The book of the month: “The Lexus and the Olive Tree: Understanding Globalization” by Thomas L. Friedman

News categories: the New Economy economics, enterprise and business strategy, investor and stakeholder relationship management, strategic enterprise management

One of the major driving forces for the New Economy is globalization. But few of us understand what exactly globalization means. Here is the best introductory book written on globalization:

The book makes the case that since the collapse of the Cold War, globalisation is the dominant system that colours world affairs. In simplest terms, the author defines globalization as the world integration of finance markets, nation states, and technologies within a free- market capitalism on a scale never before experienced. Driving it all is what he calls the Electronic Herd, the faceless buyers and sellers of stocks, bonds, and currencies, and multinational corporations investing wherever and whenever the best opportunity presents itself. It is a pitiless system richly rewarding winners, harshly punishing losers but contradictory as well. For nations and individuals willing to take the risk, globalization offers untold opportunity, yet in the process, as the Electronic Herd scavenges the world like locusts in the search for profit, globalization threatens to destroy both cultural heterogeneity and environmental diversity. The human drive for enrichment (the Lexus) confronts the human need for identity and community (the olive tree). The success of globalization, Friedman contends, depends on how well these goals can be satisfied at one and the same time. He believes they can be, but dangers abound. If nation states sacrifice too much of their identity to the dictates of the Electronic Herd, a backlash, a nihilistic rejection of globalization, can occur. If nation states ignore these dictates, they face impoverishment. The author is clarifying the complex with enlightening stories that simplify but are never simplistic.

“The Lexus and The Olive Tree” is a fascinating explanation of the forces which emerged after the fall of the Berlin Wall at the end of the 1980s - the pre-eminence of market capitalism, the information and telecommunications revolutions, the rise of an "Electronic Herd" of capital, and countries' adoption of "operating systems" to attract capital - that make up the system of globalization that is sweeping the globe. The author writes about how more and more countries have accepted what he calls a "Golden Straightjacket" of policy prescriptions - open markets, balanced budgets, deregulation and privatisation, free trade, elimination of corruption, subsidies and kickbacks, etc., - in order to be part of the developing global system. But any society--even one as free-market oriented as the USA's--can't leave tradition behind in the dust. Hence the tension between the "Lexus" (high-tech innovation) and the "olive tree" (tradition, pride, tribalism).

The book is extremely useful in helping people to understand the factors shaping today´s global economy. Not only does the book describes the new system masterfully, but also dares to make recommendations and tries to explain the trends of this new global system. The book´s conclussion is one of hope: We do not necessarily need an all encompassinng global government to police the world; the power given by the democratization of technology (internet and widespread information) can create all sorts of organizations that will find all sorts of solutions (and excert pressure) to end corruption, increase transparency and democracy, all of this with market base remedies.

Written by Thomas L. Friedman, it is probably the best introductory book on globalization. What makes Mr. Friedman such a unique voice on this topic is his career as a foreign affairs columnist for the New York Times. Over the past few years, Mr. Friedman has traveled the world many times over, collecting first-hand accounts of how globalization works, who benefits from it, and its multiple consequences. His understanding of this issue radiates through scores of personal narratives and anecdotes. Because the book was written by a journalist and not an economist, there are no tricky formulas, charts or graphs that need to be analysed and it could be understood by everyone.

The Lexus and the Olive Tree: Understanding Globalization
by Thomas L. Friedman
Paperback - 490 pages (May 2000)
Anchor Books; ISBN: 0385499345

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