Scrolling through the stories on any news site these days one could be forgiven for thinking that we are living in an increasingly divided and unequal world. It is heartening to hear of millionaires, such as Warren Buffett and the Gateses and Canadian CEO Jim Estill, who want to share their wealth to improve the lives of others. But while a millionaire who thinks tax evasion is ‘smart’ is in control of the largest economy on Earth it still seems to many that a fairer world is more out of reach than it has ever been.
The irony is that, while the President of the USA (as well as Brexiteers, Marine Le Pen, et al.) believes that the solution to his country’s perceived financial and social woes is to keep out immigrants – either by building a wall or by stopping them at immigration control – a policy of inclusion could generate greater wealth for all.
In their book Nine visions of capitalism, Charles Hampden-Turner and Fons Trompenaars explore the secrets of wealth creation and conclude that cultural inclusiveness is the key to success. Interestingly both diversity and inclusion are required – diversity on its own can lead to the problems we see in America and Europe today as well as many conflicts of the past (such as those between Protestants and Catholics in seventeenth Century Europe or between Hutus and Tutsis in Rwanda). The authors say:
Contrasting values must be joined and reconciled to make them virtuous. Polarized values are vicious in their mutual hatred. Yet our discredited politicians aid this polarization with their sterile jousting between ideologies. The irony is that those we reject could potentially make us whole, providing the missing pieces of the puzzles.
They go on to explain why immigrants are often more successful than those born in a particular country. In America, they note, those immigrants who find themselves more included, such as Jews, Chinese, Japanese and Indians, do better than those who are excluded such as blacks and Latinos. A study from 2000 found that one third of Silicon Valley’s wealth was created by Chinese and Indian immigrants entering the US after 1970. The success, say Hampden-Turner and Trompenaars may even be due to difference: ‘they are different perforce, a condition they cannot change. They therefore decide to make a difference.’
The book also proposes that the current Anglo-American model of capitalism is failing and needs to learn from models in other cultures if Western economies want to continue to grow. Part of the problem is our perception of wealth:
A community is only better off when it creates wealth, that is, when it generates more money among its members than they began with. If money has simply moved from one pocket to another then X may have outsmarted Y but no wealth has been created by that relationship. Competition is important but if this leads to a zero-sum game – wherein gains and losses total zero – then there is no gain for the society or the economy.
What creates wealth, say the authors, is ‘an inclusive relationship between diverse parties’, employees and owners, producers and consumers, lenders from borrowers, and so on. The book explores nine very different forms of capitalism, including analyses of China’s spectacular growth, Singapore’s hybridisation of East and West, and the Conscious Capitalism movement, and examines how our economies can benefit from their example. The authors see a positive future if we can learn to appreciate and incorporate difference. ‘Reconcile values,’ they say, ‘and you help to create wealth for everyone involved.’
Nine visions of capitalism, by Charles Hampden-Turner and Fons Trompenaars is available in the Infinite Ideas store for £10 (rrp £25), with free postage in the UK (shipping rates to other parts of the world vary).
By Michael Lee, author of Codebreaking our Future
There is more to the current war of words between North Korea and the US–South Korea alliance than sabre-rattling. After its northern neighbour conducted its most powerful nuclear test yet, triggering a magnitude 5.3 earthquake in the process, South Korea promised to ‘annihilate’ Pyongyang if there is even a hint that its neighbour is about to begin a nuclear war. A tense and beleaguered South Korea is now preparing for what it calls a ‘worst case’ scenario. But how realistic is this potential future?
North Korea seems to be edging ever closer to its long-term goal of mass producing nuclear warheads. A deadly cat-and-mouse game is underway, one which is starting to resemble the Cuban Missile Crisis of October 1962. But the Korea crisis of today seems even more dangerous, because we’re talking about the potential for both nuclear and conventional warfare. The border between the two Koreas is the most militarised place on earth, heavily lined with missiles. In addition, the United States Forces Korea (USFK), under the United States Pacific Command (USPACOM), has about 28,500 American soldiers, sailors, airmen and Marines stationed in South Korea. This situation could get very messy indeed. A confrontation could easily be triggered. Once again, the world is on edge as it was back in 1962.
From our vantage point in the West we can see that North Korea is trapped in a time-warp, a kind of living museum of 1950s style Cold War socialism. I believe that North Korea is a state on the edge. Its collapse is almost inevitable, but the form it will take is less clear.
The current dictatorship cannot last, in fact, I see North Korea becoming a colony, or puppet state, of China (more on that later). This colonisation could prevail until the new Asian superpower has evolved into a freer civilisation and ceases to see the US as a major strategic rival in East Asia. When this region is no longer the flashpoint of economic and ideological competition between a waning but powerful global empire – the USA – and the rise of China, the two Koreas will finally be reunified like Germany was in 1990.
Korea will then be truly free for the first time since Japan annexed it in 1895.
So where is the evidence for this scenario? The idea of North Korea imploding is plausible. In fact, the country almost collapsed completely in the 1990s after the fall of the Soviet Union. It only survives today because it offers a convenient buffer state for China against American military presence in South Korea, Japan and Australia.
By looking at Korea’s history we can get a glimpse into the future of the country. At the time of the partition of Korea into North and South Korea, the former was largely industrial and the latter agrarian. While South Korea advanced in the intervening decades into a leading Asian Tiger economy, its northern counterpart descended into a dystopia begging to be captured on celluloid. It is a story of two Koreas: to the north, economic decline of an industrial society brought about by an energy crisis coupled with ecological degradation, and, to the south, economic prosperity and technological innovation catapulting an agricultural society into the twenty-first century.
The fact that North Korea fell so hard after the collapse of communism shows the extent to which this small nation has relied upon foreign supplies. Since the Korean peninsula as a whole has little oil and gas of its own, communist North Korea depended upon the Soviet Union for its industrial energy needs until that Union broke up at the end of the 1980s. Then North Korea lost the bulk of its supply of energy to run its industries. In 1990, for example, it had imported 18.3 million barrels of oil from Russia, China and Iran. Then, abruptly, its imports from Russia fell by 90%,  a catastrophic depletion.
Then floods in 1995 and 1996 washed away precious topsoil, damaged and silted dams and flooded coal mining shafts. These natural disasters were followed by a massive drought in 1997, and then by a tsunami. It is difficult to survive twin energy and environmental challenges of this magnitude. The country’s ageing economic infrastructure and systems faltered and fell under the burden. A dangerous feedback loop was created between industrial and ecological decline as the government began burning biomass to create heat and energy to compensate for its meagre supply of oil and gas: ‘North Koreans turned to burning biomass, thus destroying their remaining forests. Deforestation led, in turn, to more flooding and increasing levels of soil erosion. Likewise, soils were depleted as plant matter was burned for heat, rather than being mulched and composted … Biomass harvesting reduces ground cover, disrupts habitats and leads to increasing soil erosion and siltation.’
Since modern agriculture depends upon fossil fuels almost as much as modern industry does, North Korea’s energy crisis was bound to lead eventually to a food crisis. Famine struck the country in the second half of the 1990s. During this period, mass starvation literally decimated the population – about 10 per cent died. This must have been a terrifying time for the nation. Even today, around 6.5 million of the state’s 23 million people are dependent upon food aid from the UN’s World Food Program (WFP). The agency reports that 37 per cent of children and 32 per cent of women in the country are badly malnourished.
So behind the façade of television broadcasts of military pomp and power, North Korea is, in reality, a depleted society unable to properly feed its own population. It is at least half-way along the road to destruction. It has undergone an industrial and agricultural collapse from which it will never fully recover unless it modernises its society and economy. The dilemma for the authorities in Pyongyang is that such a modernisation process would lead rapidly to the demise of its totalitarian political system.
The CIA World Factbook places North Korea 194th in the world according to its GDP – per capita (PPP) of $1,800. It also has a high external debt rate and very weak domestic energy stocks and production. With industrial energy being a driving force of long-term economic growth, the chances are very low of the country undergoing a strong enough economic recovery to buy the time needed to break out of its current political time-warp.
Politically isolated and cut off from modern society and from globalisation, as well as from the world’s considerable knowledge base, North Korea’s economic prospects are, indeed, poor. Veiled in secrecy, the country, tightly controlled by a dictatorship backed by the military, is in chronic lockdown mode.
Looking at North Korea’s current situation I am reminded of how the Maya civilisation declined as a result of a combination of energy shortages, food crises, natural disasters, ecological deterioration and a political vacuum. Inappropriate, rigid leadership, which was unresponsive to the root-causes of its national crisis, played a significant role in the Maya collapse. It is going to be a key element of North Korea’s future fall. The country’s totalitarian military dictatorship, which hosts about 200,000 political prisoners, seems more interested in developing its nuclear weapons programme than in feeding all of its people. The state first allocates fuel to the military and then lets the other sectors – agriculture, transportation and industry – compete for the remainder of the limited fuel supplies available to the country.
Economic progress in today’s highly competitive global world is impossible under such repressive conditions, as China discovered. Pyongyang’s inverted logic shows there is a vacuum of leadership in the country. This is a major factor in collapses of social systems, from the Maya society to modern-day Egypt and Libya during the recent Arab Spring.
Kim Jong Un, portrayed by the Western media as an ‘atomic crackpot’, is incapable of reforming the North Korean state. His brand of totalitarianism relies upon indoctrination and keeping the public ignorant to perpetuate the dynasty’s absurd state personality cult. This, in turn, makes education and information the true enemy of his state. Governance based on public ignorance cannot be sustained indefinitely in an era of globalised internet and mobile communications. The government has been known to mete out severe punishments for citizens using mobile phones or making unauthorised international phone calls. However, as evidence from former communist European states demonstrates, information, from radio, internet and books and magazines smuggled into the country, will invade North Korea. Education will infiltrate North Korea. Freedom will conquer North Korea. This small state cannot hold indefinitely against the forces of global technology revolutionising society across the planet.
Furthermore, when leadership is so globally isolated, it cannot solve global problems like climate change, environmental degradation, famine, disease and, of course, recession and government debt. This produces paralysis in the face of these borderless crises. So often, it is the failure of leadership which allows economic, environmental and social decline to tip over into outright disorder and bankruptcy.
The Mayan civilisation broke down as a result of its over-consumed, exhausted resource base, which increased competition for resources and created internal conflict. Degraded, deforested land such as we see in North Korea, becomes more vulnerable to climate change, which, in turn, further damages the soil and its fertility, leading to worsening droughts and decreased food production. This, in turn, further aggravates competition for resources, leading to social conflict. Social conflict then makes it harder for the kind of collective, co-operative action required to solve the deep-seated socio-ecological dilemma. Decline then slides down into disintegration. From a systems point of view, such destructive feedback loops are difficult to solve even by governments with high competence levels. This kind of collapse is what happened to the Maya. Unfortunately, this is likely to happen to the North Koreans, too.
To understand how this might unfold, it is important to list disaffected groups and ‘voiceless’ citizens who might take part in any Korean Revolution.
- The unemployed and unemployable;
- The poor and hungry masses;
- Workers on farms and in factories dissatisfied with top-down management and lack of labour rights;
- Political prisoners;
- The youth, who are largely in favour of modernisation and modern technology;
- Factions within the echelons of power in Pyongyang;
- Criminal gangs;
- Underground activists and those yearning for freedom and a modern education;
- Thousands of North Korean defectors in China and South Korea itself (it is estimated, for example, that there are about 23,000 North Koreans who have made it via China to South Korea).
Data is not available regarding the numbers of all these groups but it seems reasonable to assume there will be hundreds of thousands of North Koreans, perhaps as many as a million or more, willing to take part in any storming of the Bastille-style political uprising.
It would only take some catalytic force, possibly the next inevitable famine or a leadership power struggle, to release the pent-up, long-repressed anger of these masses and groups.
Which brings me to my concluding question: what effect will North Korea’s collapse have on the rest of the world? Will the regime go quietly or try to take others down with it?
I strongly expect social, economic and environmental problems to escalate in North Korea until the country reaches breaking-point. Either this tipping-point will prompt war against an external enemy, since there’s no stronger unifying force for a failing nation-state than to fight against a foreign threat, or it may prompt some woefully belated economic reform measures from its rulers. As in Russia in the 1980s, when glasnost and perestroika increased, rather than deflated, the revolutionary fervour of the Russian people, such desperate North Korean reforms will only serve to release repressed, large-scale social tensions and the population’s widespread yearning for freedom. At that point, well before 2030, a groundswell of opposition will build, spurred on by the North Korean underground liberation movement and other alienated groups, as well as by the international community. As the state begins to collapse, China, pre-empting the UN and the USA, is likely to intervene from the North, in the guise of a peace-keeping force, to end North Korea’s revolution. A new era will begin of the military occupation of the country as it becomes a colony of the Asian super-power for the following few decades. The upside of this occupation is that it will inaugurate an overdue modernisation process analogous to China’s own economic revival.
At this stage, it seems more probable that North Korea would opt for war as a strategy for holding itself together rather than reform. If a war does, indeed, unfold it would become clear at some point to the generals and soldiers of this tragic nation that they were facing certain defeat. Then a revolution could break out aimed at toppling the country’s government to stop the national suicide.
Despite this bleak outlook for North Korea, there is space, in the long-term perspective, to dream as well. For the likely time-scale for a joyous reunification of a free and democratic Korea is sometime between 2050-2120.
CIA World Factbook. Central Intelligence Agency. Washington, D.C. https://www.cia.gov/library/publications/the-world-factbook/geos/kn.html
Diamond, Jared. 2005. Collapse. Allen Lane, Penguin Group, Victoria, Australia, 2005.
Eberstadt, Nicholas. 2016.’Kim Jong Un Is Hell-Bent on a Nuclear War with the U.S.’ – http://europe.newsweek.com/kim-jong-un-hell-bent-nuclear-war-us-497511
Fox News. 2007. ‘150,000 Witness North Korea Execution of Factory Boss Whose Crime Was Making International Phone Calls’. http://www.foxnews.com/story/0,2933,313226,00.html
Haupt, A and Kane, T. 2004. Population Handbook, 5th Edition. Population Reference Bureau. Washington, D.C, 2004.
Pfeiffer, D.A. 2006. Eating Fossil Fuels. Gabriola Island, BC: New Society Publishers.
Ryall, J. 2012. ‘North Korea threatens to punish mobile-phone users as ‘war criminals’‘. The Telegraph – http://www.telegraph.co.uk/news/worldnews/asia/northkorea/9040152/North-Korea-threatens-to-punish-mobile-phone-users-as-war-criminals.html
Spodek, J. 2011. Understanding North Korea: Demystifying the World’s Most Misunderstood Country.
 See, for example, an astute and sobering analysis of this situation by Nicholas Eberstadt, entitled ‘Kim Jong Un Is Hell-Bent on a Nuclear War with the U.S.’ – http://europe.newsweek.com/kim-jong-un-hell-bent-nuclear-war-us-497511
 At the end of World War 11, North Korea and South Korea were partitioned by the victorious Allies to suit their strategic plans.
 Eating Fossil Fuels, by Dale Allen Pfeiffer (New Society Publishers, Gabriola Island, BC, Canada, 2006, p.43.
 Ibid, p.44, 49.
 World Factbook, Central Intelligence Agency. Washington, D.C. 20505 https://www.cia.gov/library/publications/the-world-factbook/geos/kn.html
 ‘150,000 Witness North Korea Execution of Factory Boss Whose Crime Was Making International Phone Calls’ November 27, 2007 – FoxNews.com http://www.foxnews.com/story/0,2933,313226,00.html
‘North Korea threatens to punish mobile-phone users as ‘war criminals’‘ – Julian Ryall, Tokyo 26 Jan 2012
Last week celebrated cross-cultural management guru Fons Trompenaars rose in the influential Thinkers50 global ranking of business thinkers. Trompenaars climbed to 33rd place partly due to his recent book, written with Charles Hampden-Turner, Nine Visions of Capitalism but mainly, according to Stuart Crainer who created Thinkers50 with Des Dearlove in 2001, due to a significant increase in citations of his work during the last two years.
The Thinkers50 ranking, often described as the Oscars of management thinking, is a celebration of the very best new management thinking as well as those ideas which stand the test of time. Crainer says he is looking for “ideas with a potential impact that extends beyond the business world to address issues ranging from reducing poverty to building a sustainable model of capitalism.”
Trompenaars’ success shows the value to consultants of publishing paradigm-shifting content in an accessible, peer-reviewed context. Self-publishing seems not to have the credibility of commercially published works. Barry Gibbons, former Global CEO of Burger King and author of ten acclaimed business books says: “A published book (accent on ‘published’) can bring a string of powerful indirect benefits. It can boost a CV. It can take the place of a business card, with 1000 times the impact. It can open up lucrative speaking or consulting opportunities. It can enhance an author’s reputation in a defined target market.”
Trompenaars’ ideas on cross-cultural development have been published widely in reviews such as Harvard Business Review and Intercultural Management Quarterly but he has also had a major impact with books like 100+ Management Models: How To Understand And Apply The World’s Most Powerful Business Tools, Servant Leadership across cultures and The global M&A tango: How To Reconcile Cultural Differences In Mergers, Acquisitions And Strategic Partnerships. Most of Trompenaars’ books are jointly published by Infinite Ideas in the UK and McGraw-Hill in the US.
Trompenaars and his team have developed a unique resource in the cross-cultural and other databases they have developed over thirty years. He adopts a measurement and data-driven approach to benchmark, inform, advise and diagnose client problems and provide practical solutions. He maintains that organizations need stability and growth, long-term and short-term decisions, tradition and innovation, planning and laissez-faire. The challenge is to integrate these opposites, not to select one at the expense of the other. You have to inspire as well as listen, to make decisions yourself but also delegate and you need to centralize your organization around local responsibilities. Trompenaars’ work is unique in that his focus has been to use his research on culture to find reconciliation of differences rather than simply identifying them.
John Naisbitt, author of Megatrends, described Nine Visions of Capitalism as “an important and brilliant book. With deep insights on China, it helps us understand a world undergoing extraordinary change.” Trompenaars recently sold his business, Trompenaars Hampden-Turner, to KPMG for an undisclosed sum. It is impossible to calculate the effect of these deep insights in the books and articles on the sale price but it’s fair to say that Trompenaars’ global Thinkers50 ranking which itself depends so heavily on publishing gave it a significant push in the right direction.
It’s Super Thursday in the publishing world, which is a bit like Christmas morning for us. We’re off to the bookshops after work to see all the beautiful, colourful covers adorning the tables like waking up and seeing what Santa has brought us. Naturally we already have bookshelves at home heaving with unread tomes and we look forward to adding to the large stacks that we may take to the beach next year. What can we say, we like choice.
Infinite Ideas does not have a book released this year, however we do have a super exciting Christmas list. There really is something for everyone from business stocking-fillers, to leadership lessons for the business aficionado in the family. However, the title that we are most excited about is all about Christmas or, more precisely, Yule. Catherine Cooper’s new book, The Wichen Tree, will be published at the end of November and is another very exciting Jack Brenin adventure.
Jack, having grown up in Greece, has never seen snow so this Yule is especially exciting for him as well as coming across many magical creatures and places in the lead up to Christmas.
If you’re new to this series, the first book, The Golden Acorn, is available for free on Kindle. There’s just enough time for you to dive into this magical series before the fifth book comes out. We’re nice like that, we thought we’d give you a bit of extra time to get hooked on the series! If you’re already a fan, then there’s still time to put it on your Christmas list and mark it on your calendar as there are just over six weeks until you can get your hands on this great book.
Also, the cover is very cool and very Christmassy, don’t you think? (Not that we’re endorsing getting this excited about Christmas already, but if other publishers are, then we will shamelessly jump on that bandwagon!)
As rain hits Britain today and the leaves suicidally fall to the ground, it signifies the end of summer and the final of the Great British Bake Off. We’ve been hooked in the office this year, and I’m sure everyone around the country is waiting with baited breath for the final this evening (that is, unless the world hasn’t ended before then).
The three finalists, Nadiya, Tamal and Ian have fought off stiff competition to get to the last week and we’ve come up with some career lessons that you can learn from these excellent bakers:
We’re not going to lie, Nadiya is our favourite contestant, perhaps in the history of bake off. We didn’t think we could find a funnier contestant than Norman but Nadiya has surpassed his wit and she is a much better baker. Nadiya has been star baker three times so far (tied with Ian) so she is in a strong position going into the final. However, her journey there has not been easy. In the beginning, Nadiya struggled with the technical challenges, often coming last or near the bottom. When faced with unknown situations, it can throw us off guard. When we’re out of our comfort zone, having to work with new clients, or having to clear up someone else’s (or your own) blunders, it can be hard to stay cool and get a suitable outcome for your business.
Nadiya has, at times, been anything but cool under pressure (the paperclip and soufflé incident from last week, for example) and she has a tendency not to believe that she is capable. However, Nadiya’s creativity and willingness to take risks has got her to the final. As with any strong leader, capability is everything. You can only fake it for so long and, trust us, your employees will know if you are ineffective when it comes to making tough decisions or coping when times get tough.
Ian, like Nadiya, is going into this final with three star baker titles to his name. He is competent and able to cope under even the toughest of pressures (and he was the first to receive the Mary Berry wink this season!) However, Ian’s stars were all awarded towards the beginning of the series, he peaked too early it would seem. Either that or his competitors were able to improve quickly and catch up with him. There are also rumours that he has been getting specialist training from a professional chef to up his game (we are not endorsing these rumours, nor are we endorsing Ian to be honest). When you’re competing with your colleagues or other businesses, it is important not to burn out too quickly. Ian’s arrogance is also something that could cost him the title.
One of the great things about Bake Off is the camaraderie between the contestants (well, except for bin-gate, but we won’t open that can of worms) and yet Ian seems to have remained a lone ranger in the tent. Perhaps his strategy is to keep his skills to himself, or to remain apart so that he can focus on making his bakes better than anyone else’s. However, when you’re in the ruthless world of business, sometimes buttering up (pun intended) the competition can be beneficial for both parties. Finding a way that both companies can work together and sharing knowledge is not always a bad thing. Though Ian’s chocolate well was a bit, well, anticlimactic, one can’t deny that Ian has great initiative and creativity, demonstrating his ability to make his own cake moulds. Seeing the problem from another angle and knowing what you can bring to the table can be great when leading a team and being familiar your strengths when times are tough can help get you out of a jam. But they could also alienate you among your colleagues, which may lead to mutiny in the ranks.
Tamal is our favourite anaesthetist and our second favourite finalist of this year’s Bake Off. Tamal has been the lucky recipient of the Hollywood Handshake (not quite an Oscar!) and is adept at his baking skills. However, Tamal’s weakness is timing. When you’re up against the wall with a particular project, time management is everything. Being a successful leader is about how you manage your employees and delegate to make things work as efficiently as possible.
Tamal is this year’s unlikely heartthrob (we wouldn’t say no to one of his vol-au-vents) and has taken it all in his stride. In business, like with everything, there will be peaks and troughs in your success. Tamal never let his successes or disasters go to his head, and he certainly isn’t signing up to be the latest Cosmo centrefold. Being able to juggle his high-pressured job with baking every week and still coming out on top is a skill that we can all learn. Sometimes, though, it’s best to keep things simple.
Though we really liked Flora, it was clear that time and again, she didn’t listen to Mary and Paul’s advice and gave herself too much to do. Superiors try to guide you in the right direction and having too much on your plate can be catastrophic for your career and your personal life if not balanced well. Dorret was eliminated in week three after she had scraped through the first two weeks. She was the recipient of the Mary Berry scowl when she confessed one week that she had bought her cookie cutter (rather than make it herself) and the next week that she hadn’t even practiced her bake. Not preparing is essentially, preparing to fail. Showing up is only half the battle, when presenting, working in a team or just working on a solo project, being prepared is key to survival in the cut throat world of business.
Whoever wins tonight (go, Nadiya!) it’s definitely been a great series and we have been lucky enough, this year, not to have had too many baking blunders ourselves. There are many lessons we can take away from watching people bake cakes in tents each week, and Infinite Ideas has lots of advice on leadership, management and other ways to run your business. Perhaps you need help on how to Cultivate a cool career or you would like to learn more about Authentic leadership, we have a whole library waiting for you.
This morning the FTSE plunged as the Chinese economy fell, putting investors around the world on a knife edge. Not since 2007 has there been such a drastic drop in global stock prices.
For many years, since the fall of Mao, the Chinese economy has flourished. It has been a great hybrid of ‘capitalism and communism’ as suggested in Charles Hampden-Turner and Fons Trompenaars’ riveting new book, Nine visions of capitalism. Look at the objects on your desk. Many of them will have been made in China. Over the past few decades, labour and manufacturing have been outsourced to China. Why? Well, quite simply, profit margin. For example, it is cheaper to catch fish in the North Atlantic, export it to China to be packaged and then ship it back to Britain than it is to package it in the UK. Clearly this is not an environmentally friendly way to do business, but from a purely capitalist perspective, it is effective.
Why is labour so much cheaper in China? Well, more people are willing to work for lower-paid jobs. With greater competition for jobs, companies can keep wages low. If you don’t want to work for a pitiful pay cheque, then someone else will. Mao’s regime forced millions into dire poverty and some are only now beginning to recover from this. Let’s, for now, put our assumptions about the working conditions aside.
Though definitely not a wholly capitalist country the People’s Republic of China has benefited from Western economic influence. While we outsource labour and other primary services to China, China in turn benefits from what Western capitalism can provide. Capitalism has allowed China to become one of the biggest economies in the world, while still claiming to be outside the capitalist bubble.
So, back to today. Over the past fortnight, the value of the yuan has been depreciating. Since then, trillions of dollars have been wiped from the FTSE. What does this all mean for the future of the economy? Perhaps China’s financial stability was poorer than anticipated. It would seem likely that the cheap labour and services that the West has been benefiting from for many years will now cost more. Trading with China will become a more costly endeavour and this could fundamentally change the face of our manufacturing and primary services.
Once again, our eyes are focused on those on Wall Street who are moving the intricate cogs that support the global economy. To the uninitiated every-person on the street, what goes on is something of a mystery. We are aware of the importance of the FTSE and the NYSE as well as how they have an important effect on the global economy. Like a heart monitor in an intensive care unit, the peaks and troughs of the FTSE index mean little to those who are not trained to recognise what it all means. But we can all imagine that the £91bn that was wiped off the FTSE today is not positive for the global economy.
China is undoubtedly a superpower with great influence. Western domination is being gradually usurped by China’s infiltration of other economies. Like dominoes, when one is affected it runs the risk of knocking down the others. We are making slow but progressive steps out of the recession that began in 2008. The memories, however, are still fresh in the minds of all who were affected, many of whom lost their homes, their jobs and their savings.
However this latest crisis develops the 2008 recession taught a valuable lesson: capitalism affects everyone under its umbrella, and often, it is those that need help most who get hit the worst when times are hard.