Global Economic Warfare
Competitiveness between economic regions
Excerpted from Transcompetition, by Harvey Robbins & Michael Finley, McGraw-Hill/Business Week Books, 1998
Copyright (c) 1998 by Michael Finley and Harvey Robbins
For the past few chapters we have been looking at transcompetitive dynamics, starting very close up, looking at the factors of personality that determine a person's competitive nature, then slowly pulling away to look at more complex entities:
Lester Thurow describes the transcompetitive world in terms of shifting tectonic plates. Each plate is always doing something, and as information moves more rapidly from one plate to the next, the actions of one region affect the other. The great economic regions each constitute a plate -- the Pacific Rim, Southern Asia, the Middle East, Europe, the Americas.
Plate tectonics is important because it explains why the earth gets the shimmies every now and then. Earthquakes occur because something happened underneath our feet. A card was pulled out of a house of cards, and the rest of the cards bore the brunt of the change.
But plate tectonics also causes the slower, almost imperceptible changes that fundamentally alter the earth's surface within what are for geology short periods of time. What seems static, the surface of the earth, is in reality in constant flux. The Indian plate pushes under the European plate, and what is by weight the world's largest mountain massif, Nanga Parbat, in the Himalayas, rises more than two feet every hundred years. Relatively quickly something significant happens -- Nanga Parbat becomes the world's tallest, as well as the world's heaviest, mountain.
Could there be a more coherent image for the scale of connectedness? Everything we do affects everything everyone else does. Though we seem separate, we are in fact in continuous contact with one another, in a continuous dance of stimulus and response.
More importantly, we must deal with the fact that the economic plates, unlike the geological ones, are within our control. They are conscious. Though what our neighbors do affects us, and may trigger a unrecallable reaction, we don't have to initiate any kind of shift unless we want to.
The In-Between age
What are the plates doing right now? They are seeking to achieve and maintain peaceful alignment -- they, and we, are enjoying a transcompetitive phase. NAFTA is linking the countries of North America to one another, and will soon add more, starting with Chile. The short-term results of NAFTA have been mostly bad, but the countries involved seem to think their best bet is regional cooperation.
The European Union is stronger than NAFTA because it is a union with teeth, not just a loose confederation. Countries like the UK and Denmark continue to drag their feet on the issues of sovereignty and identity, but the Union goes forward nonetheless.
Though developed Asian nations belong to AsiaPAC, Asia is less united than either Europe or the Americas. But it does not need unity. It has something more precious: momentum. China's economy is growing at a faster rate than any large nation in history, and with no obvious ill effects. The U.S. keeps extending China most favored nation status, in hopes China will encircle its outlaw industries -- everything from shoemaking to software piracy -- and exact change. (This, despite the fact that the worst pirates in China appear to be its own army, freelancing in the music and software counterfeiting business to pay its bills.) Japan, in the fourth year of negative growth, is like the snake that ate a great meal and is now pausing to digest it. The second-tier countries of the Pacific Rim and Southeast Asia, from Korea to Singapore and Thailand, seem unstoppable in their determination to compete on a global basis. Even India is flexing its strength as an arm's-length provider of high-tech services, including software programming, to the world.
But it is a tenuous phase. The new world order still has one foot in a dreadful past, of pogroms and invasions, and one in the hopeful future of people prospering by getting along. The new age that so many books describe never seems to arrive. We are always in an in-between age, like a boat on a river, forever approaching the next bend.
William Greider, author of One World, Ready or Not, worries that, behind the curtain of international cooperation, supercompetition is hard at work, an engine revving the world up to global cataclysm. "Global capitalism," he said, "is running out of control to some kind of abyss."
Greider surveyed the world, and found much that is ominous, including the way "global finance turns manic ... as an army of Luddites assembles across the world."
Does free trade benefit the world? He cited a visit to a Chinese factory where machinists make $50 a month to assemble parts for Boeing, all under the eyes of Communist cadres. The process seems brutal. But, as a Boeing engineer there said, it was once worse. "They used to shoot them."
Moreover, how long can Boeing's $4,000 a month machinists compete with the Chinese machinists? Greider cited Boeing engineers who told him, "The things you talk about are the things we talk about every day of the week at the Boeing Company."
In textbooks free trade benefits everyone, Greider said. But in the real world, it doesn't work that way. China forces Boeing to farm out work to China. Someday China may be able to build its own aircraft and compete with Boeing. Trade agreements are no help, Greider said. "Boeing is not going to complain about its customers in China."
While the big players play footsie with one another, the little players get hurt. Greider visited the site of a factory in Bangkok where 185 workers died in a fire in 1996. It was the worst accident in the history of capitalism, worse than the infamous Triangle Shirtwaist Factory Fire in 1911. But the world was less desensitized to industrial deaths then. The Triangle fire provoked shame and outrage. But had you even heard of the 1996 fire, the worst in the history of capitalism? In the calculation to provide low-cost goods to Western buyers, 185 lives were never factored.
When we first began writing this book, one publisher we approached was overjoyed at the topic. But we found out his reason was less happiness than horror.
"Thank God someone is doing this," he said. "You know, we put out all these books on the new age, and how everything is getting to be so rosy, with empowerment, and customer focus, and workplace democracy. But it just isn't like that out there. The stories we are hearing about competition at the international level are bloodcurdling. Companies are buying and selling the countries they do business in. Workforces are being cashed in on a whim, and work is being sourced for a third the cost 5,000 miles away.
"I really feel that we are drawing close to a blowup of the kind we haven't seen since the beginning of World War II. And the cause won't be borders or ethnic cleansing or political ambition. It will be because a few companies were helpless to control their own will to win."
