#4 Best of Globalization Blog 2013

“Globalization and capitalism are like twin siblings, both with their own unique capabilities and flaws, not always walking or running at the same speed; but in the long run, they always end up walking hand in hand.” This the heart of our post, Globalization and Capitalism, published on March 27, 2013.

We like this post, as did our readers, because we took a closer look at the ideas of globalization and capitalism. Under the microscope, you will find, as we argue, these two notions are as old as mankind. Here’s our point:

 Globalization’s genesis is knowledge and what we choose and don’t choose to do with it.

If you missed this gem, we are bringing it to the top for another read. We believe as you take time to read this post and others, you’ll find that neither globalization or capitalism are bad for our future, but a natural progression of mankind.

Globalization and Capitalism

Both, capitalism and globalization have often been vilified –sometimes even paired up as a super villain duo. They have been charged with pretty much everything going wrong in our lives. Granted, sometimes, poorly implemented versions of both phenomena are to be blamed (The Cyprus debacle being one of the most recent manifestations). However, a careful and more detailed analysis will reveal that things are not as simple as they are often believed to be.

globalization and capitalism

In reality globalization and capitalism are like twin siblings, both with their own unique capabilities and flaws, not always walking or running at the same speed, but in the long run, they always end up walking hand in hand.

First things first. By definition, globalization and capitalism have existed since the very beginning of mankind. They are both an inherent component of human nature. Both globalization and capitalism have been dubbed different origins in time, depending on the reasoning applied. Something beyond any reasonable questioning, is that both age-old processes have evolved into different stages throughout the centuries.

We have been trained to think that globalization has to do exclusively with global matters. And generally speaking, that is true. Globalization’s genesis is knowledge and what we choose and don’t choose to do with it. This involves taking in something that comes from the outside and making it one’s own –expanding the base of knowledge. Therefore every time we expand our knowledge we are increasing our level of interaction with the world, and therefore globalizing. In this regard, you might enjoy reading our analysis on The Multiplying Effect of Knowledge.

This means that even a single person is capable of expanding his or her own horizons and mind. This act in itself is an act of globalization. Like Albert Einstein so brilliantly said, “The mind that opens to a new idea never returns to its original size.”

In short, globalization can be defined as the process of putting together building blocks of knowledge throughout time.

Like every human process, globalization and capitalism can spin out of control if not handled adequately. Some thoughts from Gandhi come to mind: “The world is big enough to satisfy everyone’s needs, but will always be too small to satisfy everyone’s greed”.

Since the dawn of mankind, capitalism has become a driving force of globalization and vice-versa. If we were to visualize global society as an F1 car, capitalism and globalization would be two of its most powerful engine boosters. Like every high-speed booster, they are a double-edged sword that have the power to win the race if adequately used, or crash the car if used improperly.

Contrary to common belief, globalization isn’t the big bad wolf that some people pose it to be; neither is capitalism; turns out that the big bad wolf is ourselves. Our inability to understand globalization and capitalism, and rise up to the occasion is what is keeping us from riding the wave, rather than wiping out (mainly due to a lack of skills, narrow-mindedness, ignorance, lack of a true competitive attitude –the latter being the most important).

The many limitations capitalism has proved to have are invariably related to perverse incentives and a typically untempered greedy attitudes. Those same limitations also apply to globalization.

“The Roots of Violence: Wealth without work, Pleasure without conscience, Knowledge without character, Commerce without morality, Science without humanity, Worship without sacrifice, Politics without principles.”

–Mahatma Gandhi

The above statement is a very simple, yet a profound way to visualize that there is nothing inherently wrong and/or perverse about globalization. It all depends on how the actors react to it.

Constructive, successful, globalization can be summed up in one concept: high competition spirit/action based in each individual’s unique comparative advantages. This, of course, also fully applies to all levels of society  (organizations, countries, etc.).

Hence, the solution does not reside in throwing away both, globalization and capitalism, but in learning how to  handle them appropriately. In fact, globalization and capitalism seem to be with us forever. They are not expendable. We all must constantly strive to substantially improve these dual pillars of contemporary and future society.

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About Martin Marmolejo

Global Investment Manager | Founder & Managing Director at MMA Global Investment Management | Proud husband and father | Follow me @globalmarmolejo.

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