The fragility of a flat world

The world is flat! So says the columnist Thomas Friedman, who chose that provocative title for his best-selling book to awaken people to the dramatic effects that technology is having on the world economy.

Distance is shrinking. Geographical barriers no longer provide easy protection. Manufacturing workers and high-tech professionals alike in Europe and America are being challenged by global competition. Western consumers who call a local company are likely to speak to someone in India.

Skeptics have pointed to the limits of Mr Friedman's metaphor. As one put it, the world is not flat, but "spiky". A contour map of economic activity in the world would show mountains of prosperity and many ravines of deprivation.

Moreover, distance is far from dead. Even neighbours with low tariff barriers, like Canada and the United States, trade more internally than across borders. Seattle and Vancouver are close geographically, but Vancouver trades more with distant Toronto than with nearby Seattle.

Such criticism notwithstanding, Mr Friedman makes an important point. Globalisation, which can be defined as interdependence at inter-continental distances, is as old as human history. Witness the migration of peoples and religions, or trade along the ancient silk route that connected mediaeval Europe and Asia. But globalisation today is different, because it is becoming quicker and thicker.

After the first trans-Atlantic cable in 1868, Europe and America could communicate in a minute. In 1919, the economist John Maynard Keynes described the possibility of an Englishman in London using a telephone to order goods from around the world to be delivered to his house by the afternoon. But Mr Keynes's Englishman was wealthy and thus exceptional. Today, hundreds of millions of people around the world have access to global goods in their local supermarkets.

Similarly, as recently as two decades ago, instantaneous global communication existed, but was economically out of reach for most people. Now, virtually anyone can enter an internet café and enjoy a capability that was once available only to governments, multinational corporations and a few individuals or organisations with large budgets. Tremendous declines in computing, communication and transport costs have democratised technology.

Only a decade ago, two-thirds of all Internet users were in the US. Today, less than a quarter are located there. Knowledge is power, and more people have access to information today than at any time in human history. Non-state actors now have capabilities that were once limited to governments. The nation-state is not about to be replaced as the dominant institution of world politics, but it will have to share the stage with more actors, including organisations like Oxfam, celebrities like Bono, and trans-national terrorist networks like Al Qaeda.

But flattening is reversible. It has happened before. The world economy was highly integrated in 1914 but economic interdependence declined during the next three decades. The global economy did not recover that same level of integration until 1970, and even then it remained divided by the Iron Curtain.

World War I was the trigger that set off the reversal, with economic globalisation declining while military globalisation increased, as witnessed by two world wars and a global cold war. This reflected deeper problems of domestic inequality created by nineteenth-century economic progress.

Politics did not keep pace and the result was the rise of pathological ideologies - fascism and communism - that divided nations and the world. The creation of the welfare state in Western countries after World War II helped to create a safety net for people disadvantaged by economic change, thereby encouraging them to accept the return of international economic interdependence.

Some analysts see China playing a role today similar to Germany's role in the 20th century. A rising power, beset with internal inequality, turns to nationalism and challenges the dominant power, provoking a war that turns back the progress of economic globalisation. While the American and Chinese economies are highly interdependent today, so, too, were Germany and Britain before 1914.

But the analogy is imperfect. Germany had surpassed Britain in industrial production by 1900. Even at its current high rates of growth, China's economy is unlikely to equal that of the US for at least two more decades.

The greater threat to a flat world is likely to come from the non-state and trans-national forces that have been unleashed by the diffusion of technology. On September 11, 2001, a non-state network killed more Americans in a surprise attack than the government of Japan did at Pearl Harbour in 1941. I have called this the privatisation of war.

If such actors obtain nuclear and biological materials, the world will look very different. Borders will become harder to cross for both people and goods. And if such actors disrupt the flow of oil from the Persian Gulf, home to two-thirds of the world's reserves, a global depression like that of the 1930s could strengthen protectionism further.

Globalisation has two driving forces: technology and policy. Thus far, policy has reinforced the flattening effects of technology. As the world's largest economy, the US has taken the lead in promoting policies that reduce barriers. But the events described above could reverse such policies.

Some critics of globalisation might welcome such an outcome. But the result, as we saw after 1914, would be the worst of both worlds - reversal of the economic globalisation that spreads technology and power, but reinforcement of negative dimensions of military and ecological globalisation, such as war, terror, climate change, and the spread of infectious diseases. In that case, the flat world could become a desert.

The author is a professor at Harvard University and author of Soft Power: The Means To Success In World Politics.

Project Syndicate, 2006.
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