Cosmocrats and Capital Markets

A Future Perfectby Jon Micklethwait and Adrian WooldridgeRandom House 368p $27.50

The debate over globalization is heating up, not only in the streets of Seattle and Washington, D.C., and the halls of Congress but among academics, journalists and writers on public affairs. A major contribution is A Future Perfect, written by two veteran reporters for The Economist. As is to be expected, they are all for it. Globalizationthe planetary merging of the world economy, culture and politicsthey hold, must not only be understood but "defended stoutly." But unlike many, they seek "to drag the debate...away from a dire catalog of winners and losers and toward a fundamental appraisal of modern liberty." Ultimately they are concerned less with economicsthough most of the book discusses economic change in often vivid detailthan with political philosophy. The Economist, after all, was founded by English liberals of the school of Adam Smith, Jeremy Bentham and J. S. Mill and remains true to the cause of laissez-faire, limited government and maximum freedom of the individual.

The authors’ claims for globalization are not quite as simplistic and naïve as those of Thomas L. Friedman’s recent polemic, The Lexusand the Olive Tree. Micklethwait and Wooldridge admit up front that globalization is "neither new nor completeand it is certainly not inevitable"and that a major flaw in discussion has been exaggeration. But it still is, they hold, "both accelerating and cumulative." Despite their bias, the authors for the most part evenhandedly discussthough essentially dismissmany of the standard criticisms of globalization. These include, for example, its contribution to economic inequality within and among nations. They admit that it is more difficult to make the case for unlimited international mobility of capital than for movement of goods and labor, and that "the markets have repeatedly misjudged emerging economies." Still, the authors believe that in the final analysis markets "work."


Micklethwait and Wooldridge also refute what they style as the five myths of globalization. The first myth is that corporations have been getting bigger because bigger is better. Globalization, they hold, reduces the power of big firms, and therefore most mergers are failures. The second myth is that of standardization. Global products, they assert, are not becoming similar. Successful corporations must decentralize, and even such giants as Coca-Cola and McDonald’s vary the composition and taste of their products to meet local demands. The third myth about which they are skeptical is that the new computer technologies have created a "new economy" with different rules. The old economic laws still hold. The fourth myth, propounded by many opponents of globalization, is that it is a "zero sum game." This is not true. Globalization "helps the whole pie get bigger," and while technological change may cause short-term problems for some workers, trade in itself is a good thing; and "in the long run, the process creates more winners than losers." Above all, the consumer benefits. Finally, the authors decry the myth that location is no longer a factor. Geography still mattersbusiness clusters, such as Silicon Valley, are all important.

From the authors’ point of view, it is unfortunate that, while the nation state has been weakened by globalization, it remains important. Though in "headlong retreat," its "capacity to maul businesspeople remains pretty much unchecked." It will hang on in part because the welfare statewhich they deploreremains important to its beneficiaries; and despite globalization the nation state still has a monopoly of legitimate use of force. Increasingly, international business and above all nongovernmental organizations, such as Greenpeace and Amnesty International, play an important role, but international government has been in all respects a failure. The authors are especially critical of the United Nations, and their view of the International Monetary Fund, which they note has not alleviated poverty and in many cases has made it worse, is actually close to that of the recent street protesters.

They conclude, as many critics do, that "throughout the developed world the middle class is being splintered between those who benefit from globalization and those who are being left out." Globalization in itself is not the cause of the maladies of job displacement, poverty and environmental degradation that seem to accompany it, but rather, they argue, technological change and bad government decisions. They realize, however, this is a hard sell and are concerned about a backlash which, they know, could halt or reverse globalization.

In the coming struggle to preserve globalization Miklethwait and Wooldridge are only cautiously optimistic. They see in the Seattle revolt "an early insight into the official politics of the next century: a continuing battle between a technocratic commercial elite with a minimal grasp of politics and a disenfranchised, angry minority with a minimal grasp of economics." Their heroes remain Ronald Reagan and Margaret Thatcher, their villains a disparate group including Pope John Paul II, the Zapatistas, the "swarm" of N.G.O.’s and militant Islam. Their major short-term concern is the increasing rebellion against their god of free trade, and they fear that "opposition toward globalization seems to be sp r the meaning of freedom. Globalization not only "hands power to individuals," it enables them to reject the "tyranny of place" and the constraints of ancestry. The real enemy of liberalism, as they define it in 19th-century terms, is no longer discredited socialism but communitarianism, which they associate, probably unfairly, with coercion. Their ideal society is not only one of prosperity and efficiency, which they say globalization brings, but one in which the individual is absolutely free to decide who he or she will bewhat he or she will believe, what clothes he or she will wear, what food will be consumed or where one will live on any day of the year. Rights belong to individuals and not to governments or social groups; "the essence of freedom lies in individual choice"; and "the fundamental prejudice is skepticism and an abhorrence of certainty." Above all, there is "the most fundamental freedom of all: the freedom to define our own identities."

One may reject the authors’ concept of freedomthe popes have long condemned 19th-century liberalism, which brings with it, as they themselves admit, the danger of an "anomie" opposed by the whole thrust of Catholic and natural law social thought. One mayindeed mustcavil at some of the particulars of their overly sanguine view of the contemporary world. But anyone interested in globalizationwhich means anyone concerned about the human futurecan profit from reading this informative, often sprightly and well-crafted book.

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