Hi Karen and Arthur,
Yes, Noreena Hertz's book ("The Silent Takeover") is largely a case of
"creative fiction" -- to use your felicitous phrase.
Yes, I too have seen some of her interviews and, like you and Arthur, "was
struck by her confidence and assurance." However, it is still the case that
her book rests on flawed calculations and conceptual confusion, I'm afraid.
(She may well be invited for talks by CEOs -- 'cos she is indeed a most
attractive person -- see her photo inside the front cover of her book! --
Wow! -- I'd be tempted, too, if I were a CEO!)
The biggest flaw in her book (with which she starts powerfully in the first
chapter) is to fall into the same trap as the Institute for Policy Studies
(IPC, Washington DC) in their publication of December 2000 ("Top 200: The
rise of corporate global power"). This has had wide, but brief, publicity
since it was initially promulgated. But no self-respecting anti-globaliser
uses this argument now. I'm sure that some FWers are aware of this, but let
me précis this delusion for those who are not.
The flawed argument rests on computing the size of multinational
corporations (MNCs) by sales, but that of nations by gross domestic product
(GDP). Yet GDP is a measure of value added of a country, not of sales. If
one were to tot up the total sales in a country then the relative economic
size of MNCs falls several-fold.
Noreena Hertz writes in her book:
" . . . 51 of the 100 biggest economies in the world are now corporations,
only 49 are nation states. The sales of General Motors and Ford are
greater than the GDP of the whole of sub-Saharan Africa . . . Wal-Mart . .
. has higher revenues than most Central and Eastern European states
including Poland, the Czech Republic [etc] . . ." (page 7)
The first critics to demolish this type of paranoia were Paul de Grauwe (of
Leuven University) and Filip Camerman (of the Belgian Senate) ("How big are
the big multinational companies?", Mimeo, January 2002). If you compare the
added value of MNCs with added value (GDP) of nation states then the
economic weight of MNCs tends to sink by 70 or 80%. For example, sales by
General Motors in 2000 were $185 billion but value added was only $47 billion.
If the MNCs' vs Nation-states' rankings are compared like-for-like, then we
have the situation whereby only 2 of the top 50 economies are MNCs -- and
only 37 of the top 100. According to the IPC, Hertz and the
anti-globalisers, General Motors is bigger than Denmark. In reality,
Denmark's economy is three times bigger than General Motors. Even
Bangladesh has a bigger economy than General Motors.
The economies of the largest MNCs are indeed very large but in relative
terms they are nowhere near as large as they used to be decades ago. They
are becoming relatively less powerful year by year vis-ŕ-vis the rising
numbers of new MNCs. Many more new jobs are created by medium-sized
businesses and even more by small businesses.
Nation-states are steadily losing the control they used to have over their
economies -- this is not to be doubted. Consumers are becoming much more
powerful than they used to be. But nation-states are still powerful in
other ways -- and need to be. General Motors is many times more
economically powerful than Nepal but if, for some reason, the Nepalese
Government tells General Motors to get out, then it would have to. At the
end of the day, the nation-state sets the legislative rules by which
companies operate. Let's not confuse the sizes or functions of two quite
different institutions.
Keith
(KLW)
<<<<
I saw the interview. I too was struck by her confidence and assurance.
During the interview she placed some postives from the fact that CEOs are
inviting her around for a talk. I wonder. She should learn and understand
the danger of being co-opted. I think she is in a management school in the
UK. So she might be the house radical. I hope not. I fear so, though.
Let's see.
I note too that the interview was long on identification of problems and
short on policy solutions. Again, let's see.
>>>>
(AC)
<<<<
I apologize that I cannot provide a link to video of this interview I'm
promoting, rather than a link to the transcript, but it is worthwhile
reading, especially for those of you on FW who are interested in the debate
about globalization. I was struck by this woman's young age and her
striking focus. I know, you thought I was going to write 'striking
beauty'. Well, she was pretty but it was the look in her eye and verbal
assurance that caught my attention. Tell me, O Wise Ones, is it mature
knowledge or youthful confidence? Are her ideas creative fiction or
imaginative solutions?
>>>>
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Keith Hudson, General Editor, Handlo Music, http://www.handlo.com
6 Upper Camden Place, Bath BA1 5HX, England
Tel: +44 1225 312622; Fax: +44 1225 447727; mailto:[EMAIL PROTECTED]
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