Globalization and Network Power

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I’m intrigued when a commentator gives high praise to a work by someone who comes from a political vantage different from his own. I get even more interested when another take on the same piece seems straight out of Rashomon, a radically different account with only a few facts in common.

The opus in question is a new book, Network Power: The Social Dynamics of Globalization, by David Singh Grewal. It caught the attention of Christopher Caldwell of the Weekly Standard (who also writes regularly for the Financial Times), who gave it high marks, and Tyler Cowen, who was singularly unimpressed.

I have to say that although I have never mentioned him in this blog, I very much like Caldwell, and therefore am prejudiced in his favor. He often has a fresh perspective (which is hard in and of itself to pull off), is fair minded and well reasoned, and even when I don’t agree with him, I have to give him credit for making a good case.

We’ll get to the balance of Caldwell’s article on the book in due course, but I want to give his description of what it’s about versus Cowen’s so you can see how they come from parallel universes. First, Caldwell in the Financial Times:

At the heart of globalisation is a basic, and politically explosive, mystery; globalisation proceeds through the breaking down of boundaries, the unfolding of diversity and freedom of choice – so why is it experienced by so many people as a constriction, an oppression and a loss of freedom? In a brilliant and subtle book*, a Harvard graduate student has solved this mystery – even if he has not solved the problem. David Singh Grewal believes the answer lies in something called “network power”. Networks are the means by which globalisation proceeds. All networks have standards embedded in them. In theory we can choose among the standards and become more free. In practice, Mr Grewal shows, our choices tend to narrow over time, so that standards are imposed on us.

Here is how it works. Networks tend to grow. As time passes, one of the most attractive things about a network will be simply that a large number of people have already chosen it. This is network power. Once a network reaches “critical mass”, Mr Grewal says, the incentives to join it can become irresistible. Certainly some standards are intrinsically better than others. “But as the network power of a standard grows,” Mr Grewal writes, “the intrinsic reasons why it should be adopted become less important relative to the extrinsic benefits of co-ordination that the standard can provide.” People defect from alternative networks. Eventually those alternatives disappear altogether. The choice of networks becomes a Hobson’s choice. You remain free to choose your network, but the distinction between choosing to join a network and being forced to join one is less evident.

Mr Grewal sees such a “merger of reason and force” in many areas, economic and non-economic – from the Windows operating system to the ISO 9000 standard of industrial control to Britain’s adoption of the metric system. Since English has become the first global lingua franca, many non-native speakers have freely chosen to speak it. But, for someone who wants to participate in the global economy – which is to say, the economy – to what extent is this really a choice?

Cowen is guardedly positive about the book. Yet (if you believe Caldwell’s account), Cowen picked up on what appears to be a secondary thread as the focus of his comments:

Indeed, while this convergence in ways of thinking and living may extend to influence cultural forms like music or food, it need not necessarily do so. It is striking that in this moment of global integration producing massive convergence in economic, linguistic, and institutional standards, we should be so worried about restaurant chains and pop music, neglecting much more significant issues. Famously, Sigmund Freud argued that nationalist rivalries between neighboring countries reflected the “narcissism of minor differences,” a pathological focus on relatively trivial distinctions driven by the desire to keep at bay an anxiety-provoking recognition of fundamental sameness.

That is from David Singh Grewal’s Network Power: The Social Dynamics of Globalization, one of the most interesting books on cultural globalization in recent years. He uses the ideas of social networks and peer effects to argue that widespread cultural convergence is occurring, most of all in ways of life. Here is the book’s home page.

There is much wrong in the central thesis. “Ways of thinking” may be less diverse across countries (France is more like Germany than it used to be) but ways of thinking are now much more diverse within countries and in fact within the world as a whole. What’s so special about having diversity distributed according to geographic or political criteria? …

Nor is he capable of simply coming out and saying that lots of countries in the world *ought* to be doing more to emulate Anglo-American ways of thinking.

The following claim is also questionable:

To reshape or reduce the power that the social structures we create have over us, we can only summon the organized power of politics. The large-scale voluntarism of sociability, by contrast, has always delivered the most varied and elaborate forms of individual subjugation.

Cranky Tyler is about to come out of his shell, so maybe it is time to end this post. It’s still a book worth reading and thinking about.

These may not be bad observations, but it appears that Cowen has mischaracterized what Grewal’s main thrust is. Cowen appears to have been set off by the mention of socio-cultural issues, which seems a comparatively minor aspect of Caldwell’s reading (as in, having to conduct business in English, a second language for most of the world’s population, requires years of effort to attain reasonable competence and is a bloody nuisance, but given our world’s Tower of Babel, any lingua franca will inconvenience many. But I don’t see American cultural influence stemming from that but from the fact that the film industry was born in Hollywood and still has a considerable scale advantage).

Guess this means we all have to read the book to see who got it right.

Grewal indirectly gives support to one of Dani Rodrik’s notions, that globalization presents a trilemma. You can have any two of democracy, national sovereignty and global economic integration, but you cannot have all three at once. The notion of network power is a detailed working through of how networks, which are both a force for and an element of international economic integration, are at odds with local/national power structures (e.g., the EU’s ongoing battles to get Microsoft to comply with its anti-trust rules).

From the balance of Caldwell’s article:

Networks, Mr Grewal believes, can impinge on our political autonomy, channelling it into situations where dissent is possible but pointless. Although people enter them freely, networks, like political systems, can bias outcomes. A new order can be camouflaged as a broadening of options. Networks vary along three dimensions, Mr Grewal thinks: “compatibility” (with other networks); “availability” (openness); and “malleability”. They tend to be open and compatible in the early stages, and open and incompatible in the later ones.

The transition from the General Agreement on Tariffs and Trade to the World Trade Organisation in the mid-1990s demonstrates this process, Mr Grewal believes. The logic of the WTO’s core principle of non-discrimination among trade partners gives the body and authority that goes far beyond regulating trade, into areas of domestic policy that were protected by sovereignty under Gatt. Mr Grewal does not deny that there are intrinsic efficiencies to a transparent and uniform trading standard. But he believes that most countries join the WTO for the extrinsic benefits of participating in the network, and find the standard the network upholds intrinsically undesirable.

Mr Grewal nails his own anti-capitalist colours firmly to the mast. But his political engagements never outrun his diagnoses. Network Power leans on Marx, Keynes and the Canadian philosopher, Charles Taylor, to examine the more general problem of “power structures” – how power can be exercised over people even when no one is visibly giving orders. But he avoids attributing network power to “false consciousness” – the Marxian idea that people are easily fooled out of knowing their own interest. Indeed, he grants that most standards are the product of consent, although of a funny kind. “One of the interesting things about globalisation is the extent to which people consent to structures that are consciously and explicitly viewed as undesirable.”

This is a patient and powerful argument. The book’s concepts are presented with such extreme theoretical clarity that all readers, even those who do not share Grewal’s commitment to trammelling global capitalism, will be able to deploy his insights to other ends. What network-power effects explain the sudden spread of anti-smoking activism? How was the US institution of the Social Security number transformed into a financial tracking system? Is “political correctness” just old-fashioned cant or does it draw a sinister new force from network power?

Mr Grewal calls for a reassertion of democratic sovereignty to counter the unintended (and undesired) consequences of network choices. But he admits that the political solutions to network power are not yet obvious. Networks are transnational, while politics remains national, and Mr Grewal does not consider global government either feasible or (as far as one can tell) desirable. What is valuable about this book is its diagnosis, not its prescriptions. It may be the richest and most hard-headed explanation yet of the relationship between globalisation and diversity. Clearly the two are closely related. Since there seems to be more variety right in front of our noses than there was in the world of our parents, we are tempted to think globalisation has fostered diversity. But this is an optical illusion. Globalisation merely reveals diversity that was already there. It flushes diversity out from the places it was hidden, much as a hunter flushes his quarry out of a thicket, and to similar effect.

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  1. Dan Duncan

    “…So why is it (Globalization)experienced by so many people as a constriction, an oppression and a loss of freedom?”

    Maybe, the reflexive cry of “oppression” (or, “Free Markets!”) in response to the inevitability of “Globalization” is simply an unwitting participation in an even broader network…a broader network that describes Globlization in terms of a “good node” or a “bad node”.

    Based on the post (since I haven’t read the book), it seems like Grewal is trying to explain water to a fish.

    Why is it that people tend to think of Globalization as if it’s a relatively modern phenomenon? [By “modern”—-w/in 500 years.]

    A globe is a sphere, and humans have been pushing for sphere expansion since the advent of the dot.

    The narcissism reveals itself by considering the sphere expansion to be a modern dilemma unto its own. Globalization is the 3rd Law of Thermodynamics. It’s entropy. It’s not a network.

    And where does Cowan come off stating that “ways of thinking are now much more diverse within countries and in fact within the world as a whole”? Ask a person where he stands on abortion. If he’s against it, it is wildly improbable that he’s also against gun control, and for capital punishment, etc., etc. This is not diverse thinking. It’s one of two tracks…established by….you guessed it—The Network…aka The Dreaded Hegemon. [Just say it Mr. Grewal.]

    And finally: Grewal calls for “a reassertion of democratic sovereignty to counter the unintended (and undesired) consequences of network choices”….What in the hell does that even mean?

    I’m going to read the book (which would have been helpful before spewing these opinions), but I hope it’s not filled with this kind of abstract drivel…”reassertion of democratic sovereignty…” Gimme a break.

  2. Anonymous

    Even though economics and culture are inextricably interwoven, it is nevertheless important to try to draw distinctions between the two.

    Likewise, it is also necessary to draw a distinction between high culture and low (popular) culture.

    As to culture: High culture in the United States is very diverse. For instance, one can go to museums in just about any major city in the U.S. and see superb collections from all points of the globe. However, U.S. popular culture is very parochial. How many American teenagers are familiar with Thalia or Shakira?

    Conversely, in Mexico (where I live) there is great diversity in popular culture. Besides knowing the Latin pop singers like Thalia and Shakira, every teenager intimately knows the music of Madona and Britney. Just let me add that, for a latin singer to crossover to the U.S. market, like Ricky Martin, he has to anglosize his music.

    High culture in Mexico tends to be very parochial and insular. You cannot go to a major museum in any Mexican city and see anything but Mexican. The director of Latin American art at a major U.S. museum told me a story of a bequest from the Gellman Collection that gives some insight. Gellman allowed a choice between a superb collection of 20th-century European modernists or an equally superb collection of 20th-century Mexican modernists. My museum director friend bemoans the fact that they chose the Mexican collection, “as if they really needed more Mexican art,” he said–and thus deprived the Mexican people of being able to get a glimpse of the 20th-century European greats.

    As to the economy: Where you see “globalization,” from a Latin American perspective I don’t see anything but economic imperalism.

    I don’t want to run on too long, but just let me cite a couple of links:ública%20Argentina.pdf

    To give some flavor of Kirchner’s speech to those who don’t speak Spanish, I will translate a passage:

    “Today, what is denied to Argentina are not funds or new loans that we have not solicited and that, obviously, we haven’t thought to do so; it is something worse, the denial of refinancing if we do not accept conditions that are none other than the same policies that drove us into default. For Argentina that was running towards the abyss, there were help and fresh funds; for Argentina that with effort and lonliness recovered, there is no refinancing. This situation merits that Garcia Marquez dedicate some paragraphs of his ‘magic realism.’ “

    As Kirchner points out, while the imposition of neo-liberalism may have brought about some growth in the economy, the “recommended or imposed objective to minimize the role of the governments” results in a growth in poverty and a more unequal distribution of income.

    Let me give an example of what Kirchner is talking about. Here in Mexico the government sold the national telephone company to group headed up by Carlos Slim. Slim paid top price for Telmex, but for that he also received what is in effect a 15-year monopoly for telephone services in Mexico. The prices he charges have moderated somewhat–still not like in the U.S., but better–but for a long time we paid 5 or 6 times for telephone services what you paid in the U.S. As a result, Carlos Slim is now one of the three wealthiest men in the world. To put this in perspective, Slim’s wealth is equivalent to 14% of Mexico’s GNP. Bill Gates’ is equivialent to less than .5 of one percent of the GNP of the United States.

  3. Anonymous

    Yves, it seems like the globalizatin article has strong crosslinks to your running series on nonlinear dynamics. After all, growing syhcnrony can lead to global instability.

  4. binaryoptions

    I don’t see any unique applications this book offers. There is nothing novel about networks. I’m sure its described under various other names through history.

    I think Duncan’s comments “explain water to fish” accurately summarizes this books objective. There’s something in the industry called “vanity publishing”. This books seems to reek of this.

  5. bobo7874

    This book sounds like a bunch of abstract nonsense. I’ll wait for Bruce Greenwald’s upcoming book “Globalization”. Greenwald at least knows globalization is a cyclical phenomena that has waxed and waned through history. And I look forward to his theory that globalization will wane as economies become more service driven. I think it is early to make any such claims because companies have begun making significant efforts to offshore legal, accounting, consulting and securities work. The only thing that will stop it is that the US workers doing these jobs are much more vocal politically than workers in manufacturing, and will defend the various trade and immigration laws that provide economic moats that protect their incomes.

  6. Juan

    How about:

    “The forces of production which capitalism has evolved have outgrown the limits of nation and state. The national state, the present political form, is too narrow for the exploitation of these productive forces. The natural tendency of our economic system, therefore, is to seek to break through the state boundaries. The whole globe…has become one economic workshop, the different parts of which are inseparably connected with each other. This work was accomplished by capitalism. …
    The nation must continue to exist as a cultural, ideologic and psychological fact, but its economic foundation has been pulled from under its feet.”
    (Leon Trotsky, The War and the International, 1914)

    Nevertheless, the interwar years did see substantial seperation of the ‘inseperable’, with a new wave of globalization (and new organizational forms) taking shape from the late 1950s but, more recently, becoming stressed by its own success.

    Or, the interpenetrating of formerly national economies through the agency of not-national capital also generates international, national, subnational tensions which can manifest as heightened nationalism(s) and, potentially, the ending of this phase of globalization.

  7. Anonymous

    Sounds to me like the Grand Poohba lemming explaining to the unenlightened why they must jump:

    “It’s inevitable”!

    Give me a break, pleeaase!

    The world is full of possibilities and we need to think of some – quickly!

    – Avg Joe

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