Thomas L. Friedman, "Globalization as an International System"  (2002)

While there are a lot of similarities in kind between the previous era of globalization and the one we are now in, what is new today is the degree and intensity with which the world is being tied together into a single globalized marketplace and village. What is also new is the sheer number of people and countries able to partake of today's globalized economy and information networks, and to be affected by them. The pre-1914 era of globalization may have been intense, but many developing countries in that era were left out of it. The pre-1914 era may have been large in scale relative to its time, but it was minuscule in absolute terms compared to today. Daly foreign exchange trading in 1900 was measured in the millions of dollars. In 1992, it was $820 billion a day, according to the New York Federal Reserve, and by April 1998 it was up to $1.5 trillion a day, and still rising. Around 1900, private capital flows from developed countries to developing ones could he measured in the hundreds of millions of dollars and relatively few countries were involved. By 2000, it was being measured in the hundreds of billions of dollars, with dozens of countries involved. This new era of globalization, compared to the one before World War I, is turbocharged.

But today's era of globalization is not only different in degree; in some very important ways it is also different in kind—both technologically and politically. Technologically speaking, it is different in that the previous era of globalization was built around falling transportation costs. Thanks to the invention of the railroad, the steamship and the automobile, people could get to a lot more places faster and cheaper and they could trade with a lot more places faster and cheaper. But as The Economist has noted, today's era of globalization is built around falling telecommunications costs thanks to microchips, satellites, fiber optics and the Internet. These new information technologies are able to weave the world together even tighter. These technologies mean that developing countries don't just have to trade their raw materials to the West and get finished products in return; they mean that developing countries can become big-time producers as well. These technologies also allow companies to locate different parts of their production, research and marketing in different countries, but still tie them together through computers and teleconferencing as though they were in one place. Also, thanks to the combination of computers and cheap telecommunications, people can now offer and trade services globally —from medical advice to software writing to data processing—services that could never really he traded before. And why not? A three-minute call (in 1996 dollars) between New York and London cost $300 in 1930. Today it is almost free through the Internet.

These technologies are making it possible not only for traditional nation-states and corporations to reach farther, faster, cheaper and deeper around the world than ever before, but also for individuals to do so. I was reminded of this point close to home, when in the summer of 1998 my then seventy-nine-year-old mother, Margaret Friedman, who lives in Minneapolis, called me sounding very upset. "What's wrong, Mom?" I asked. "Well," she said, "I've been playing bridge on the Internet with three Frenchmen and they keep speaking French to each other and I can't understand them."' When I chuckled at the thought of my card-shark mom playing bridge with three Frenchmen on the Net, she took a little umbrage. "Don't laugh," she said, "I was playing bridge with someone in Siberia the other day."

When I say that globalization has replaced the Cold War as the defining international system, what exactly 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 people from east to west was largely frozen by the Iron Curtain, bur 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, commerce and foreign relations of virtually every country in the world.

Today's era of globalization is a similar international system, with its own unique attributes, which contrast sharply with those of the Cold War. To begin with the Cold War system was characterized by one overarching feature-- division. The world was a divided-up, chopped-up place and both your threats and opportunities in the Cold War system tended to grow out of who you were divided from. Appropriately, this Cold War system was symbolized by a single word: the wall--the Berlin Wall. One of my favorite descriptions of that world was provided by Jack Nicholson in the movie A Few Good Men. Nicholson plays a Marine colonel who is the commander of the U.S. base in Cuba, at Guantanamo Bay. In the climactic scene of the movie, Nicholson is pressed by Tom Cruise to explain how a certain weak soldier under Nicholson's command, Santiago, was beaten to death by his own fellow Marines: "You want answers?" shouts Nicholson. "You want answers?" "I want the truth," retorts Cruise. "You can't handle the truth," says Nicholson. "Son, we live in a world that has walls and those walls have to be guarded by men with guns. Who's gonna do it? You? You, Lieutenant Weinberg? I have a greater responsibility than you can possibly fathom. You weep for Santiago and you curse the Marines. You have that luxury. You have the luxury of not knowing what I know--that Santiago's death while tragic probably saved lives. And my existence, while grotesque and incomprehensible to you, saves lives. You don't want the truth because deep down in places you don't talk about at parties, you want me on that wall. You need me on that wall."

The globalization system is a bit different. It also has one overarching feature-- integration. The world has become an increasingly interwoven place, and today, whether you are a company or a country, your threats and opportunities increasingly derive from who you are connected to. This globalization system is also characterized by a single word the Web. So in the broadest sense we have gone from a system built around division and walls to a system increasingly built around integration and webs. In the Cold War we reached for the "hot-line," which was a symbol that we were all divided but at least two people were in charge—the United States and the Soviet Union--and in the globalization system we reach for the Internet, which is a symbol that we are all increasingly connected and nobody is quite in charge.

This leads to many other differences between the globalization system and the Cold War system. The globalization system, unlike the Cold War system, is not frozen, bur a dynamic ongoing process. That's why I define globalization this way: it is 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 enabling the world to reach into individuals, corporations and nation-states farther, faster, deeper, cheaper than ever before. This process of globalization 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. Therefore, globalization also has its own set of economic rules—rules that revolve around opening, deregulating and privatizing your economy, in order to make it more competitive and attractive to foreign investment. In 1975, at the height of the Cold War, only 8 percent of countries worldwide had liberal, free-market capital regimes, and foreign direct investment at the time totaled only $23 billion, according to the World Bank. By 1997, the number of countries with liberal economic regimes constituted 28 percent, and foreign investment totaled $644 billion.

Unlike the Cold War system, globalization has its own dominant culture, which is why it tends to be homogenizing to a certain degree. In previous eras this sort of cultural homogenization happened on a regional scale— the Romanization of Western Europe and the Mediterranean world, the Islamification of of Central Asia, North Africa, Europe and the Middle East by the Arabs and later the Ottomans, or the Russification of Eastern and Central Europe and parts of Eurasia under the Soviets. Culturally speaking, globalization has tended to involve the spread for better and for worse of Americanization—from Big Macs to iMacs to Mickey Mouse.

Globalization has its own defining technologies: computerization, miniaturization, digitization, satellite communications, fiber optics and the Internet, which reinforce its defining perspective of integration. 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.

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. You acted on the world in that system through your state. The Cold War was primarily a drama of stares confronting states, balancing states and aligning with states. And, as a system, the Cold War was balanced at the center by two super-states: 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, though, 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. Who ousted Suharto in Indonesia in 1998? It wasn't another state; it was the Supermarkets, by withdrawing their support for, and confidence in, the Indonesian economy. You will not understand the front page of newspapers today unless you bring the Supermarkets into your analysis. Because the United Stares can destroy you by dropping bombs and the Supermarkets can destroy you by downgrading your bonds. In other words, the United Stares 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. Individuals can increasingly act on the world stage directly—unmediated by a state. So you have today not only a superpower, not only Supermarkets, but, as will be demonstrated later in the book, you now 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 knowledge of the U.S. government, Long-Term Capital Management—a few guys with a hedge fund 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 retaliated with a cruise missile attack on him (where he resided in Afghanistan) as though he were another nation-state. Think about that. The United States fired 75 cruise missiles, at $1 million apiece, at a person! That was a superpower against a Super-empowered angry man. Jody 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 all the 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 super-power 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.