This article is based on the book:
The Lexus and the Olive Tree

By Thomas L. Friedman

The Big Idea

Pulitzer Prize winning journalist Thomas L. Friedman, writes in his book, The Lexus and the Olive Tree, about the phenomenon of globalization and how it has instituted an international system that has replaced the Cold War. It is a system that has united the fates of peoples all over the world from Brazilian Indians to Thai bankers to multinational company executives. Here, Friedman explains how the democratization of information, technology and finance has shrunk the world into an over connected community where billions of dollars are moved from one country to another with the click of a mouse. He offers not only an astonishingly all-encompassing perspective on this globalized, Fast World but also options for countries and companies who wish not only to survive in it but also to thrive in it. He also explains how in the globalized world a balance must be maintained between the Lexus (the aspiration towards material prosperity) and the olive tree (the ancient forces of culture, race, tradition and community).

Thomas L. Friedman was for some years the foreign affairs columnist for The New York Times, firing off reports as Beirut correspondent and later winning a Pulitzer Prize for his book, From Beirut to Jerusalem. In this new bestseller, Friedman explores an arena much larger than geopolitics because it encompasses the globe itself. He ventures to declare that globalization has become the defining international system in the world today, replacing the system put in place by the Cold War. In fact, he contrasts the defining principles that distinguish the Cold War and globalization. During the Cold War, there were two superpowers, each excluding the other in its spheres of political and economic influence. In the globalized world, the defining principle is not exclusion but integration. The Internet is integrating the entire world.

Friedman says, “That’s why I define globalization this way: it is the inevitable 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, and deeper, cheaper than ever before.”

Globalization is a spawn of a free market economy. Its defining measurement is speed. Friedman says the most frequently asked question in a globalized world is, “How fast is your modem?” In this system, the defining economists are Joseph Schumpeter, the Austrian Minister of Finance and Harvard Business School Professor and Intel Chairman, Andy Grove. Schumpeter wrote in his book, Capitalism, Socialism and Democracy that the essence of capitalism is the process of continuously destroying the old and less efficient product or service and replacing it with new, more efficient ones. Grove took this notion and popularized the idea that dramatic industry-transforming innovations are taking place so fast that only the paranoid, those who are constantly on the watch for these innovations, can survive. In such a world there are no friends or enemies, only competitors. Nothing is constant, not your job, your community or your workplace, which can be threatened almost overnight by new technological forces beyond your control.

Friedman thinks globalization is built around three balances, which overlap and affect one another. There is the traditional balance between nation-states, between nation states and global markets and between individuals and nation-states. The balance between nation-states still exists. In explaining the second balance, between nation-states and global markets, Friedman describes the millions of investors as the Electronic Herd, who move money around the world with the click of a mouse and who center their activities in such financial centers as Wall Street, Hong Kong, London and Frankfurt, which he calls, “the Supermarkets”. Suharto's downfall in 1998 in Indonesia is example of the Supermarkets' clout. They withdrew their support for the Indonesian economy. In the third balance, the one between individuals and nation-states, the individual gains so much power that it can influence the decisions of nation-states ...