THE LIFEWORTH REVIEW OF 2008

The Power Shift

In the 70′s the Japanese novelist Yasunari Kawabata proclaimed the 21st century to be the Asian Century.3 In the intervening years the growth of technology and industry across many parts of Asia has created a new level of economic power. Being so populous, half of the largest 10 private employers of the world are from Asia.4 Asia’s foreign currency reserves are around US$4 trillion, well over half the world’s total.5 The Gross Domestic Product (GDP) of Asia is about US$14 trillion, overtaking that of the US, with Asia’s share in world merchandise exports standing at 27.9%, up from 19.1% in 1983. In 2008, the majority of Asia’s trade was, for the first time in modern economic history, within Asia.6 Also that year was the first time that the number of middle class people in Asia exceeded that in the West.7

The power shift was symbolised in March 2008 when Indian conglomerate Tata completed its purchase of British car brands Jaguar and Land Rover.8 That stimulated debate about the loss of British iconic brands to the East. That acquisition was simply the latest in a trend over many years that has seen luxury car company Lotus bought by a Malaysian firm, and the luxury fashion firm Mulberry bought by a Singaporean firm, to name just two famed British brands. In sport, the purchase of Manchester City football club by a Thai businessman and former prime minister, then sale in 2008 to a member of the Royal Family from Abu Dhabi further highlighted the changing global economy.9 This shift also extends to technology innovations, as highlighted by the data on internet traffic. In 1999, 91% of data from Asia passed through the United States at some point on its journey. By 2008 that number had fallen to 54%.10

The financial crisis beginning in 2008 gave this power shift a further push, because at root it is a Western financial crisis, and although the ripples spread around the world, it was West financial institutions and governments who were most affected through a loss of capital and confidence (see ‘The end of financial triumphalism). As the BBC economics editor described it, “the credit crunch is creating a new world order in banking and finance… It’s a world in which the Chinese state, if it coordinated the investments of its cash-rich institutions, could end up owning more-or-less the entire financial system of the US and the UK.”11 The implications of the financial crisis was something we paid much attention to in our analysis during 2008, in sections titled The end of financial triumphalism, ‘Beyond the Western financial crisis‘, ‘Islamic Finance‘, and ‘Sovereign Wealth Fund Responsibility‘. The political philosopher John Gray, summed up some implications of the crisis in The Observer in September 2008:

“Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably… The era of American global leadership, reaching back to the Second World War, is over… The American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated… In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed….How symbolic that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.”12

The following month Professor Gray might also have mentioned India launching their first lunar mission, to further illustrate that the shift is beyond the economic.13 Mark Leonard, with the European Council for Foreign Relations said in June 2008 that “it’s not just economic and military power that’s shifting from West to East. China is emerging as an intellectual power. It’s coming up with its own ideas, which are very influential, which other people are copying.” He explained to policy makers in the West that “the debate we’re having about managing China’s rise has got a mirror image in China, where they’re having an argument about how to manage the West’s decline.”14 Writing in his book before the financial crisis broke, in early 2008, Kishore Mahbubani notes that “for centuries, the Asians (Chinese, Indians, Muslims, and others) have been bystanders in world history. Now they are ready to become co-drivers.”15 The need to convene a Group of 20 of the world’s largest nations, rather than a G7 or G8, as in previous years, further highlights the historic shift.

These economic changes will also impact on development cooperation, due to the changing budgets of governments, and of civil society in general, due to the changing budgets of middle classes worldwide.16 Given the role of development cooperation and of civil society campaigning in shaping corporate responsibility agendas, this is likely to be significant for the future of responsible enterprise, something we return to below.

Another dimension to the shift is cultural. The Malaysian politician Anwar Ibrahim has often spoken of an “Asian renaissance” that is emerging in line with new economic power and cultural confidence. “By Asian renaissance we mean the revival of the arts and science under the influence of classical models based on strong moral and religious foundations; a cultural resurgence dominated by a reflowering of art and literature, architecture and music and advancements in science and technology,” he explains.17 One indicator was that throughout 2008 art critics were reporting the contemporary Chinese art as the hottest market in the art world.18 Cultural confidence pervades people’s identities and will therefore shape their assumptions and beliefs about the way enterprise should be conducted, amongst their other attitudes to life and work.

Ibrahim has noted how the shift in power has “given rise to the self-induced fear on the part of the West that its civilisation is on the verge of being overwhelmed by a horde of marauding Asians.”19 The concept of an inevitable “clash of civilisations” between the West and East has been developed by some contemporary Western philosophers.20 We believe, that is a perspective arising from an ignorance of the diversity of Asian cultures and the interpolation between East and West through the ages. We also think it unhelpful in enabling the world to come together to face common global challenges such as climate change. But nor do we think the rise of Asia is something for Asians to feel pride about. Power is not in itself a source of pride; the manner of its generation and application can be. There is no pride to be had in power derived from exploitation or unsustainable processes, or if used in irresponsible ways. With new found power comes new found responsibilities, that extend beyond traditional concerns for family, ethnicity, nation or region. “Asians must not repeat the mistakes and excesses of the past inflicted upon them by multinational corporations,” asserts Anwar Ibrahim.21 In this review we will explore how responsibilities are evolving in the business community in Asia.

» Importance of Asia

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and C Ng, ‘Introduction’, in J. Bendell, N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines. (Page numbers for this section are available in the pdf download and hardcopy.)

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