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A unified planet suddenly seems possible
555
EDITOR’S A unified possible
INTRODUCTION planet
suddenly
seems
Just a few years ago, who would have thought that Ronald Reagan would agree with the ‘Evil Empire’ to reduce nuclear arms; that the USSR would hold free elections; that Hungary and Poland would be moving towards the West; that the UK, France, Germany, Italy, and other former enemies would States of Europe’; that the Chinese be talking seriously about a ‘United would revolt against their government; and that US corporations like Avis, Polaroid, and Lockheed would be owned by their employees, working and collaborating with their competitors? Yet closely with government, these dramatic changes have become a common part of life today as we enter the 1990s. A new global order is emerging, with a vengeance. Enormous obstacles remain, as we are reminded daily by each new crop of crises in China, the USSR, and even in the USA. But enormous forces also seem to be driving the world towards an old dream that has eluded the long advance of civilization. Until recently the very idea that the Earth would be integrated into a single whole was so monumental that it was almost universally regarded as radical, unworkable, or utopian. Now a unified planet suddenly seems possible. The papers in this special issue of futures help explain the origins of the global economy, the unusual challenges this remarkable development poses, and where the world seems to be heading. They were presented at the George Washington University Conference on the Global Economy held in Washington, DC, USA, in December 1988, which Hazel Henderson and I organized. We felt that international events had accelerated to a new phase, and so we brought together 50 scholars, politicians, and business executives from around the world for a two-day seminar to explore the emerging global economic order. Later, the editors of Futures invited me to edit the conference papers for this special issue. The first paper by Michael Marien, Editor of Future Survey, provides a broad overview by analysing the prospects for increasing ‘globalness’ in terms of driving forces and barriers. Major driving forces include the explosion of information technology which is knitting the world into a tight skein of communications, and seminal ideas like Europe 1992, common while the inhibiting barriers include security, and sustainable growth; nationalism, a gap between rich and poor nations, outworn ideologies, information overload, and ineffective institutions. Although these barriers
FUTURES December 1989
556
Editor’s
introduction
are formidable, on balance, Marien thinks increased globalness is inexorable. Next, futurist and social entrepreneur Hazel Henderson offers a panoramic view of what this all means. She describes how natural processes of planetary development are moving all of us from the old East-West world game of ‘mutual assured destruction’ to a new North-South world game of ‘mutual assured development’: the globalization of production and markets; rising COSIS of environmental decay and nuclear arms; and the movement of people, currency, and information across borders. These historic developments are unifying the world-whether we are ready or not-into what should become a more cohesive and more benign whole. The most successful nations today such as Japan understand that cooperation is more productive than c-onflict, that human and social factors are now more critical than capital. Stuart Umpleby, Professor of Systems and Cybernetics at George Washington University, then draws on cybernetic principles to outline how the emerging global order may effectively be controlled. Umpleby shows that all systems regulate the ‘variety’ in their environment using a hierarchy of control methods, starting with the ideas used to define the system, which and ending with methods for controlling produces regulating structures, deviations. This framework leads to a strategy for creating a unified global system: first define and disseminate global concepts, then translate these into global institutions, and finally monitor world performance for corrective action. Turid Sato, formerly with the World Bank and now a consultant in economic development, identifies what may be the major cause for lagging development in the Third World. The debt crisis is only a visible symptom she claims. The real problem is that aid of the more basic problem, provided by institutions like the World Bank is organized primarily to serve If we really hope to assist the poor, the needs of the programme sponsors. it will be necessary to devise a different process that helps these nations find their own solutions to their unique needs by drawing on their own special strengths. Robert Hamrin, an independent economist who has worked on major addresses the urgent need for an ethical projects for the US government, Although Hamrin begins with an ‘appeal to the model of global economics. heart’, he is not simply moralizing but urging a hard look at the illogical way modern people find themselves helpless victims of the old mechanistic model of economics inherited from the industrial past. Instead, he proposes a more reasonable basis for an effective global economy that draws on religious ideals to create a human-centred system that includes social values, promotes economic justice, and fosters a conservation ethic. While these first five papers deal with the global economy in general terms, the last four focus on particular regions of the world. Abdul Said, Professor of Peace Studies at American University, illuminates the poorly understood but rich economic heritage of the Middle East. Said notes that neither capitalism nor socialism are workable here since they divorce Islamic people from the moorings of their culture. This troubled region must rediscover its identity anew by formulating a modern form of Muslim economics based on devotion to God, community service, human values,
FUTURES
December
1989
Editor’s
introduction
557
Moreover, bringing this Islamic model of and other Islamic principles. development alive would help all other people realize that, rather than being divided by our differences, we should prize them as assets. Fang Kai Bin, Director of the Shanghai Institute for Science of Sciences, describes China’s emergence as a major economic power in the global economy. The recent suppression of dissent in Tiananmen Square may leave this description a bit dated, but Professor Fang’s comments remain generally valid. He points out that China should become an advanced nation in time, participating actively in the globally integrated, high-technology world now developing; however, it also intends to do so on its own terms, which differ mainly in that China seems determined to retain social control over its market system. Tamas Meszaros, Dean of the Industrial Economics Faculty at Karl Marx University in Budapest, provides an insider’s analysis of the restructuring now underway in East Europe. Meszaros shows how the Hungarian economic system has evolved through three distinct stages on its road to a decentralized, market economy governed by a multiparty political process. However, there remain enormous obstacles, he cautions, and various members of the socialist bloc will follow different paths of development. The final paper by Chiaki Nakano, a research associate at the Institute of Moralogy in Japan, examines the factors that have allowed his nation to become the most successful competitor in the world. Nakano attributes this success to Japan’s ability to synthesize two forces usually regarded as the creative freedom of capitalism and the antithetical by other nations: cohesive community of socialism. This synthesis is best articulated, he feels, by a Japanese scholar, Professor Hiroyuki Itami, who formulated the concept of the ‘humanistic enterprise system’. Nakano thinks this model should spread to dominate the world because it is both efficient and equitable.
Common
patterns
Readers will find their own personal meanings in this rich assortment of diverse papers, but what general conclusions do they suggest as a whole? True, the contributors all share a ‘progressive’ perspective, which is why they were invited to our conference. However, they come from many nations around the world, they draw on a variety of intellectual disciplines, and represent different political views. Yet despite all this diversity, I find that some common patterns run through the papers.
Technological
change
Henderson, Marien, Fang, Nakano, and others to a lesser extent, all agree that the emergence of a global economy is being driven by the power of unprecedented technological change. Possibly the biggest event of our time is that computerized information systems are rapidly integrating the planet into a unified whole. Mikhail Gorbachev, arguably the most influential politician today, recently told the UN that the world is becoming ‘a single global organism’. This new reality was illustrated dramatically when the Wall Street crash of 1987 reverberated almost instantaneously throughout the
FUTURES
December 1989
558
Editor’s
introduction
financial centres of the entire world, and it also seems to underlie the world-wide explosion of social change that has recently appeared in such Poland, Hungary, the USSR, diverse regions as the Philippines, China Europe, and the Middle East. The recent revolt in China, for instance, was fostered to a large extent by the power of global media that now reaches 800 million Chinese who have access to TV sets.
But many of the papers in this issue also raise a difficult question: How can the world economy be unified without somehow reconciling the old conflict between capitalism and socialism that has polarized the globe? True, socialism is so badly discredited around the world presently that many are quick to think the problem is essentially resolved because capitalism will soon reign supreme. Francis Fukuyama of the US Department of State created a minor uproar with his widely read article claiming that the decline of socialism represents nothing less than ‘the end of history’. He notes, ‘what we may be witnessing is . . . the end of mankind’s ideological evolution and the emergence of Western liberal democracy [capitalism] as the final form of human government’*’ Socialist nations may realize that they must adopt market mechanisms, but this hardly means they will emulate the ‘anything goes in the pursuit of profit’ system now running rampant in the USA and the UK, which is reaching such a frenzy of greed that it seems likely to trigger a political backlash. Does anyone really believe that the USSR will allow raiders like T. Boone Pickens to dismember their carefully planned state enterprises? Can you imagine China permitting billionaires such as Don Trump to play Monopoly with the real estate in Beijing? Recent polls show that 86% of the Soviet people hold an ‘equal income ethic’ that runs counter to central capitalist tenets like profit making.I Capitalists may be tempted to gloat over the failures of socialism, but they might be wise to show a little humility about the faults in their system. No one doubts that the USA, for instance, enjoys an unusually creative form of entrepreneurial freedom that has produced great material abundance, yet it suffers from poor health care, a failing educational system, crime and drug use among the worst in the world, a growing underclass stunted by serious poverty, and other major social problems. One study ranked the USA 27th in overall quality of life among 124 nations.’ The evidence also shows that US economic performance itself has been mediocre of late. Growth in GNP, productivity, capital investment, and average wages have been below other industrialized nations during the last decade, and respected studies conclude that the nation is undergoing a serious decline in competitiveness.4
The relative strengths and weaknesses of various economic systems is a huge, complex topic beyond the scope of this brief introductory essay, but another major theme running through these papers suggests how the conflict between capitalism and socialism may be resolved. Henderson,
FUTURES
December
1989
Editor’s
introduction
559
Hamrin, Said, Fang and Nakano argue that one of the greatest needs facing the world is to create a synthesis of the best qualities in both systems: the creative genius, productivity, and entrepreneurial freedom of markets that has made the USA, Canada, the UK, Hong Kong, and other basically capitalist nations wealthy, combined with the social equity, security, community, and other advantages that are prized in socially controlled economies like those of China, the USSR, Eastern Europe, France, Greece, Yugoslavia and Egypt. The papers in this special issue contain ample evidence of both sets of Meszaros, Fang and others point out that market advantages. Marien, prices, entrepreneurship, decentralization, and related free enterprise concepts are spreading rapidly around the world because the exploding complexity of an intensely competitive, high-technology, global economy cannot be successfully managed with centralized government controls. At the same time, Henderson, Umpleby, Sato Danforth, Hamrin, and Said point out that cooperation, participative leadership, the use of social indicators, and other such policies that generally foster the public welfare are no longer simply ‘nice’ or ‘desirable’; these various ‘social’ or ‘democratic’ practices are beginning to exceed capital, technology, and related material resources in importance, since human and intellectcal resources are becoming more critical in the knowledge-based economres that are emerging today. The great power of Japan offers the most visible example, as noted in Nakano’s paper, but the same trend can be seen in Europe, progressive elements in the USA, and some socialist nations. About a half-dozen countries including Japan, West Germany, and the Scandinavian states have the highest overall quality of life in the world because they have carefully cultivated mixed economies combining markets and social control. Leadingedge US corporations like IBM, GM Saturn, and NCR have been developing a ‘democratic’ model of enterprise that is more productive since it unifies the interests of investors, employees, customers, the public, and government-a ‘new capitalism’.5 Even competitors are collaborating. One of the most striking trends in the USA today is the formation of collaborative working relations between competing firms that take the form of R&D consortia, joint ventures, business-government projects, and various other ‘strategic alliances’. At the other end of the political spectrum, the Soviets, Chinese, and other socialist nations seem intent on inventing an ‘advanced’ form of ‘market socialism’ that serves the public welfare better. A key strategy might be to adopt a democratic type of decentralized planning among workers, managers, government and the public while operating within free marketsa ‘new socialism’. The Konveyer plant in the USSR has developed a system in which workers buy shares in the enterprise, which has allowed the company to operate so smoothly without help from Moscow that employees received a 20% dividend in 1988. ‘We are looking for new ways to live, and this seemed ideal’, said the plant manager. A Chinese official expressed doesn’t have a patent right over markets. their goals this way: ‘Capitalism We’re trying to establish an unprecedented form of market economy based on public ownership.’ Thus, it seems to me that a seminal new idea is emerging today out of a
FUTURES
December
1989
560
Editor’s
introduction
wave of creative, pragmatic experimentation flowing everywhere. There is a dawning realization that decentralized free markets are essential to manage diversity and complexity, while collaborative working relations are also necessary to draw all this grassroots activity together into a coherent whole at the level of the individual enterprise, national economies, and the entire globe. If this critical trend continues, it could ignite an intellectual awakening that might spread like wildfire around the world to produce a new economic order constructed on a powerful new blend of both free enterprise and democracy, of material and social values, right- and left-wing orientations, competition as well as cooperation, both capitalist and socialist ideals. Differences will always flourish to serve the unique needs of individual cultures, but they are likely to be seen as variations on this central model of political economy that will form the basis for a unified global order, what I have called ‘democratic free enterprise’.6
Challenges
ahead
Events will not work out quite this way, of course, and the historic challenge of redefining capitalism and socialism is so great that it seems certain to produce a rolling series of massive new crises. In the socialist bloc, the ‘Tienanmen Square syndrome’ is the most obvious danger but many other problems abound. For instance, reforms in the USSR have thus far largely produced such chaos that even the old system, bad as it was, is now breaking down out of sheer confusion. State enterprises are flatly refusing to fulfil their production targets, many major companies are failing and should be declared bankrupt, strikes are beginning to paralyse the econinflation is rising, and the state is running a deficit of about omy, $160 billion per year. These political pressures may prove too great for the charismatic Gorbachev himself. A Soviet leader confided to me that he does not even want to think about what could happen if Gorbachev falls from power. The capitalist world seems more assured presently, but the ‘great crash of ‘87’ may be an omen of serious trouble ahead. In the USA, the budget and trade deficits show little sign of abating, economic performance remains modest, raiders hold corporations hostage to takeovers, and big business seems paralysed by the same debilitating bureaucracy condemned in big government. John Akers, Chairman of IBM, one of the best managed corporations in the world, acknowledged recently that the company is strangling in its own bureaucracy. It is hard to envision continuing for long in this same way. These are enormous obstacles. They may not be overcome soon, and some failures will undoubtedly occur, but I am more impressed with the massive technological forces that are now integrating the world. The creation of new global institutions for the information age seems inevitable over the long term of IO-20 years for the same reason that the old institutions dominated the industrial age: not because of good intentions, altruism, or even sound planning, but because a more productive blend of democracy and free enterprise has now become functionally necessary to survive under the difficult conditions looming ahead, and so it is rapidly becoming one of the most powerful forces in the world. The evidence, it
FUTURES
December
1989
Editor’s
introduction
561
seems to me, shows that traditional forms of capitalism and socialism may offer special advantages, but they also suffer severe disadvantages because of structural limits in both systems: economic freedom is creative but socially disruptive, while government controls are orderly but stifling. The next great step in social development, as this special issue of Futures suggests, is to synthesize these two once-great ideologies into a common conceptual framework upon which to construct a unified global economic order. Some time in the next decade or two, roughly about the turn of this century, I estimate that the union of a new capitalism and the new socialism universally accepted model of global should create a more powerful, enterprise able to work effectively throughout most economic systems of the world. Even now, global corporations from major nations are starting thereby beginning to intermesh joint ventures in each other’s countries, national economies into one indivisible whole that may in time include a common global currency and central banking system. This economic breakthrough, along with other developments like the global information systems now forming very rapidly, should then produce a vibrant global economy, reduce armaments, and create some type of world governance. Before too long, we could see the growth of economic blocs like the EEC and the Pacific Basin merge into a single global system of unrestricted trade, and partnerships might form between developed nations and the Third World, all fuelled by an explosion of international communications and travel that should weave the world’s cultures together into a rich tapestry of diverse and languages. It appears likely that even the former races, religions, antagonism between the USA and the USSR may be transformed into a close working relationship. these remarkable but realistic From a broad, historical perspective, prospects-which would have been thought impossible a few years agoindicate that the long evolution of civilization may be leading to some shows a tortuous but steady trend of aggregation climatic phase. History into ever larger social systems: from primitive tribes, to cities, to nations, to A Soviet colleague and I have been studying how this superpowers. long-term trend seems to be moving nations together as the revolutionary force of information technology spreads to create a central nervous system for the planet. We conclude that this historical trajectory should soon reach the next logical stage of human progress: a coherent, manageable, unified global order that works-One World.’ William
E. Halal
Professor of Management George Washington University Washington, DC 20052, USA
Notes and references 1. Fukuyama’s article, ‘The end of history’, appeared in The Washington Post, 30 July, 1989. 2. As reported in the Soviet journal, 20th Century and Peace, March, 1989. 3. Richard Estes, paper presented at the Global Development Conference, University Pennsylvania, College Park, PA, USA, 15 September, 1986.
FUTURES
December
1989
of
562
Editor’s
introduction
4. For instance, see the report of the MIT Commission on Industrial Productivity, Made in America; Regaining the Competitive Edge (Cambridge, MA, USA, MIT Press, 1989). 5. As explained in William E. Halal, The New Capitalism (New York, Wiley, 1986). The superior performance of this concept is demonstrated by studies of Lee Preston, ‘Stakeholder management and corporate performance’, a paper presented at the Conference on SocioEconomics, Harvard University, 1989. 6. Preston, op tit reference 5. 7. See my articles, ‘Political economy in an information age’, in Lee Preston (editor), Research in Corporate Social Performance and Policy (Greenwich, CT, USA, JAI Press, 1988); or ‘One world: the union of a new capitalism and a new socialism’, in Howard Didsbury (editor), The Future: Opportunity not Destiny (Washington, DC, USA, World Future Society, 1989).
FUTURES
December
1989
EDITOR’S A unified possible
INTRODUCTION planet
suddenly
seems
Just a few years ago, who would have thought that Ronald Reagan would agree with the ‘Evil Empire’ to reduce nuclear arms; that the USSR would hold free elections; that Hungary and Poland would be moving towards the West; that the UK, France, Germany, Italy, and other former enemies would States of Europe’; that the Chinese be talking seriously about a ‘United would revolt against their government; and that US corporations like Avis, Polaroid, and Lockheed would be owned by their employees, working and collaborating with their competitors? Yet closely with government, these dramatic changes have become a common part of life today as we enter the 1990s. A new global order is emerging, with a vengeance. Enormous obstacles remain, as we are reminded daily by each new crop of crises in China, the USSR, and even in the USA. But enormous forces also seem to be driving the world towards an old dream that has eluded the long advance of civilization. Until recently the very idea that the Earth would be integrated into a single whole was so monumental that it was almost universally regarded as radical, unworkable, or utopian. Now a unified planet suddenly seems possible. The papers in this special issue of futures help explain the origins of the global economy, the unusual challenges this remarkable development poses, and where the world seems to be heading. They were presented at the George Washington University Conference on the Global Economy held in Washington, DC, USA, in December 1988, which Hazel Henderson and I organized. We felt that international events had accelerated to a new phase, and so we brought together 50 scholars, politicians, and business executives from around the world for a two-day seminar to explore the emerging global economic order. Later, the editors of Futures invited me to edit the conference papers for this special issue. The first paper by Michael Marien, Editor of Future Survey, provides a broad overview by analysing the prospects for increasing ‘globalness’ in terms of driving forces and barriers. Major driving forces include the explosion of information technology which is knitting the world into a tight skein of communications, and seminal ideas like Europe 1992, common while the inhibiting barriers include security, and sustainable growth; nationalism, a gap between rich and poor nations, outworn ideologies, information overload, and ineffective institutions. Although these barriers
FUTURES December 1989
556
Editor’s
introduction
are formidable, on balance, Marien thinks increased globalness is inexorable. Next, futurist and social entrepreneur Hazel Henderson offers a panoramic view of what this all means. She describes how natural processes of planetary development are moving all of us from the old East-West world game of ‘mutual assured destruction’ to a new North-South world game of ‘mutual assured development’: the globalization of production and markets; rising COSIS of environmental decay and nuclear arms; and the movement of people, currency, and information across borders. These historic developments are unifying the world-whether we are ready or not-into what should become a more cohesive and more benign whole. The most successful nations today such as Japan understand that cooperation is more productive than c-onflict, that human and social factors are now more critical than capital. Stuart Umpleby, Professor of Systems and Cybernetics at George Washington University, then draws on cybernetic principles to outline how the emerging global order may effectively be controlled. Umpleby shows that all systems regulate the ‘variety’ in their environment using a hierarchy of control methods, starting with the ideas used to define the system, which and ending with methods for controlling produces regulating structures, deviations. This framework leads to a strategy for creating a unified global system: first define and disseminate global concepts, then translate these into global institutions, and finally monitor world performance for corrective action. Turid Sato, formerly with the World Bank and now a consultant in economic development, identifies what may be the major cause for lagging development in the Third World. The debt crisis is only a visible symptom she claims. The real problem is that aid of the more basic problem, provided by institutions like the World Bank is organized primarily to serve If we really hope to assist the poor, the needs of the programme sponsors. it will be necessary to devise a different process that helps these nations find their own solutions to their unique needs by drawing on their own special strengths. Robert Hamrin, an independent economist who has worked on major addresses the urgent need for an ethical projects for the US government, Although Hamrin begins with an ‘appeal to the model of global economics. heart’, he is not simply moralizing but urging a hard look at the illogical way modern people find themselves helpless victims of the old mechanistic model of economics inherited from the industrial past. Instead, he proposes a more reasonable basis for an effective global economy that draws on religious ideals to create a human-centred system that includes social values, promotes economic justice, and fosters a conservation ethic. While these first five papers deal with the global economy in general terms, the last four focus on particular regions of the world. Abdul Said, Professor of Peace Studies at American University, illuminates the poorly understood but rich economic heritage of the Middle East. Said notes that neither capitalism nor socialism are workable here since they divorce Islamic people from the moorings of their culture. This troubled region must rediscover its identity anew by formulating a modern form of Muslim economics based on devotion to God, community service, human values,
FUTURES
December
1989
Editor’s
introduction
557
Moreover, bringing this Islamic model of and other Islamic principles. development alive would help all other people realize that, rather than being divided by our differences, we should prize them as assets. Fang Kai Bin, Director of the Shanghai Institute for Science of Sciences, describes China’s emergence as a major economic power in the global economy. The recent suppression of dissent in Tiananmen Square may leave this description a bit dated, but Professor Fang’s comments remain generally valid. He points out that China should become an advanced nation in time, participating actively in the globally integrated, high-technology world now developing; however, it also intends to do so on its own terms, which differ mainly in that China seems determined to retain social control over its market system. Tamas Meszaros, Dean of the Industrial Economics Faculty at Karl Marx University in Budapest, provides an insider’s analysis of the restructuring now underway in East Europe. Meszaros shows how the Hungarian economic system has evolved through three distinct stages on its road to a decentralized, market economy governed by a multiparty political process. However, there remain enormous obstacles, he cautions, and various members of the socialist bloc will follow different paths of development. The final paper by Chiaki Nakano, a research associate at the Institute of Moralogy in Japan, examines the factors that have allowed his nation to become the most successful competitor in the world. Nakano attributes this success to Japan’s ability to synthesize two forces usually regarded as the creative freedom of capitalism and the antithetical by other nations: cohesive community of socialism. This synthesis is best articulated, he feels, by a Japanese scholar, Professor Hiroyuki Itami, who formulated the concept of the ‘humanistic enterprise system’. Nakano thinks this model should spread to dominate the world because it is both efficient and equitable.
Common
patterns
Readers will find their own personal meanings in this rich assortment of diverse papers, but what general conclusions do they suggest as a whole? True, the contributors all share a ‘progressive’ perspective, which is why they were invited to our conference. However, they come from many nations around the world, they draw on a variety of intellectual disciplines, and represent different political views. Yet despite all this diversity, I find that some common patterns run through the papers.
Technological
change
Henderson, Marien, Fang, Nakano, and others to a lesser extent, all agree that the emergence of a global economy is being driven by the power of unprecedented technological change. Possibly the biggest event of our time is that computerized information systems are rapidly integrating the planet into a unified whole. Mikhail Gorbachev, arguably the most influential politician today, recently told the UN that the world is becoming ‘a single global organism’. This new reality was illustrated dramatically when the Wall Street crash of 1987 reverberated almost instantaneously throughout the
FUTURES
December 1989
558
Editor’s
introduction
financial centres of the entire world, and it also seems to underlie the world-wide explosion of social change that has recently appeared in such Poland, Hungary, the USSR, diverse regions as the Philippines, China Europe, and the Middle East. The recent revolt in China, for instance, was fostered to a large extent by the power of global media that now reaches 800 million Chinese who have access to TV sets.
But many of the papers in this issue also raise a difficult question: How can the world economy be unified without somehow reconciling the old conflict between capitalism and socialism that has polarized the globe? True, socialism is so badly discredited around the world presently that many are quick to think the problem is essentially resolved because capitalism will soon reign supreme. Francis Fukuyama of the US Department of State created a minor uproar with his widely read article claiming that the decline of socialism represents nothing less than ‘the end of history’. He notes, ‘what we may be witnessing is . . . the end of mankind’s ideological evolution and the emergence of Western liberal democracy [capitalism] as the final form of human government’*’ Socialist nations may realize that they must adopt market mechanisms, but this hardly means they will emulate the ‘anything goes in the pursuit of profit’ system now running rampant in the USA and the UK, which is reaching such a frenzy of greed that it seems likely to trigger a political backlash. Does anyone really believe that the USSR will allow raiders like T. Boone Pickens to dismember their carefully planned state enterprises? Can you imagine China permitting billionaires such as Don Trump to play Monopoly with the real estate in Beijing? Recent polls show that 86% of the Soviet people hold an ‘equal income ethic’ that runs counter to central capitalist tenets like profit making.I Capitalists may be tempted to gloat over the failures of socialism, but they might be wise to show a little humility about the faults in their system. No one doubts that the USA, for instance, enjoys an unusually creative form of entrepreneurial freedom that has produced great material abundance, yet it suffers from poor health care, a failing educational system, crime and drug use among the worst in the world, a growing underclass stunted by serious poverty, and other major social problems. One study ranked the USA 27th in overall quality of life among 124 nations.’ The evidence also shows that US economic performance itself has been mediocre of late. Growth in GNP, productivity, capital investment, and average wages have been below other industrialized nations during the last decade, and respected studies conclude that the nation is undergoing a serious decline in competitiveness.4
The relative strengths and weaknesses of various economic systems is a huge, complex topic beyond the scope of this brief introductory essay, but another major theme running through these papers suggests how the conflict between capitalism and socialism may be resolved. Henderson,
FUTURES
December
1989
Editor’s
introduction
559
Hamrin, Said, Fang and Nakano argue that one of the greatest needs facing the world is to create a synthesis of the best qualities in both systems: the creative genius, productivity, and entrepreneurial freedom of markets that has made the USA, Canada, the UK, Hong Kong, and other basically capitalist nations wealthy, combined with the social equity, security, community, and other advantages that are prized in socially controlled economies like those of China, the USSR, Eastern Europe, France, Greece, Yugoslavia and Egypt. The papers in this special issue contain ample evidence of both sets of Meszaros, Fang and others point out that market advantages. Marien, prices, entrepreneurship, decentralization, and related free enterprise concepts are spreading rapidly around the world because the exploding complexity of an intensely competitive, high-technology, global economy cannot be successfully managed with centralized government controls. At the same time, Henderson, Umpleby, Sato Danforth, Hamrin, and Said point out that cooperation, participative leadership, the use of social indicators, and other such policies that generally foster the public welfare are no longer simply ‘nice’ or ‘desirable’; these various ‘social’ or ‘democratic’ practices are beginning to exceed capital, technology, and related material resources in importance, since human and intellectcal resources are becoming more critical in the knowledge-based economres that are emerging today. The great power of Japan offers the most visible example, as noted in Nakano’s paper, but the same trend can be seen in Europe, progressive elements in the USA, and some socialist nations. About a half-dozen countries including Japan, West Germany, and the Scandinavian states have the highest overall quality of life in the world because they have carefully cultivated mixed economies combining markets and social control. Leadingedge US corporations like IBM, GM Saturn, and NCR have been developing a ‘democratic’ model of enterprise that is more productive since it unifies the interests of investors, employees, customers, the public, and government-a ‘new capitalism’.5 Even competitors are collaborating. One of the most striking trends in the USA today is the formation of collaborative working relations between competing firms that take the form of R&D consortia, joint ventures, business-government projects, and various other ‘strategic alliances’. At the other end of the political spectrum, the Soviets, Chinese, and other socialist nations seem intent on inventing an ‘advanced’ form of ‘market socialism’ that serves the public welfare better. A key strategy might be to adopt a democratic type of decentralized planning among workers, managers, government and the public while operating within free marketsa ‘new socialism’. The Konveyer plant in the USSR has developed a system in which workers buy shares in the enterprise, which has allowed the company to operate so smoothly without help from Moscow that employees received a 20% dividend in 1988. ‘We are looking for new ways to live, and this seemed ideal’, said the plant manager. A Chinese official expressed doesn’t have a patent right over markets. their goals this way: ‘Capitalism We’re trying to establish an unprecedented form of market economy based on public ownership.’ Thus, it seems to me that a seminal new idea is emerging today out of a
FUTURES
December
1989
560
Editor’s
introduction
wave of creative, pragmatic experimentation flowing everywhere. There is a dawning realization that decentralized free markets are essential to manage diversity and complexity, while collaborative working relations are also necessary to draw all this grassroots activity together into a coherent whole at the level of the individual enterprise, national economies, and the entire globe. If this critical trend continues, it could ignite an intellectual awakening that might spread like wildfire around the world to produce a new economic order constructed on a powerful new blend of both free enterprise and democracy, of material and social values, right- and left-wing orientations, competition as well as cooperation, both capitalist and socialist ideals. Differences will always flourish to serve the unique needs of individual cultures, but they are likely to be seen as variations on this central model of political economy that will form the basis for a unified global order, what I have called ‘democratic free enterprise’.6
Challenges
ahead
Events will not work out quite this way, of course, and the historic challenge of redefining capitalism and socialism is so great that it seems certain to produce a rolling series of massive new crises. In the socialist bloc, the ‘Tienanmen Square syndrome’ is the most obvious danger but many other problems abound. For instance, reforms in the USSR have thus far largely produced such chaos that even the old system, bad as it was, is now breaking down out of sheer confusion. State enterprises are flatly refusing to fulfil their production targets, many major companies are failing and should be declared bankrupt, strikes are beginning to paralyse the econinflation is rising, and the state is running a deficit of about omy, $160 billion per year. These political pressures may prove too great for the charismatic Gorbachev himself. A Soviet leader confided to me that he does not even want to think about what could happen if Gorbachev falls from power. The capitalist world seems more assured presently, but the ‘great crash of ‘87’ may be an omen of serious trouble ahead. In the USA, the budget and trade deficits show little sign of abating, economic performance remains modest, raiders hold corporations hostage to takeovers, and big business seems paralysed by the same debilitating bureaucracy condemned in big government. John Akers, Chairman of IBM, one of the best managed corporations in the world, acknowledged recently that the company is strangling in its own bureaucracy. It is hard to envision continuing for long in this same way. These are enormous obstacles. They may not be overcome soon, and some failures will undoubtedly occur, but I am more impressed with the massive technological forces that are now integrating the world. The creation of new global institutions for the information age seems inevitable over the long term of IO-20 years for the same reason that the old institutions dominated the industrial age: not because of good intentions, altruism, or even sound planning, but because a more productive blend of democracy and free enterprise has now become functionally necessary to survive under the difficult conditions looming ahead, and so it is rapidly becoming one of the most powerful forces in the world. The evidence, it
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seems to me, shows that traditional forms of capitalism and socialism may offer special advantages, but they also suffer severe disadvantages because of structural limits in both systems: economic freedom is creative but socially disruptive, while government controls are orderly but stifling. The next great step in social development, as this special issue of Futures suggests, is to synthesize these two once-great ideologies into a common conceptual framework upon which to construct a unified global economic order. Some time in the next decade or two, roughly about the turn of this century, I estimate that the union of a new capitalism and the new socialism universally accepted model of global should create a more powerful, enterprise able to work effectively throughout most economic systems of the world. Even now, global corporations from major nations are starting thereby beginning to intermesh joint ventures in each other’s countries, national economies into one indivisible whole that may in time include a common global currency and central banking system. This economic breakthrough, along with other developments like the global information systems now forming very rapidly, should then produce a vibrant global economy, reduce armaments, and create some type of world governance. Before too long, we could see the growth of economic blocs like the EEC and the Pacific Basin merge into a single global system of unrestricted trade, and partnerships might form between developed nations and the Third World, all fuelled by an explosion of international communications and travel that should weave the world’s cultures together into a rich tapestry of diverse and languages. It appears likely that even the former races, religions, antagonism between the USA and the USSR may be transformed into a close working relationship. these remarkable but realistic From a broad, historical perspective, prospects-which would have been thought impossible a few years agoindicate that the long evolution of civilization may be leading to some shows a tortuous but steady trend of aggregation climatic phase. History into ever larger social systems: from primitive tribes, to cities, to nations, to A Soviet colleague and I have been studying how this superpowers. long-term trend seems to be moving nations together as the revolutionary force of information technology spreads to create a central nervous system for the planet. We conclude that this historical trajectory should soon reach the next logical stage of human progress: a coherent, manageable, unified global order that works-One World.’ William
E. Halal
Professor of Management George Washington University Washington, DC 20052, USA
Notes and references 1. Fukuyama’s article, ‘The end of history’, appeared in The Washington Post, 30 July, 1989. 2. As reported in the Soviet journal, 20th Century and Peace, March, 1989. 3. Richard Estes, paper presented at the Global Development Conference, University Pennsylvania, College Park, PA, USA, 15 September, 1986.
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4. For instance, see the report of the MIT Commission on Industrial Productivity, Made in America; Regaining the Competitive Edge (Cambridge, MA, USA, MIT Press, 1989). 5. As explained in William E. Halal, The New Capitalism (New York, Wiley, 1986). The superior performance of this concept is demonstrated by studies of Lee Preston, ‘Stakeholder management and corporate performance’, a paper presented at the Conference on SocioEconomics, Harvard University, 1989. 6. Preston, op tit reference 5. 7. See my articles, ‘Political economy in an information age’, in Lee Preston (editor), Research in Corporate Social Performance and Policy (Greenwich, CT, USA, JAI Press, 1988); or ‘One world: the union of a new capitalism and a new socialism’, in Howard Didsbury (editor), The Future: Opportunity not Destiny (Washington, DC, USA, World Future Society, 1989).
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