The Lexus and the Olive Tree: Understanding Globalization

by Thomas L. Friedman Narrated by Thomas L. Friedman

Overview

As the Foreign Affairs columnist for The New York Times, Thomas L. Friedman has traveled to the four corners of the globe, interviewing people from all walks of contemporary life -- peasants in the Amazon rain forest, new entrepreneurs in Indonesia, Islamic students in Teheran, and the financial wizards on Wall Street and in Silicon Valley.
Now Friedman has drawn on his years on the road to produce an engrossing and original look at the new international system that, more than anything else, is shaping world affairs today: globalization.
His argument can be summarized quite simply. Globalization is not just a phenomenon and not just a passing trend. It is the international system that replaced the Cold War system. Globalization is the integration of capital, technology and information across national borders, in a way that is creating a single global market and to some degree, a global village. You cannot understand the morning news or know where to invest you money or think about where the world is going unless you understand this new system, which is influencing the domestic policies and international relations of virtually every country in the world today. And once you do understand the world as Friedman explains it, you'll never look at it quite the same way again.
Using original terms and concepts -- from "The Electronic Herd" to "DOScapital 6.0" -- Friedman shows us how to see this new system. With vivid stories, he dramatizes the conflict of "The Lexus and the Olive Tree" -- the tension between the globalization system and ancient forms of culture, geography, tradition and community -- and spells out what we all need to do to keep this system in balance.
Finding the proper balance between the Lexus and the olive tree is the great drama of the globilization era, and the ultimate theme of Friedman's challenging, provocative book -- essential listening for all who care about how the world really works.

Editorial Reviews

Publishers Weekly - Publisher's Weekly

"In the Cold War, the most frequently asked question was 'How big is your missile?' In globalization, the most frequently asked question is 'How fast is your modem?' " So writes New York Times Foreign Affairs columnist Friedman (author of the NBA-winning From Beirut to Jerusalem), who here looks at geopolitics through the lens of the international economy and boils the complexities of globalization down to pithy essentials. Sometimes, his pithiness slips into simplicity. There's a jaunty innocence in the way he observes that "no two countries that both had a McDonald's had fought a war against each other, since each got its McDonald's." For the most part, however, Friedman is a terrific explainer. He presents a clear picture of how the investment decisions of what he calls the "Electronic Herd" — a combination of institutions, such as mutual funds, and individuals, whether George Soros or your uncle Max trading on his PC — affect the fortunes of nations. The book's title, in its reference to both the global economy (the Lexus) and specific national aspirations and cultural identity (the olive tree), echoes Benjamin Barber's Jihad vs. McWorld. Like Barber, Friedman takes note of what may be lost, as well as gained, in the brave new world: "globalization enriches the consumer in us, but it can also shrink the citizen and the space for individual cultural and political expression." The animating spirit of his book, however, is one of excitement rather than fear. Some of the excitement is the joy a good lecturer feels in making the complex digestible. Writing with great clarity and broad understanding, Friedman has set the standard for books purporting to teach Globalization 101.

Library Journal

A two-time Pulitzer Prizewinning reporter and current New York Times columnist, Friedman believes that with the end of the Cold War we are now in the era of the international globalization system. He defines globalization as the integration of finance, stock markets, nations, and technology and explains its dependence on computers, the Internet, transaction speed, and innovation. Friedman catalogs the benefits and pitfalls of globalization in a text so clearly written and with so many examples that one easily forgets that this is a book about economics. He makes a compelling case that international economics is changing and that globalization is inevitable and calls for both the United States and global business to pursue responsible capitalism that would make globalization more effective and fair. He ends with a call for businesses to understand that U.S. military and economic strength provide essential stability. Readers of Friedmans column will recognize many of these concepts. Well written, cogently argued, thought-provoking, and very highly recommended.
— Patrick J. Brunet, Western Wisconsin Technical College Library, La Crosse

Kirkus Reviews

A brilliant guidebook to the new world of "globalization" by Pulitzer-winning New York Times columnist Friedman (From Beirut to Jerusalem, 1988). Like El Niño, globalization is blamed for anything and everything, but few understand just what it really is. In simplest terms, Friedman 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; there simply is no other game in town. Friedman's discussion is wonderfully accessible, clarifying the complex withenlightening stories that simplify but are never simplistic. There are flaws, to be sure. He is perhaps overly optimistic on the ability of the market forces of globalization to correct their own excesses, such as environmental degradation. Overall, though, he avoids the Panglossian overtones that mar so much of the literature on globalization. Artful and opinionated, complex and cantankerous; simply the best book yet written on globalization. (First printing 100,000) (Author tour)

From the Publisher

Required reading...No one gives a better explanation of [globalization] than New York Times correspondent Thomas L. Friedman....Impressive.” —The Christian Science Monitor

“Important…Friedman writes in straightforward language that should make globalization's complexities comprehensible. There's a great deal of wisdom in this book.” —USA Today

“Friedman gets the economics right. His book is a wellspring of economic common sense that will inoculate its readers against the ‘globaloney' so prevalent in popular discussions of the subject.” —Foreign Affairs

“Friedman convincingly argues that what creates wealth has suddenly changed.…The Lexus and the Olive Tree makes alarmingly good sense; it educates and provokes.” —The Baltimore Sun

“A lively mix of anecdote and analysis…full of solid reporting…Friedman is eager, provocative, [and] often entertaining….Insightful.” —The Boston Globe

“There is hardly a page in The Lexus and the Olive Tree without an underlineable passage….Friedman has used his remarkable vantage point to provide a readable overview that no academic or narrow-beat reporter could have given us….A genuinely important book.” —Salon

JUN/JUL 00 - AudioFile

NEW YORK TIMES columnist Thomas Friedman gives a succinct and insightful explanation of the benefits and challenges of globalization and technology. The Lexus, the automobile that uses parts from all over the world, represents the marvels of technological development and global integration; the olive tree is synonymous with traditional, communal agrarian existence. Friedman is unabashed in his enthusiasm for new technologies and new methods of governance, but he also projects sympathy for those who fear and resist the move to a new economy. While his compelling dissection of the major issues confronting all societies slips into a pro-American diatribe in the tape's final moments, the author commendably makes a complex topic accessible and enjoyable. J.B.B. © AudioFile 2000, Portland, Maine

Product Details

BN ID:	2940170510108
Publisher:	Simon & Schuster
Publication date:	07/02/2013
Edition description:	Unabridged

Read an Excerpt

When I speak of the "the Cold War system" and "the globalization system," what do I mean?

I mean that, as an international system, the Cold War had its own structure of power: the balance between the United States and the U.S.S.R. The Cold War had its own rules: in foreign affairs, neither superpower would encroach on the other's sphere of influence; in economics, less developed countries would focus on nurturing their own national industries, developing countries on export-led growth, communist countries on autarky, and Western economies on regulated trade. The Cold War had its own dominant ideas: the clash between communism and capitalism, as well as detente, nonalignment, and perestroika. The Cold War had its own demographic trends: the movement of peoples from east to west was largely frozen by the Iron Curtain, but the movement from south to north was a more steady flow. The Cold War had its own perspective on the globe: the world was a space divided into the communist camp, the Western camp, and the neutral camp, and everyone's country was in one of them. The Cold War had its own defining technologies: nuclear weapons and the second Industrial Revolution were dominant, but for many people in developing countries the hammer and sickle were still relevant tools. The Cold War had its own defining measurement: the throw weight of nuclear missiles. And lastly, the Cold War had its own defining anxiety: nuclear annihilation. When taken all together the elements of this Cold War system influenced the domestic politics and foreign relations of virtually every country in the world. The Cold War system didn't shape everything, but it shaped many things.

Today's era of globalization, which replaced the Cold War, is a similar international system, with its own unique attributes.

To begin with, the globalization system, unlike the Cold War system, is not static, but a dynamic ongoing process: globalization involves the inexorable integration of markets, nation-states, and technologies to a degree never witnessed before--in a way that is enabling individuals, corporations, and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before, and in a way that is also producing a powerful backlash from those brutalized or left behind by this new system.

The driving idea behind globalization is free-market capitalism--the more you let market forces rule and the more you open your economy to free trade and competition, the more efficient and flourishing your economy will be. Globalization means the spread of free-market capitalism to virtually every country in the world. Globalization also has its own set of economic rules--rules that revolve around opening, deregulating and privatizing your economy.

Unlike the Cold War system, globalization has its own dominant culture, which is why it tends to be homogenizing. In previous eras this sort of cultural homogenization happened on a regional scale--the Hellenization of the Near East and the Mediterranean world under the Greeks, the Turkification of Central Asia, North Africa, Europe and the Middle East by the Ottomans, or the Russification of Eastern and Central Europe and parts of Eurasia under the Soviets. Culturally speaking, globalization is largely, though not entirely, the spread of Americanization--from Big Macs to imacs to Mickey Mouse--on a global scale.

Globalization has its own defining technologies: computerization, miniaturization, digitization, satellite communications, fiber optics and the Internet. And these technologies helped to create the defining perspective of globalization. If the defining perspective of the Cold War world was "division," the defining perspective of globalization is "integration." The symbol of the Cold War system was a wall, which divided everyone. The symbol of the globalization system is a World Wide Web, which unites everyone. The defining document of the Cold War system was "The Treaty." The defining document of the globalization system is "The Deal."

Once a country makes the leap into the system of globalization, its elites begin to internalize this perspective of integration, and always try to locate themselves in a global context. I was visiting Amman, Jordan, in the summer of 1998 and having coffee at the Inter-Continental Hotel with my friend Rami Khouri, the leading political columnist in Jordan. We sat down and I asked him what was new. The first thing he said to me was: "Jordan was just added to CNN's worldwide weather highlights." What Rami was saying was that it is important for Jordan to know that those institutions which think globally believe it is now worth knowing what the weather is like in Amman. It makes Jordanians feel more important and holds out the hope that they will be enriched by having more tourists or global investors visiting. The day after seeing Rami I happen to go to Israel and meet with Jacob Frenkel, then governor of Israel's Central Bank and a University of Chicago-trained economist. Frenkel remarked that he too was going through a perspective change: "Before, when one talked about macroeconomics, we started by looking at the local markets, local financial system and the interrelationship between them, and then, as an afterthought, we looked at the international economy. There was a feeling that what we do is primarily our own business and then there are some outlets where we will sell abroad. Now we reverse the perspective. Let's not ask what markets we should export to, after having decided what to produce; rather let's first study the global framework within which we operate and then decide what to produce. It changes your whole perspective."

While the defining measurement of the Cold War was weight--particularly the throw weight of missiles--the defining measurement of the globalization system is speed--speed of commerce, travel, communication and innovation. The Cold War was about Einstein's mass-energy equation, e = mc². Globalization is about Moore's Law, which states that the computing power of silicon chips will double every eighteen to twenty-four months. In the Cold War, the most frequently asked question was: "How big is your missile?" In globalization, the most frequently asked question is: "How fast is your modem?"

If the defining economists of the Cold War system were Karl Marx and John Maynard Keynes, who each in his own way wanted to tame capitalism, the defining economists of the globalization system are Joseph Schumpeter and former Intel CEO Andy Grove, who prefer to unleash capitalism. Schumpeter, a former Austrian Minister of Finance and Harvard Business School professor, expressed the view in his classic work, Capitalism, Socialism and Democracy, that the essence of capitalism is the process of "creative destruction"--the perpetual cycle of destroying the old and less efficient product or service and replacing it with new, more efficient ones. Andy Grove took Schumpeter's insight that "only the paranoid survive" for the title of his book on life in Silicon Valley, and made it in many ways the business model of globalization capitalism. Grove helped to popularize the view that dramatic, industry-transforming innovations are taking place today faster and faster. Thanks to these technological breakthroughs, the speed by which your latest invention can be made obsolete or turned into a commodity is now lightning quick. Therefore, only the paranoid, only those who are constantly looking over their shoulders to see who is creating something new that will destroy them and then staying just one step ahead of them, will survive. Those countries that are most willing to let capitalism quickly destroy inefficient companies, so that money can be freed up and directed to more innovative ones, will thrive in the era of globalization. Those which rely on their governments to protect them from such creative destruction will fall behind in this era.

James Surowiecki, the business columnist for Slate magazine, reviewing Grove's book, neatly summarized what Schumpeter and Grove have in common, which is the essence of globalization economics. It is the notion that: "Innovation replaces tradition. The present--or perhaps the future--replaces the past. Nothing matters so much as what will come next, and what will come next can only arrive if what is here now gets overturned. While this makes the system a terrific place for innovation, it makes it a difficult place to live, since most people prefer some measure of security about the future to a life lived in almost constant uncertainty ... We are not forced to re-create our relationships with those closest to us on a regular basis. And yet that's precisely what Schumpeter, and Grove after him, suggest is necessary to prosper [today]."

Indeed, if the Cold War were a sport, it would be sumo wrestling, says Johns Hopkins University foreign affairs professor Michael Mandelbaum. "It would be two big fat guys in a ring, with all sorts of posturing and rituals and stomping of feet, but actually very little contact, until the end of the match, when there is a brief moment of shoving and the loser gets pushed out of the ring, but nobody gets killed."

By contrast, if globalization were a sport, it would be the 100-meter dash, over and over and over. And no matter how many times you win, you have to race again the next day. And if you lose by just one-hundredth of a second it can be as if you lost by an hour. (Just ask French multinationals. In 1999, French labor laws were changed, requiring--requiring--every employer to implement a four-hour reduction in the legal workweek, from 39 hours to 35 hours, with no cut in pay. Many French firms were fighting the move because of the impact it would have on their productivity in a global market. Henri Thierry, human resources director for Thomson-CSF Communications, a high-tech firm in the suburbs of Paris, told The Washington Post: "We are in a worldwide competition. If we lose one point of productivity, we lose orders. If we're obliged to go to 35 hours it would be like requiring French athletes to run the 100 meters wearing flippers. They wouldn't have much of a chance winning a medal.")

To paraphrase German political theorist Carl Schmitt, the Cold War was a world of "friends" and "enemies." The globalization world, by contrast, tends to turn all friends and enemies into "competitors."

If the defining anxiety of the Cold War was fear of annihilation from an enemy you knew all too well in a world struggle that was fixed and stable, the defining anxiety in globalization is fear of rapid change from an enemy you can't see, touch or feel--a sense that your job, community or workplace can be changed at any moment by anonymous economic and technological forces that are anything but stable.

In the Cold War we reached for the hot line between the White House and the Kremlin--a symbol that we were all divided but at least someone, the two superpowers, were in charge. In the era of globalization we reach for the Internet--a symbol that we are all connected but nobody is totally in charge. The defining defense system of the Cold War was radar--to expose the threats coming from the other side of the wall. The defining defense system of the globalization era is the X-ray machine-to expose the threats coming from within.

Globalization also has its own demographic pattern--a rapid acceleration of the movement of people from rural areas and agricultural lifestyles to urban areas and urban lifestyles more intimately linked with global fashion, food, markets, and entertainment trends.

Last, and most important, globalization has its own defining structure of power, which is much more complex than the Cold War structure. The Cold War system was built exclusively around nation-states, and it was balanced at the center by two superpowers: the United States and the Soviet Union.

The globalization system, by contrast, is built around three balances, which overlap and affect one another. The first is the traditional balance between nation-states. In the globalization system, the United States is now the sole and dominant superpower and all other nations are subordinate to it to one degree or another. The balance of power between the United States and the other states still matters for the stability of this system. And it can still explain a lot of the news you read on the front page of the papers, whether it is the containment of Iraq in the Middle East or the expansion of NATO against Russia in Central Europe.

The second balance in the globalization system is between nation-states and global markets. These global markets are made up of millions of investors moving money around the world with the click of a mouse. I call them "the Electronic Herd" and this herd gathers in key global financial centers, such as Wall Street, Hong Kong, London and Frankfurt, which I call "the Supermarkets." The attitudes and actions of the Electronic Herd and the Supermarkets can have a huge impact on nation-states today, even to the point of triggering the downfall of governments. You will not understand the front page of newspapers today, whether it is the story of the toppling of Suharto in Indonesia, the internal collapse in Russia or the monetary policy of the United States unless you bring the Supermarkets into your analysis.

The United States can destroy you by dropping bombs and the Supermarkets can destroy you by downgrading your bonds. The United States is the dominant player in maintaining the globalization gameboard, but it is not alone in influencing the moves on that gameboard. This globalization gameboard today is a lot like a Ouija board--sometimes pieces are moved around by the obvious hand of the superpower, and sometimes they are moved around by hidden hands of the Supermarkets.

The third balance that you have to pay attention to in the globalization system--the one that is really the newest of all is the balance between individuals and nation-states. Because globalization has brought down many of the walls that limited the movement and reach of people, and because it has simultaneously wired the world into networks, it gives more power to individuals to influence both markets and nation-states than at any time in history. So you have today not only a superpower, not only Supermarkets, but, as I will also demonstrate later in the book, you have Super-empowered individuals. Some of these Super-empowered individuals are quite angry, some of them quite wonderful--but all of them are now able to act directly on the world stage without the traditional mediation of governments, corporations or any other public or private institutions.

Without the knowledge of the U.S. government, Long-Term Capital Management--a few guys in Greenwich, Connecticut--amassed more financial bets around the world than all the foreign reserves of China. Osama bin Laden, a Saudi millionaire with his own global network, declared war on the United States in the late 1990s, and the U.S. Air Force had to launch a cruise missile attack on him as though he were another nation-state. We fired cruise missiles at an individual! Jodie Williams won the Nobel Peace Prize in 1997 for her contribution to the International Ban on Landmines. She achieved that ban not only without much government help, but in the face of opposition from the Big Five major powers. And what did she say was her secret weapon for organizing 1,000 different human rights and arms control groups on six continents? "E-mail."

Nation-states, and the American superpower in particular, are still hugely important today, but so too now are Supermarkets and Super-empowered individuals. You will never understand the globalization system, or the front page of the morning paper, unless you see it as a complex interaction between all three of these actors: states bumping up against states, states bumping up against Supermarkets, and Supermarkets and states bumping up against Super-empowered individuals.

Copyright © 1999 Thomas Friedman

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