Taking Stock of the Takeover

World leaders are gathered in South Africa to consider how the gap between poor and wealthy nations can be closed. Author Noreena Hertz, a World Bank economist turned anti-globalization protester, could give them a few pointers.

| Mon Aug. 26, 2002 3:00 AM EDT

World leaders -- minus President George Bush -- have convened in South Africa for what is being described as the largest summit in UN history, charged with addressing the 'global apartheid' separating rich and poor nations. Late last week, the summit attendees were given a stark view of the challenge facing them, as the World Bank issued a report suggesting that free trade policies and corporate-led globalization serve only to widen the gap between poor countries and their wealthy counterparts.

Noreena Hertz, a Cambridge economist and author who has experience with both sides of the globalization debate -- working for the World Bank and protesting on the streets at the World Economic Forum -- made a similar suggestion in her 2001 book, The Silent Takeover. Named one of the best books of 2001 by The Sunday Times of London, The Silent Takeover argues that free market capitalism is changing our world for the worse and suggests that western governments have virtually abandoned their roles as economic rule-setters.

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MotherJones.com: What do you think of President Bush's assertion that free trade is the quickest way for poor nations to build affluence?

Noreen Hertz: That would be great if anything approximated free trade. You have the US and Europe -- rich countries -- telling poor countries to open up their markets as they are subsidizing their own markets, the very markets -- like textiles and agriculture -- that the developing countries could have a chance at selling into.

How can Bush demand that the only way developing countries are going to move forward is by opening up their markets and then, at the same time, pass the farm bill -- which protects the big American agricultural companies? It's hypocritical.

MJ.com: Your book has been described as "a wake-up call to government and business." Since its UK publication last April, have you seen any evidence that politicians and/or CEOs are listening?

NH: Absolutely. In Europe especially. A week doesn't go by without me being asked by some government minister to come in and talk to them about why this is going on, why people are turning their back on the ballot box.

[British Chancellor] Gordon Brown is going to double Britain's aid to developing countries. Politicians and citizens are recognizing that if we want a better National Health Service [in Great Britain], we will have to pay more taxes, which was heresy under Thatcher. Guy Verhofstadt, the Belgium Prime Minister, has been talking about a need for global binding on ethics and the environment. And, not only that, in October of last year, he put together a one-day event which addressed the concerns of the anti-globalization movement. He invited me, Naomi Klein, Susan George, Bill Clinton, Mary Robinson, and the head of UN AID to spend a day with him, examining these issues and looking for a way forward. We are being taken seriously at a political level. I wouldn't say that this is happening within the Bush administration, but elsewhere.

MJ.com: A year ago, writing in the Guardian, you said there were hopeful signs that people weren't going to sit quietly while government ceded social and market authority to corporations. Do you still see those signs?

NH: More than ever. All this data is coming out now showing that people are willing to engage in nonpolitical forms of political engagement like boycotting, signing petitions, etc. In America, three times more people are involved today in some form of community activism than a decade ago.

Since Sept. 11, especially in America, there's been a massive interest in looking at environmental issues. Businesses are hiring accounting and consulting firms to do environmental and social audits.

At the World Economic Forum conference that I attended in February, you couldn't go to a session without a CEO starting his talk saying, "We must not ignore the voices of the protesters outside." And you could just say that this is rhetoric, but we must not underestimate the potential of rhetoric to work.

And then in terms of the number of people who actually have been going out on the streets to protest -- in Europe hundreds of thousands of people have been on the street. It's a little different here in the US, because of the post Sept. 11 environment. My American friends say they felt that any kind of dissent was seen as anti-patriotic. There needed to be a time of mourning.

MJ.com: Given the string of financial scandals in the US, is it fair to suggest, as some in Europe have, that the American model of capitalism is dead?

NH: Dead is too strong, but it's definitely seriously wounded. The American neo-liberal project, with its underlying belief in minimalist government and a self regulating market, has been proven to be seriously flawed.

Thanks to the wave of scandals, we will be seeing increased pressure on government and corporations to accept the need to rein in the most rapacious elements of capitalism, not only by activists, but by an increasingly mainstream constituency of shareholders, pensioners, and consumers, who are increasingly aware of the fact that the current configuration of power is both unsustainable and dangerous.

MJ.com: Several prominent pundits were predicting that kind of backlash after the Enron collapse. But the pressure on Washington evaporated. What's different now?

NH: With not only Enron, but also Tyco, Adelphia, WorldCom and Xerox scandals hitting the airwaves, I think we will see a growing backlash against corporate influence in Washington.

The question though is to what extent sustained action will follow political rhetoric. For all Bush's talking the talk, it remains very unclear as to whether he will actually walk the walk. To what extent will he impose new regulatory demands? How significantly will he resource enforcement agencies? And will he finally accept a need for meaningful reforms of campaign finance?

MJ.com: On the issue of electoral politics, many pundits and politicians have blamed the increasingly low voter turnouts in the US and abroad on a general political apathy and disengagement from society. Do you feel that's a fair analysis?

NH: Politicians often subscribe to this idea that the population is apathetic. But what's even worse is when they cite the policy of contentment. When you look at the correlation between socioeconomic status and voter turnout, you see that the poor are disproportionately not voting. This group of people who are economically marginalized are increasingly politically marginalized as well.

In Argentina in the last elections, 40% of the population spoiled their ballot-sheets. Some people are thinking that a non-vote is a form of protest itself. People are consciously not voting.

Politicians have become so intent on attracting the swing voter. Instead of tapping into this untapped market -- the nonvoter -- they go to the middle-class, middle-ground voter who may go either way. The dangers of that are we have a rise of far-right extremist politics. These politicians are very clever. They target the groups who feel very detached from traditional politics. Many of the working class people who voted for [French presidential candidate Jean-Marie] Le Pen, for example, are the very people who would've traditionally voted for the left.

MJ.com: As you note in your book, citizens are voting with their pocketbooks. How can politicians lure these "shareholder activists" back to the poll booths?

NH: It's really important that those of us in the protest movement don't forget that the end goal is not more protesting -- it's to reinvigorate the system. To win voters back to the polls, I think politicians will need to embrace a new political agenda that's based on fundamental principles of inclusivity and access to justice for all, and a reconnection of the social with the economic. They will to need address their relationship with big business, and disenfranchise big business. They'll need to reject the Reagan /Thatcher trickle-down creed which has proven not to work, and stop spending $75 billion a year on subsidies to business.

MJ.com: You helped set up Russia's first stock exchange and later worked at the World Bank in Moscow to advise the Russian government on its economic reforms. What do you make of Washington's recent statement that Russia now has a free market economy?

NH: What we see in Russia is a system of capitalism at its most extreme. The oligarchs running the country are accumulating vast wealth and then you have professors who can't even get a basket of basic foodstuffs together. Life expectancy has fallen over the last 10 years. The whole Washington push to turn Russia into a free market economy -- in terms of human cost and inequality it's much more of a depressing picture.

MJ.com: You've worked for change from within the system (at the World Bank in Moscow) and also from the outside (as a street protester at the World Economic Forum). Which role do you prefer, and why?

NH: I had a personal epiphany when I was working at the World Bank. I'd gotten my MBA at Wharton, and up until then I'd bought the neo-liberal line hook, line, and sinker. I suddenly understood that there would be this huge social cost and seeing that that wasn't on the agenda made me question the agenda. I quit my job and I looked at the world afresh. Nowadays, I'm on the other side of the fence.

When I was invited to go to the World Economic Forum, I struggled with whether I should go or not. I'd been planning to go to the World Social Forum in Porto Alegre instead. Ultimately I thought it would be more valuable for me to go to New York. I told myself, "I'm going to make sure that I speak at everything I go to. I need to voice and articulate these concerns, take the opportunity of having these face to face interactions." And that is exactly what I did.

It's nice, if you're involved in activism, to go and spend time with other activists. And that's really valuable in terms of moving the agenda on, and encouraging younger activists. But it's also really positive to be around people who don't obviously have the same views but who may also care about a lot of the same things that we care about. I don't think that those of us in the movement have in any way the monopoly on moral imperative.

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