Customer Reviews

The Silent Takeover: Global Capitalism and the Death of Democracy

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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.

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 corporate law and regulations, enforced by prosecutors and an international civil and criminal court. Most importantly, accounting and audit regulations would be part of that international civil law. (Yes, I do know that the U.S. has voted against an international criminal court. That muffled thumping you hear is Woodrow Wilson spinning in his grave.)

It is important that the rules are the same for everybody and the process is open and transparent because transgressors go to jail. (So when Enron pulls what they did in India, somebody goes to jail and Enron suffers financial penalties and sanctions. Bribery and fraud shouldn't hide behind subsidiaries and national sovereignty.) My estimation of businessmen (and lawyers and accountants) is that they aren't going to behave until somebody goes to jail for not behaving. I would deliberately and intentionally put the multinationals on the defensive by making international government and multinational corporations adversaries in public court. (And, of course, buying the judge is a crime.) Doing business internationally is a privilege not a right. If you don't play by the house rules, you don't play at all. The World Trade Organization hasn't done the one critical job: Separating the multinational corporation from national sovereignty. The World Trade Organization is a nice try, but now it's time to get real.

One of the most important reasons to have the U.N. instead of the U.S. incorporate multinational corporations is to correct one of the most pernicious and egregious confusions of globalization (which Hertz only indirectly addresses): that multinational corporations are somehow American and that they act with the support and protection of the U.S. government. A multinational corporation should never be able to imply that it acts with the military support of any government, particularly the American government because of the superiority of its military forces. That amounts to translating military force into a business advantage. (And, as an American taxpayer, why am I paying to support a military that helps somebody else get rich? Ah, oops.)

American foreign policy would be a lot less complicated if everybody (Americans included) understood that multinational corporations are not American corporations. They act solely in their own interest and so should we.

Americans also need to remember that while the Founding Fathers choose representative democracy, they didn't choose capitalism. Socialism and communism hadn't been invented yet. There is nothing uniquely American about capitalism. (Though that particular blend of friendliness and aggressiveness with which we practice it seems to be uniquely American.)

This book does get you to stop consuming long enough to start thinking . . .

Most of Ms. Hertz's book is a brisk trip through material which has been covered elsewhere before. But Ms. Hertz does us the immense favor of providing us with a clean structure that suggests that we view the interconnectedness of the free market ideology, the consolidation of the media, the attacks on unions and the social welfare as working together to form a new non-public consensus in which governments do not govern (instead they act as shills and prostitutes for business interests) and businesses have come to govern (think of the Body Shop, or Ben and Jerry's who maintain very narrow political platforms as a means to demonstrate their liberal "caring."). She moves through this material at a good speed, with intellectual rigor, and with plenty of examples and facts to back up her assertions.

Two things are original to Ms. Hertz's work: the story of how the penetration of business into government and vice versa means that the public is no longer even taken into consideration by those in power (except perhaps as potential rioters). She suggests that governments have so weakened themselves through policies of deregulation and privatization (in keeping with the dicta of the free market priests at the WTO and the IMF and the Fed), they are no longer conduits for the needs of citizens they once represented. Paradoxically, having supped full on tax breaks and corporate welfare, corporations now find they have to take over functions once supplied by the state: well-educated workforces for one. They do this sporadically, she notes, and almost always with an eye toward the accrual of PR benefits. It is doubtful they will fund common public goods such as the infrastructures that once ameliorated the dark side of capitalism -- welfare and unemployment programs to take just two examples. Incidentally, she doesn't blame them for their activities. She understands businesses are driven by only one imperative finally: creating wealth for shareholders. Which is why the free market can never fully deliver public goods, despite what the free marketeers say.

Citing as a precursor protests in the Progressive era that went outside the usual course of democratic institutions, she believes that it is time for people to make themselves heard - and not just through their purchases or the stocks they choose to buy (although that can be a powerful check on the corporation) - but also through putting their bodies in the street. For now, in the absence of government, she sees it as perhaps the only check on the private international structures of financial domination - the WTO, IMF.

Although Ms. Hertz's make you believe that the global hypercapitalism is going to be nearly impossible to stop, her personal story gives one some hope. An economist trained at Wharton (she was there to help "jump start" the Soviet economy in the early 90s), she has switched her allegiance to those people on the other side of the barricades. A powerful conversion story.

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 appreciated. I can heartily recommend it to you. Enjoy!

Whether done silently or not, the author makes the case for the fact that huge transnational corporations (TNCs) have taken on the societal role that formerly fell to governments and that governments largely accede to and support the agenda and maneuverings of those corporations. As a result, perhaps as many as one half of voting-age citizens in democracies do not find their political processes viable, worth participating in. The author examines alternatives to democratic participation, to pressuring corporations.

Beginning with the rise of Thatcher and Reagan, neo-liberalism has become the dominant economic and political philosophy worldwide with deregulation and privatization being core elements of that thinking. It is a very sparse view of the obligations of leading institutions to look out for the general good of society. However, for the book supposedly being a critique of laissez-faire capitalism, the author seems to have somewhat mixed feelings concerning the desirability of free-running capitalism. Her biggest concern seems to be the maldistribution of the wealth gains of the 1990s. But she also seems to be dazzled by the huge increases in wealth experienced by many and the overall benefits of free trade.

What is missing from the analysis is any real understanding of the true powerlessness of the working class to withstand this business assault. With the mass media and politicians firmly supporting the business agenda, workers have nowhere to turn as they are downsized, benefits are cut, jobs are shipped overseas, and workers' rights on the job are toothless or nonexistent. As a substitute for actual worker power on the job, the author would suggest shareholder activism: forcing ethical behavior and investment through pressuring boards of directors and fund managers. Of course, any significant shareholding is already skewed towards the rich whose concerns are not those of the working class.

The author makes much of the ability of consumer activism to curtail corporate excesses, instead of using the political process. She cites the examples of Kathy Lee Gifford and Nike, where consumers supposedly forced companies to not use sweatshop labor. Of course, that is the sort of thing that is unverifiable as contractors move about globally, not to mention such protests cannot possibly be more than a drop in the proverbial bucket. While noting the several protests surrounding meetings of world trade bodies, again, the net effect of those protests has amounted to little. Much of these actions perpetuate an illusion that the system is modifiable by citizens, despite the absence of political participation.

Of course, corporations are forever concerned with image, that is, their brands. In the interest of name promotion and co-opting protest movements, the author cites several examples of corporations providing such social services as education and health care in various countries where their factories are located. The author does not note that under IMF structural adjustments, governments have been forced to cut social services to the bone. So corporations can step into that vacuum when they wish, but when cheaper labor can be found elsewhere, those facilities are closed just as quickly as the factories. The same sort of thing can be said for the codes of conduct adopted by most TNCs: when those vaguely worded declarations affect the bottom line, they can be dispensed with in a heartbeat. A particularly pernicious development in the U.S. is the penetration of primary and secondary schools by large corporations under the guise of supplying needed technology. Of course, corporate logos and advertising are part of the package.

This review is not to say that the author is pleased with this state of affairs. She does not regard ad hoc protests as a good substitute for democratic participation. But there seems to be little appreciation or emphasis on the class nature of the domination of corporations. Although large parts of the citizenry are turned off by politics, no assessment is made as to the depth of their disaffection or understanding. Are citizens alarmed with consumerism as the dominant mode of life? Is there really much in the way of an untapped potential to transform the economic and political system? Is there a noticeable path for citizens to recapture the political process and minimize reliance on largely ineffectual, random protests that are easily shunted aside by TNCs? Those answers are crucial if neoliberalism is to be countered.

Many interesting quotes and figures, many with references. But I find the endless spew of facts makes the read a bit dull. I was hoping more for an analysis of the problem with a digestable solution, but so far (I am half way through) it has been a flat description of the problem, with little to make me even care about the it, which is remarkable as I am already enraged about how capitalism has gone awry.

Globalism..you've all heard of it. But what is it?. Why has there been huge opposition towards it in other parts of the world, while here at home we just shrug it off as we head towards Wal-Mart?

"Silent Takeover" explores the paradox of capitalism and free trade that has over the years, transformed big business into multinational corporations that span the globe, and where in many cases, profits exceed the gross domestic product of several small nations put together.

The author admits that never have we had more choices as consumers. Products from all over the globe line the supermarket shelves. Advances in technology, lower production costs, offer us a multitude of gadgets while superstores display an array of electronics that dazzle before our very eyes.

But Dr Hertz warns that all that glitters is not gold, and there is a high tradeoff to all this seemingly wonderful progress. In her book she explores how left unchecked and unregulated, corporations and big money can manipulate governments, dictate domestic matters, and even influence foreign policy.
And while corporations worldwide dodge taxes through loopholes, people across the globe have been burdened to bridge the gap.

The "Silent Takeover" explores the increasing improbability of lawmakers to be impartial, if they fear the loss of corporate sponsorship and asks, are we citizens or consumers first? Do we still have a say in our government's decision making, or have "We the People" been reduced to merely "We the Market" ?

This book examines why economic globalism, left to progress in it's current direction, can never benefit societies as a whole, and why the gap between the rich and the poor will only widen unless reforms are made.

This is a very commendable book, and the issues are current and happening right now. You will be surprised at the full scope of the situation. The author who credentials are impressive, is a strong advocate of public participation and summarizes her suggestions for reform at the end. You can open this book to literally any page and discover some sort of interesting tidbit.

I liked this book; it was amazingly easy to read, without being trite or condescending. Many of the stories and anecdotes I knew from other readings, but there was new material, and all of it was well done in the telling.
This was not heavy going, nor was it an ill-structured string of disjointed stories.
I recommend it as an excellent introduction to the issues.

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 European Union use non-tariff trade barriers to keep foreign goods and commodities out of their domestic markets.

Heertz also notes that political campaigning has become so expensive in the United States - and elsewhere in the developed world - candidates must solicit financial and logistical support from corporations, making politicians beholden to corporate interests rather than the electorate they putatively serve. As corporations and their agents use their influence to shred the social contract, anti-globalization activists respond by demanding they provide the services once offered by the state.

From my perspective, the major flaw in this book is Noreena Heertz's failure to address historical claims made by proponents of current trends in globalization. Heertz's critique would be stronger had she pointed-out that the richest nation-states in the world today are wealthy because their governments intervened in their economies. Nonetheless, Noreena Hertz "the Silent Takeover" is a coherent and well written analysis of globalization.