Thomas Friedman's book has already become a globalisation classic. But it may end up looking like a foolish period pieceby Paul Krugman / November 20, 1999 / Leave a comment
Every few years a book comes along which perfectly expresses the moment’s conventional wisdom-which says pretty much what everybody else in the chattering classes is saying, but does it in a way which manages to sound fresh and profound. Notable examples are Paul Kennedy’s The Rise and Fall of the Great Powers (1988), with its theme of “imperial overstretch,” of a US declining under the weight of its commitments; or Lester Thurow’s Head to Head (1993), with its vision of a desperate commercial struggle among the advanced nations, and of a US unable to compete because of its na? faith in free markets. It is already clear that Thomas Friedman’s The Lexus and the Olive Tree-which tells the story of the new global economy, and of a US triumphant because it is the nation best suited to capitalise on it-is the latest in the series. Will Friedman’s vision date as quickly as those of his predecessors?
It is possible to summarise fairly quickly what Friedman has to say, because it is what you read in every issue of Business Week or The Economist. Information technology, he tells us, has made the world a small place, in which ideas and money move almost instantly across borders. This smaller world rewards countries and societies which meet its needs-namely, those with strong property rights, open minds and a flexible attitude-but it inflicts devastating punishment on those who fail to live up to global standards. Old-fashioned power politics is becoming obsolete because it conflicts with the imperatives of global capitalism. We are heading for a world which is basically democratic, because “you can’t keep ’em down on the farm” once they have internet access, and basically peaceful, because George Soros will pull out his money if you rattle your sabre. This story is told via hundreds of anecdotes, most of them involving the author. But has Friedman got it right?
We might start with something that he almost certainly has wrong. If there is one single fact which transformed America’s image of its place in the world, which made earlier vintage global visions look so foolish in retrospect, it is the contrast between America’s unexpected prosperity and Japan’s even more unexpected economic malaise. There is no careful discussion of what went wrong with Japan, but the clear implication of Friedman’s various parables is that Japan is in trouble because it is hidebound and inefficient,…