Despite globalisation, there is still a gap in cultural thinking
Life is a journey of different cycles.
Travelling last month with old university friends - an Indian from Zambia, two Americans, a Spaniard and two from France - made me realise that communication between East and West remains a gulf to be bridged, despite our common use of the English language and English education.
Do East and West think differently? The answer must be yes, if you define the East as the Asian continent and the West as Europe plus America. Globalisation has integrated thinking and promoted universal standards because many Asian intellectuals are Western educated. Many social objectives, such as the pursuit of wealth, power, justice, global peace and happiness are universal. But the reality is that the concepts of justice, faith, liberty, social status and values are very different, even within one country, let alone a region - which gives rise to the need for continual dialogue for social harmony.
The late French historian and philosopher, Fernand Braudel, writing in the mid-1960s, classified the world into four contemporary civilizations - Western, Muslim, Far Eastern and African. To Braudel, civilisation, rather than culture, is defined by geography, society, economies and ways of thought. Within the Western world, there were three sub-groups - Europe, America and Russia and its ex-Soviet satellite countries. He identified four civilisations outside Europe: China, India, Japan and the Maritime Far East, which includes Asean and Korea.
The study of civilisations is both timely and important, because in 1993 the American political scientist Samuel P Huntington argued in his famous essay and later book, The Clash of Civilisations, that there is a shifting balance of power between civilisations - particularly between Western universalism, Muslim militancy and Chinese assertion. Huntington believed that the "clashes of civilisations are the greatest threat to world peace, and an international order based on civilisations is the surest safeguard against world war".
The irony is that even as Europe struggles with its debt crisis, the whole world was uniformly cheering Spain or Italy in their football final, broadcast worldwide. Technology today has transcended cultures and civilisations, but deep national, ethnic and religious divisions lie under the surface.
It is always controversial to debate what is different between East and West, especially since Western intellectuals are beginning to question whether the West is in decline. Princeton political scientiest Professor Robert Keohane, in a recent review of the debate on American decline in Foreign Affairs magazine, correctly asked: "Will the instabilities in the global economy exposed by the 2008 financial crisis be corrected or merely papered over and thus left to cause potential havoc down the road?"
My recent attendance at various conferences analysing the aftermath of the current financial crisis suggests to me that there is a gradual but perceptible re-appraisal of the whole basis of current mainstream Western economic thinking. What went wrong in the whole analytical framework that has failed the economics profession, regulators and policy-makers in predicting and managing the current crisis?
The current analytical framework stems from the French mathematician Rene Descartes (1596-1650), who pioneered modern scientific thinking; that the behaviour of the whole can be understood entirely from the study of its parts. This led to specialisation in scientific disciplines, centered on rational, reductionist and linear analysis that broke down most problems into manageable parts, to identify statistical relationships that have predictive power.
In contrast, Eastern thinking has always been holistic, diverse, eclectic and complex. Indian Nobel laureate Amartya Sen, in his book The Argumentative Indian, argued that "the simultaneous flourishing of many different convictions and viewpoints in India has drawn substantially on the acceptance - explicitly or by implication - of heterodoxy and dialogue". Ubiquitous heterodoxy is the essence of Indian thinking.
The late Cambridge Sinologist and biologist Joseph Needham, the foremost Western expert on Chinese science and civilisation, considered that the key words for Chinese thought are "order and pattern" within the one gigantic whole "organism". Chinese practitioners, ancient and modern, think in terms of whole systems that are subject to continuous change from the binary forces of Yin (negative) and Yang (positive) that interact in a continual process of change and evolution.
As University of California physicist, system-thinker and ecologist Fritjof Capra has pointed out, "analysis means taking something apart in order to understand it; systems thinking means putting it into the context of the larger whole". Mainstream economics assumes that human economic behaviour is rational, but crowd behaviour clearly can be very different and often the opposite of individual behaviour. The whole is obviously more than the sum of its parts. This is true of what is happening to the global economy.
The trouble with systems thinking is that it is much more difficult to make predictions that are multi-dimensional, complex and non-linear. This is probably why Eastern thinking has long been thought to be mystic and non-scientific. Fortunately, the arrival of super-fast computers, complex non-linear mathematics and the Internet has allowed us to mine the "big data" of human behaviour, so that we can today see graphically the architecture of markets and the process of change, such as the large-scale transactions in financial markets that have pattern - some orderly, some chaotic - that signal the processes of change.
Such data maps suggest that the financial crisis essentially articulates the painful unfolding of major systems change on a global scale, as the financialisation of Western markets based on debt has proved to be unsustainable. Non-Western emerging markets, such as those of China, India and the Muslim world, reflect the flip side of Western models and experience that have both positive and negative lessons of what works and what doesn't. We cannot study our markets in isolation.
Specifically, Asian markets are inextricably tied to Western economies through complex "connectors" that have dynamic feedback mechanisms - namely global supply chains, financial and social networks that have only just begun to be studied. We urgently need a better system-wide framework to enable us to chart these turbulent times and to manage evolving complexity.
Andrew Sheng is president of the Fung Global Institute.