Preface to the Paperback Edition (March 2017)
From Silk to Silicon was originally conceived in an era of optimism about globalization. It was written as that optimism was eroding, and it came out at a time of full-bore pessimism about the future of global trade, finance, migration, climate, and other such issues. Nevertheless, I believe that the book’s underlying message is more important than ever—that the increasing integration of the global economy, driven by many factors including technologies that we don’t even know about yet, is bound to continue. In this book, which covers nearly a thousand years, I focus on the human contribution to globalization, particularly on ten very special people who drove globalization to heights that could never have been envisioned in their lifetimes. They did so amidst circumstances that were every bit as challenging as our era, if not more so. Indeed, the characters in this book can enhance our understanding of how globalization has evolved and how exceptional people can really change the world for the better.
Origins of From Silk to Silicon
When I first began this book, my perspective on globalization was heavily influenced by my professional experience. As an investment banker between the late 1970s and early 90s, I helped countries such as Costa Rica, Indonesia, and Turkey restructure their debts in global markets, and I subsequently oversaw my firm’s Asian business from Tokyo. As undersecretary of commerce for international trade in the mid-1990s, I worked on negotiations to integrate emerging market nations such as China, India, and Brazil into the global trading system. As dean of the Yale School of Management from 1996 to 2005, I expanded the number of foreign students coming to my school and opened up new opportunities for studying outside the United States.
In all these positions I deepened my understanding of globalization by traveling extensively and writing articles and books reflecting my experiences. I was also taken by the enthusiasm for international trade and investment on the part of government officials and business leaders, as well as young entrepreneurs and students. I saw evidence that governments nearly everywhere were keen to adopt U.S.-type market-oriented policies. It all made me think that the trajectory of globalization would continue to follow a sharply upward incline.
These feelings compelled me to look into the phenomenon of globalization in greater historical depth, and so I began this book project. I wanted to know how the interdependence of nations evolved and how our era compared to others. I was eager to better understand the ups and downs of globalization and the forces behind those patterns. And because of a long-held interest in historical biography, I wanted to tell the story of globalization through people who gave the phenomenon a gigantic boost by virtue of their powerful ideas and their indefatigable roll-up-the-sleeves leadership.
The Pall over Globalization
While I was writing, however, it seemed as if the engines of globalization not only stalled but went into reverse gear.
In 2008, a financial crisis that began in the United States spread to every corner of the globe. In conjunction with several years of the deep recession that ensued, it obliterated trillions of dollars of capital assets and destroyed millions of lives. The world entered a long period of anemic growth and debilitating unemployment.
Moreover, the volume of trade as a percentage of global activity decelerated by more than half from the pattern of previous decades. Global trade negotiations stopped altogether, replaced by regional talks—themselves resting on tenuous political support in the United States and Europe. A significant number of new trade barriers were erected. Projections for foreign investment in factories and other hard assets around the world were being revised downward, with such capital flows among rich countries declining in 2015 by 40 percent compared to a decade before.1For trade figures, see “Merchandise Trade,” The Economist, July 30, 2016; also, Shawn Donnan, “Global Economy Faces Fifth Year of Weak Trade Growth,” Financial Times, April 7, 2016. Regarding trade restrictions, see World Trade Organization, Report on G20 Trade Measures (Geneva: World Trade Organization, June 21, 2016). Regarding foreign investment, see Shawn Donnan, “Political Fears Hit Foreign Investment Around the World,” Financial Times, June 21, 2016.
Interest rates reached unprecedented lows in North America, Europe, and Asia, signaling investors’ conviction that global growth would continue to be slow for a long time to come. Global banks reduced their international lending in response to escalating regulation and heightened fear of taking on too much risk, and many international banks—including Citibank, Goldman Sachs, Deutsche Bank, and the Hong Kong Shanghai Banking Corporation—closed some of their operations outside their home counties, or dramatically cut their professional workforces abroad. Scandals relating to the rigging of international interest rates and the illegal manipulation of the $5-trillion-dollar foreign exchange market, together with growing concerns about tax evasion by multinational companies, cast additional doubt on the soundness of the global banking system.2For decline in global lending see Susan Lund et al., Financial Globalization: Retreat or Reset? (McKinsey Global Institute, March 2013); see also, Ian Talley and William Maudlin, “Globalization on the Skids,” Wall Street Journal, October 7, 2016, A1. For constricting global operations of banks see, for example, David Henry, “Citigroup Quietly Scales Back in Consumer Banking,” Reuters, January 13, 2015; also, Justin Bear and Max Colchester, “When Bigger Isn’t Better: Banks Retreat From Global Ambitions,” Wall Street Journal, May 30, 2016; also, Ben McLannahan and Don Weinland, “Goldman Sachs to Axe 30% of Asia Investment Bankers,” Financial Times, September 25, 2016.
While I was writing this book, the rapid economic growth of emerging market nations, including China, slowed dramatically. Powerhouses like Brazil experienced serious setbacks, and others with once-promising futures, such as Venezuela, headed for total collapse.
The prices of commodities and raw materials plummeted, deflating the many nations that exported them, from Saudi Arabia to Indonesia, and from China to Canada. Oil prices, among the most important determinants of stability in the global economy, dropped by two-thirds.3Regarding oil prices, see David Sheppard and Neil Hume, “Oil in Bear Market Territory: 5 Things to Watch,” Financial Times, July 28, 2016.
During this period, the European Union experienced extreme financial tensions over the economic implosion of Greece. The “Arab spring” spread like wildfire, and, almost as fast, self-destructed into counter rebellion and chaos—making it all but impossible for the region to link into the global economy except in the most tenuous way. The global refugee situation reached dire dimensions, causing unprecedented stress on the international system of humanitarian assistance. Ebola renewed fears of a global pandemic, and a few years later, the Zika virus was causing new global concerns.
In the 2006-2016 period, China became a major player on the global scene in trade, finance, and military affairs. It has risen so quickly and with such force that it threatened to dramatically change the political, military, and economic global order as we have known it. At a minimum, Beijing rattled confidence in the West that trade was, on balance, beneficial.
Cyber security, barely a concept when I started my research, became a worldwide nightmare. Between 2012 and 2014 alone, the number of cyber attacks on industrial control systems around the world rose fourfold.4Dennis Chesley, Miles Everson and John Garvey, “Global Power Shift,” Strategy + Business, Summer 2016, 49
Environmental degradation, often pushed further by climate change, was a major feature of the times. Heat waves, coastal flooding, massive storms, sea-level rises all became more pronounced. Although these occurrences couldn’t be technically connected to climate change, many experts asserted a direct link existed.5World Bank, “Climate Change,”; Tom Randall, “Fire, Floods and Scorchers: Earth Destroys Yet Another Heat Record,” Bloomberg, August 17, 2016; also, Editorial Board, “Extreme Weather Like the Louisiana Floods Should Serve as a Warning,” Washington Post, August 22, 2016
All the while, the voices of middle-class men and women in the West whose livelihoods were affected by imports, offshoring, technological change, and deteriorating economies grew louder. No wonder. Inequality of wealth and income soared in much of the world, while wages stagnated.6Josh Zumbrun, “Voter Discord Over Wages Isn’t Easily Resolved,” Wall Street Journal, August 8, 2016, A2; also Richard Dobbs et al., Poorer Than Their Parents? A New Perspective on Income Inequality (McKinsey Global Institute, July 2016) Reflecting the despair and anger felt by millions about the lack of economic opportunity, and also reflecting disdain for government officials and anyone else in elite circles, nationalism and populism became the political order of the day, elevating leaders throughout the West who challenged the conventional wisdom that a liberal, open global economy was, after all, in the interests of the industrial democracies. This was no small matter since that philosophy had been the foundation of Western progress since the end of World War II, and later had been widely adopted by the rest of the world after the Soviet Union collapsed in 1990-91. It seemed as if a revolution in thought and action against globalization was gathering force.
Today the clouds over globalization that emerged while I was writing this book show no signs of abating.
Terrorism has, of course, been a feature of our world since 9/11 but since this book was published, it accelerated across borders, with tragedies occurring in cities including Paris, Brussels, Nice, San Bernardino, Orlando, Baghdad, Nairobi, and Dakar.
Cyber attacks have increased dramatically and are likely to become a major component of international relations, of warfare, and of life in general in this century.
The ability of multinational companies to take advantage of different national laws in the absence of effective international regulation—most visibly with regard to taxes—promises to become a more explosive issue.
Climate change continues to be one of the most acute issues of our time, and its effects are outpacing the speed of the international cooperation needed to address them.
In the summer of 2016, the United Kingdom voted to leave the European Union, with uncertain implications for European integration, global financial markets and international trade. Just how big a disruption England’s decision will be is not yet knowable, but many observers think it could be the beginning of a great unravelling of international cohesion.
In November of the same year, American voters elected Donald Trump as president, whose platform was characterized as “America First.” He campaigned on a variant of nationalism that was explicitly opposed to globalization, even promising to abrogate a wide swath of treaties the United States had previously ratified, and causing governments and their citizens everywhere to wonder the degree to which Mr. Trump would follow through on his campaign pledges and totally upend the cooperatively-managed, rules-based global order that had gained momentum around the world since the end of World War II.
The nationalist thrust of Brexit and Trump is being emulated by leaders in Europe, in Russia, and in China, too. Analogies to the destructive 1930s are being used increasingly by commentators around the world.
Indeed, in late 2016, the leaders of international organizations such as the International Monetary Fund and the World Trade Organization have been sounding the alarms time and again that governments need to address international problems and enhance coordination, or else a massive recession would ensue—or even political and military conflict. The metaphor for the times has been building walls, as opposed to building bridges.
Globalization is Still Unstoppable
To many educated observers all these factors constitute a gigantic stop sign for the future of globalization. But I don’t buy that argument. Here is why:
The current situation…
I believe globalization is still the most important trend of our age, and as I show in this book, individuals have the opportunity to make a clear, positive difference in where our world is headed. When I think about globalization, the image in my head is one of a powerful freight train that won’t be derailed, no matter what obstacles are put on the tracks.
Let’s take a minute to consider how extensive globalization has become, how woven it is into our everyday lives, and how far-fetched it is to think that it could come unwound to any great degree.
This past summer I was taken by an article in Bloomberg View by Afshin Molavi7Afshin Molavi, “The Fourth of July, Brought to You by Belgium, Brazil, and China,” Bloomberg View, July 1, 2016 about typical American activities on July 4 (which I recount here with a few additions of my own.) Molavi envisioned an Independence Day holiday in which Americans’ use of commonplace goods revealed how much our everyday routines reflect global connections. He imagined someone having a Budweiser beer that, incidentally, came from a subsidiary of its Brazilian-Belgian owner called InBev; snacks from Sara Lee, whose parent company is Mexico’s Grupo Bimbo; a hot dog that was made by Smithfield Foods, a component of China’s Shaunghui; a Good Humor ice cream cone, from Unilever, a British-Dutch conglomerate.
After all that, there might be a tablet of Alka-Seltzer, which belongs to Germany’s Bayer Schering Pharma. The hypothetical American might have used his Apple iPad, designed by a U.S. company but assembled from parts all over the world. Maybe he would have watched a movie on American-owned Netflix, now in more than 130 countries, or would have hopped into his Chrysler, owned by Italy’s Fiat, to catch a movie at a cinema that happens to be owned by Dalian Wanda Group, a Chinese corporation that owns more movie theaters than any other company in North America.
Indeed, the world is much more interconnected than most of us realize. Political sentiment about globalization may have turned negative, but look what has happened in spite of that.
Let’s start with the fact that nearly 50 percent of all revenues of the U.S. S&P 500 top companies are derived from their business abroad.8Steve Goldstein, “S&P 500 Companies Generate Barely Over Half Their Revenue at Home,” MarketWatch, August 19, 2015 In addition, over the last few years, the world’s great companies have continued to merge their nationalities. In 2015, for example, America’s General Electric combined with France’s Alstom to create a transatlantic energy powerhouse. Japan’s publishing empire, Nikkei, swallowed the UK’s Financial Times. Already this year, major international deals are in the works in the beer industry, in automotive technology, in biotechnology, in chemicals, in industrial gases, in video games, and with regard to national stock exchanges. In the first six months of 2016, China invested nearly $29 billion in the United States, about 50 percent more than it did for all of 2015, much of that going to purchase U.S. companies. Halfway through 2016, Beijing’s investments in Germany already exceeded those of 2015 in number and in dollar value.9For China figures see Derek Scissors, “The Year China Inc. Bet Big on the U.S.,” Wall Street Journal, July 14, 2016. For Germany figures see Guy Chazan, “German Angst Over Chinese M&A,” Financial Times, August 9, 2016
Globalization doesn’t only mean mergers. Companies such as Intel, IBM, General Electric, Apple, and Microsoft have also expanded their research operations abroad to countries including India, China, Singapore, and Israel in order to be nearer customers and technological talent. In fact, PricewaterhouseCoopers has estimated that 94 percent of all global companies now do some research and development outside their home countries.10Barry Jaruzelski, Kevin Schwartz and Volker Staack, “Innovation’s New World Order,” Strategy + Business, Winter 2015
There are many up-and-coming players on the global scene too. Multinationals from emerging markets—such as South Korea’s Samsung, Mexico’s CEMEX, Brazil’s Embraer, China’s Lenovo, and India’s Mahindra—have dramatically expanded their global reach, enhancing the international mix of goods, services, and talent.
Venture capital has gone global too, as American funds such as Sequoia or Inventus Capital Partners fund start-ups in countries such as India, China, and Israel.11See, for example, http://www.sequoia.com/ McKinsey & Company now estimates, in fact, that because of the Internet, some 86 percent of tech-based start-ups do some cross-border business.12Rana Foroohar, “We’ve Reached the End of Global Trade,” Time, October 12, 2016 Not just that, but American business, so long the leader in innovation, is also adopting technology first popularized in countries such as China, like WeChat and Alipay, that facilitate mobile payments and transfers from person to person.13Paul Mozur, “China, Not Silicon Valley, Is Cutting Edge in Mobile Tech,” New York Times, August 2, 2016
Decisions and events in one part of the world continue to have extraordinary impact across the globe. When the U.S. Federal Reserve even hints about moving U.S. interest rates, every market from Frankfurt to Mumbai to Tokyo is deeply affected. When Chinese growth slows, its excess steel production floods global markets at subsidized prices, causing industrial labor problems all over the world.
International research consortiums that advance critical knowledge have been growing at a rapid pace. Think about the Geneva-based Large Hadron Collider, designed to explore particle and high-energy physics, among other phenomena, and consisting of the world’s largest distributed computing grid spanning thirty-six countries. Another example: The Breakthrough Energy Coalition, devoted to the production of clean energy, and consisting of the United States, France, Germany, Japan, India, Saudi Arabia, China, South Africa, Nigeria, and others.14Regarding the Large Hadron Collider, see “About CERN,” CERN; for Breakthrough Energy Coalition see “Coalition,” Breakthrough Energy Coalition
More than ever in history, young people around the world are exchanging ideas and experiencing each other’s cultures firsthand. In 2015 six million foreign students were studying in the United States, a tenfold increase from when I started From Silk to Silicon.15Due to an editing error, the number in the paperback version is wrong. The sentence should read, “In 2015-16, total international student enrollment was 1,043,839, almost a 100% increase in the past decade.” Source: “International Students in the United States,” Institute for International Education, Project Atlas In the same period, the number of American students studying abroad grew from 200,000 to more than 300,000,16“US Students Abroad Top 200,000, Increase by 8 Percent,” Institute for International Education, November 13, 2006, and “2016 ‘Fast Facts’,”Institute for International Education and my own school—the Yale School of Management—concluded more than twenty partnerships with other business schools around the world, from the National University of Singapore, to HEC in Paris, to the Pontifica Universidad Católica in Chile.17”Mission,” Global Network for Advanced Management, Yale School of Management It is not just the United States that is a magnate for student exchange these days, either. In the last decade, foreign students studying in China reached almost 400,000 from negligible levels. Within a few years, China could be the second largest destination for overseas study next to the United States.18Douglas Belkin and Te-Ping Chen, “Enrollment from Abroad Sets Records at U.S. Colleges,” Wall Street Journal, November 14, 2016
Tourism and travel have grown rapidly. In 2006 revenues from international tourism were $743 billion, and by 2015 they had nearly doubled to $1.26 trillion.19UNWTO, “Global international tourism revenue from 2000 to 2015 (in billion U.S. dollars)“; see also, OECD Tourism Trends and Policies 2016 (Paris: OECD Publishing, 2016) Foreign visitors to the United States grew from 21,668,290 in 2006 to 34,419,016 in 2014, greater than a 50 percent increase.20National Travel and Tourism Office, 2015 Monthly Tourism Statistics, “U.S. Visits Trend Line”
Today more people are forcibly displaced from their homes than any time since the end of World War II. This is an unmitigated disaster, to be sure. But when these people are combined with other flows of human being across borders—migrants and immigrants—the world is experiencing the greatest intermingling of human cultures in history.
The global regulatory foundations for many activities have been strengthened—for finance, for food safety, for dealing with public health emergencies, and for transmission of data. And toward the end of 2015, an accord on climate change was concluded among 178 countries that holds great promise for cooperation on one of the most important global issues of this century.
In one major international forum after another—including the Group of Twenty nations, the IMF, the World Bank, the World Trade Organization, the Organization for Economic Cooperation and Development, and numerous UN organizations, for example—a number of the same challenges have dominated the agendas, including inequality, sustainability, and education. More than ever before, there has been a true meeting of the minds on the nature of global problems and the priorities and the need for action. Even if progress is slow, never has the global discussion of global problems been so rich, and never have national governments devoted so much time and effort to them.
Trade may be slowing, but communications is not. Think of the global connections that have been made via Google, Amazon, Alibaba, Instagram, and Twitter—all in the last decade. The McKinsey Global Institute calculates that data transmission across borders has increased by forty-five times during the last ten years.21James Manyika et al., Global Flows in a Digital Age (McKinsey Global Institute, April 2014) Throughout history, in fact, technology has been an amplifier of globalization because it knows no national boundaries. Thus it is a sure thing that regardless of what politicians think and do, advances in medicine, 3-D printing, sensors, nano-technology, data collection and analysis, and robots with artificial intelligence will spread as if borders hardly existed. There will be global businesses we never conceived of. When I began this book, for example, the company called Uber didn’t exist. Today it is in sixty-six countries.22“International Sites,” Uber Technologies Inc. There was no Airbnb. Today it is in 34,000 cities in more than 150 countries.23“About Us,” Airbnb, Inc. There will be research breakthroughs that will reduce diseases and increase human longevity. There will be new inventions that change the very nature of work. We cannot conceive of the extent of human progress that new technologies will bring.
Even as the pace of trade has slowed in recent years, we should not disregard the growing infrastructure for commerce, such as the expansion of the Panama Canal, new trade routes through the (melting) Arctic Circle, and the New Silk Road that China is building across the Eurasian continent. One day new channels like these will facilitate a rebound in today’s sagging trade. And we should not ignore the real possibilities of new centers of economic growth and dynamism in the world, such as Africa and the Arab Gulf.
At the same time, the last decade witnessed extensive global cross-fertilization among cities. In an era of hyper-urbanization, the great metropolises of the world—including New York, London, New Delhi, Rio, Manila, and Shanghai—are sharing ideas about new systems for transportation, telecommunications, sustainable construction, law enforcement, and much more. On another level, global financial centers such as New York, London, Dubai, Singapore, and Hong Kong, have enhanced their cooperation through communications and corporate networks. On yet another plane, the innovative culture of Silicon Valley is being emulated in entrepreneurial hubs across the globe in places such as Dublin, Bangalore, Tel Aviv, and Seoul.
Consideration of the role that cities will play in the future of globalization raises yet another critical point about who, in addition to governments, the influential actors in the future of globalization will be.24See, for example, Noah Toly and Sam Tabory, 100 Top Economies: Urban Influence and the Position of Cities in an Evolving World Order (Chicago: Chicago Council on Global Affairs, October 2016) Alongside these urban players will be large non-profit organizations such as the Bill & Melinda Gates Foundation, for example, not to mention social media organizations such as Facebook, with its 1.8 billion subscribers.25“Stats,” Facebook
Nor should we forget that while nationalism, populism, and inward-looking policies may be in fashion in the West, China is busy concluding new trade agreements, India brags about its new openness, and the countries of Southeast Asia are working toward a new common market.26See, for example, Bruce Stokes, “Unlike the West, India and China Embrace Globalization,” YaleGlobal Online, October 18, 2016 Washington may be a reluctant funder of the IMF, but Beijing has recently established the Asian Infrastructure Investment Bank, with forty-six founding governments, a potential rival of the existing World Bank.27Asian Infrastructure Investment Bank Asia is pivotal to the future of the globe, and could have as much influence on the course of globalization as what happens in the United States and Europe.
Nor do many public opinion polls jive with the kind of negativity surrounding the positions of so many politicians. In the middle of a U.S. presidential campaign that denigrated trade agreements in ways not seen in many generations, national polls showed that a majority of citizens favored trade and the politically toxic Trans Pacific Partnership. Sixty-five percent of Americans—just about two out of three—felt increasing connections with other countries were good for the country.28See, for example, Dina Smeltz et al., America in the Age of Uncertainty (Chicago: Chicago Council on Global Affairs, October 2016); also, Jackie Calmes, “Who Hates Free Trade Treaties? Surprisingly, Not Voters,” New York Times, September 21, 2016
The Essence of Globalization
I believe that globalization is a highly beneficial force that enlarges the possibilities for mankind. It’s not just that it has enhanced our choices of products and services, and not just that it has allowed people of different nationalities to pool their innate talents, not just that it has contributed to the richness of our literature, our visual arts, our scientific and technical knowledge, our fundamental ideas about life. Globalization has also helped lift more than half a billion people out of deep poverty in the last few decades alone. In liberating men and women in the developing world to become producers and consumers since the 1980s, it has also afforded opportunities to billions of citizens to enter the global middle class, giving them better lives, greater freedoms, and much more promising futures. Not incidentally, these same men and women have become major consumers, providing a growing market for American companies, and they have also become a new pool of workers and entrepreneurs, giving us more products at lower prices, and increasing the efficiency of economies everywhere.
As becomes clear in this book, however, in any given era globalization can be a positive phenomenon or a negative one—and usually both at the same time. Globalization can reinforce and multiply positive trends, but it can just as easily accelerate the spread of highly damaging developments too. For example, global communications gives us almost unlimited choices through e-commerce, but it also facilitates coordination among terrorists. Global supply chains lower the cost of goods and services, but they also make us increasingly vulnerable to supply disruptions from natural disasters or political interference. This duality is a theme throughout this book, but I conclude time and again that on balance globalization is a net contributor to human progress.
Here is another way to think about globalization. Globalization is about a growing connection among people of different nationalities. That could be trade that enriches exporters and at the same time clobbers companies and communities who cannot withstand the competition. Globalization is about transmission of ideas across borders. It could entail embracing laissez-faire economic policies or imposing protectionist policies. Globalization is about globe-spanning networks, be it the worldwide supply chains of multinational corporations that carry 80 percent of the world’s commerce or the social media that make it easier for drug traffickers to coordinate their worldwide activities. It is about common vulnerability, be it climate change, public health emergencies, or recession. It is, in short, about goods, services, ideas, peaceful movements, and aggressive and destructive forces all coursing through the channels that have been opening and growing for centuries. Globalization is also a mind-set, focused on confidence that open societies that let in foreign influences are good, or alternatively, reflecting convictions that national go-it-alone policies are a better way. It’s a kind of contagion, of which there is no end of both good and bad.
For all these reasons, everything that has been happening for the last decade—even seemingly antiglobalization movements and activities that have spread from one country to another—is, in one way or another, about globalization, because it’s about the spread of ideas and techniques and tangible things, or widespread resistance to that. And for the same reasons, you can understand why globalization cannot be stopped.
The Next Phase
We need to acknowledge that the inseparable combination of globalization and technology has proceeded at a pace that has been too fast for political systems to accommodate. Too many people have been hurt by the rapid changes; the gap between winners and losers has become too big; and the laws, regulations, and institutions of society have not kept up. In addition, in a period of rapid change, millions of people have become more insecure, wishing to withdraw into worlds they know, their families, and their extended “tribes.” In an ever-smaller world, a large number of them have become suspicious of other races, other cultures, resenting immigration, refugees, and the intrusion of people from somewhere else who are unlike them.
These feelings and the disorientation that surrounds them are, in my view, dangerous on many levels, but they are also understandable. The McKinsey Global Institute has said that the transformation of society is “happening ten times as fast and at 300 times the scale, or roughly 3,000 times the impact” of the Industrial Revolution.29Richard Dobbs, James Manyika and Jonathan Woetzel, “The Four Global Forces Breaking All the Trends,” in No Ordinary Disruption (New York: Public Affairs, May 2015), April 2015 Even allowing for hyperbole, it is clear that we are passing from one era to another and the transition could be tumultuous. But globalization has always been disruptive; it has always left many people behind and destroyed many lives; and it has always spawned antiglobalization protests, often violent and lasting many decades. In the end, though, the world has always moved in the direction of more integration.
Looking forward, for many countries national efforts will surely be focused on improving education and job training, enhancing social mobility and reducing income disparities, and building a stronger social safety net that includes better access to health care and more secure retirement benefits. It is my hope that now and in the years ahead, the agenda for globalization will give much more priority than it has to date to helping those people who have been left behind in the progress that globalization has brought and will continue to bring.
Depending on how a new approach to globalization is handled, the outcome over the next few decades could be either frightening or encouraging. We may see a variant of the destructive nationalism that we saw in the 1930s in Germany, Italy, and Japan. But it is also plausible that our governments, individually and collectively, could focus on the all-important domestic foundations of sustainable globalization. For all the talk about international cooperation, the fact is that many of the critical decisions that underlay the global economy are domestic in origin. That includes many aspects of taxation, subsidies, education, worker retraining, banking regulation, dealing with disparities of income and wealth, and—most critically—making sure that decisions are arrived at in a fair, transparent, and democratic way. Were governments and societies to focus on that set of policies, whether we call it nationalism or populism, they could build a more confident consensus for outward-looking policies on the part of individual nations. And in that way, they might build a stronger platform for intergovernmental cooperation on trade, immigration, and other aspects of an interconnected world.
Globalization itself could also take on forms that are much different than today. In place of the trends toward democracies that we have seen these past several decades, we could be at the beginnings of a wave of authoritarian governments. Momentum for free markets could give way to state control of economies. We could return to a world dominated by a concert of major powers, as was the case in the nineteenth century. Or, globalization could take place amidst widespread chaos and disorder. In this book I have described many frameworks for globalization through the last ten centuries—gigantic kingdoms, colonial and corporate empires, eras of constant war—but nothing stopped the world from becoming smaller and more interconnected. In fact, in their own ways, every era fostered that trend.
While no one can predict the near-term, nor what may happen over the next decade or two, what is clear is that the long arc of history implies that sooner or later governments and their societies will realize that globalization is a fact of life. They will come to the conclusion that the solutions to most national problems will require more and not less global collaboration; more and not less exchange of goods, services, and ideas across borders; more and not less sensible global regulation; and more and not fewer effective international institutions. The only question is how we get there, low long it will take, and how chaotic and painful the transition will be.
I Remain Bullish
The last chapter of From Silk to Silicon is entitled, “The Best is Yet to Come.” When this book came out, I was often asked by interviewers how I could be so optimistic. One part of my answer was to refer to the people I wrote about and the challenges they faced. It was easy for me to show how the obstacles they confronted were at least as daunting as those we are facing today.
Also, in presenting the case for a positive future, I could point to the fact that the big breakthroughs that each of my ten protagonists made occurred when there was a fundamental disruption of the patterns of the past, when the old rules and customs were discarded and replacements were nowhere in sight, and when everything was in flux.
Bottom-line: History shows that the deep-seated problems that we confront today are not challenges but opportunities.
I believe that in the future the achievements of those in this book will not just be matched, but that they will be exceeded. There are so many places to advance our civilization, including in clean energy and the environment, other essential infrastructure, public health, eradication of poverty, financial stability, job creation, education, and more effective governance of countries and international institutions.
The talent pool from which to draw will be bigger than ever before, given advances in the spread of knowledge and information, and the ease of financing great projects. Our global human pathfinders will not just come from the most powerful countries of the day, but from the cities and countryside of nations all over the globe—the favelas outside Rio, the inner cities of Nigeria, the remote islands of Indonesia, the new schools of Kazakhstan. New leadership will also surely come from half of the world’s population who heretofore have been heavily disenfranchised—women.
More than ever, therefore, I think it’s crucial to reflect on the historical context to appreciate where we have been and where we are going, and to understand why the past is prologue to what lay ahead. That was the original purpose of From Silk to Silicon, and it remains so in this new edition.
November 30, 2016
References [ + ]
|1.||↑||For trade figures, see “Merchandise Trade,” The Economist, July 30, 2016; also, Shawn Donnan, “Global Economy Faces Fifth Year of Weak Trade Growth,” Financial Times, April 7, 2016. Regarding trade restrictions, see World Trade Organization, Report on G20 Trade Measures (Geneva: World Trade Organization, June 21, 2016). Regarding foreign investment, see Shawn Donnan, “Political Fears Hit Foreign Investment Around the World,” Financial Times, June 21, 2016.|
|2.||↑||For decline in global lending see Susan Lund et al., Financial Globalization: Retreat or Reset? (McKinsey Global Institute, March 2013); see also, Ian Talley and William Maudlin, “Globalization on the Skids,” Wall Street Journal, October 7, 2016, A1. For constricting global operations of banks see, for example, David Henry, “Citigroup Quietly Scales Back in Consumer Banking,” Reuters, January 13, 2015; also, Justin Bear and Max Colchester, “When Bigger Isn’t Better: Banks Retreat From Global Ambitions,” Wall Street Journal, May 30, 2016; also, Ben McLannahan and Don Weinland, “Goldman Sachs to Axe 30% of Asia Investment Bankers,” Financial Times, September 25, 2016.|
|3.||↑||Regarding oil prices, see David Sheppard and Neil Hume, “Oil in Bear Market Territory: 5 Things to Watch,” Financial Times, July 28, 2016.|
|4.||↑||Dennis Chesley, Miles Everson and John Garvey, “Global Power Shift,” Strategy + Business, Summer 2016, 49|
|5.||↑||World Bank, “Climate Change,”; Tom Randall, “Fire, Floods and Scorchers: Earth Destroys Yet Another Heat Record,” Bloomberg, August 17, 2016; also, Editorial Board, “Extreme Weather Like the Louisiana Floods Should Serve as a Warning,” Washington Post, August 22, 2016|
|6.||↑||Josh Zumbrun, “Voter Discord Over Wages Isn’t Easily Resolved,” Wall Street Journal, August 8, 2016, A2; also Richard Dobbs et al., Poorer Than Their Parents? A New Perspective on Income Inequality (McKinsey Global Institute, July 2016)|
|7.||↑||Afshin Molavi, “The Fourth of July, Brought to You by Belgium, Brazil, and China,” Bloomberg View, July 1, 2016|
|8.||↑||Steve Goldstein, “S&P 500 Companies Generate Barely Over Half Their Revenue at Home,” MarketWatch, August 19, 2015|
|9.||↑||For China figures see Derek Scissors, “The Year China Inc. Bet Big on the U.S.,” Wall Street Journal, July 14, 2016. For Germany figures see Guy Chazan, “German Angst Over Chinese M&A,” Financial Times, August 9, 2016|
|10.||↑||Barry Jaruzelski, Kevin Schwartz and Volker Staack, “Innovation’s New World Order,” Strategy + Business, Winter 2015|
|11.||↑||See, for example, http://www.sequoia.com/|
|12.||↑||Rana Foroohar, “We’ve Reached the End of Global Trade,” Time, October 12, 2016|
|13.||↑||Paul Mozur, “China, Not Silicon Valley, Is Cutting Edge in Mobile Tech,” New York Times, August 2, 2016|
|14.||↑||Regarding the Large Hadron Collider, see “About CERN,” CERN; for Breakthrough Energy Coalition see “Coalition,” Breakthrough Energy Coalition|
|15.||↑||Due to an editing error, the number in the paperback version is wrong. The sentence should read, “In 2015-16, total international student enrollment was 1,043,839, almost a 100% increase in the past decade.” Source: “International Students in the United States,” Institute for International Education, Project Atlas|
|16.||↑||“US Students Abroad Top 200,000, Increase by 8 Percent,” Institute for International Education, November 13, 2006, and “2016 ‘Fast Facts’,”Institute for International Education|
|17.||↑||”Mission,” Global Network for Advanced Management, Yale School of Management|
|18.||↑||Douglas Belkin and Te-Ping Chen, “Enrollment from Abroad Sets Records at U.S. Colleges,” Wall Street Journal, November 14, 2016|
|19.||↑||UNWTO, “Global international tourism revenue from 2000 to 2015 (in billion U.S. dollars)“; see also, OECD Tourism Trends and Policies 2016 (Paris: OECD Publishing, 2016)|
|20.||↑||National Travel and Tourism Office, 2015 Monthly Tourism Statistics, “U.S. Visits Trend Line”|
|21.||↑||James Manyika et al., Global Flows in a Digital Age (McKinsey Global Institute, April 2014)|
|22.||↑||“International Sites,” Uber Technologies Inc.|
|23.||↑||“About Us,” Airbnb, Inc.|
|24.||↑||See, for example, Noah Toly and Sam Tabory, 100 Top Economies: Urban Influence and the Position of Cities in an Evolving World Order (Chicago: Chicago Council on Global Affairs, October 2016)|
|26.||↑||See, for example, Bruce Stokes, “Unlike the West, India and China Embrace Globalization,” YaleGlobal Online, October 18, 2016|
|27.||↑||Asian Infrastructure Investment Bank|
|28.||↑||See, for example, Dina Smeltz et al., America in the Age of Uncertainty (Chicago: Chicago Council on Global Affairs, October 2016); also, Jackie Calmes, “Who Hates Free Trade Treaties? Surprisingly, Not Voters,” New York Times, September 21, 2016|
|29.||↑||Richard Dobbs, James Manyika and Jonathan Woetzel, “The Four Global Forces Breaking All the Trends,” in No Ordinary Disruption (New York: Public Affairs, May 2015), April 2015|