Capitalism versus Communism: Half-Time or Perfect Storm? And a Case for Optimism.
Sunshine is delicious, rain is refreshing, wind braces us up, snow is exhilarating; there is really no such thing as bad weather, only different kinds of good weather.
John Ruskin (1819-1900).
Art critic and patron, draughtsman, philosopher, philanthropist.
Students of history will recognise that the title of this book is derivative. It is ‘borrowed’ from a classic example of reportage, John Reed’s immersive account of the 1917 Russian Revolution: Ten Days That Shook the World. First published in 1919, here is the description of the work from the editor of the Penguin Classic reprint:
A contemporary journalist writing in the first flush of revolutionary enthusiasm, [Reed] gives a gripping record of the events in Petrograd in November 1917, when Lenin and the Bolsheviks finally seized power. Containing verbatim reports both of speeches by leaders and the chance comments of bystanders, set against an idealized backcloth of the proletariat, soldiers, sailors, and peasants uniting to throw off oppression. Reed’s account is the product of passionate involvement and remains an unsurpassed classic of reporting.
Reed’s passion was for the Bolshevik cause and socialism more generally, and he was unashamedly honest in stating this in his book’s introduction. But his admiration was for the cerebral Lenin, not the brutal Joseph Vissarionovich Stalin who sowed the seeds of the ultimate failure of the Soviet dream (see Chapter Three).
The novelist and social commentator George Orwell presciently foresaw this eventual failure in Animal Farm, published in 1945 when criticising ‘Uncle Joe’ was unfashionable, to say the least, especially in America.
The most memorable (and frequently quoted) line from Orwell’s allegorical novella is “All animals are equal, but some animals are more equal than others”. The inequality alluded to in this sentence has been widely interpreted as a cause for the relative demise of communism vis-à-vis capitalism, but this is fundamentally flawed for two key reasons:
- It assumes that communism has failed, which, as demonstrated in this book, as a political system it continues to thrive in a nation of 1,411,778,724 souls in China; add to this 93,000,000 in Vietnam, 25,000,000 in North Korea, 12,000,000 in Cuba and more.
- It assumes that capitalism as an economic system delivers equality in wealth. As French economist Thomas Piketty has demonstrated in his thought-provoking and successful book, Capital in the Twenty-First Century, this is patently not the case. The principal surprise is that – in contrast to what Marx had predicted – the considerable inequality in wealth that capitalism has created hasn’t (yet) attracted any significant, sustained, ‘beyond state’ rebellious reaction. From this perspective, the capitalist/communist nation-state has survived and prospered, North Korea and several ‘communist legacy’ countries excepted regarding prosperity.
What has undoubtedly triumphed is market economics. As I have chronicled throughout this book, so has international free trade and globalization’s long march (see Appendix Two) that was engineered in the aftermath of World War II (see the Introduction).
In a guest piece for The Economist, the current Director-General of the WTO, Ngozi Okonjo-Iweala, has presented her manifesto for rejuvenating the multilateral trade deals that underpin and drive the globalization process (see Chapter Nine). She also challenges those who argue that such progress is stalling:
The idea that global trade is waning has become widely accepted. Yet the perception is far from reality. Fears of de-globalization are not matched by evidence of companies abandoning foreign suppliers for domestic ones, or less trade in intermediate goods. On the contrary, global trade for merchandise is at a record high. And the overwhelming majority is conducted on the basic tariff terms that governments extend on a non-discriminatory basis to all WTO members, in line with the organization’s “most-favoured–nation” principle.
Capitalism versus Communism: Half Time? Or Perfect Storm?
This book aims to convey the dramatic series of simultaneous discontinuous changes and events that arose in an extremely short timeframe during the 1990s, a turbulence unknown since the Second World War.
During this extraordinary decade, and as the Cold War ended, political systems diverged further while economic systems based on ‘free’ markets converged as the principal means of ‘doing business’ as globalization progressed. In the 21st Century, a new political economy is taking shape: its direction of travel is shrouded in uncertainty, ‘disruption’ and multiple discontinuities.
It should be acknowledged here that there is a danger in presenting capitalism and communism as a pure dichotomy in which the two are polar opposites, although I do accept that the ‘versus’ in this section’s title suggests this to be the case. A detailed assessment of the semantics involved and the debates they embrace is beyond the scope of Ten Years, but a brief discussion is warranted.
There is a tendency in much of the literature to describe communism as a political system and capitalism as an economic system, i.e. comparing the two is akin to contrasting chalk and cheese. But there is also a rich stream of thought which expresses itself under the banner of Authoritarian Capitalism.
In Chapter Five, for example, we assessed China’s economic reforms under Deng Xiaoping in the 1980s and early 1990s. As discussed there, he stated that “We must integrate the universal truth of Marxism with the concrete realities of China, blaze a path of our own and build socialism with Chinese characteristics”, an almost perfect euphemism for the concept of authoritarian capitalism when examined alongside the actions Deng took, e.g. the creation of Special Economic Zones (SEZs) which required rapid and ‘forced’ mass movement of people into newly created supercities.
Russia is also typically cited as an example of authoritarian capitalism, particularly following the collapse of the USSR, discussed briefly in Chapter Eleven in relation to the background events which led to the country’s debt default in 1997.
At the time of writing – autumn 2021 – Xi Jinping of China and Vladimir Putin of Russia have manoeuvred politically to secure effective lifetime presidencies. Russia is increasingly likened to a dictatorship, and both countries have made provocative territorial military gestures part of their respective foreign policies.
Both China (joined in 2001) and Russia (2012) are fully signed up members of the WTO, which has international free trade and market economics as its rules-based platform. Their entry into this post-Bretton Woods institution represent highly symbolic moments in economic history wherein the two communist giants have effectively agreed to play by the rules of the capitalist game (see Chapter Nine).
There are no clear answers to the two questions raised in this section’s heading. However, as captured in this laconic quote, Deng Xiaoping’s economic philosophy does offer a clue: “It doesn’t matter whether a cat is black or white as long as it catches mice”. Many contemporary observers suggest that the true nature of competition on the global stage in the context of globalization dynamics is authoritarian capitalism versus liberal capitalism. And the likely winner? Only time will tell, and only a fool would tell you otherwise.
Essential Issues in Trade, Globalization and International Business Not Covered in This Book
Every writing project has its limitations and, while not wishing to pre-empt legitimate critique, it does need to be acknowledged that, within this book’s scope, significant regions of the globe have been largely or entirely overlooked, including:
- The populous markets within the Indian sub-continent (e.g. Bangladesh, India, Pakistan).
- The populous markets within Africa (e.g. Ethiopia, Kenya, Nigeria, South Africa).
- The populous markets within South America (e.g. Brazil, Chile, Mexico; the perennially troubled Argentina; the oil-blessed but bankrupt Venezuela).
- Much of Southeast Asia.
- The rich and poor countries of the middle east where wealth is directly related to the land-luck of oil deposits.
- The sanctions-restricted Iran.
- The coup-prone Egypt.
- The ever-turbulent Turkey.
The following Issue Categories in trade, globalization and international business stray beyond the boundaries of our studied decade, but they do influence and are influenced by it. As ever, historical events and processes have antecedents and consequences and can rarely be considered in isolation of each other.
- The spectre of Middle East conflict remained (and remains) ever-present, as does the menace of OPEC, which caused so much devastation to Western economies and geopolitical stability during the 1970s and ‘80s and left a legacy that influenced the decade explored in this book. However, it should be noted that OPEC remains vulnerable to the threat facing all cartels, ‘legitimate’ or otherwise: the rogue member, in this case, a powerful supplier who breaches production targets for financial or political gain (e.g. Saudia Arabia). Furthermore, ambitious oil exploration projects, significant advances in drilling technology (e.g. for deepwater extraction), oil ‘substitutes’ such as shale, new oil & gas extraction processes such as fracking and a political determination amongst many countries not to be dependent on foreign oil (e.g. the US), all combine to undermine OPEC’s previous influence.
- The multiple agendas of ‘Climate Change’ institutions and movements permeate all aspects of society, economics and geopolitics, and have done for decades. And they will continue to do so in the future, but with greater intensity and deeper scrutiny. As I compose this sentence, the 2021 United Nations Climate Change Conference (COP 26) in Glasgow, UK, has concluded with a spat over the coal lexicon. The multiple-language countries China and India insisted on last-minute changes to the multiple-nation (English language) climate pact, forcing a change to the pledge to “phase out” coal with one to “phase down” its use. This semantic nuance brought the British minister presiding over the event, Alok Sharma, to tears as he closed the conference. And the UK Prime Minister Boris Johnson expressed his frustration at the watered-down outcome:
While many of us were willing to go there, that wasn’t true of everyone. Sadly that is the nature of diplomacy. We can lobby, cajole, encourage, but we cannot force sovereign nations to do what they do not wish to do.
Johnson’s subtle reference to national sovereignty underlines the complexity of international relationships and diplomacy between nation-states regarding geopolitical agreements. The Swedish schoolgirl and environment campaigner Greta Thunberg’s Cop 26 ‘brief tweet summary’ will probably linger longer: “Blah, blah, blah”.
- From a broader-based economics perspective, there is no explicit discussion made in this book relating to the Marshall Plan, which played a hugely significant role in the post-war reconstruction (and political stability) of Western Europe. See Steil, The Marshall Plan: Dawn of the Cold War, for an authoritative account of the Marshall Plan and its role in the collapse of post-war US-Soviet Relations and the origins of the Cold War (discussed in Chapters Two and Three of this book).
- The role of the World Bank in developmental economics in the post-Bretton Woods era is paid little attention in this book. The Bank’s remit primarily focuses on providing loans and grants to low- and middle-income countries for capital projects such as infrastructure. Throughout the decade this book covers, the World Bank spent much energy ‘cleaning up’ the legacy of controversial policies it had pursued during the previous decades, many of which left the poorest countries with substantial debt burdens. In our decade, the World Bank also took an active role in financing global ‘public goods’ such as malaria control, ozone-depletion damage reversal and preventing deforestation in areas such as the Amazon. For example, the Bank has increasingly refused finance for commercial logging ventures or any infrastructure projects that would potentially harm the environment. When assessing the World Bank’s historical performance and prescribing its future direction, Clemens and Kremer argue for a policy focus on reducing poverty worldwide. Their article was published in 2016 in the influential Journal of Economic Perspectives, and the Bank has adopted its central tenets:
The Bank’s greatest impact comes from its role in the dramatic policy changes many developing countries have undertaken in multiple sectors that most economists would consider likely to reduce poverty, either by increasing growth or promoting equity.
- The role of the IMF in post-war economic stability has been alluded to, for example, regarding the collapse of Comecon (Chapter Three) and the Asian financial crisis/Russian debt default (examined in Chapter Eleven). The institution has not been explored in any detail, not least because it has a long and chequered history that takes it beyond the book’s scope. It is highly controversial from some perspectives; for example, it is often informally referred to as the ‘capitalism roadshow’ by its critics and even its potential beneficiaries (e.g. Malaysia in 1997). At the core of its operations is ‘conditionality’, a set of policies and conditions that the IMF requires from a country in exchange for providing financial resources. The funds will be withheld if the conditions are agreed upon but not met. The IMF requires collateral from countries for the loans it dispenses. It also requires that any government seeking its assistance – capitalist or communist, democratic or despotic – adjust its deemed macroeconomic imbalances through closely scrutinised policy reforms. Known as the ‘Washington consensus’, such reforms include fiscal (tax and spend) discipline, budget reductions, subsidy reductions, privatisation, financial liberalisation, trade liberalisation and, in some cases, an insistence on breaking up import substitution programmes by opening markets up to inward Foreign Direct Investment (FDI). The overall goal is to reduce government involvement levels in macroeconomic management and encourage a shift towards free-market economics (see the Introduction). ‘Big name’ countries that have sought IMF funding include the ever-volatile Argentina (frequent clients) and a reforming Russia during the 1990s. One of the earliest and biggest beneficiaries was the UK, which sought $4bn in 1976 to address the chronic sterling currency crisis it faced (at the time, this was the largest loan ever to have been requested from the IMF). The IMF’s loan conditions required drastic budget cuts by the UK’s government, many of which were anathema to the ruling Labour Party’s left-wing. The Party fractured, and within three years, Margaret Thatcher, a firm believer in the supply-side macroeconomic policies underpinning the IMF’s economic blueprint, won the 1979 General Election. Only half of the loan facility was drawn down, and the outstanding debt was settled before Thatcher assumed power.
- The powerful positive impact of diasporic remittances on developing economies such as Bangladesh, India, Pakistan and the Philippines is acknowledged here but not elaborated upon, even though it grew significantly and consistently in our studied decade. On a related theme, inward investments to China from overseas Chinese workers in the early days of Deng’s reforms in the 1980s contributed to China’s economic stability and growth, an important ‘hidden’ factor underpinning Deng’s success which I explored in Chapter Five.
- Finally, microfinance is a global financial services category designed for individuals and small businesses who lack access to conventional banking and related services. It includes microcredit, which provides small loans to poorer clients in already ‘poor’ countries. Payment systems, savings and checking accounts and microinsurance are also categorised under the microfinance label. These simple, low-key services aim to reach excluded, mostly poorer populations and segments within them, including the socially marginalised and geographically isolated. The principal goal of most microfinance initiatives and projects is to help these communities become self-sufficient at an ultra-local level. The microfinance movement is diverse, incorporating savings banks, agricultural and development banks, specialised rural banks, financial cooperatives and credit unions. Geographically, the highest concentration of microfinance accounts is in India, with high growth penetration taking place in West Africa and, most recently, in Eastern and Southern Africa. Some providers are private enterprises, many are state-owned or assisted, with Non-Governmental Organizations (NGOs) playing an increasingly important role. The highly fragmented microfinance ‘ecosystem’ makes it difficult to measure, both in its scale and impact on developmental economics, particularly as compared to the role of traditional trade and aid in securing stable economic prosperity in a wildly diverse political sphere. The Nobel Peace Prize in 2006 was awarded jointly to the Bangladeshi microfinance/microcredit social entrepreneur and civil society leader Muhammed Yunus and the bank he founded, the Grameen Bank. It provides a rare, universally acknowledged example of the direct relationship between economic principles and societal peace (also, see the discussion relating to the pacifist principles underpinning the early arguments for European integration in Chapter Eight). The Nobel Peace Prize awarded to Yunus and Grameen Bank recognised:
their efforts through microcredit to create economic and social development from below… lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty… across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.
Predicting the Future is a Torrid Task
Far too often, ‘Epilogues’ in nonfiction books waste words reviewing what has been written and read already, whereas their purpose should be mildly reflective but primarily forward-looking. An excellent example of this can be found in How Britain Really Works: Understanding the Ideas and Institutions of a Nation by former Times Literary Supplement editor Stig Abel. In the book’s brief epilogue, Abel announced that his wife was pregnant with their third child, Phoebe, when writing his book. He envisioned a state-of-the-nation vista of how Britain might look when his unborn child reached her teenage years in the 2030s. While this writing technique is not unique, it is well executed with reference to his book’s essence.
In the following sections, I will aim to emulate (steal) Abel’s literary insight but, in the field of globalization and its impact on international business strategy, I wouldn’t dare to dream so far ahead. Recall the quote from Lenin cited in Chapter One: “There are decades when nothing happens; and there are weeks when decades happen.” Events, dear reader, events…
Looking Back and Reflecting
This book opens in late-1987 with global financial markets in turmoil, greed in the ascendency (a sign of things-to-come), walls falling (but a trend which would be reversed), Germany reunifying, China emerging (while ground-strafing its protesting students), the USSR collapsing, George Soros rupturing the UK’s monetary policy, the fractious 1992 process limping towards a European Single Market following five centuries of turmoil and terror — and all of this within four years.
As the decade progressed, the Chinese dragon fiercely roared and its economy soared. Japan wilted while the ‘Asian Tiger’ economies of Hong Kong, Indonesia, Malaysia, Singapore, South Korea, Taiwan and Thailand flourished before many then floundered. The US quietly blossomed in a sustained period of real (non-inflationary) economic growth underpinned by cumulative annual productivity gains and technological progress.
At the outset of our tumultuous ten years, the much-maligned and misunderstood WTO, with all its rules and regulations and deterrents and structures and commitment to fair play, was still on the horizon. Meanwhile, the General Agreement on Tariffs and Trade (GATT) meandered along its half-century journey towards a belated birth of multilateral, rules-based ‘free trade’ in 1995.
In our decade, global financial markets were characterized by extreme turbulence that saw capitalism face-off against two varieties of communism, witnessed dramatic transformations in information and communications technologies, and concluded with the Asian financial crisis and the newly minted Russian state defaulting on its sovereign debt in 1998, threatening Wall St. in the process.
Ten Years chronicles these cataclysmic events and addresses many burning questions that define the modern era:
- What is globalization? And was it designed?
- Why do countries trade? And is it ‘free’?
- Risk, uncertainty and chance: Does God play dice?
- The Berlin Wall falls, Germany reunifies, Comecon unravels, the Soviet Union dissolves, the Cold War ends: Game over? Or end of Round One?
- What is liberal democracy? And did history end?
- A tale of two Chinas: What happened and why?
- The EU is born, kicking and screaming. But did this success sow the seeds of future failure?
- What is the WTO? And does it matter?
- Who invented the internet? And how did it happen?
- Capitalism versus communism: Final score or half-time?
Looking Forward to a New Enlightenment and a Case for Optimism
According to Edwin Land, founder of Polaroid, “Optimism is a moral duty”. My preferred observation on the subject comes from the barrister and ‘Rumpole of the Bailey’ author, John Mortimer: “Pessimism is the best basis for a cheerful disposition. It means that I am constantly surprised”.
Despite such positivity, much is made of the impact of social media being excessively negative, and there does seem to be an air of doom and gloom if one is foolish enough to get sucked into its sticky entrails or become hooked on 24/7 rolling news channels: they have to say something and, if they become too cheerful, you may as well switch channels and watch something more ecumenically evangelical.
Bad news sells. The print media are desperate and with good reason. Even ‘quality’ newspapers are seduced by the seductive power of ‘clickbait’ in their online presence as ‘digital natives’ engage in ‘doomscrolling’, the obsessive hunt for bad news that has fuelled so much of the web and social media in recent years.
But it’s not all bad.
In 2018, the highly respected linguist, author and philosopher Steven Pinker provided a welcome respite from the doomsayers with a reassessment of humanist progress and a renaissance of the enlightenment philosophy.
He did so with reference to solid ideas and hard statistics: we are, for the most part, leading much better lives from many dimensions of measurable or intangible perspectives. As the back cover blurb of his book states and my studying of it verifies:
If you follow the headlines, the world in the 21st century appears to be sinking into chaos, hatred, and irrationality. Yet Enlightenment Now shows that this is an illusion – a symptom of historical amnesia and statistical fallacies. If you follow the trendlines rather than the headlines, you discover that our lives have become longer, healthier, safer, happier, more peaceful, more stimulating and more prosperous – not just in the West, but worldwide. Such progress is no accident: it’s the gift of a coherent and inspiring value system that many of us embrace without even realizing it. These are the values of the Enlightenment: of reason, science, humanism and progress.
Furthermore, as The Economist noted in a 2017 special briefing on one aspect of globalization – regional inequality, primarily in wealthier, developed economies including the UK, Germany and in the mid-west USA – there are many ‘Left-behind places’. But in the briefing, they also devote attention to those economic policies that governments, both national and regional, can adopt to address the problem.
This message should be heeded, but that it is not a new idea should also be acknowledged. In his most impactful book, The Affluent Society, the influential economist John Kenneth Galbraith recognised that capitalism is great at creating wealth but less good at distributing it more equitably or allocating it in a more meaningful way for the benefit of broader society. This book was originally published in 1958 when America was drenched in post-war prosperity and ahead of the tidal wave of consumerism so perfectly captured in the TV drama series Mad Men.
Starting in the Introduction, I have discussed the seminal, visionary work of Adam Smith, and without doubt, his Wealth of Nations treatise can be seen as a blueprint for capitalism. Perhaps the most enduring critique of his philosophy has related to its emphasis on ‘self-interest’, which was at its core. But as Pinker (2018) notes:
Smith was not saying that people are ruthlessly selfish, or that they ought to be; he was one of history’s keenest commentators on human sympathy. He only said that in a market, whatever tendency people have to care for their families and themselves can work to the good of all. Exchange can make an entire society not just richer but nicer, because in an effective market it is cheaper to buy things than to steal them, and other people are more valuable to you alive than dead.
Following is a positive metaphor deeply rooted in the humanistic tradition which Pinker so eloquently describes.
The Jar: A Metaphor for Work-Life Balance
A philosophy professor stood before the class with some items on the table alongside her lectern. When the class began, wordlessly, she picked up a very large, empty mayonnaise jar and proceeded to fill it with rocks, each roughly 2″ in diameter and of uneven shape. She then asked the students if the jar was full. They agreed that it was.
The professor then picked up a box of pebbles and poured them into the jar. She shook the jar lightly. The pebbles, of course, rolled into the open areas between the rocks. She asked the students again if the jar was full. They agreed that it was.
The professor then picked up a box of sand and poured it into the jar. Of course, the sand filled up the tiny spaces that existed between everything else. She asked once more if the jar was full. Despite suspecting upcoming deceit but enjoying the entertainment not generally associated with a heavy subject, the students responded with a unanimous “Yes!”.
The professor then produced two cans of beer from under the podium and proceeded to pour their entire contents into the jar, effectively filling the empty space between the sand. The students laughed.
“Now,” said the professor, as the laughter subsided, “I want you to recognize that this jar represents your life. The rocks are the important things — your family, your partner, your health, your children. Things that if everything else was lost and only they remained, your life would still be full. The pebbles are the other things that matter, like your job, your house, your car. The sand is everything else — the small stuff. If you put the sand into the jar first,” she continued, “there is no room for the pebbles or the rocks. The same goes for your life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you. Pay attention to the things that are critical to your happiness. Play with your children. Take time to get medical check-ups. Take your partner out dancing. There will always be time to go to work, clean the house, give a dinner party and fix the car. Take care of the rocks first — the things that really matter. Set your priorities. The rest is just sand.”
One of the students raised his hand and cheekily inquired what the beer represented.
The professor smiled. “I’m glad you asked. It just goes to show you that no matter how full your life may seem, there’s always room for a couple of beers”.
The fashionable focus on work-life balance alluded to in ‘The Jar’ is not new. Arnold J. Toynbee (1889-1975), philosopher of history, a long time ago contended that:
The supreme accomplishment is to blur the line between work and play.
The Benefits of International Free Trade Face Political Obstructionism
From political economy to competitive advantage, there have been two recurring themes throughout this book:
- The benefits of free trade between nations to society and economies have been proven over centuries, not decades, despite opposing forces, including world wars, cold wars, financial catastrophes, and global pandemics.
- The critical role of free markets (supply and demand) in driving customer choice, competitive dynamics, innovation and productivity is equally proven, a powerful testament to the wisdom and prescience of their early proponents, Adam Smith and David Ricardo.
In a well-regarded and widely disseminated 2018 discussion paper for the Institute of Economic Affairs, Free Trade And How It Enriches Us, Prof. Donald Boudreaux praises international free trade as an economic principle but draws attention to the vagaries of political interference with its progressive impact.
The case for free trade has been familiar to economists since the work of Adam Smith in the late eighteenth century and David Ricardo four decades later. But politicians keep forgetting it, if they ever knew it … The 50-year post-World War II international consensus in favour of free trade was a triumph of wise policy over demagoguery. Alas, that consensus is collapsing.
Prof. Boudreaux was writing at the height of Donald Trump’s rhetoric surrounding his ‘America First’ isolationist US foreign policy stance. Trump’s bombast was backed up by:
- Replacing the North American Free Trade Agreement (NAFTA) with the United States–Mexico–Canada Agreement (USMCA), ratified by all three countries in March 2020.
- Triggering US/EU tit-for-tat tariff-setting.
- Initiating aggressive on-off trade wars with China.
- Undermining the post-Bretton woods rules-based institutional frameworks discussed in the Introduction, i.e. the WTO, IMF and the World Bank.
- Numerous geopolitical destabilising decisions, including withdrawal from the Paris Climate Accords (effective 2016) and The Joint Comprehensive Plan of Action (the Iran nuclear deal, implemented 2016).
- Threatening to ‘defund’ NATO amongst other international military organizations and affiliations.
At the time of writing this second edition of Ten Years, Trump was gone. The world is now waiting anxiously to decipher the international trade and foreign policy posture of the new(ish) US Administration, focussing in particular on which elements constitute the emerging ‘Biden Doctrine’.
Despite the above, the economics of Adam Smith and David Ricardo have stood the test of time, as Smith’s most recent biographer, Jesse Norman, observes:
And there is one thing that Smith gets triumphantly, monumentally right, that guarantees his place among the immortals: he sets himself to address the foundational question of how far the pursuit of individual self-interest through cultural and market exchange can yield economic growth and socially beneficial outcomes. That marks the moment at which economics starts to come of age.
In the Introduction to Ten Years, I discussed uncertainty, risk, risk assessment and mitigation. And I also contemplated randomness as a greater terror. As I conclude the book in this epilogue, it is worthwhile revisiting the observations made by Sir John Kay, an economist and business strategy professor, and Lord Mervyn King, a former Governor of the Bank of England, from their 2021 book Radical Uncertainty: Decision-making for an unknowable future:
We live in a world of radical uncertainty in which our understanding of the present is imperfect, our understanding of the future even more limited, and in which no one person or organisation can hold the range of information required to arrive at the ‘best explanation’.
It is rare to see the complex interrelatedness of macroeconomic and microeconomic issues discussed within one book. The ‘decision-making’ in the book’s title could refer to economic policies determined by politicians and institutions such as the WTO, the IMF, the World Bank, and international business strategies developed by corporations. Information and knowledge can be used to ‘look back and explain’ or to ‘look forward and predict’. Regarding the latter category, we can meticulously and systematically reduce information interpretation errors by adhering to a structured approach such as the one presented below:
- Issue Identification:
(opportunities, threats, critical success factors).
- Issue Identification:
- Political, economic or business strategy decisions:
- Political, economic or business strategy decisions:
- Performance review, evaluation and control:
- Performance review, evaluation and control:
- Do it again!
- Do it again!
This knowledge management process is adapted from the complex markets analysis process presented in Chapter Five, Analysing Global Markets and the Intelligent Company of Outside Fortress Europe: Strategies for the Global Market. In that book, I present comprehensive lists of the data-set categories that provide the essential inputs into a robust intelligence creation process to guide effective decision-making in business strategy.
Ten Years has examined significant events and historical economic and political processes as they have unfolded over the decade under study: 1988-1998. I have extended the analysis to provide a similar but brief assessment of the two decades that followed, and this is included as Appendix One, 1998 – 2018: A Brief Overview.
In Appendix Two, I present a comprehensive table of significant milestones in ‘the long march of globalization’, from Ötzi ‘the Iceman’ millennia ago to Donald Trump’s international trade shenanigans and the impact of the smartphone and social media network revolutions at the time of writing this book.
A series of questions concludes this book.
Do we take a chance and roll the dice to make our decisions and determine our future? Or do we study, think, learn, and apply the great ingenuity, patience, perseverance, endeavour, stubbornness, and sheer bloody-mindedness that distinguishes our species and its innate humanity?
Can we cooperate, or must we compete? Is big data big enough? Will the machines learn, and will our intelligence be artificial or natural or both? And how do we compute complexity? As Albert Einstein observed:
Any intelligent fool can make things bigger and more complex. It takes a touch of genius and a lot of courage to move in the opposite direction.
I give the last word on wisdom in this book to Plato (423-347 BCE), Greek philosopher and higher education pioneer:
A good decision is based on knowledge, not numbers.
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