A pervasive misunderstanding holds that Thailand, formerly known as Siam, first dispatched an envoy to Europe under the rule of King Narai. This delegation, led by Kosa Pan, set sail for France in 1686 aboard two French ships, accompanied by fellow ambassadors Ok-luang Kanlaya Ratchamaitri and Ok-khun Si Wisan Wacha, along with Jesuit Father Guy Tachard. However, this was not Siam's initial foray into European diplomacy. In reality, it was King Ekathotsarot who, 80 years earlier, had first initiated such diplomatic ventures by sending an envoy to The Hague in 1606 — a significant event reported in the Dutch newspapers of the period. This interaction paved the way for a treaty between the two nations, signed in 1617.
I
For Siam, this diplomatic event signified its adaptability to a shifting era, echoing back to the days of Jan Huygen van Linschoten between 1583 to 1588. During this period, Linschoten served as secretary to the Portuguese Archbishop in Goa, India, where he had access to confidential Portuguese documents. These included not only maps and navigation charts, but also detailed the trade routes to the East Indies.
Capitalising on this privileged information, Linschoten transcribed the documents and later consolidated them into a book, "Itinerario", published in 1596. This compilation was of notable significance. It housed detailed maps and navigation guidance that enabled other nations, the Dutch in particular, to counter Portuguese supremacy over the Eastern trade routes. Hence, it didn't merely record historical facts, but altered the course of global trade and diplomacy.
Armed with the invaluable information disclosed in "Itinerario", the Netherlands found itself in a position to challenge the Portuguese supremacy sanctioned by the Treaty of Tordesillas. This treaty, a product of negotiations between Spain and Portugal in 1494 and blessed by Pope Alexander VI, carved the world in two along a demarcation line situated 370 leagues west of the Cape Verde islands. Spain was granted rights to all lands, newly discovered or yet to be discovered, in the Americas and Asia west of the line. On the other side of this geopolitical divide, Portugal was allotted territories to the east.
The Dutch, alongside other burgeoning European powers such as England and France, disregarded the Treaty of Tordesillas. This treaty, fundamentally a private accord between Spain and Portugal and endorsed by the Pope, did not take into account the interests of other nations. No invitation was extended to these countries during the negotiations, resulting in a considerable disregard for their global ambitions.
Unwilling to be side-lined from the immense wealth and opportunities the New World and the Asian trade routes presented, the Dutch, English and French dismissed the treaty's stipulations. Not least of the reasons for this dissent was the fact that the Netherlands was a Protestant country, thus adding a religious undertone to the political dynamics. Their refusal to recognise the treaty was not just an act of defiance; it was a statement of intent in the evolving theatre of global trade.
As meticulously documented in "Journal, Memorials and Letters of Cornelis Matelieff de Jonge: Security, Diplomacy and Commerce in 17th-century Southeast Asia", the "Historiche Verhael" (Historical Narrative) chronicles Admiral Matelieff's voyage. It also marks a seminal moment in proto-globalization history, encapsulating the Battle of Cape Rachado — a landmark naval confrontation off the coast of modern-day Malacca in 1606.
This epic battle, involving no less than 31 ships, saw the Dutch East India Company locking horns with the Portuguese — the two naval superpowers of that era. The conflict ignited an alliance between the Dutch and the forces of Johor, setting them against the Portuguese.
Despite the Portuguese initially clinching victory, the brutal nature of the battle and the ensuing losses compelled the Sultanate of Johor to extend their support to the Dutch. This support ranged from supplies and logistical aid to the provision of vital ground forces. This allegiance ultimately culminated in the Portuguese surrendering, thereby ending their 130-year regional dominance.
By 1641, the city and fortress of Malacca, a bastion of Portuguese influence, capitulated to the Dutch-Johor alliance. The shift in power was indeed a ripple effect stemming from the Battle of Cape Rachado, underscoring its critical role in the dynamics of Southeast Asian history.
II
Siam, through its treaty with the Dutch, situated itself as a pivotal trade hub in Southeast Asia, and specifically, mainland Southeast Asia. The nation boasted an array of valuable commodities, spanning from shellac and tin to teakwood, ivory, gemstones, and spices. This diverse portfolio initiated a subtle yet significant shift in trade directions, skewing them westward.
In Siam, a longstanding tradition was the appointment of two separate officers, each responsible for authorising trade and tax collection in either the western (กรมท่าขวา: Krom-Ta-Kwa) or eastern (กรมท่าซ้าย: Krom-Ta-Sai) directions which primarily facilitated connections with China and Northeast Asian regions, including Korea and Japan. However, the situation in Japan at the time was different. The country, then in its Edo period, had closed itself off to foreign influences, sparing only Nagasaki as a link to the western world. Thus, the Japanese started to leverage Siam as an intelligence hub, using it to monitor movements from the West.
Yet, the mercantilism encapsulated in Thomas Mun's "England's Treasure by Foreign Trade" (1628) would soon undergo a transformative shift towards modern capitalism. This change was most prominently depicted in the works of Adam Smith, frequently regarded as the father of modern economics, who critiqued Mun's approach.
Smith posited that the key to economic growth lay in the division of labour. In his seminal work, "The Wealth of Nations" (1776), he illustrated how specialisation and labour division facilitated a more efficient use of resources and bolstered productivity. This principle formed the bedrock of his comprehension of a market-based capitalist system. The evolution from mercantilism to capitalism, as illustrated by these contrasting views, underscores the dynamic nature of economic thought and practice.
As the 19th century unfolded, Britain found itself at the heart of significant economic policy shifts, climaxing in the repeal of the Corn Laws in 1846. These laws, emblematic of a mercantilist approach, set up a tariff system safeguarding domestic grain producers. Their repeal marked a victory for the Anti-Corn Law movement and signified a crucial pivot towards free trade and market liberalisation – the very hallmarks of capitalism. The Economist, founded in 1843 and since linked with promoting free trade, globalization, and liberal economic policies, further cemented this shift.
Within this evolving capitalist framework, Karl Marx offered a radical reinterpretation and critique of capitalism. Despite his Hegelian philosophical influences, Marx significantly diverged in his argument, placing economic systems, means of production, and class relations - the material conditions - as the driving forces behind historical change.
Marx's critique, notably articulated in the "Paris Manuscripts" and "Das Kapital," fundamentally differed from Smith's perspective. In contrast to Smith, Marx perceived labour not merely as a commodity, but as the source of all value in a capitalist system. He scrutinised capitalism for its 'alienation' - the system's tendency to disconnect workers from the product of their labour, the act of production itself, their own 'species-essence', and from their fellow workers.
These phenomena have collectively shaped the era of capitalism as we understand it today.
III
In the wake of the post-Cold War era, marked by an accelerating pace of globalization, numerous international conglomerates have metamorphosed into distinct species of global organisations. While traces of their national cultural DNA remain, these entities now navigate the complex interplay between global logic and local imperatives, each guarded by the respective bureaucracies and laws of local governments. This dynamic has given rise to a dual-speed system, a testament to the intricacies of operating in an increasingly globalised yet locally nuanced landscape.
We delve into this "ideal model," exploring how international conglomerates navigate the varying speeds of globalization. On one hand, they must align with the brisk pace of the global market; on the other, they must collaborate with local partners to mitigate these speed differentials in their operations. Within this framework, we scrutinise the adaptations of different types of conglomerates, such as Sogo Shosha, Keiretsu, and Chaebol, as well as modern US corporations, which represent the 'ideal model'. This model is characterised by the following structure:
The global headquarters takes charge of defining the overall corporate strategy and ensures its consistent implementation across all operations. It often presides over significant business decisions, manages global partnerships, and governs corporate-wide resources and functions, such as finance, human resources, and R&D.
Regional or country offices serve as the "interface layer" in this model. Their role involves adapting and implementing the global strategy within the context of their specific region or country. This includes complying with local laws and regulations, adjusting to local market conditions, and fostering relationships with local stakeholders.
Local operations are primarily focused on the daily business in their particular locations. They engage directly with customers, manage local marketing and sales, and oversee local employees.
By comparing these diverse conglomerate types to the "ideal model," we can better understand the strategies and adaptations companies employ in our increasingly interconnected, yet locally nuanced, business world.
IV
Kenichi Ohmae's concept of a 'borderless world' set forth in his influential work, "The Borderless World: Power and Strategy in the Interlinked Economy" (1990), posits the increasing irrelevance of national borders in the face of evolving global economic forces. Ohmae contends that traditional nation states have become obsolete in a world where economies are sector-driven, crossing national boundaries and regions. In his "borderless world," the real influencers are corporations and consumers, taking precedence over national governments.
This groundbreaking perspective was further developed, critiqued, and expanded by several scholars across various fields. Thomas Friedman, an American political commentator, takes this idea forward, illustrating the world as "flat" in relation to commerce and competition in his book "The World is Flat: A Brief History of the Twenty-first Century" (2005). Social-cultural anthropologist Arjun Appadurai, renowned for his work in globalization studies, introduced concepts like "ethnoscapes", "mediascapes", "technoscapes", "finanscapes", and "ideoscapes" to elucidate the various flows within a global cultural economy. Dutch-American sociologist Saskia Sassen examined the role of global cities as essential nodes in the global economic network, while Spanish sociologist Manuel Castells explored the facets of the global network society in "The Rise of the Network Society" (1996). Furthermore, Nobel laureate Joseph E. Stiglitz critically evaluates globalization, focusing on issues such as inequality and the role of international institutions like the International Monetary Fund.
To validate this model, we've leveraged stock data, examining performance over a 20-year span. The findings have proven quite intriguing and are summarised as follows.
While the portfolio representing the 'ideal model' initially outperformed the benchmark S&P 500, its growth decelerated following the COVID-19 crisis of 2019. Interestingly, a new breed of "globalization" emerged, delivering growth rates that potentially outpaced both the 'ideal model' and the benchmark. This new dynamic underscores the fluidity and resilience of global markets, even amid unforeseen crises.
In conclusion, our analysis, underpinned by robust data, underscores that the forces of globalization and capitalism continue to evolve, just as they have over the past few centuries. Today, this evolution is spearheaded by the vanguard of a new breed of capitalism, represented by the FANG/MT entities (Meta, Apple, Netflix, Google, Microsoft, and Tesla). The pace of change, already breathtaking, is likely to become even more intense, fuelled by the ongoing race in artificial intelligence. This modern dynamic of capitalism, thus, presents a fascinating narrative for the future of global economics.