The Silent Takeover

May 27, 2002
Cambridge University economist Hertz asserts that Reagan's and Thatcher's brand of free market capitalism has had dire social and political repercussions, although it has triumphed as the dominant world ideology and brought prosperity to many. She sensibly argues that with government in retreat from its traditional rule-setter role, multinational corporations have grown so powerful—51 of the hundred biggest economies in the world are corporations—that they determine political policies rather than operate subject to them. Market success may rule, but Hertz laments that the state, in appearing to serve business, may be nullifying democracy's social contract to represent and protect the rights of all citizens equally. WTO protests and activism reinforce her sense of growing political discontent not only about income distribution effects (97% of the increase in income over the past 20 years in the U.S. has gone to the top 20% of the families) but also about human rights issues. Campaign finance realities, declining voter participation, increasing alienation and terrorism amid glowing corporate results represent an urgent cry for reform to Hertz. Since corporations are not designed and cannot be expected to serve a general population's social and political needs, she argues that democracies need to move toward a realignment between the state's political power and the corporations' economic power so that all people have a positive stake in world economic progress. Hertz maps out a proposed agenda, and her eloquent call to action deserves the attention of every concerned citizen of our troubled world. (June 17)Forecast:Concern about the unchecked influence of multinational corporations in the political sphere—both nationally and internationally—is a hot topic, and Hertz's credentials as a respected academic with a Wharton MBA and a pro–free market mindset reinforce her arguments. This book and Joseph Stiglitz's Globalization and Its Discontents (Forecasts, May 13) will catch the eye of those seeking to understand how business will and should be done responsibly in the future.