Excerpt from The Lexus and The Olive Tree by Thomas Friedman, plus links to reviews, author biography & more

The globalization system, by contrast, is built around three balances, which overlap and affect one another. The first is the traditional balance between nation-states. In the globalization system, the United States is now the sole and dominant superpower and all other nations are subordinate to it to one degree or another. The balance of power between the United States and the other states still matters for the stability of this system. And it can still explain a lot of the news you read on the front page of the papers, whether it is the containment of Iraq in the Middle East or the expansion of NATO against Russia in Central Europe.

The second balance in the globalization system is between nation-states and global markets. These global markets are made up of millions of investors moving money around the world with the click of a mouse. I call them "the Electronic Herd" and this herd gathers in key global financial centers, such as Wall Street, Hong Kong, London and Frankfurt, which I call "the Supermarkets." The attitudes and actions of the Electronic Herd and the Supermarkets can have a huge impact on nation-states today, even to the point of triggering the downfall of governments. You will not understand the front page of newspapers today, whether it is the story of the toppling of Suharto in Indonesia, the internal collapse in Russia or the monetary policy of the United States unless you bring the Supermarkets into your analysis.

The United States can destroy you by dropping bombs and the Supermarkets can destroy you by downgrading your bonds. The United States is the dominant player in maintaining the globalization gameboard, but it is not alone in influencing the moves on that gameboard. This globalization gameboard today is a lot like a Ouija board--sometimes pieces are moved around by the obvious hand of the superpower, and sometimes they are moved around by hidden hands of the Supermarkets.

The third balance that you have to pay attention to in the globalization system--the one that is really the newest of all is the balance between individuals and nation-states. Because globalization has brought down many of the walls that limited the movement and reach of people, and because it has simultaneously wired the world into networks, it gives more power to individuals to influence both markets and nation-states than at any time in history. So you have today not only a superpower, not only Supermarkets, but, as I will also demonstrate later in the book, you have Super-empowered individuals. Some of these Super-empowered individuals are quite angry, some of them quite wonderful--but all of them are now able to act directly on the world stage without the traditional mediation of governments, corporations or any other public or private institutions.

Without the knowledge of the U.S. government, Long-Term Capital Management--a few guys in Greenwich, Connecticut--amassed more financial bets around the world than all the foreign reserves of China. Osama bin Laden, a Saudi millionaire with his own global network, declared war on the United States in the late 1990s, and the U.S. Air Force had to launch a cruise missile attack on him as though he were another nation-state. We fired cruise missiles at an individual! Jodie Williams won the Nobel Peace Prize in 1997 for her contribution to the International Ban on Landmines. She achieved that ban not only without much government help, but in the face of opposition from the Big Five major powers. And what did she say was her secret weapon for organizing 1,000 different human rights and arms control groups on six continents? "E-mail."

Nation-states, and the American superpower in particular, are still hugely important today, but so too now are Supermarkets and Super-empowered individuals. You will never understand the globalization system, or the front page of the morning paper, unless you see it as a complex interaction between all three of these actors: states bumping up against states, states bumping up against Supermarkets, and Supermarkets and states bumping up against Super-empowered individuals.

Copyright & copy; 1999 Thomas Friedman