The Lexus and the Olive Tree

By Thomas Friedman
In this fascinating book, the famous journalist, Thomas Friedman explains the impact globalization is
making on politics, economics, society and religion. Friedman dramatises the conflict between the
Lexus (globalisation) and the Olive tree (the ancient forces of culture, geography, tradition and
community.) He discusses the benefits and costs of globalisation. He critically examines the potential
backlash from people who have been hurt by globalisation and tries to explain what preventive
measures can be taken.
Globalisation is not a new phenomenon. From the mid-1800s to the late 1920s, the world saw a
frenetic pace of globalisation. If we look at the volumes of trade and capital flows across borders,
relative to GNP, and the flow of labor across borders, relative to populations, the period of
globalization preceding World War I was quite similar to what we are seeing today. Countries like
Great Britain, were huge investors in emerging markets. There were no currency controls. So no
sooner had the transatlantic cable been connected in 1866 than banking and financial crises in New
York were quickly being transmitted to London or Paris. In those days, people also migrated freely.
Other than in wartime, countries did not require passports for travel before 1914. Immigrants went
into America without visas. The inventions of the steamship, telegraph, railroad and eventually
telephone, all helped to shrink the world significantly.
There are many similarities between the previous era of globalization and the one we are now in. But
as Friedman correctly points out, what is new today is the degree and intensity with which the world is
being tied together into a single globalized marketplace and village. What is also new is the sheer
number of people and countries who can take advantage of the globalized economy and information
networks. During the pre 1914 era of globalization, many developing countries were left out. The
pre-1914 era may have been large in scale relative to its time, but it was minuscule in absolute terms
compared to today. Daily foreign exchange trading in 1900 could be measured in millions of dollars.
In 1992, it was $820 billion a day, and by April 1998 it had risen to $1.5 trillion a day.
Todays globalization is also different technologically and politically. The previous era of
globalization was built around falling transportation costs, due to the invention of the railroad, the
steamship and the automobile. Todays globalization is built around falling telecommunications costs
thanks to microchips, satellites, fiber optics and the Internet.
The earlier era was dominated by British power, the British pound and the British Navy. Todays era
is dominated by American power, American culture and the American dollar.
Indeed, many people equate globalisation with Americanisation.
Friedman has divided the book into three parts. The first part of the book explains how to look at
todays globalization system and how the system works. The second part explains how nation-states,
communities, individuals and the environment interact with this system. The third part explains the
backlash against globalization. And the fourth explains the unique role the United States has to play in
stabilizing this new system.
Integration
Globalization has one overarching feature integration. The threats and opportunities in a globalised
economy increasingly derive from whom one is connected to.