The Lexus and the Olive Tree: Understanding Globalization

Friedman, the well-traveled New York Times foreign-affairs columnist, peppers The Lexus and the Olive Tree with stories that illustrate his central theme: that globalization--the Lexus--is the central organizing principle of the post-cold war world, even though many individuals and nations resist by holding onto what has traditionally mattered to them--the olive tree.

Problem is, few of us understand what exactly globalization means. As Friedman sees it, the concept, at first glance, is all about American hegemony, about Disneyfication of all corners of the earth. But the reality, thank goodness, is far more complex than that, involving international relations, global markets, and the rise of the power of individuals (Bill Gates, Osama Bin Laden) relative to the power of nations.

No one knows how all this will shake out, but The Lexus and the Olive Tree is as good an overview of this sometimes brave, sometimes fearful new world as you'll find. --Lou Schuler

The book is in four parts.

Part one explains how to look at the system we call globalisation and how it works.

Part two is a discussion of how nation-states, communities, individuals and the environment interact with the system.

Part three is a good look at the backlash.

Part four is an even better look at the unique role of the USA in this new world.

To understand and convey the complexity of what is going on, Friedman believes that he had to learn to combine six dimensions or perspectives in different ways and weights to understand the systemic interrelationships at play and then tell stories in order to explain it. This is what he does in the book. He also identifies what he believes to be the key driving forces to globalisation and the conditions necessary for a society to succeed in a globalised world.

As an analysis of the multiple forces at play and their interaction, The Lexus and the Olive Tree could hardly be bettered, and the comment that we know about as much about the globalised world that is emerging as we did about the Cold War world in 1946 really resonates.

I am less satisfied with Friedman's prescription, which is essentially that rape is inevitable - and may be pleasurable - so we may as well relax and enjoy it. That both under-rates the very real dangers posed by a large group of potential losers and, more important, absolves us from the need to search creatively for a third way that places more emphasis on the human spirit and sustainability and less on money as such.

It is notable how much of the business literature is beginning to focus on ethics, spiritual values and moral and ethical obligations. It is also notable how rapidly the various movements to reshape the world around more fundamentally human values are building strength. The balance is not just, as Friedman seems to suggest, between globalised progress and separatist stagnation, but other options need creative development, based on wider values than those that motivate the 'electronic herd'.

The conspiracy theorists claim that global business is consciously trying to promote the 'inevitability' of a system that happens to suit them very well. They would probably claim that Friedman has fallen into their trap. Whatever the truth or otherwise of a 'conspiracy', I am left with Russell Ackoff's phrase ringing in my head - 'If we don't work to get the future we want, we will have to learn to live with the future we get.'

Recognising the strength of the forces that Friedman describes so well, that is perhaps the issue. Are we clear about what kind of world we want and are we prepared to work for it?


Defining Globalization- The Lexus and the Olive Tree   January 9, 2000
LeeAnn Stone (Pepperdine University)
22 out of 23 found this review helpful

In "The Lexus and the Olive Tree", Thomas Friedman describes and defines globalization (the current "international system") in terms of its contrasts with the previous Cold War system. The unique defining imagery of the two systems highlights these contrasts: the perspective of division (Cold War) vs. integration (globalization); the symbol of the wall vs. the world wide web; the document of "The Treaty" vs. "The Deal"; the anxiety of annihilation from a well-known enemy vs. destruction from an anonymous one; the defense system of the radar to expose threats from without vs. the X-ray to expose threats from within; and the connection of the hot line between the White House and the Kremlin- a symbol that we were all divided, but at least someone was in charge vs. the Internet- a symbol that we are all connected but nobody is in charge.

The Cold War power structure was exclusively a balance between nation-states, specifically between the two superpowers of the United States and the Soviet Union. In contrast, Friedman details the three overlapping balances which define the power structure of globalization. These are the balance between nation-states; between nation-states and the global "Supermarkets" (the key global financial centers); and between "Super-empowered individuals" and nation-states. This last balance is not only the newest, but potentially the most threatening to global well-being. For while the combination of the fall of borders and the connecting of people through technology can and has empowered to great good, it also leaves avenues open for "Super-empowered Angry Men" (and Women) to use the powers embedded in globalization to act directly on the world stage without the previous era's mediation of governments, corporations or other institutions. As a result, this globalized world is a potentially more dangerous one than the Cold War world.

The "Golden Straightjacket" is Friedman's metaphor for a country's adoption of the economic and political rules that enable it to become a member of the globalized system. Donning this straightjacket has many implications for countries that do so; among them, Friedman observes, economies typically grow and politics shrink. Political choices are more limited, but transparency and openness increases. Those countries that put on the Golden Straightjacket are rewarded by the Electronic Herd- the traders and multinational corporations who constitute the funding sources in the world today. Those that don't are disciplined by the herd as it avoids investing or withdraws its money from that country. Thus, concludes Friedman, it is not necessarily inevitable that a country don the Golden Straightjacket and participate in globalization, however, the only place a country can go to get big checks is to the Electronic Herd. Countries' choices therefore include either donning the straightjacket and behaving in a way that is attractive to the herd, or not and living with the consequences.

The implications of donning this straightjacket extend even deeper, for the Electronic Herd's motivations in investing in a country are significantly different than the motivations of the superpowers during the Cold War. Cold War motivations revolved strictly around gaining and maintaining allegiances, of making more of the world "ours" and less "theirs". In contrast, the Electronic Herd's motivation is profit. Thus, transparency of financial data and transactions, reliable accounting practices, reduction of corruption and predictability of the business environment, freedom of the press, having a bond market, and democratization (to provide flexibility, legitimacy and sustainability) are key indicators of a countries' preparedness to provide a foundation for investment by the herd. Some of these indicators cut to the very core of a countries' existing socio-political culture. As Friedman concludes, "joining the global economy and plugging into the Electronic Herd is the equivalent of taking your country public" (p.141).

With metaphors and illustrative anecdotes dispersed liberally throughout the book, Friedman is able to maneuver the reader through the complexities of the overlapping influences of globalization on the world today. He has coined a number of new terms, some of which will certainly enter the permanent lexicon. All 382 pages are interesting reading that lead the reader to a greater understanding of the web of interconnectedness that defines the world today. Not only compelling intellectual content here, but a source of good cocktail party conversation as well.


A must read to understand today's events   May 14, 2001
William Tarr (Pepperdine University, California)
21 out of 22 found this review helpful

Friedman's book is an engaging look at what globalization means in this post Cold War world. By describing the rise of global markets through examining the world through six different "lenses," he is able to take a complex subject and make an understandable and compelling argument for his view that globalization is like the dawn. In his own words "even if I didn't much care for the dawn there isn't much I could do about it."

As the New York Times foreign affairs columnist he is able to bring a wealth of experience and personal observation to the book, and he fills it with interesting, compelling, and sometimes disturbing anecdotes from his travels and relationships with foreign leaders.

He makes a case that through the democratization of finance, information, and technology, we have an increasingly interdependent global economy, fraught with both great rewards, and great dangers. Friedman artfully describes those groups of people who are well positioned for success (and also risk) in the global economy, "gazelles and lions," who have to run every day to eat or to avoid being eaten. The author also describes those people who are not positioned to compete in the global economy (the "Fast World") and see globalization as an unseen and uncontrollable force increasingly threatening the lives and livelihood of both themselves and their children (turtles, trying to avoid becoming road kill).

Friedman explains the danger to a backlash against globalization and gives real suggestions about things to change in our political construct, and things to preserve and strengthen. In his words "America, at its best is not just a country. It's a spiritual value and role model. It's a nation that is not afraid to go to the moon, but also still loves to come home for Little League."

I finished the book with tears in my eyes. The strength of his vision is compelling and this book is the first I have read that has both defined, and accurately caught the start of, this new system of globalization.


Comprehensive and comprehensible   March 22, 2000
Todd J. Abrajano (St. Louis, Missouri)
33 out of 38 found this review helpful

When dealing with a subject as broad as globalization, operational definitions can rarely communicate its scope. In May of 1997, The International Monetary Fund attempted to define globalization in World Economic Outlook as, "the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology." Although this definition is operationally sufficient, it does not remotely begin to convey the primacy that the subject matter deserves in economic, political, environmental and social circles today. Fortunately for those of us that are not globalization experts, Thomas L. Friedman has penned what, quite possibly, might be the best book that has been published on the topic to date.

In The Lexus and the Olive Tree, Friedman uses may analogies and illustrations from his travels as the foreign affairs correspondent for The New York Times to fashion a layman's understanding of the globalization process. Friedman initially notes that: "Globalization is not a phenomenon. It is not just some passing trend. Today it is the overarching international system shaping the domestic politics and foreign relations of virtually every country, and we need to understand it as such" (p. 7). The author argues that as a result of the end of the cold war, the world order has turned to globalization due to "the democratization of technology" (p. 41), "the democratization of finance" (p. 47), and "the democratization of information" (p. 54). Friedman goes on to point out that: "When it comes to the question of which system today is the most effective at generating rising standards of living, the historical debate is over. The answer is free-market capitalism... When your country recognizes this fact, when it recognizes the rules of the free market in today's global economy, and deciddes to abide by them, it puts on what I call 'the Golden Straitjacket' "(p. 86). It is the use of these clever analogies that makes the book so easy for Everyman to comprehend. By turning complex ideas into unforgettable memory aids, Friedman effectively makes the economic and political theories he examines intelligible.

Although Friedman spends the bulk of his 378 pages of main text purporting the benefits and advantages of globalization, he does a splendid job of reporting the downside of the process. Friedman cites: "There is no question that in the globalization system, where power is now more evenly shared between states and Supermarkets [Wall Street, Chicago Board of Trade, major foreign stockmarkets, etc.], a certain degree of decisionmaking is moved out of each country's political sphere, where no one person, country or institution can exert exclusive political control... Clearly, one of the biggest challenges for political theory in this globalization era is how to give citizens a sense that they can exercise their will, not only over their own governments but over at least some of the global forces shaping their lives" (pgs. 161-162). In addition, Friedman tackles the dissident arguments of "homogenization" of cultures (p. 238), that "income gaps between the haves and have-nots within industrialized countries widened noticeably" (p.248), and "instead of popular mass opposition to globalization, [what has been occurring] is wave after wave after wave of crime" (p. 273). Ultimately, however, the author concludes that: "Because we tend to think of globalization as something that countries connect to outside themselves, or something imposed from above and beyond, we tend to forget how much, at its heart, it is also a grassroots movement that emerges from within each of us. This is why we always have to keep in mind that... there is a groundswell of people demanding the benefits of globalization" (p. 286).

In my opinion, the most relevant truism in Friedman's work comes in the introduction. While explaining his feelings on the subject of globalization, the author states, "I didn't start globalization, I can't stop it... and I'm not going to waste time trying. All I want to think about is how I can get the best out of this new system, and cushion the worst, for the most people" (p. xviii). After reading this definitive work on the subject, one would have to conclude that Friedman succeeds in his goal.


A Layperson's Guide to the World   June 12, 2000
S. Roggendorf (Bettendorf, IA USA)
21 out of 23 found this review helpful

Friedman does an excellent job in bringing the experience and history of globalization to the general public; although Friedman is emphatic in his explanation that globalization is not a phenomemon or a trend. He provides excellent examples of what is occuring in the world in relation to politics and economics. He fully explains the title of the book and how it applies to globalization and the US pace that is set and how it is pertinent to our way of life at this moment. It was an experience to read his book and in doing so, opened my eyes to the placement of the US in the world scheme. I am not an individual that is usually intrigued by politics or economics on the world scale, but Friedman provides the links between events and outcomes of the past several years, that helped me to grasp where the US has been and where we are currently going. This book has been passed around to all my colleagues and business associates. I recommend this edition for those that have read the first edition of Friedman's and encourage those that may be hesitant to involve one's self into this topic, to just read the first chapter before coming to a decision.