The Silent Takeover: Global Capitalism and the Death of Democracy

The Silent Takeover by Noreena Hertz is a readable and reasoned critique of globalization from a capitalist perspective.Hertz, professor of international business at the University of Cambridge, argues that global trade and economic development has become seriously unbalanced in favour of multinational corporations, and that governments have become little more than handmaidens to corporate interests.Hertz argues that after the fall of communism in Eastern Europe the right-wing in the United States, Britain, Canada, and much of the rest of the developed world vilified the redistributive role of government in society and forced governments to retreat from involvement in the economy.Known as the Washington Consensus, this movement made International Monetary Fund and other institutional loans to nation-states contingent on government deregulation and trade liberalization. Hertz contends that this retreat from the public sphere has increase inequality and poverty throughout the world and reduced governments to handmaidens for corporations. She writes:"The role of nation states has become to a large extent simply that of providing the public goods and services that business needs at the lowest cost while protecting the world's free trade system."Heertz points-out that many Asian governments rejected the imposition of American-style capitalism and regularly intervene in the market for social, political and economic reasons. Although these countries are subjected to the same vicissitudes as states operating on other economic principles, they continue to prosper and some have been so successful they are considered threats by many "First World" states.Anti-globalization protests are, Heertz contends, motivated by a variety of well-founded suspicions of the emerging capitalist world order. She argues protestors recognize the principle proponents and beneficiaries of globalization in its present form are the United States, international organizations controlled by the U.S. such as the World Bank and the International Monetary Fund, and multinational corporations. The protestors suspect - rightly in my opinion - current trends in globalization will result in gross income equalities like those that have emerged in the U.S. in recent decades. Heertz notes that 97% of the increase in income in the U.S. in the last 20 years has gone to the richest 20% of the population, and that the 13,000 wealthiest households in the United States have almost as much income as the 20 million poorest households.Heertz claims anti-globalization activist are motivated by the hypocrisy of so-called "First World" countries demanding poor states open their doors to international trade and cease intervening in their economies. The world's richest nations are far more likely to offend the principles of free trade than the world's poorest. The United States pays American cotton growers and buyers approximately 4 billion dollars a year in subsidies. The United States and the Eur

The thesis in this extremely well written and eminently readable tome runs along what is by now the well-worn path of a number of other neo-Luddite authors like Sales Kirkpatrick and Neil Postman. Hertz, a Cambridge scholar and an economist, posits that the neo-conservative policies first initiated by the Reagan administration in the United States and by Martha Thatcher's government in Britain were profoundly anti-democratic, having disastrously disruptive effects in terms of its social and political consequences for the citizens of those countries. Thus, she argues that although the initial effects was to bring a wave of prosperity and wealth to a narrow segment of each of the societies, the growth of the transnational corporations has increasingly served to progressively and surreptitiously disenfranchise ordinary citizens of their most basic rights by corrupting the political policies of those countries to favor the needs, prerogatives, and perspectives of the corporations over those of the citizenry at large. In fact, she argues, the transformation of laws and regulations relating to the conduct of such corporations has been so profound and far-reaching that they now act in a manner that is beyond the reach and control of those polities from which they originally arose. Such corporations now act to influence the policies and laws of most social democracies that they now act to determine political policies rather than operate in deference to them. Slowly this state of affairs has acted to subvert the rights of ordinary citizens, for the state increasingly has become more an agent of the interests of the transnational now becomes an agent corporation than a bulwark of protection for the citizenry of the country as it formerly was. This, she argues, serves to nullify the basic social contract between the people on the one hand, and the state, on the other for the state to offer equal protection to all its citizens in general, and not to special interests such as the transnational corporations in particular. She cites, by way of an example, the fact that in the last twenty years income redistribution policies instituted by the state has been profoundly prejudiced in favor of the highest reaches of society, stealing from the poor to give to the rich. Hertz recognizes the intrinsic difficulty associated with attempting to effect any reform or reversal of such policies. Yet, unless social democracies move quickly and decisively to realign the calculus pertaining to the equation between the countervailing political power of the state over the economic power of the transnational corporation, common citizens may lose forever their ability to participate meaningfully in the democratic process in order to positively influence their own fates in a post-industrial culture that increasingly favors the rights, prerogatives, and preferences of the rich and powerful. This is an important and even profound book, and one that deserves to be more widely read and

Noreena Hertz is a gentle, soft spoken economist from Cambridge University with a microscopic intellect capable of dissecting elements of prevailing tragedy in the world global economy. Along with Greg Palast and Kevin Phillips, she sees the inherent dangers of a world economy in which ethics and humane considerations have been preempted by a rush to riches of multinational corporations and international bankers, led by the World Trade Organization.The gentle, soft spoken Hertz was one of the many individuals who was victimized by tear gas during the demonstrations in Genoa during World Trade Organization discussions in that city. Regrettably even the highly respected New York Times political journalist Thomas Friedman, following such demonstrations against the WTO in Seattle, referred to the demonstrators as "flat earth proponents." Ms. Hertz does not fall into that category, as she demonstrates in her articulate presentation of how nations in need were ultimately bankrupted by loan policies dictated by the World Trade Organization. She asserts that she is not opposed to major corporations entering the economic pictures of nations in our current multifaceted global economy. What she abhors is the danger of such emergence without appropriate regulatory patterns being in place. She accordingly parts company with the so-called "free market" concepts of economist Milton Friedman of the "Chicago School" and delineates how his theories misfired when applied by adherents such as Ronald Reagan in the United States and Margaret Thatcher in Great Britain.Hertz notes that "the next revolution will not be on television." She is referring to the intellectual revolution to thwart ongoing efforts of WTO which have produced myriad problems in nations such as Bolivia, where the nation's water supply was privatized and controlled for a time by the Bechtel Corporation until the citizenry spontaneously erupted against prevailing policies, along with other destructive instances in such important South American nations as Argentina and Brazil. The reason why she believes that this ongoing "revolution" will not be on television is that the media is so entwined with the corporate world, which pays huge amounts for commercial advertising. Hertz sees danger in the control that these global corporate giants hold over the communications industry.It is no accident that Hertz and her message has received its greatest attention in the alternative media. Her brilliant work is rivaled by Gregory Palast of the BBC. His evocative work on the excesses of the WTO, "The Best Democracy Money Can Buy," belongs on the same coffee table next to Hertz's "The Silent Takeover."

Obviously written for a general audience, not an academic or business one, the arguments, and the examples used, have appeared elsewhere, but these separate strands are woven together into a tapestry that looks a lot like the writing on the wall. First Hertz narrates how we arrived at globalization and then identifies a number of problems with globalization: the polarizing of rich and poor as the rich get ever richer and poor get ever more numerous (with the consequent loss of social cohesion), the decision making of the WTO and IMF, who rely on economic criteria alone, when the consequences of those decisions are not only economic, the purchasing of political power by multinational corporations with the resulting cynicism and apathy of voters, the promoting of business interests instead of public interests through the media after the media has been consolidated into large conglomerates, relying on the new consumerism and shareholder activism by a minority instead of political action by a majority and relying on temporary charity by the super rich and multinational corporations instead of permanent governmental action to promote social and economic justice and equality.Hertz has a common sense solution: "In a world of global capital, politics must be reframed at the global level, too." Six steps will globalize politics: Minimum health, safety and welfare standards at work, international regulation of multinationals, a global legal aid fund, a World Social Organization, steps to reduce economic inequality (such as debt reduction and increased aid) and a global tax authority. This is, well, optimistic. (A World Social Organization that does anything besides talk? Yeah, right.)I'd prefer to think outside the box: In legal terms, a corporation is a `person.' And there begins the ambiguity that continues to cause confusion. This corporate `person' is `immortal' but `lives' only in economic terms. Does that sound like anybody you know? No? Me neither. Want to limit the power of multinational corporations? Put an expiration date on the certificate (charter) of incorporation. Want to impose social responsibility (a/k/a ethics) on multinational corporations? Change corporate governance by changing legal requirements for the articles of incorporation. Make the board of directors responsible to more than the shareholders with mandatory environmental and social audits, not just financial audits. Require a consumer on the board of directors. If a manufacturer, require an hourly employee on the board. If a power, oil or chemical company, require an environmentalist on the board. If a drug company, require a doctor on the board.So now consider this: Have the U.N. incorporate multinational corporations (just like a Delaware corporation is issued a certificate or charter of incorporation by the Delaware Secretary of State after acceptance of the articles of incorporation). The multinational corporation would be subject to international co

We sometimes catch a glimpse of "anarchist" protesters and heads of state at global economic summits, but many of us lack a comprehensive view of the process of globalization. Depending on what papers you read and how closely you read them, your view of globalization may be more or less informed, more or less ideologically biased, but is most probably lacking in some aspect. This book brings it all together in a timely and accurate historical tale. Hertz starts by identifying certain realities and discontents: corporations getting larger and larger everyday through mega-mergers; a widening gap between the rich Haves and the poor Have-nots; fewer and fewer people turning out to vote, as more and more people, from Seattle to Genoa, hit the streets in protest of profligate politics and out-of-control business. She then focuses on one of the major causes of these problems: the government's mad-dash to "liberalize" and deregulate their control of commerce and industry. In other words, the private sector is set free and the state withers away in every capacity -- except insofar as campaign and lobby contributions purchase the last of our "representative" influence in the political sphere. The picture this book paints is nothing less than the hijacking of our democratic political heritage by large, increasing global corporations who pay no homage to local people, public health, labor rights, environmental degradation or national sovereignty -- and, conversely, the shrinkage of our government to the role of a corporate nanny, whose primary function would appear to begging large corporations not to flee to the Third World with large, tax-fed subsidies and lax environmental codes. Very concisely worded, accurately and appropriately referenced, the book will serve as a solid companion to anybody interested in understanding where the last 50 years of scandal-ridden politics and unfettered business have landed us. By no coincidence was "The Silent Takeover" The Sunday Times' book of the year and a best seller in England. Apparently, it has now been translated into French, German, Spanish, Italian, Dutch, Korean, Portuguese and Japanese.