George Soros tells her he’s part of it. Venus, a girl on the streets of Genoa with stars stuck on her eyes, tells her she would die for it. Identifying just what ‘it’ stands for is the obsession of Noreena Hertz, author of The Silent Takeover: Global Capitalism and the Death of Democracy, and confidante of billionaires and rabble-rousers alike.
Soros and Venus are part of the same ‘continuum of protest’, says Hertz of the movement labeled anti-globalization. But the problem is, ‘it’s the worst branded movement I’ve ever seen.’ Very few followers are actually against globalization; even fewer are anti-capitalist. ‘It’s a quest to make globalization work in a better, more equitable way,’ she elucidates.
Call it what you will, just two and a half years after the Battle of Seattle, anti-globalization evokes fear in government and big business even as they struggle to understand it. Hertz is their new informant, a double agent who crosses the barricades between protesters, corporations and governments. She makes no secret of the fact that any intelligence she gathers inside one camp may be shared with the others.
The Silent Takeover, published in the UK last year and in the US last month, describes how government has ceded control to corporate interests. It is so crammed with damning numbers and anecdotes that it has become the protester’s bible.
However, Hertz is also associate director of the center of international business and management at the Judge Institute of the University of Cambridge, and as an academic she goes one-on-one with CEOs and keynotes in the City. She’s been doing a lot of thinking, she says, and her next book will pick up where Takeover’s critique left off. It will be a handbook for change, including tips for companies competing in the new business environment.
Hertz has her critics, notably the Financial Times’ Martin Wolf. Even Howard Davies, chairman of the UK’s Financial Services Authority, gleefully suggested in a Guardian review that Hertz’s keen sense of image and publicity makes her more Naomi Campbell than Naomi Klein. He slated Takeover as ‘breathless globaloney’. The Economist pegged the book’s headline shocker – 51 of the world’s largest economies are corporations, only 49 are nation-states – as empty rhetoric, pointing out that even comparing GDP to value added (rather than to revenue, as Hertz does) is a soft comparison.
Takeover does play fast and loose with statistics, which Hertz collects like Pokemon cards. But it also nails a host of moving targets and does so in a lucid, hip style. US readers may be especially intrigued by Hertz’s European perspective on issues such as the genetically modified food debate, and the new US edition has been updated to cover George W Bush’s environmental and social policies.
Hertz’s premise is that a global movement, ranging from 250,000 protesters on the streets of Barcelona recently to housewives boycotting GM food to socially responsible investors, has replaced political democracy. ‘There is unanimous concern that governments have handed over the public interest to corporations, that people need to take control of their own destiny, and that the world could be significantly better for so many people,’ she says.
Since Takeover’s publication, Hertz has been hobnobbing with CEOs, institutional investors and governments, infiltrating the World Economic Forum and debating with the likes of Bill Clinton and Mary Robinson. She seems to be thinking more like a management professor, less like a street protester, and she’s ready to use her public platform to find solutions.
Companies be warned, she says. The movement, which has matured fast since its debutantes’ ball in Seattle, is radically transforming the business environment. Michael Porter’s five forces of competition are obsolete and are being replaced by five new forces: non-governmental organizations (NGOs), grassroot activists, the angry excluded, political shoppers and governments.
‘Each of these forces is putting pressure on companies in significantly new ways,’ Hertz says. Brent Spar and Greenpeace’s ‘masterful’ media campaign were turning points for NGOs, which have since orchestrated more successful campaigns and boycotts. NGOs are the new fifth estate, according to Edelman PR Worldwide, whose second annual NGO survey found Amnesty International, the World Wildlife Fund and Greenpeace to be Europe’s most trusted brands.
With her nose for quirky detail, Hertz seems particularly interested in grassroot activists like the anti-supermarket protesters she met in Devon recently. Empowered by the internet, such groups often use culture jam to subvert brands and ad campaigns (check out www.adbusters.org) and hold workshops on things like brand-bashing or how to spot greenwashing. More significantly, grassroot activists are going to court, for example with suits against Shell for its Nigerian activities or against Unocal for its doings in Burma. These cases are being heard under the Alien Tort Claims Act, which allows foreign nationals to sue multinational companies in US courts.
A conversation Hertz had with Owen Saro-Wiwa, brother of executed Nigerian anti-Shell activist Ken Saro-Wiwa, sums up the nature of the angry excluded. Talking about growing up in Ogoniland, he recounted how one day they got their first television and suddenly realized there were people out there in the world living in beautiful houses and driving cars. ‘Why don’t we have this?’ they thought. Adds Hertz: ‘The angry excluded are the ones blowing up pipelines because they feel their communities are being ravaged and they have no redress through any official channel.’
Oddly, under political shoppers, Hertz lumps institutional investors in with the three out of four consumers who choose products on a green or ethical basis. These ‘political investors’ include NGOs like Friends of the Earth or Amnesty International which are beginning to file shareholder resolutions, as well as mainstream pension funds like Calpers which now uses human rights screens. She brandishes new data showing that 77 percent of UK pension scheme members want socially responsible investment policies; socially screened funds in the US have been growing 1.4 times as fast as other funds; and the equivalent funds in the UK have doubled over the past three years. For her part, Hertz was recently invited by a group of UK pension funds to advise on investing in companies that make political contributions. She flagged this as a danger area, suggesting corporate reputation is vulnerable to attack for being seen to back specific policies.
The fifth force is government, which is beginning to respond to this ‘new, anti-globalization, post-Seattle climate.’ Hertz cites mandatory environmental reporting in Denmark, Holland and France as well as EU president Guy Verhofstadt’s calls for global binding agreements on ethics and the environment.
It’s a whole new era of unpolitics. ‘At the same time as voter turnouts have been falling, there’s been an explosion in non-traditional forms of political expression,’ says Hertz, pointing out that the number of people boycotting goods, signing petitions and going on marches has grown 200 percent over the last ten years. ‘But I don’t believe the movement has the monopoly on moral imperative. There are CEOs, investors and bankers who want to address these issues, too.’
What is her advice to companies? First, Hertz invokes the words of hockey great Wayne Gretzky: ‘I skate to where the puck is going to be.’ Companies have to recognize the regulatory environment is changing and be ready for it, like Honda in the 1970s, which spent money on developing small, clean cars instead of lobbying against environmental legislation.
Next, pointing to the specter of Andersen, ‘Choose your friends wisely.’ Companies must worry not just about their subcontractors and supply chains, but about auditors, consultants and ad agencies. And they should consider their membership in industry associations. BP and Shell, for example, did well to pull out of the Global Climate Coalition because they realized that lobbying against environmental protocols would hurt their brands.
‘Walk the talk,’ Hertz also counsels. ‘It’s meaningless to spend tons of money on slick ad campaigns and corporate communications if the rhetoric doesn’t match the reality. Exxon Mobil sponsoring National Tree Week, for example, wasn’t going to swing it for any stakeholder it was trying to appease.’
Finally, Hertz says, ‘Join the movement.’ That is, use corporate power and influence in a positive way, for example Levi’s and Van Heusen trying – albeit unsuccessfully – to get China to lighten up on freedom of association, or BP making explicit its payments to the Angolan government.
Corporate success in the face of social, environmental and governmental pressures may not be quite as straightforward as Hertz makes it sound. Nonetheless, her courage and passion are infectious – diseases any company would do well to catch. ‘Big companies feel vulnerable in this new environment,’ she empathizes. ‘It’s a matter of taking big, brave steps.’
Noreena Hertz’s The Silent Takeover is published in the UK by Arrow (paperback, £7.99) and in the US by Free Press (hardcover, $25).
