Friday, September 24, 2010

Five best books on globalization

Stephen King is HSBC’s Group Chief Economist and the global head of economics and asset allocation research at the bank, where he has worked since 1988. He is the author of Losing Control: The Emerging Threats to Western Prosperity, and since 2001 has written a weekly column in The Independent.

For FiveBooks, he discussed five books on globalization with Tom Dannet. One title he mentioned:
The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor by David Landes

The Wealth and Poverty of Nations. Another huge historical sweep on economic development and, perhaps controversially, this time more a view of why the West has been particularly successful and why other countries have not. I think there’s a danger that recent events may begin to question some of those assumptions, but as a tentative exploration of the issue of economic progress and culture, it’s fascinating.

One of the stories here is about clocks, and how the Europeans would bring their clocks along when it came to trading with China. Europeans used clocks as a coordinating mechanism: what time you arrived for work, and what time you went home in the evening. Whereas the Chinese initially regarded clocks as being almost a decorative toy, so you’d end up with this weird situation throughout China with extremely long hours being worked in the summer and extremely short hours in the winter, which were all determined by the lack of understanding of this particular technology.

I think what’s clever about the book in one sense is that it points out that it’s not just the technology that’s important but how you use it. If you invest in lots of computers, unless you can do something with them and work out how you can become more productive, the computers in themselves are utterly useless. There are lots of examples of this in the world: you have to work out how best to use a technology before investing in it.

Landes believes the Western world has been well placed to exploit new technologies?

Yes, there’s a lot of Enlightenment thinking going on in this particular book. I’m not 100 per cent sure that this still stacks up, because one big challenge to the whole Enlightenment process is the rise of Asia over the last 50-60 years. It has proved to have been successful for a number of decades now, so it does raise some big questions as to whether it’s either the same model and we haven’t understood it, or a different model, in which case it’s a challenge to Western assumptions about liberal democracy, and so on.

New technology can cause tremendous upsets. I think often people forget that the technologies partly explain why it is that some countries have become rich or some others have remained poor or become poor. What of course we don’t know is whether countries that are currently wealthy might subsequently become poor in the future, and I think this is a big question for the West, actually. If China and Brazil and India trade increasingly with each other, and the demographics of the world’s population continue to change in a way that makes the West increasingly unimportant, there are some big questions as to whether the West itself, having unleashed this wonderful new information technology, will go the same way as, say, Islam in the 14th and 15th centuries: of having a technology that has been so disruptive that it makes life much more difficult for the West than it assumed 20 or 30 years ago.

Historically speaking, all empires lose it at some stage.

They do. The one thing you could say is that countries which have recently lost it, like say the UK, or maybe Austria, have remained relatively wealthy. But it may be like the demise of the Roman Empire: it took hundreds of years to fall flat on its face, and maybe we’re seeing the same kind of process in the West. Landes wouldn’t support that view: he’d say there’s a particular model that’s worked well and here are the reasons why. But the lessons from history seem to be that those who think they’re going to be powerful suddenly find that their power has gone. I’m not sure I agree with all of it but it’s a fascinating book, particularly for these examples of how technologies were used in different parts of the world with completely different conclusions.
Read about the other books on King's list.

Also see Moisés Naím's top ten books on globalization.

--Marshal Zeringue