PERSPECTIVES

the impact of globalization

Walk into your local coffee shop and you will find yourself part of a cultural experiment on a scale never before envisioned. In less than half a century, the coffee chain has grown from a single outlet in Seattle to more than 21,000 stores around the globe. Each day near identical stores serve near identical coffee in near identical cups to hundreds of thousands of people. For the first time in history, your morning coffee tastes the same no matter if you are sipping it in New York, London, Sao Paulo, Buenos Aires or Hong Kong.

Of course, it is not just your local coffee shop. Pick any global brand and you will recognize their presence in most countries around the world. It is easy to see this homogenization as loss of diversity, identity or the westernization of society. But, the rapid pace of change also raises the more interesting question of why – over our relatively short history - do we have so many distinct cultures in the first place. And, if diversity is a part of our psychological make-up, how will we fare in a world that is increasingly bringing together people from different cultural backgrounds and traditions?

our history

As far as we can tell, around 60,000 years ago, cumulative cultural adaptation was what propelled modern humans out of Africa in small tribal groups, by enabling us to acquire knowledge and produce technologies suitable to different environments.  Eventually these tribes would occupy nearly every environment on Earth – from living on ice to surviving in deserts or steaming jungles, even becoming sea-going mariners as the Polynesians did. And amongst each one we see distinct sets of beliefs, customs, language and religion.

The importance of the tribe in our evolutionary history has meant that natural selection has favoured in us a suite of psychological dispositions for making our cultures work and for defending them against competitors.  These traits include cooperation, seeking affiliations, coordinating activities, and tendencies to trade and exchange goods and services.  The Dutch became experts at this. Thus we evolved cooperation and sociality beyond relations among family members, to making cooperation work among wider groups of people.

In fact I believe that the success of cooperation as a strategy has been in a key driver in our evolutionary path towards living in larger and larger social groupings that bring together people from different origins. The economies of scale that we realize even in large groups are significant.  Large groups also benefit from the efficiencies that flow from a division of labour, and from access to a vast shared store of information, skills and technology. It's interesting to note that not all nations/countries, in particular those in a developing stage have recognized the value of the larger group. In fact some still pursue a tribal instinct of protect, command and control. 

a one world culture

Not so surprisingly, the very psychology that allows us to form and cooperate in small tribal groups is enabling humanity to form into the larger social groupings of the modern world.  Early in our history most of us lived in small groups of maybe 50 to 200 people.  At some point tribes formed that were essentially coalitions of groups.  Collections of tribes later formed into chiefdoms in which for the first time in our history a single ruler emerged.

Several chiefdoms would eventually come together in city-states such as Catal-Huyuk (world oldest city in Anatolia Turkey) or Jericho in the Palestinian West-Bank. City-states gave way to nation states, and eventually to collections of states such as the U.S. or the U.K. emerged, and even in our modern world to collections of nations such as seen in the European Union.  At each step formerly competing entities discovered that cooperation could return better outcomes than endless cycles of betrayal and revenge. It should be noted that this has not always been the case, but more often than not, it has.

This is not to say that cooperation is easy, or that it is not subject to reversal. Just look at the outpouring of cultural diversity that sprang up with the collapse of the Soviet Union. Despite being suppressed for decades, almost overnight Turkmenistan, Uzbekistan, Kazakhstan, Chechnya, Tajikistan, Moldova, Kyrgyzstan, and Dagestan came onto our world maps, all differentiated by culture, ethnicity, and language.

Therefore I believe that there is no reason to rule out a “one world” culture - and in some respects, as Starbucks vividly illustrates, we are already well on our way to accomplishing this.

The road less travelled

But two factors looming on the horizon are likely to slow the rate at which global cultural unification will happen.  One is resource, the other is demography.   Cooperation has worked throughout history because large groups of people have been able to use resources more effectively and provide greater prosperity and protection than smaller groups.  But that could change as resources become scarce.

I think there, this must be one of the most pressing social questions that we must answer - because if people begin to think they have reached what we might call ‘peak standard of living’ then they will naturally become more self-interested as the returns from cooperation begin to leak away.  After all, why cooperate when there are gains to be made?

Related to this, the dominant demographic trend of the next century will be the movement of people from poorer to more affluent regions of the world.  Diverse people will be brought together who have little common cultural identity of the sort that historically has prompted our cultural nepotism, and this will happen at rates that exceed those at which they can be culturally integrated.

At first, I believe, these factors will cause people to pull back from whatever level of cultural ‘scaling’ they have achieved to the previous level.  An example is the nations of the European Union squabbling over national versus EU rights and privileges.  A more troubling example might be the rise of nationalist groups and political parties or far right groups as can be found in various European nations.

One early sign of a sense of decline in ‘social relatedness’ might be the increasing tendency of people to avoid risk, to expect safety, to be vigilant about fairness, to require and to be granted “rights.” These might all be symptoms of a greater sense of self-interest, brought about perhaps by declines in the average amount of “togetherness” we feel.  When this happens, we naturally turn inwards, effectively reverting to our earlier evolutionary instincts, to a time when we relied on kin selection or cooperation among families for our needs to be met. 

Against this backdrop the seemingly unstoppable and ever accelerating cultural homogenization around the world brought about by travel, the Internet and Social networking (i.e. Facebook, Twitter, Blogs), although often decried, from my perspective is probably a good thing even if it means the loss of cultural diversity. But it increases our sense of togetherness via the sense of a shared culture.  In fact, breaking down of cultural barriers – unfashionable as this can sound – is probably one of the few things that societies can do to increase harmony among ever more heterogeneous peoples.

So, to my mind, there is little doubt that globalization and the vast movement of people is creating great uncertainty and upheaval as resources, money and space become ever more scarce.  There will be setbacks and conflicts. But if there was ever a species that could tackle these challenges it is our own.  It might be surprising, but our genes, in the form of our capacity for culture, have created in us a machine capable of greater cooperation, inventiveness and common good than any other on Earth. And of course it means you can always find a cappuccino just the way you like it no matter where you are in the world.

A BUSINESS PERSPECTIVE

In the past going global made sense for just about every western company.. Western markets were extremely competitive, population expansion had slowed and income had flattened, and corporate operating costs were rising thereby thinning out margins. Developing nations, by contrast, where characterized by high population growth, relatively low wages, and a welcoming climate for foreign investors. As technology and communications shrank distances, chasing growth globally became universally logical, and trade and capital flows surged.

I believe that over the past few years, we’ve entered a different phase of globalization, which I call often refer to as Globalization 2.0. Governments of developing nations have become wary of opening more industries to multinational companies and are now carefully protecting local interests. Too, they are finding out that it’s easy to do business with each other than to rely on traditional trading partners in developed markets. On the other hand institutions in developed markets now carefully select the countries or regions with which they want to do business, pick the sectors in which they will invest, and select local companies to partner with—slow moving, selective with significant focus on nationalism and regionalism.

Several factors seem to be driving this new era. First and foremost, many government in developing markets find it risky to continue to open their markets and sectors to foreign competition who often are more efficient, have greater leverage and as such can deliver products at better consumer price points. Two, some countries have accumulated significant foreign exchange reserves and boosted exports, and therefore have become less reliant on foreign investments. Foreign governments are defining national security more broadly—more dependence on foreign investments and trade means being susceptible to global crisis, which in turn directly drive increases in food prices.

Of great interest are developments in China. Not surprisingly China is now Brazil’s largest trading partner. China, which is well on its way to becoming the world’s largest economy, now sets international business rules and norms rather than follows them.

Finally, policy makers in developing countries are intervening to create uneven playing fields that give local players an advantage—they perceive more and more sectors to be of strategic importance and thus deter foreign companies from entering their core markets.

state run capitalism in developing countries

Leaders in developing markets have come to realize that their markets are crucial to growing the economy and improving living standards—and therefore in some cases support autocratic or corrupt governments to stay in power. But they also realize that if they allow the market to decide which companies survive, they risk losing political power, as they would no longer control job creation and people’s living standards. They may also inadvertently enrich those citizens who would challenge their power—an absolute ‘no, no’.

The objective of state capitalism is to control the wealth that markets generate by allowing the government to play a dominant role through public-sector companies and politically loyal corporations (i.e., Electric Utility, Telecommunications, Transportation & Logistics, Ports). Whereas the free market system’s for maximizing profits and growth is economic, state capitalism’s goal is political power: to control economic development and thereby maximize the incumbent regime’s chances of survival. It isn’t a coherent philosophy but a set of techniques peculiar to each country. I can attest to this first hand.

But state capitalism is not necessarily just a developing-world phenomenon. For example, as controversy swells over the U.S. government’s spying on foreign governments and citizens, doubts about the nature of American capitalism is also growing. People across the world who suspect that the U.S. is constantly eavesdropping on their email or cell phone calls will perceive U.S. companies to be instruments of America’s form of state capitalism, which focuses on gathering data, information and thus global knowledge. Not surprisingly, U.S.-based IT, Telecomm and Internet-based companies are bound to face greater scrutiny abroad thus causing a globalization speed bump.