in Kant’s sense a state bound by the rule of law, then the nations would forswear violence in the interests of commerce. Kant’s theory of perpetual peace would be called a form of Idealism or Institutionalism by today’s IR specialists.
Before returning to the questions of how to achieve global peace in our generation, I will take us on a very brief tour through the phases of globalization that have brought us to today’s new equality of courage and force.
Commercial Capitalism, 1500–1800
Columbus and da Gama set off a three-century process that was marked by Europe’s growing dominance of global sea-based commerce. Europeans colonized the Americas (and later Australia) at horrific costs to the native inhabitants. They incorporated these new lands and parts of coastal Asia and North Africa into a global production system based on slave production in the colonies and global-scale sea-borne trade. As their economic and military power rose, the European states became not only colonizers but imperial powers across the Americas, North Africa and Asia. Interestingly, they did not succeed in colonizing sub-Saharan Africa until the second half of the 19th century, largely because malaria was a barrier to European colonization and imperial rule until the Europeans discovered and mass produced the anti-malarial quinine (extracted from the bark of the South American cinchona tree).
I would highlight a few of the key characteristics of this first phase of global capitalism, dating roughly from 1500 to 1800. First, it produced a truly global economy. Second, it was incredibly dynamic—the very hallmark of capitalism. It is remarkably dynamic. It was driven by the lust for profits, visions of glory, and yearnings for great wealth. It produced outcomes that are unimaginable in scale and scope. We should reflect that before the phone, the radio, the telegraph, indeed any form of rapid communications, multinational companies and European imperial governments were straddling the world in remarkable feats of scale, scope, and sheer logistics.
Third, of course, this world of commercial capitalism was indescribably brutal. The Europeans were not just colonizers; they were mass murderers and mass enslavers. We have smoothed over this brutality in our books and teachings, but it is plain to see. Murder, genocide, ethnic cleansing, and slavery, were all foundational parts of early capitalism, and typically carried out in the name of bringing “civilization” to the natives.
There is a fourth point as well. Commercial capitalism was mercantilist, meaning that it emerged as an alliance of companies (like the East India Company) and government. There was little that was “free market” about commercial capitalism during 1500–1800. The European navies protected their merchant fleets. Business and government colluded at every turn. That pattern is still with us today, despite the introductory economics textbooks written to the contrary.
Industrial Capitalism, 1800–1950
Watt’s engine was perhaps the single most important technological breakthrough since agriculture, or at least a rival of the horse-drawn plow, the sailboat and windmill, and the printing press. The steam engine allowed humanity to break free of what economic historians now call the “organic economy.” The organic economy means an economy in which the primary energy sources are limited to human brawn, animal traction, wind power for sails, and some water wheels and windmills to power industry in a few choice locations. Economic historians like E. H. Wrigley have cogently explained that an organic economy can hardly rise above subsistence. The steam engine allowed the breakthrough beyond subsistence, by harnessing the vast energy stored in fossil fuels.
The Industrial Age transformed the world and created a world industrial economy. The industrial economy was characterized by what is now called “endogenous growth,” meaning that one revolution of technology led to the next through a kind of chain reaction. So, what started with the steam engine becomes the railway era; then Faraday’s discoveries of electromagnetism lead to the electric dynamo and the start of electrification in the second half of the 19th century. The inventions of Daimler and Benz give the world the internal combustion engine and the automobile age. On and on it has gone, until today we are the beneficiaries of the information revolution, in which every day a new breakthrough—in my view is as consequential as any of the breakthroughs of the past—pours forth.
Our capacity to manage, manipulate, store, and transmit data will completely transform the world economy once again. We see this happening before our eyes. Just yesterday, DeepMind of Google announced a new breakthrough in artificial intelligence with a neural network now separated from the computer memory, which allows for a massive expansion in artificial intelligence, computational power, and machine learning. Discoveries like these are coming every day.
Of course, what endogenous growth meant beginning around 1800 was persistent economic growth. But another notable fact from 1800 until today has been differential economic growth across the world map. At the beginning of the new economic era, one country and one country alone had an Industrial Revolution—and that was Britain. Then, the Industrial Revolution started to spread. It spread next to next-door, to France, and then in the 1840s, to Germany and to the United States, and from then to more and more parts of the world. But, one part of the world, Western Europe and the United States (also known as the North Atlantic) achieved early economic growth that was sustained for two centuries. What had been established as the Western World between 1500 and 1800, became a dominant Western World in the 19th and 20th centuries. The economic dominance of the Western World (more accurately, the North Atlantic regions of Europe and North America, plus Australia, New Zealand, and Japan) peaked around 1950, at which time the Western predominance very slowly began to subside as Asia countries began to achieve rapid economic growth.
One of the predominant behavioral principles of European imperialism was: “Do not educate the natives. That could be dangerous for your political control.” Yet without even a modicum of education in the imperial possessions, there could be no long-term economic development. The lack of education during the colonial era is one of the key reasons why Africa was held back for more than a century. When Mozambique finally gained independence from Portugal in 1975, the country had just a handful of African high-school graduates.
Britain’s Imperial rule left a lot of violence and deranged societies, but it also left a little bit of infrastructure and some institutions of lasting value, such as the courts. I wouldn’t exaggerate this impact though, because I think a country needs colonial rule to have improved institutions. Reform can occur without imperial rule from the outside (as happened in Japan, for example). For example, a poor, institutionally laggard country could say: “Thank you. Why don’t you perhaps send us an academic to give us a lecture, rather than sending your troops to conquer us?”, and I think that the institutional reform could emerge just fine.
The Era of Convergence, 1950—Present
For the first 150 years of the Industrial Revolution the world had essentially two core centers of innovation: Western Europe, especially Germany and the United Kingdom; and the United States, especially the East Coast of the United States. After World War II, the information age gave birth to Silicon Valley, with Berkeley, Stanford, the semiconductor revolution and the military complexes of California, giving rise to another zone of innovation. This made three major zones of innovation.
Remarkably, Korea, Japan, and China taken together are producing more patents in total than Europe or the United States. Of course, the three East Asian powerhouses don’t view themselves yet as one integrated entity; in fact, there is currently a geopolitical divide, between the U.S. allies Japan and Korea on one side and China on the other side. Yet my guess is that this divide will prove to be a transitory phenomenon and that a fairly unified Northeast Asian economic community will be core a feature of the 21st century. It may indeed become the center of gravity of the world economy in 30 or 40 years.
The catch-up of Northeast Asia is really something new because the North Atlantic has dominated the world economy for at least two centuries, and the West has been in the ascendancy for 500 years. I think that the North-Atlantic-led world economy is gradually being replaced by a multipolar world in which East Asia, and potentially Southern Asia, because major global centers of power, innovation, and dynamism.
The rapid decline of global poverty has indeed produced so much hope that the 193 member states of the UN adopted the Sustainable Development Goals (SDGs) in September 2015. SDG 1 calls on the world to end extreme poverty—end it completely—by 2030. The UN member states are not radicals. They are sober-headed. The fact that these governments could envision the end of extreme poverty by 2030 means that it is feasible, though it is by no means guaranteed.
What then are the main lessons of this era of convergence? First, the rise of Northeast Asia is ending several centuries in which the North Atlantic countries have been ascendant (1500–1800) and dominant (1800–2000). Second, the end of extreme poverty in northeast Asia presages the end of extreme poverty globally. East Asia provides an important example and role model for the countries of South Asia and sub-Saharan Africa on how to eliminate extreme poverty.
Third, global-scale technological systems have played a central role, perhaps the central role, in global convergence. We live in a world of global-scale tehno-economic systems. In a few hours, when I fly home from Germany, I will get on a plane made by one of two producers, Airbus or Boeing. The pilots will fly the jet home using globally agreed and supervised protocols and technologies. As soon as I land, my mobile phone will immediately restore connectivity to the Internet, as it does all over the world. We do not speak about “local knowledge” in civil aviation, air traffic control, IP protocols, or 4G telecoms. These are all global systems, built for global-scale high performance, and we should be grateful for that. The once-laggard countries now leapfrogging economic development are achieving success by tapping into these global systems.
I emphasize this point because it is sometimes overlooked or hidden from view. Many of today’s romantic thinkers, who are unhappy with the downsides of modern technologies, pine away for a simpler world. Yet there is no way that today’s crowded planet of 7.5 billion people could feed itself, stay safe from epidemic diseases, obtain fresh water daily, and escape from extreme poverty, other than by plugging into sophisticated global systems of energy, water, communications, transport, and information.
So, we need a sophisticated globalization and a technology-based globalization, but we also need a decency-based and environmentally sustainable globalization. That brings us to our generation’s grand challenge: sustainable development.
The New Globalization (Present–2100)
The world needs a new globalization that is not only dynamic in terms of economic growth, but also fair in terms of the sharing of prosperity, and sustainable in terms of environmental impacts. This triumvirate of economic, social, and environmental objectives has an official name adopted by the 193 UN member states: sustainable development.
We are currently far off course to achieving sustainable development. Consider my own country, the United States. Since 1981, US public policy has been reckless, greedy, and corrupted, from the moment that the newly elected president Ronald Reagan declared, “The solution to our problems is not government; government is the problem.” This idea unleashed an era of greed and irresponsibility that has dramatically exacerbated income inequality and dramatically intensified the damage to the natural environment, especially through human-induced global warming.
For the first time, we have a globally agreed framework for globalization. This framework can serve as the basis for actions to ensure that globalization is productive, fair, and sustainable. It can serve as a basis for engagement of the business sector, the universities, the politicians, civil society, the religious leaders, and other key groups in our society. I believe there is a phenomenal value to having a globally agreed framework. In dozens of countries around the world there is already an active effort to put the SDGs into practice.
I urge the wonderful Humanistic Management Network to embrace the Sustainable Development Goals as a framework for teaching, training, and business management, one that can help to infuse ethical practices into individual businesses and the global economy. What I am hoping is that we can turn the SDGs into real life, in politics, the platforms of political parties, the agendas of universities, and the behaviors and missions of businesses.
I can tell you, based on my 16 years advising the Secretary General of the United Nations, that implementing globally agreed goals is not an easy thing. But, it is our challenge now, and it is urgent that we succeed. What are the right modes for success?
The SDGs are the right starting point, because they give us a direction, a telos (end goal). Aristotle, yes, had it right 2500 years ago. He invented political science to solve the problem of achieving the end-goal of human happiness (eudaimonia) through the right kinds of politics. We need to cultivate the virtues and ethics that will promote sustainable development.
We need to pay special attention to empowering the disempowered. The message of the Beatitudes, that “the poor shall come first” is at the core of social justice.
And, of course, we need expertise mobilized through active deliberation and fearless, unbiased analysis that universities are best at mobilizing.
All of this is to say we have a very, very large agenda to ensure that the next era of globalization truly serves the human good. Yet we have vast knowledge, both technical and ethical, many tools at our disposal, and all the reasons in the world to work together to succeed.