Noreena Hertz: Why we must stay silent no longer


Richard Moore

Dear cj,

This article presents a comprehensive overview of the
consequences of globalization around the world - with a
special emphasis on the crisis of democracy that is facing
us.  Noreena is unable to think outside the box when it comes to
solutions, but in some sense that makes here article more
useful.  Her conservatism in that regard will increase the
credibility of her summary to mainstream readers.  Public
education is a matter of removing one brick at a time from
the wall of the matrix.

best regards,

btw> I'll be in Dublin this weekend at a "Convergence
Festival" put on by "Sustainable Ireland".   Laurence Cox is
chairing a series of workshops on "Tools for Change", and
I've got a two-hour slot to talk about "Post Seattle:
Building a Global Movement", followed by plenty of time for

Monday we'll continue our dialog thread.

From: "Brit Eckhart" <•••@••.•••>
To: <•••@••.•••>
Subject: Fw: Why we must stay silent no longer, The Observer, London, 08 April 
Date: Sun, 15 Apr 2001 10:10:53 -0400

-----Original Message-----
From: Drusha L. Mayhue <•••@••.•••>
To: •••@••.••• <•••@••.•••>
Date: Sunday, April 15, 2001 1:38 AM
Subject: [toeslist] Why we must stay silent no longer, The Observer, London,
08 April 2001

>This is the best article I've seen that makes all the connections between
>democracy, multinational corporations, and the public sector/private sector
>debate.  I would urge all to read the whole article.  It's worth the time.


THE OBSERVER, London, 08 April 2001

Why we must stay silent no longer 

Noreena Hertz is one of the world's leading young thinkers,
whose agenda-setting new book on corporate power is already
sparking intense debate on both sides of the Atlantic. In
this remarkable special essay for The Observer she argues
that governments' surrender to big business is the deadliest
threat facing democracy today

Sunday April 8, 2001
The Observer 

In the hullaballoo following the American presidential
election, with hanging and pregnant chads, and ballot forms
that needed a PhD to decipher, it was easy to forget
something that was in many ways even more alarming than
confusion over who won. More than 90 million Americans had
not bothered to vote - that is, more than the combined
population of England, Ireland and Scandinavia.

Low turnout is not just a US phenomenon. In the UK, the
landslide victory for Labour in the election of 1997 was
achieved on a turnout of 69 per cent - the lowest since the
war. During the European elections in 1999, less than half
of the electorate voted, and less than a quarter came out in
the UK. In the Leeds Central by-election last year only 19
per cent of those eligible to vote did so. Predictions for
the forthcoming general election are that turnout will fall
to the lowest level yet.

People have lost faith in politics, because they no longer
know what governments are good for. Thanks to the steady
withdrawal of the state over the past 20 years from the
public sphere, it is corporations, not governments, that
increasingly define the public realm.

Unregulated or under-regulated by governments, corporations
set the terms of engagement themselves. In the Third World
we see a race to the bottom: multinationals pitting
developing countries against each other to provide the most
advantageous conditions for investment, with no regulation,
no red tape, no unions, a blind eye turned to environmental
degradation. It's good for profit, but bad for workers and
local communities. As corporations go bottom fishing, host
governments are left with little alternative but to accept
the pickings. Globalisation may deliver liberty, but not
fraternity or equality.

At the headquarters of the World Trade Organisation on the
banks of Lake Geneva we see rulings being made in the names
of the free market that limit states' abilities to safeguard
their people's interests. When the European Union tried to
ban synthetic hormones from beef on the basis of strong
evidence that they could cause cancer, reduce male fertility
and in some cases result in the premature onset of puberty
in young children, it found itself unable to do so thanks to
a WTO ruling which put the interests of Monsanto, the US
National Cattlemen's Association, the US Dairy Export
Council and the National Milk Producers Federation first.

Time and time again the WTO has intervened to prevent
governments from using boycotts or tariffs against companies
that they find to be acting in ethically or environmentally
unacceptable ways.

In Germany, where revenue from corporate taxes has fallen by
50 per cent over the past 20 years, despite a rise in
corporate profits of 90 per cent, a group of companies,
including Deutsche Bank, BMW, Daimler-Benz and RWE, the
German energy and industrial group, thwarted in 1999 Finance
Minister Oskar Lafontaine's attempt to raise the tax burden
on German firms, threatening to move investment or factories
to other countries if government policy did not suit them.
'It's a question of at least 14,000 jobs,' threatened Dieter
Schweer, a spokesman for RWE. 'If the investment position is
no longer attractive, we will examine every possibility of
switching our investments abroad.' Daimler-Benz proposed
relocating to the US; other companies threatened to stop
buying government bonds and investing in the German economy.

In view of the power these corporations wield their threats
were taken seriously. Within a few months Germany was
planning corporate tax cuts which would reduce tax on German
companies below US rates. As one of German Chancellor
Gerhard Schröder's senior advisers in Washington commented
at the time, 'Deutsche Bank and industrial giants like
Mercedes are too strong for the elected government in

In the US, the quid pro quo being exacted by George W's
corporate backers is becoming all too clear. Since being
elected, the President has opened up the Arctic National
Wildlife Refuge to oil drillers, retreated from his promises
of protecting forests, made moves to weaken the requirement
on mining companies to clean after themselves and in recent
weeks both reversed a campaign pledge to regulate CO 2
emissions from power plants and trashed the Kyoto treaty on
global warming. The interests of the US people suborned to
those of the major US energy giants that bank-rolled him:
$47 million was all it cost.

Here in the UK public services are increasingly being handed
over to private corporations to manage and fund. The
Government has already withdrawn from running the railways,
soon it'll be withdrawing from air traffic control. Private
health insurance is being pushed by the Conservatives as a
way of staving off the collapse of our National Health
Service. Even the education of our children, once the most
sacred preserve of the state, is increasingly delegated to
the private sector.

Although it remains too early to see the consequences of the
privatisation of public services played out in full, initial
indications are troubling. The rail crashes, for which
Gerald Corbett, when chief executive of Railtrack, put the
blame on the way the railway 'was ripped apart at
privatisation'; Angel School in Islington, a primary school
now being run by the private company Cambridge Education
Authorities, under threat of closure despite the fact that
it has constantly improved its educational results, with the
parents and staff left with no real means of redress or
recourse; Nottingham University's acceptance of £3.8m from
British American Tobacco to set up, of all things, a school
of corporate social responsibility; and the US model of
healthcare proposed as a blueprint for our health reforms,
despite the fact that 45 million Americans currently do not
have health insurance and 25 per cent of the chronically ill
there do not have adequate coverage.

This is the world of the Silent Takeover, a world in which
governments can no longer be relied on to protect the
people's interests. Blinded by the allure of the market,
they now put corporate interests first.

So it is left to us, through individual action, to take the
lead. In a world in which power increasingly lies in the
hands of corporations rather than governments, the most
effective way to be political is not to cast one's vote at
the ballot box but to do so at the supermarket or at a
shareholders' meeting.

Because, when provoked, corporations respond. While
governments dithered about the health value of GM foods,
supermarkets faced with consumer unrest pulled the products
off their shelves overnight. While nations spoke about
ethical foreign policy, corporations pulled out of Burma
rather than risk censure by customers. George W may have
backed down on his campaign pledges to limit CO 2 emissions,
but BP, a corporation, continues to spearhead their
reduction. And when stories broke over the world of children
sewing footballs for Reebok for a pittance, what did
governments do? Nothing. But the corporation, fearing a
consumer boycott, stepped in with innovative plans for
dealing with the child labour problem.

Delivering a quality product at a reasonable cost is not all
that is now demanded of corporations. The key to consumer
satisfaction is not only how well a company treats its
customers, but increasingly whether it is perceived as
taking its responsibilities to society seriously. People are
demanding that corporations deliver in a way that
governments can't or won't.

It is not just the brown-rice-eating, sandal-wearing brigade
who are making demands: 60 per cent of UK consumers are
prepared to boycott stores or products because they are
concerned about their ethical standards. Three-quarters of
British consumers would choose a product on green or ethical
issues. More than 75 per cent of Americans would boycott
stores selling goods produced in sweatshops. Monsanto was
brought to its knees by a coalition of eco-warriors and
Britain's Women's Institute members. In America, the
Interfaith Centre on Corporate Responsibility, with $110
billion at its disposal, is among the ethical investors now
using shareholder power to 'regulate' corporate manoeuvres
and get corporations to do good.

Can we entrust the public interest to consumer and
shareholder activists? Can shopping adequately replace
voting? No, it cannot. The world cannot be simplified to the
extent that consumer politics tends to demand. Is GM food
necessarily always bad for consumers or the environment? Or
could this technology be harnessed for good? Child labour
may be distasteful to Western expectations, but does
boycotting goods made with child labour improve or
exacerbate the lot of Third World children?

Trusting the market to regulate may not ultimately be in our
interest. Moreover, populist politics can easily result in
tyranny, not necessarily of the majority, but by those who
can protest most effectively. Rather than empowering all,
consumer and shareholder activism give greatest voice to
those with the most money in their pockets, those with the
greatest purchasing power, those who can switch from seller
to seller with relative ease. Consumer and shareholder
activism is a form of protest that favours the middle
classes and the outpouring of dissatisfaction of the

Nor should the takeover by corporations of governments'
responsibilities be viewed as a reason for governments to
withdraw. Despite the roles corporations are beginning to
play in the social sphere, despite the fact that they may be
able to play some role in alleviating poverty and inequity
and protecting the environment, social investment and social
justice will never become their core activity. Their
contribution to society's needs will always remain at the
margins. Corporate social responsibility cannot be thought
of as a reasonable proxy for state responsibility.

In Japan's Mitsubishi Villages, Nissan Towns, and Toyota
Cities the Japanese keiratsus - trading companies - used to
provide school vouchers, housing, and health care. In the
wake of the Asian financial crisis, the firms are
withdrawing support from the community. The head of Toshiba
says that they are no longer 'a charity': entire communities
are suffering. The suicide rate in Japan rose by a third
between 1997 and 1999, a testament to the social strain.

As more and more of the public realm is handed over to the
private sector to manage, we need to see the Japanese case
as a cautionary tale. If this move by Western corporations
towards greater responsibility and care is predicated solely
on the continuing strength of the global economy, on the
fact that philanthropic acts are essentially tax write-offs
against balance sheets firmly in the black, is it not likely
to be reversed when times once again become difficult?
Companies will simply not be able to justify staying
involved to their shareholders, unless they calculate that
withdrawal from their social commitments will be so damaging
to their reputation as to be more costly than maintaining
them. The corporate provision of welfare risks dependence on
the continued generation of profits.

We must also ask ourselves whether a price will be exacted
for acts of corporate benevolence. Today Microsoft puts
computers in our schools; will it tomorrow determine what
our children learn? When Mike Cameron, a 19-year-old
student, turned up at Greenbriar High School in Evans
Georgia on official 'Coke Day' wearing a T-shirt with a
Pepsi logo he was suspended. Channel One Network is now
notorious for having provided 12,000 American schools with
money and goods in exchange for beaming their commercials
directly into the classroom. But do we want to live in a
world in which commercialisation takes advantage of
shortages in funding and rides on the back of children's'
learning? This is not about ethics, this is about business.
Sometimes the two will coincide, but clearly not always.

Corporations are not society's custodians: they are
commercial entities that act in the pursuit of profit, not
ethical considerations. They are morally ambivalent. Often
their business interests happen to coincide with society's,
but this is by no means always the case. Governments on the
other hand are supposed to respond to citizens. Downgrading
the role of the state in favour of corporate activism
threatens to make societal improvements dependent on the
creation of profit. And governments that stand back while
corporations take over, without being willing to set the
terms of engagement or retain the upper hand, are in danger
of losing the support of the people, whose feeling of lack
of recourse or representation is showing itself in a wave of
protest that goes beyond individual acts of consumer and
shareholder dissent.

Take the 40,000 Frenchmen who gathered outside the trial of
French farmer José Bové or Granny D, the 91-year-old
American great-grandmother who walked across America to
protest against the relationship between big business and
politics and was greeted by thousands upon her arrival at
Washington DC or the Seattle Prague and May Day rioters that
we saw on our television screens last year - all are
examples of a global uprising of people who now see
themselves as politically disposed.

All over the world, people are beginning to lash out against
corporations, governments and international organisations
alike. In a world in which politicians now all sing from the
same hymn sheet, people who want to change the hymn have to
go outside the church.

But like consumer and shareholder activism, other forms of
protest should not be idealised. Their limitations are
clear. The commonality of interests often centres on a
shared general disillusionment, rather than specific
concerns or proffered solutions. In some cases protesters
are motivated by a sense of common good, but in others they
are concerned only with safeguarding their own interests, or
those of a limited group as in the British fuel protests of
autumn 2000.

Pressure groups need to play to the media, which encourages
posturing, the demonisation of 'enemies', a massive
oversimplification of issues and the choosing of fashionable
rather than difficult causes to champion. Issues such as
forest biodiversity, nitrate leaching or soil erosion in
Africa hardly ever get a look in. And, as one of London's
May Day protesters told me: 'There has to be trouble,
otherwise the papers won't report it.'

But despite the limitations of protest, despite its failure
to balance effective means with democratic ends, despite the
fact that it can never by itself be a long-term solution,
the crucial question is whether protest can change politics
in the same way as it is beginning to change the corporate
agenda. Can protest put the people back into the forefront
of politics?

There are signs that perhaps it can, and that perhaps the
political corpse is beginning to twitch. In June of 1999 in
Cochabamba, Bolivia's third largest city, the water
authority was privatised, following recommendations from the
World Bank. At once the price of water tripled, which meant
that a typical worker was spending almost a quarter of his
or her monthly wage on water charges. People gathered on the
streets and protested, there was a four-day general strike,
bill payment was boycotted, and 30,000 people marched
through the city centre in anger. Finally, in April 2000,
the privatisation of the water supply was revoked. Back in
1985, government leaders had asked the Bolivian people for
patience and sacrifice as it implemented neo-liberal
reforms. Fifteen years later, it seemed that their patience
had run out.

In New Zealand, a country that embraced free market
fundamentalism with enthusiasm in the early 1980s, the new
Labour administration is implementing changes that for the
past 20 years would have been considered heretical.
Workplace accident insurance has been renationalised, a
state-run People's Bank will open soon in which personal
banking fees will be 20 to 30 per cent lower than those
charged by private banks, tax cuts for high earners have
been reversed and trade union rights boosted. As Prime
Minister Helen Clark has said, New Zealand's experiment in
market fundamentalism has failed.

In the US we are also seeing the beginnings of a turnaround.
Prompted by the complete failure of California's privately
owned power distributors to deliver electricity at a fair
price to citizens, or often to deliver it at all, and
experiencing their first state-wide blackouts since the
Second World War, Californian politicians are contemplating
a once unthinkable change of course: to regain control of
the very transmission system that the state privatised five
years ago. Even Ronald Reaganland is breaking with its past.

Small signs, it is true, and for now focused on
renationalisation rather than issues of global concern, but
they represent cracks in an ideology that had become
hegemonic over the past 20 years, the beginnings of a
recognition that there has to be new thinking.

But while in faraway lands the unthinkable is being thought,
here at home do we have any signs that politicians are
questioning their certainty that the private sector will be
our salvation? Any willingness to admit the dangers of this
silent takeover, this world in which corporations not
governments are increasingly making the rules? No.

Looking at the choices on offer at the forthcoming election,
we see all too clearly the extent of the political
consensus. A reduced state, with an ever greater dependence
on corporations for solutions, has become the standard line
touted by all parties.

As far back as 1968, Margaret Thatcher said in a famous
speech: 'There are dangers in consensus: it could be an
attempt to satisfy people holding no particular views about
anything. No great party can survive except on the basis of
firm beliefs about what it wants to do.' The irony is that
by buying so wholeheartedly into the form of capitalism
initiated by Thatcher and Reagan, British politics has
fallen into this very trap, leaving us the electorate
increasingly alienated from and distrustful of politics, and
providing us with little alternative but to protest rather
than vote. Until the Government regains the trust of the
electorate, the people will continue to scorn democracy.
Until the state reclaims the people, the people will not
reclaim the state.

* Noreena Hertz is the Associate Director of the Centre for
International Business and Management at the Judge Institute
of Management Studies, University of Cambridge. Now aged 33,
she graduated from University College, London, with a degree
in philosophy and economics in 1987, when she was 19, before
taking an MBA at the Wharton School of the University of
Pennsylvania. Dr Hertz then moved to St Petersburg to help
set up the city's stock exchange and help tutor Boris
Yeltsin's advisers in market economics following the
overthrow of communism. Returning to Britain, she completed
her PhD at Cambridge and, in 1996, then went to the Middle
East to head a team of 40 researchers developing the role
that the private sector might play in the peace process.

Dr Hertz's book The Silent Takeover: Global Capitalism and
the Death of Democracy , is published by Heinemann at
£12.99. The accompanying Channel 4 film, The End of Politics
will be broadcast as the curtain raiser to Channel 4's
general election coverage.

Guardian Unlimited © Guardian Newspapers Limited 2001

Richard K Moore
Wexford, Ireland

    A community will evolve only when
    the people control their means of communication.
    - Frantz Fanon

    "One cannot separate economics, political science, and
    history. Politics is the control of the economy. History,
    when accurately and fully recorded, is that story. In most
    textbooks and classrooms, not only are these three fields of
    study separated, but they are further compartmentalized into
    separate subfields, obscuring the close interconnections
    between them" -- J.W. Smith, The World's Wasted Wealth 2,
    (Institute for Economic Democracy, 1994), p. 22.

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