The Silent Takeover: Global Capitalism and the Death of Democracy [Paperback]

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."

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 . . .