Standing on the Sun. Christopher Meyer
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Standing on the Sun
HOW THE EXPLOSION OF CAPITALISM ABROAD WILL CHANGE BUSINESS EVERYWHERE
Christopher Meyer
with Julia Kirby
Harvard Business Review Press
Boston, Massachusetts
Copyright 2012 Harvard Business School Publishing Corporation
All rights reserved
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to [email protected], or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.
Library of Congress Cataloging-in-Publication Data
Meyer, Christopher, 1948-
Standing on the sun : how the explosion of capitalism abroad will change business everywhere / Christopher Meyer with Julia Kirby.
p. cm.
ISBN 978-1-4221-3168-8 (hardback)
1. International trade. I. Kirby, Julia. II. Title.
HF1379.M493 2012
330.12'2—dc23
2011032402
Chris Meyer
To my teachers:
Emily Alford
George Norton Stone
Philip Wagreich
Otto Eckstein
Peter Temple and Carl Sloane
Stan Davis
Stuart Kauffman
Kevin Kelly
Julia Kirby
To my family:
Alan, David, Jane, and Ted
Contents
Introduction
The center of capitalism?
Part I Capitalism Adapts
ONE Capitalism's New Center of Gravity
The shifting environment of the global economy
TWO Cambrian Capitalism
Runaway feedback, the peacock's tale, and the evolution of capitalism
Part II Runaways and Renaissance
THREE Capitalism in Color
What doesn't get measured … needs to be
FOUR Embracing Externalities
How corporations will adapt to new forms of feedback
FIVE Pseudocompetition
Killing the sacred cow of capitalism
SIX The Invisible Handshake
Collaborative production as the world's business model
SEVEN The Fourth Sector
The social sector as capitalism's R&D lab
Part III Moving On
EIGHT Call It Capitalism …
Global monopolies and national business models
NINE … And Move On
The new multinational as the vector of economic evolution
Epilogue
Notes
Bibliography
Acknowledgments
About the Authors
Introduction
The center of capitalism?
In the central market in Phnom Penh, the smell of sweet pork sausages on street vendors' grills hangs in the humid air, and the sound of merchants and motorbikes is a constant buzz. Inside the huge, domed bazaar and surrounding awning-covered stalls, it's easy to lose your bearings; around the next corner you might find silver jewelry, vibrant silks, $20 knockoffs of vintage Movados with movements made in Russia. On a recent visit, Chris, traveling with family, edged past an eight-foot pile of hoodies and was confronted by a table of Hollywood films at roughly 50 cents per DVD.
He wasn't surprised; it's what one has come to expect in a country that is not itself a significant producer of intellectual property. Chris thought of the usual prediction: that as such nations' economies mature, they begin to see the light and devote the resources to protect intellectual property rights. As grown-up capitalists, surely they'll live by grown-up capitalist rules. But in the midst of that buzzing Cambodian hive of capitalism, it was hard to hold fast to the belief. He had to wonder, Would emerging economies really adopt a two-hundred-year-old approach to intellectual property? Or would their rapid ascendance give them the chance for a do-over so that they might concoct a new way of conducting business more aligned to the realities of the digital age? And then, as they gradually overtook the first world in vitality and sheer size, would a new global norm take shape around their practice?
A few months later, we started researching this book. Its thesis, in a nutshell, is that capitalism itself is a system and that as the environment that hosts capitalism changes—in particular, as the better part of global economic growth begins to occur outside the mature economies of the West—the capitalist system will evolve.
This is a high-level argument—and a tough one to counter. Like any “ism,” capitalism is a social construct; capitalism is only a term for what capitalists tend to believe and do. Beyond a few fundamentals—that it puts faith in markets as the best way to allocate resources, that it depends on private ownership of property, that it features mechanisms for accumulating capital to fund endeavors larger than individuals can undertake alone—very little about it is set in stone. This is why we often hear phrases suggesting different styles of capitalism: “capitalism with Chinese characteristics,” for example, or “Northern European social capitalism.” No surprise, then, that capitalism is subject to change.
And what's behind that change? Again, at the theoretical level, it's easy to surmise. Like any adaptive system, capitalism is nested in an environment, so any substantial change in that environment alters what it takes to thrive. It's the same basic phenomenon as in nature: when the insect population of the Galapagos moves on to new flowers with a different shape, the beaks of the finches evolve in turn.
That the environment of global commerce is undergoing major change is no secret. Advancing technology, for one thing, constantly reinvents the context in which commerce operates. Demographics, too, have an effect, as the generations raised with new technological capabilities begin to fill positions of power. Most strikingly, the very geography of capitalism is shifting. With each passing year, emerging economies account for a larger proportion of global GDP; from 2004 to 2009, they accounted for almost all of the world's GDP growth. Patterns of consumption are being upended as global standards of living rise; India's middle class is now bigger than the entire U.S. population. Americans and others in the developed world have long fretted about job losses and other social implications of this huge and ongoing shift. But the impact of emerging economies will