by June Milligan |
Noreena Hertz is a gentle, soft-spoken Cambridge University economist who was able to predict our current global economic disaster almost a decade ago. Part activist, part detective, she did her research, and found that as far back as 200l, over half of the world’s 100 largest economies were corporations, not countries. The sales of General Motors and Ford were greater than the gross domestic product of all of sub-Saharan Africa, and Wal-Mart had a turnover higher than the revenues of most Eastern European countries. Now in 2010 even more of the world’s largest economies are corporations.
The author gives us some history of this trend, then focuses on some of the major causes. Probably the most important cause is government’s mad dash to deregulate commerce and industry during the last twenty years. The picture this book paints shows nothing less than the hijacking of our democratic political heritage by large global corporations who pay few taxes and no attention to local people, public health, labor rights, environmental degradation or national sovereignty. Now we can all see where the last 50 years of scandal-ridden politics and unfettered business and banking have landed us.
Some years ago Hertz saw the dangers of a world economy in which ethics and humane considerations have been preempted by a rush to riches by multinational corporations and international bankers, led by the World Trade Organization. She argues that both economics and business need to be put back into the human social context. Drawing on subjects as diverse as anthropology, physics, geopolitics and neurology, Hertz’s economic vision is at once eclectic and holistic, which probably explains her ability to foresee dangers and opportunities that others do not.
She explains that globalism isn’t just allowing companies to trade freely all over the world. It’s about what types of rights and responsibilities come with that. With inequality surging, resources rapidly diminishing, and the stability of many countries in question, capitalism-at-all-costs is no longer an option. Long ago she saw the flaws in this very extreme form of capitalism where the pendulum has swung so far in one direction that the focus is completely on the short term, and no one is thinking about the consequences.
The most recent example of ignoring the consequences is the state of the current global financial crisis. This largest crisis since the Great Depression confirmed Hertz’s long-standing conviction that there would be dire consequences if unregulated markets were rewarded for success but not penalized for failure. Hertz is now being looked to as something of a visionary in Europe, someone uniquely qualified to rebuild our dilapidated economic theories while helping to create a blueprint for a new kind of capitalism. Her idea of “co-op capitalism” calls for businesses, governments and the public to experiment together to design new, more adaptive business models and financial structures that take both profit and larger social goals into account. Companies should be financially motivated to behave in ways that benefit everyone.
Although Hertz comes from a long line of academics – her great grandfather was the chief rabbi of the U.K. and she speaks Russian, French, German, Hebrew and Arabic as well as English – her appreciation for business came from her parents who started their own fashion company. They were entrepreneurs so she grew up believing in the power of innovation. After Russia began to implode after the Berlin Wall fell, she was invited to help set up Russia’s first stock exchange, and was in the country during the 1991 coup. During those years she realized that how an economy functions is not just about a market anonymously distributing things, but is also about the way people relate to each other and how power is distributed. She argues that corporations are gaining immense power at the expense of society and democracy, and this dynamic has created a system where the corporation is king, the state its subject, and its citizens just consumers.
When the financial crisis hit in September 2008, Hertz published a piece entitled, “The Death of Gucci Capitalism” in the British political magazine The New Statesman, declaring that we had come to the end of the Reagan-Thatcher era in which unregulated markets had more power than governments, where risk was seen as a public good and success was measured only by GDP; where the aggressive expansion of Anglo-American capitalism had left the world an “interconnected mess.” She feels that this recent financial meltdown heralds the death of a paradigm. Since then some of the biggest corporations in the world have spotted her as being dead-on in her economic predictions and are making sure their senior management is aware of her theories by becoming engaged with what she thinks are some of the most important issues of the post-crisis world. These days she is taking notes of best practices around the world to help identify new ways of operating.
In her speeches she mentions the billion-dollar Linux model and the field of biotechnology, where collaboration between academic institutions and companies is the norm. She points to the Emilia-Romagna region in Italy where co-ops work within a market-economy framework and are profit oriented, but because workers all own shares in the companies they work for, a long-term focus on collective success is built into the system. That area of Italy is one of the most successful economic regions in Europe, so they must be doing something right.
This book was a best seller in England and has been translated into seven additional languages. Other books by Noreena Hertz are: The Debt Threat: How Debt is Destroying the Developing World – and Threatening All of Us; Russian Business Relationships in the Wake of Reform; and IOU: The Story of the Debt
For more info, contact June Milligan, specializing in helping people learn how to let go of unproductive thinking (775) 786-9111.
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