World 3.0

by Pankaj Ghemawat

  As I listened to David and Colin describe what they were doing, I also thought back to a conversation I had had a few weeks earlier with Muhammad Yunus, the founder of Grameen Bank and a winner of the Nobel Peace Prize, about his concept of social business. Worldreader.org fit with his sense that people should try to work toward their desired social outcomes themselves, instead of waiting around for governments. But its emphasis on raising money “to close the gap between the cost of the devices and the price local governments can pay, until the unit cost of e-readers falls below an appropriate local market price” went beyond Yunus's emphasis on self-sustaining models of social business. David and Colin were wary of applying too strict a market test to attempts to address the large market failure that they thought they had identified.

  Instead, Worldreader.org actually seemed to bridge the gap between traditional businesses and traditional nongovernmental organizations. As a nonprofit, it had to articulate its goals more carefully, bound its scope more explicitly, and be clearer about its funding mechanisms, including the role of prices, in trying to recover its costs, than the typical private business, in which most of these parameters are determined by profit-maximization. But as we have already seen, David and Colin's clarity and crispness was entirely businesslike when it came to questions about what they were trying to do, why and where—not to mention whom to work with (the entire value web: donors, ministries, hardware and content suppliers, cell phone companies, teachers, students … ), what metrics to use and how to run really rigorous field trials.

  Like most nascent ventures, Worldreader.org still faces a large number of uncertainties, but I find its story wonderfully inspiring. Not all of us can go nearly so far down the path of helping those who are far away, but building awareness of and acquaintance with others can only help with the achievement of this higher objective—as well as being useful in and of themselves.

  Maximizing Human Potential

  Throughout most of this book, I've exhorted readers to change their personal attitudes about globalization: to shake off the myths that lead to an awful amount of misdirection, to understand its real benefits and costs, and to push for much more openness and some—but only as necessary—regulation. Building bridges across cultural, administrative, geographic, and economic distance, where markets fail to do so, as David and Colin are attempting, is perhaps the highest form of global citizenship. In support of such an assessment, who better to cite than Adam Smith, the alleged prophet of selfishness as a virtue: “To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitutes the perfection of human nature.”33

  The awareness-acquaintance-altruism sequence laid out in the preceding sections was meant to help us move in that direction, even if we don't get as far as David and Colin, by suggesting how to open up to the rest of the world at the individual level. Note the focus on reducing internal distance at the individual level instead of the country or business levels that were targeted in earlier chapters—a focus on the barriers that exist within one's own mind. But to ask a more basic question, why does this progression make sense? It is worth concluding by (re)summarizing the several levels at which it may help maximize human potential.

  First, this progression holds several possible attractions at the individual level. In Ananya's case, I'm cheered by recent research indicating that biculturals/triculturals have the potential to serve as particularly useful connectors in organizations that cross borders and bridge distances. In addition, I think her cross-border experiences have enriched her in a way that is independent of any material benefits. And then, as the Dalai Lama has emphasized, there is a transcendental appeal to developing—as I hope she is—the capacity to do the right thing for unselfish reasons.

  But ultimately, individual benefits from the kinds of engagement with the world advocated in this chapter are just the icing on the cake. The real gains accrue at the societal level. If enough of us broaden our sympathies—even just a little—it could go a long way to help in addressing obvious challenges: the threat of protectionism, surges in anti-immigrant sentiment, tensions in the U.S.-Chinese relationship, the risk that the poorest among us, particularly in Africa, may fall even farther behind, and so on.

  And while particular challenges will eventually pass (one hopes), the need to promote more cross-border engagement and sympathy will persist. The darker legacies of Worlds 0.0 and 1.0—the imprint of a vast span of human history—are always with us. So I'm skeptical of optimistic arguments that circles of cooperation, having expanded over the last few millennia, will continue to do so, or that that may even be the “destiny” of life on earth.34

  Instead, I find myself more inclined to agree with cognitive scientist Steven Pinker: “Global cooperation and moral progress will not increase toward some theoretical maximum or Teilhardesque Omega Point, but will level off at a point where the pleasures resulting from global cooperation (having more stuff than you had before) are balanced by the pleasures resulting from non-cooperation (having more stuff than your neighbors, or the warm glow of ethnic chauvinism).”35 And since openness tends to expand (and contract) in fits and starts, we shouldn't even expect it to move smoothly toward a single equilibrium.

  How far we are going to get in unlocking the full potential of World 3.0, then, depends on our mind-sets, which is why this chapter focused on how we might open them up. The really great news—about mind-sets as well as actual levels of integration—is that there is so much room to do better! When we conquer irrational fears and don't let the excesses of market failure get out of hand, we can confidently reach out and improve the possibilities for ourselves and for humanity around the world. And that vision—with openness as a source of inspiration and hope rather than fear—is the promise of World 3.0.

  About the Author

  Pankaj Ghemawat is the Anselmo Rubiralta Professor of Global Strategy at IESE Business School. Between 1983 and 2008, he served on the faculty at Harvard Business School where, in 1991, he became the youngest person in the school's history to be appointed a full professor. Ghemawat was also the youngest “guru” included in the Economist's guide to the greatest management thinkers of all time, published in 2008.

  Ghemawat's previous books include Commitment, Games Businesses Play, Strategy and the Business Landscape, and the award-winning Redefining Global Strategy, which the New York Times called “a nicely revised picture of globalization.” He is also the author of more than one hundred research articles and case studies, ranks as one of the world's bestselling authors of teaching cases, and has been elected a fellow of the Academy of International Business and of the Strategic Management Society. Other recent honors include the McKinsey Award for the best article published in Harvard Business Review and the Irwin Award for the Educator of the Year from the Business Policy and Strategy division of the Academy of Management.

  Ghemawat works with companies, governments, multilateral institutions, and business schools on international opportunities and challenges. He consults on strategy and leadership development around the world and is a regular speaker on globalization-related topics. He also served on the taskforce appointed by the AACSB, the U.S.-based accreditation body for business schools, on the globalization of management education, and authored the report's recommendations concerning what to teach about globalization, and how.

  For more information, visit www.ghemawat.org.

  Notes

  Chapter One

  1. See Pankaj Ghemawat, Redefining Global Strategy (Boston: Harvard Business School Press, 2007), especially chapters 4–7 or, for an abbreviated treatment, Pankaj Ghemawat, “Managing Differences: The Central Challenge of Global Strategy,” Harvard Business Review, March 2007, 58–68.

  2. Wolf Schäfer, “Lean Globality Studies,” Globality Studies Journal, no. 7 (2007): 1–15.

  3. See Douglass C. North, John Joseph Wallis, and Barry R. Weingast, Violence and Social Orders: A Conceptual Framework for Interpreting
Recorded Human History (New York: Cambridge University Press, 2009), 21.

  4. Smithsonian Museum of Natural History, “Homo Sapiens,” http://humanorigins.si.edu/evidence/human-fossils/species/homo-sapiens.

  5. This is the period of the Neolithic revolution, see “The History of Cities,” Encyclopaedia Britannica, http://www.britannica.com/EBchecked/topic/118952/city/61355/The-history-of-cities?anchor=ref232180.

  6. See, for instance, Jared Diamond, “The Worst Mistake in the History of the Human Race,” Discover, May 1987, 64–66, http://www.environnement.ens.fr/perso/claessen/agriculture/mistake_jared_diamond.pdf. Lesser inequality actually leads Diamond—but very few others—to assert the superiority of World 0.0.

  7. See, for instance, Lawrence H. Keeley, War Before Civilization (Oxford: Oxford University Press, 1996).

  8. See Elman R. Service, Primitive Social Organization: An Evolutionary Perspective (New York: Random House, 1971), 159; Robert L. Kelly, The Foraging Spectrum: Diversity in Hunter- Gatherer Lifeways (Washington, DC: Smithsonian Institution Press, 1995), 209–216; Allen W. Johnson and Timothy Earle, The Evolution of Human Societies: From Foraging to Agrarian State (Stanford: Stanford University Press, 1987), 246; North, Wallis, and Weingast, Violence and Social Orders, 1.

  9. The estimated number of independent polities in 3000 BC is drawn from Rein Taagepera, “Expansion and Contraction Patterns of Large Polities,” International Studies Quarterly 41, no. 3 (Sept. 1997): 475–504.

  10. North, Wallis, and Weingast, Violence and Social Orders, chapter 1.

  11. This is based on rough estimates in Struggling to Survive: Children in Armed Conflict in the Democratic Republic of the Congo, Watchlist Country Report, April 2006, http://www.watchlist.org/reports/files/dr_congo.report.20060426.php?p=0).

  12. Joseph Henrich et al., “Markets, Religion, Community Size, and the Evolution of Fairness and Punishment,” Science 327, no. 5972 (March 19, 2010): 1480.

  13. In case you worry about—or are waiting for—world government, extrapolations of this long-run trend toward political consolidation suggest that the world will coalesce into one political entity after AD 3000 or even AD 4000.

  14. See Taagepera, “Expansion and Contraction Patterns of Large Polities.”

  15. Thus, medieval Italian city-states—in which influential families lived in fortified keeps and fought street battles (think Romeo and Juliet) and violent death rates remained more than a hundred times higher in Europe than they are today—still resembled the anocracies of World 0.0.

  16. Karl Marx and Friedrich Engels, The Communist Manifesto (London: Penguin Classics, 2002), 223.

  17. See, for instance, Karl Deutsch and Alexander Eckstein, “National Industrialization and the Declining Share of the International Economic Sector 1890–1959,” World Politics 13 (1961): 267–299.

  18. Keyword search of Library of Congress Catalog, January 2010.

  19. See, respectively, Paul Kennedy, Preparing for the Twenty-First Century (New York: Vintage, 1993); Anthony Giddens, Runaway World: How Globalization Is Reshaping Our Lives (London: Profile, 1999); and Joseph S. Nye and John D. Donahue, Governance in a Globalizing World (Washington, DC: Brookings Institution Press, 2000).

  20. Benedictus XVI, Encyclical Letter Caritas in Veritate, June 29, 2009, permalink: http://www.zenit.org/article-26386?l=english; and Jörg Eigendorf, “Dalai Lama—‘I Am a Supporter of Globalization,’” Welt Online, July 16, 2009, http://www.welt.de/international/article 4133061/Dalai-Lama-I-am-a-supporter-of-globalization.html.

  21. Brian Sullivan, “Rupert Murdoch Interview: Economy Weak; Danger of Inflation Great,” Fox Business Network, April 27, 2009, http://seekingalpha.com/article/133580-rupert-murdoch-interview-economy-weak-danger-of-inflation-great?source=commenter.

  22. Matt Ridley's The Rational Optimist (New York: HarperCollins, 2010) is an atypically interesting example of this subgenre.

  23. Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 2001), 145.

  24. David Ignatius, “Populism Popular at the World Economic Forum in Davos,” Washington Post, January 31, 2010, http://www.washingtonpost.com/wp-dyn/content/story/ 2010/01/29/ST2010012903888.html?sid=ST2010012903888.

  25. See, for instance, Ian Bremmer, The End of the Free Market: Who Wins the War Between States and Corporations? (New York: Penguin, 2010).

  26. “U.S. Seen as Less Important, China as More Powerful. Isolationist Sentiment Surges to Four-Decade High,” Survey Report of the Pew Research Center, December 3, 2009, http://people-press.org/report/569/americas-place-in-the-world.

  27. Phillip Blond, “The Rise of the Red Tories,” Prospect, February 28, 2009, http://www.prospectmagazine.co.uk/2009/02/riseoftheredtories/.

  28. Raj Patel, The Value of Nothing: How to Reshape Market Society and Redefine Democracy (London: Picador, 2010).

  29. Matt Ridley, The Rational Optimist: How Prosperity Evolves (New York: HarperCollins, 2010), 34–35.

  30. Loretta Radeschi, “The 100-Mile Suit,” The Crafts Report, http://www.craftsreport.com/insight-gained/99-philadelphiasuit.html

  31. See http://ecoseny.blogspot.com.

  32. Even before the crisis, cross-country evidence indicated a general connection between these ideas in many people's minds: those who were suspicious of free markets were more likely to hold negative opinions of globalization. See Martin S. Edwards, “Public Opinion Regarding Economic and Cultural Globalization: Evidence from a Cross-National Survey,” Review of International Political Economy 13, no. 4 (October 2006): 587–608.

  33. The impact of trade barriers on the volatility of food prices and better ways of responding than each country striving for self-sufficiency are discussed further in chapter 7.

  34. Specific data in this regard will be provided in chapters 11 and 15.

  Chapter Two

  1. Thomas Friedman, The World Is Flat (New York: Farrar, Straus and Giroux, 2005), 176.

  2. Arundhati Roy, “Globalization Is Ripping Through People's Lives,” speech in Lannan Foundation in Santa Fe, New Mexico, September 18, 2002, published September 27, 2002, on socialistworker.org.

  3. For World 1.0, I've used various quotes, including the following precrisis quote from a former professor of mine: “Local decision-making, productivity-enhancing technological change, and the growing demand for services will be the key forces shaping our futures—not globalization, meaning the global flow of goods and capital” from Bruce C. Greenwald and Judd Kahn, Globalization (Hoboken, NJ: John Wiley and Sons, 2009). And since excitement about intermediate levels of integration tends to be even more muted, I looked long and hard for a prior incarnation of World 3.0 before settling on the following quote from a former CEO whom I know: “There is a balance on the spectrum between ‘local’ and ‘global’ that represents the ‘sweet spot’ … I've referred to this concept of the right balance as ‘the race to the middle.’”

  4. “Many U.S. Parents Outsourcing Child Care Overseas,” video report, Onion News Network, http://www.theonion.com/content/video/report_many_u_s_parents.

  5. For a more extended discussion of semiglobalization and common misconceptions often articulated about the extent of globalization, see chapter 1 of Pankaj Ghemawat, Redefining Global Strategy (Boston: Harvard Business School Press, 2007) or, for more scholarly treatments, Pankaj Ghemawat, “Semiglobalization and International Business Strategy,” Journal of International Business Studies 34, no. 2 (March 2003): 138–152; and Edward E. Leamer, “A Flat World, a Level Playing Field, a Small World After All, or None of the Above? A Review of Thomas L. Friedman's The World Is Flat,” Journal of Economic Literature 45 (March 2007): 83–126.

  6. Estimates based on data from the Universal Postal Union and the International Telecommunication Union.

  7. Estimate based on data from TeleGeography Research and Cisco.

  8. Pankaj Ghemawat and Steven A. Altman, “The Indian IT Services Industry in 2009,” pp. 2–3, unpublished draft, August 200
9, available from www.ghemawat.org.

  9. Len Klady, “International Box Office: Boom Times,” Screen Daily, May 6, 2010, http://www.allbusiness.com/economy-economic-indicators/economic-conditions-recession/ 14397137-1.html.

  10. Pew Project for Excellence in Journalism, “The State of the News Media: An Annual Report on American Journalism,” March 15, 2010, http://www.stateofthemedia.org/2010/. The study includes content analysis of TV (network and cable), newspapers, online news sites, and radio.

  11. MediaTenor, “Different Perspectives: Locations, Protagonists, and Topic Structures in International TV News,” March–April 2006. The European figures provided are based on recent data from Switzerland, Austria, Germany, United Kingdom, and Italy.

  12. Calculations by Ethan Zuckerman, as reported in “A Cyber-house Divided,” Economist, September 4, 2010, 58.

  13. See, for instance, Parag Khanna, “Remapping the World,” in List of 10 Ideas for the Next 10 Years, Time, March 11, 2010.

  14. The figures are for a 30GB fifth-generation iPod introduced in late 2005.

  15. Greg Linden, Kenneth L. Kraemer, and Jason Dedrick, “Who Captures Value in a Global Innovation Network? The Case of Apple's Ipod,” Communications of the ACM 52, no. 3 (March 2009); Greg Linden, Kenneth L. Kraemer, and Jason Dedrick, “Who Profits from Innovation in Global Value Chains? A Study of the iPod and Notebook PCs,” Industrial and Corporate Change 19, no. 1 (2009): 81–116.

  16. On the foreign content of Chinese exports, see Robert Koopman, Zhi Wang, and Shang-Jin Wei, “How Much of Chinese Exports Is Really Made in China? Assessing Domestic Value-Added When Processing Trade Is Pervasive,” NBER working paper 14109, June 2008. For cross-country evidence, see Guillaume Daudin, Christine Rifflart, and Danielle Schweisguth, “Value-Added Trade and Regionalization,” OFCE Centre de Recherche en Économie de Sciences Po Paris, September 2008; and Robert C. Johnson and Guillermo Noguera, “Accounting for Intermediates: Production Sharing and Trade in Value Added,” unpublished draft, June 2009.