America must lead for globalism to succeed

November 24, 2005|By EDWARD GOLDBERG

It has been said that John F. Kennedy would listen to the score of the Broadway musical Camelot envisioning that his Washington would rise to the noblest deeds of the Arthurian legend. Well, Arthur's round table did come to America - not during the New Frontier, but 35 years later under a new name, globalization. And like Camelot, globalization lasted for one brief, shining moment.

Globalization of the 1990s was a direct consequence of the fall of communism. It promised that in a world not divided by ideology, a liberal capitalist system could function globally and lift living standards around the world. Its foundation was the free flow of capital and a belief that a world marketplace of entrepreneurial innovation would be created. And so it was. New brands such as Nokia emerged literally from the depth of the Finnish Arctic while Brazilian and Indian entrepreneurs revolutionized the world's steel industry and Starbucks competed with century old coffee houses in the marketplaces of Vienna.

Trade and dollar flows were the new armies, breaking down borders in a way not seen since Caesar's time. Globalization even challenged the power of nation states. By using the marketplace to vote on the validity of a country's fiscal condition, globalization became the judge of a nation's economic wherewithal. In the process, it often usurped political power from a country's leadership.

Globalization depended on six unwritten rules:

That the rules of the game would be basically U.S. rules, very subtly enforced.

As the sole superpower, the United States would act as the neutral world policeman to protect and nurture world trade.

That the United States would understand that, in the rising tide of global prosperity, the country that makes the rules proportionately would benefit greater than others and, consequently, should not be threatened by the rise of new economic powers.

That the U.S. political leadership would accept the idea that a Chrysler owned by Mercedes is neither an American company nor a German company but a globalized company.

That in accepting that concept, the leadership would convince the segment of the American population that was not immediately benefiting from globalization that everything would be OK.

That national leaders would be ensured of understanding that, for globalization to succeed, nationalism and the use of nationalism for domestic political purposes must be restrained.

Ironically, it was the United States, the country that set the rules for globalization and whose industries were the true beneficiaries of globalization, that came to view the new round table as too threatening.

Globalization was antithetical to the President Bush/neo-conservative value of American exceptionalism. An administration made up of many who thought President George H.W. Bush's "new world order" was naive in its world view, both in protecting U.S. interests and guaranteeing future U.S. economic security, could not tolerate the slow erosion of the power of the nation-state which was implicit as globalization sped forward.

But it was not only the erosion of national power that was unpalatable to the parochial Bush administration; it was also the new globalized citizen. That citizenry included a growing group of international executives and academics who travel and communicate worldwide and who saw themselves as citizens of both the United States and the world. It's a group whose very worldliness put its members in direct conflict with Mr. Bush's base constituency.

Nationalism begets nationalism. And when the United States made the determination that its interests could be better served with a more go-it-alone strategy, it implicitly sanctioned the rights of other countries to withdraw from the round table. In subtle and not so subtle ways, other nations began to understand that it could now be beneficial to discourage the centripetal force of globalization.

As examples, China is desperately searching for its own oil sources, believing it no longer can feel secure relying on multi-national oil companies. France has announced its intention to come up with a list of strategic French industries that will be protected from foreign takeover, which would be a flagrant breach of European Union law governing the free movement of capital. And Europe has rejected a unified constitution. There is a sense in the world that the time of globalization has passed.

Perhaps globalization had to change. Its basic concept of a world joined not solely through the relation of nation-states but also through a free flow of capital and technology emerged too quickly and became too threatening to both modern states and ancient cultures. But in a world satiated with technology yet short of natural resources, where globalization has caffeinated the massive societies of China and India and parochialism is in open rebellion, the alternative to globalization is pre-World War I economic nationalism.

For real globalization to work, there must be U.S. leadership to support it.

Edward Goldberg, president of a New York-based consulting firm, advises Russian companies on finance and trade. His e-mail is edg@annisagroup.com.

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