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word of the contract was made public�察�Republicans made it a campaign issue。 It became 
such a political hot potato that Governor Joe Kernan�察�a Democrat who had succeeded 
O'Bannon�察�ordered the state agency�察�which helps out´of´work Indiana residents�察�to 
cancel the contract´and also to put up some legal barriers and friction to prevent 
such a thing from happening again。 He also ordered that the contract be broken up 
into smaller bites that Indiana firms could bid for´good for Indiana firms but very 
costly and inefficient for the state。 The Indianapolis Star reported that a check 
for 993��587 was sent to pay off Tata for eight weeks of work�察�during which it had 
trained forty´five state programmers in the development and engineering of up´to´date 
software�此 �'The company was great to work with��' said Alan Degner�察�Indiana's 
commissioner of workforce development。; 
So now I have just one simple question�此�Who is the exploiter and who is the exploited 
in this India´Indiana story�拭�The American arm of an Indian consulting firm proposes 
to save the taxpayers of Indiana 8。1 mil207 
lion by revamping their computers ´using both its Indian employees and local hires 
from Indiana。 The deal would greatly benefit the American arm of the Indian 
consultancy�察�it would benefit some Indiana tech workers�察�and it would save Indiana 
state residents precious tax dollars that could be deployed to hire more state workers 
somewhere else�察�or build new schools that would permanently shrink its roles of 
unemployed。 And yet the whole contract�察�which was signed by pro´labor Democrats�察�got 
torn up under pressure from free´trade Republicans。 
Sort that out。 
In the old world�察�where value was largely being created vertically�察�usually within 


a single company and from the top down�察�it was very easy to see who was on the top 
and who was on the bottom�察�who was exploiting and who was being exploited。 But when 
the world starts to flatten out and value increasingly gets created horizontally 
��through multiple forms of collaboration�察�in which individuals and little guys have 
much more power���察�who is on the top and who is on the bottom�察�who is exploiter and 
who is exploited�察�gets very complicated。 Some of our old political reflexes no longer 
apply。 Were the Indian engineers not being ;exploited; when their government educated 
them in some of the best technical institutes in the world inside India�察�but then 
that same Indian government pursued a socialist economic policy that could not provide 
those engineers with work in India�察�so that those who could not get out of India had 
to drive taxis to eat�拭�Are those same engineers now being exploited when they join 
the biggest consulting company in India�察�are paid a very comfortable wage in Indian 
terms�察�and�察�thanks to the flat world�察�can now apply their skills globally�拭�Or are 
those Indian engineers now exploiting the people of Indiana by offering to revamp 
their state unemployment system for much less money than an American consulting firm�拭�
Or were the people of Indiana exploiting those cheaper Indian engineers�拭�Someone 
please tell me�此�Who is exploiting whom in this story�拭�With whom does the traditional 
Left stand in this story�拭�With the knowledge workers from the developing world�察�being 
paid a decent wage�察�who are trying to use their hard´won talents in the developed 
world�拭�Or with the politicians of Indiana�察�who wanted to deprive these Indian 
engineers of work so that it could be done�察�more expensively�察�by their constituents�拭�

And with whom does the traditional Right stand in this story�拭�With those who want 
to hold down taxes and shrink the state budget of Indiana by outsourcing some work�察�
or with those who say�察 �Let's raise taxes more in order to reserve the work here and 
reserve it just for people from Indiana;�拭�With those who want to keep some friction 
in the system�察�even though that goes against every Republican instinct on free trade�察�
just to help people from Indiana�拭�If you are against globalization because you think 
it harms people in developing countries�察�whose side are you on in this story�此�India's 
or Indiana's�拭�
The India versus Indiana dispute highlights the difficulties in drawing lines between 
the interests of two communities that never before imagined they were connected�察�much 
less collaborators。 But suddenly they each woke up anddiscovered thatin a flat world�察�
where work increasingly becomes a horizontal collaboration�察�they were not only 
connected and collaborating but badly in need of a social contract to govern their 
relations。 
The larger point here is this�此�Whether we are talking about management science or 
political science�察�manufacturing or research and development�察�many�察�many players and 
processes are going to have to come to grips with ;horizontalization。; And it is going 
to take a lot of sorting out。 
Where Do Companies Stop and Start�拭�
Tust as the relationship between different groups of workers will have to I be sorted 
out in a flat world�察�so too will the relationship between companies and the communities 
in which they operate。 Whose values will govern a particular company and whose 


interests will that company respect and promote�拭�It used to be said that as General 
Motors goes�察�so goes America。 But today it would be said�察 �As Dell goes�察�so goes 
Malaysia�察�Taiwan�察�China�察�Ireland�察�India 。 。 。; HP today has 142��000 employees in 178 
countries。 It is not only the largest consumer technology company in the world�察�it 
is the largest IT company in Europe�察�the largest 
209 
IT company in Russia�察�the largest IT company in the Middle East�察�and the largest IT 
company in South Africa。 Is HP an American company if a majority of its employees 
and customers are outside of America�察�even though it is headquartered in Palo Alto�拭�
Corporations cannot survive today as entities bounded by any single nation´state�察�
not even one as big as the United States。 So the current keep´you´awake´at´night issue 
for nation´states and their citizens is how to deal with corporations that are no 
longer bounded by a thing called the nation´state。 To whom are they loyal�拭�
;Corporate America has done very well�察�and there is nothing wrong with that�察�but it 
has done well by aligning itself with the flat world�察─�said Dinakar Singh�察�the hedge 
fund manager。 ;It has done that by outsourcing as many components as possible to the 
cheapest�察�most efficient suppliers。 If Dell can build every component ofits computers 
in coastal China and sell them in coastal America�察�Dell benefits�察�and American 
consumers benefit�察�but it is hard to make the case that American labor benefits。; 
So Dell wants as flat a world as possible�察�with as little friction and as few barriers 
as possible。 So do most other corporations today�察�because this allows them to build 
things in the most low´cost�察�efficient markets and sell in the most lucrative markets。 
There is almost nothing about Globalization 3。0 that is not good for capital。 
Capitalists can sit back�察�buy up any innovation�察�and then hire the best�察�cheapest 
labor input from anywhere into the world to research it�察�develop it�察�produce it�察�and 
distribute it。 Dell stock does well�察�Dell shareholders do well�察�Dell customers do 
well�察�and the Nasdaq does well。 All the things related to capital do fine。 But only 
some American workers will benefit�察�and only some communities。 Others will feel the 
pain that the flattening of the world brings about。 
Since multinationals first started scouring the earth for labor and markets�察�their 
interests have always gone beyond those of the nation´state in which they were 
headquartered。 But what is going on today�察�on the flat earth�察�is such a difference 
of degree that it amounts to a difference in kind。 Companies have never had more 
freedom�察�and less friction�察�in the way of assigning research�察�low´end manufacturing�察�
and high´end manufacturing anywhere in the world。 What this will mean for the 
long´term 
210 
relationship between companies and the country in which they are headquartered is 
simply unclear。 
Consider this vivid example�此�On December 7�察�2004�察�IBM announced that it was selling 
its whole Personal Computing Division to the Chinese computer company Lenovo to create 
a new worldwide PC company´the globe's third largest´with approximately 12 billion 
in annual revenue。 Simultaneously�察�though�察�IBM said that it would be taking an 18。9 
percent equity stake in Lenovo�察�creating a strategic alliance between IBM and Lenovo 


in PC sales�察�financing�察�and service worldwide。 The new combined company's worldwide 
headquarters�察�it was announced�察�would be in New York�察�but its principal manufacturing 
operations would be in Beijing and Raleigh�察�North Carolina�察�research centers would 
be in China�察�the United States�察�and Japan�察�and sales offices would be around the world。 
The new Lenovo will be the preferred supplier of PCs to IBM�察�and IBM will also be 
the new Lenovo's preferred supplier of services and financing。 
Are you still with me�拭�About ten thousand people will move from IBM to Lenovo�察�which 
was created in 1984 and was the first company to introduce the home computer concept 
in China。 Since 1997�察�L

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