Managing local practices in global contexts
Managing local practices in global contexts

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Managing local practices in global contexts

3.1.1 Global convergence?

The Nobel Laureate, Douglass North (1990, p. 46), has argued that progress, from a less to a more complex society, is characterised by a lengthy and uneven but unidirectional move from informal institutional rules of practice to formal constraints. Thus, informal sanctions, taboos, customs, traditions and codes of conduct are superseded by formal rules embodied in constitutions, laws and legally enforceable property rights, including intellectual property and copyrights. North argues that the transition is related clearly to the increasing specialisation and division of labour associated with more complex societies.

As the USA's long economic boom unfolded in the 1990s, the country seemed to be at the forefront of progress towards opportunities promised by the realisation of an information age and the knowledge economy. Fears that Japan had developed a new and superior form of capitalism subsided as Japan's miracle growth faltered in the early 1990s. Meanwhile, the dismantling of the Berlin Wall in 1989 signalled the end of four decades of Cold War and, as the former Soviet Union imploded, the USA became the sole global superpower. It seemed as if US-style liberal democracy had triumphed over the alternatives. For many of its advocates, globalisation emerged as a fighting ideology that extended the US ideals of free-market economics, liberal individualism and the rule of explicit written laws. The historian Niall Ferguson (2004) has argued that what he believes to be ‘the American empire’ now bestrides the globe in the way that the Colossus (one of the seven wonders of the Ancient World) was said to tower over the harbour of Rhodes. However, there are many areas of the world in which local expectations bear little resemblance to the Anglo-Saxon institutional rules of practice – and opinions about the inevitability or desirability of convergence vary considerably.

For Peru-born economist Hernando de Soto (2000, p. 228): ‘capitalism is the only game in town. It is the only system we know that provides us with the tools required to create massive surplus value’. De Soto argues that four-fifths of the world's population continue to remain poor because they linger at the periphery of the capitalist game: ‘They have no stake in it’ (de Soto, 2000, p. 207). Although a greater number of them might wear Nike shoes or check their Casio watches, knowledge about credit and how to fund investments remains irrelevant: the local knowledge that counts is ‘how to survive’, often in the face of frightening adversity. On the other hand, we have the challenge of explaining how much of Asia has become rich when Africa, Latin America and former members of the Soviet Block have remained poor. Here we look first at de Soto's argument and then consider rules of practice in Japan and China.

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