Questions of Life and Death

Interview with Noreena Hertz

[This interview published in: Weltwoche 17/03 is translated from the German on the World Wide Web, www.weltwoche.ch/ressort_bericht.asp. Noreena Hertz, 35, is an author and economist. After graduating at 19 and becoming an economics professor in Cambridge at 30, she is a star of the anti-globalization movement today. “There is no necessary connection between capitalism and democracy.”]

Ms. Hertz, you are one of the most passionate critics of globalization. What is good in globalization?

Globalization has greatly helped certain sectors of the population. Globalization has multiplied the options of the educated, accelerated technological change and increased prosperity. A somewhat just distribution of this prosperity and access to information and education has not occurred. The worldwide differences between rich and poor were never as great as today.

For the first time in history, more than half of humanity live in more or less functioning democracies today.

There is no necessary connection between capitalism and democracy. Dictatorships are in no way punished by the international financial markets. Tunisia with very dubious achievements in human rights need only pay 3 percent interest on its debts while Brazil with an unstable democracy must pay interests between twelve and fifteen percent. Thus the markets in no way automatically favor democratic states. This was clear to me when I worked for the World Bank at the beginning of the nineties. Investors were only interested in stability, not in democratic progress.

But democratic regimes are more stable than dictatorships in the long run. Transparency, separation of powers and legal security are presuppositions for functioning markets.

Yes, theoretically. However the interest of property rights usually prevails in practice and very rarely human rights and rights of freedom.

Whoever reads your book could conclude that the power of big business was an invention of Margaret Thatcher and Ronald Reagan. Nevertheless the dictum “What is good for General Motors is good for America” comes from the golden age of Keynesianism in the fifties and sixties, to say nothing of the superiority of the economy over politics at the beginning of the 20th century.

Obviously large corporations always had massive power. The history of the western countries of the last hundred and fifty years is a history of the tension between politics and the economy as centers of power.. In 1876, the American presidential candidate Rutherford Hayes spoke of “a government of corporations, by corporations and for corporations” which for many describes the Bush administration. Governments in the past understood that the power of big business threatened to become excessive and intervened in regulatory ways. We have now waited in vain a rather long time since Thatcher and Reagan. What distinguished these two from their predecessors since the Second World War was the fact that they str4ipped themselves of power in favor of the economy in dogmatically insisting governments only inflicted damage.

You complain that many people lost trust in this politics dependent on the economy and took to the streets. However the number of those who voted for the heads of government and heads of state was far greater than the number of demonstrators. Whose legitimacy is stronger?

Not for a second do I idealize or romanticize civil society. Civil society has a great legitimation problem. For whom do these people actually speak? Who gave them a mandate? For example, abortion advocates and abortion opponents belong to civil society. In this milieu, only the one who cries loudest is often heard. I believe there is a serious crisis of democracy. When only 51 percent of eligible voters go to the polls and 90 million non-voters are largely persons with a trifling or precarious socio-economic status, politics becomes increasingly a realm of the privileged.

As one struggling for more global justice, shouldn’t you be glad that many of these globalization losers do not vote any more? Or do you seriously believe that these voter groups – deeply alarmed and mainly protectionist-oriented – can be won for your goals like better working conditions and stronger environmental protection in the third world?

I don’t believe that 49 percent of Americans who abstained in the last presidential election would have voted rightwing. Many would have championed a better health care system and better public services.

Internationalists like you have the problem of marching shoulder-to-shoulder with the “arch-enemy”, namely nationalists and protectionists.

Some groups in the movement argue in a nationalist and protectionist way. Very strange alliances can be seen at the demonstrations. My disapproval of this circle is just as strong as my condemnation of the dominant neoliberal ideology. Protectionists do not romp around in the anti-globalization movement. The greatest protectionists are in the governments. Through the agrarian policy of the European Union (EU) and the US, the countries of the third world lose over a billion dollars daily in trade sales because they cannot export their products to rich countries.

You seem to have far greater problems with politics than with the economy although your sharpest criticism is directed at multinational corporations.

Many politicians today lack a moral imperative. They act as though they have no options any more because the economy dictates conditions. This is not true. Politicians can still make decisions in the interests of many, not in the interests of a few. In Great Britain, finance minister Gordon Brown recently emphasized that taxes must be raised to improve the health system. However most politicians act today as though the world were a positive sum game, as though one could lower taxes and nevertheless have better public services. This is obviously nonsense.

You express a contempt of politics often heard in the circles of big business. In your book, you praise supermarket chains that “over night” remove their genetically modified products from the shelves and contrast them with the governments that endlessly debate whether these products should be allowed. This is a very unfair comparison since the decision processes of whole societies are infinitely more complicated than businesses with only a single goal: profit.

Businesses react more quickly than political systems in maximizing profits for their shareholders. Sometimes business decisions are connected with social improvements and sometimes not. Businesses are morally ambivalent since maximum profit does not distinguish between moral and immoral actions. Politicians make this distinction.

Whoever looks through this year’s WEF (World Economic Forum) program in Davos hardly notices the moral ambivalence of the economy. Many things seemed copied from the manifestos of the anti-globalization movement: “We must globalize globalization” etc. Is the globalization euphoric “Davos man” seriously questioned? Is the WEF a gigantic PR-exercise?

When I leafed through the program, I found many meetings about poverty, development assistance and growing inequality that I attended enthusiastically. However the participants were mostly from circles of the international economic elite. Many seminars focused on narrowly defined economic questions without even mentioning human rights or environmental rights. At least representatives of non-governmental organizations and unions were invited and given the opportunity to confront top managers directly with their concerns – as I did last year in conversation with Bill Gates. This can only be positive.

You will be presented at this year’s WEF as a “global leader of tomorrow”. You have been an international media star since the publication of your book “The Silent Takeover” (“Wir lassen uns nicht kaufen!”). Are you occasionally surprised about your status or are you secretly convinced that the world owes this to you?

The success of my book took me completely by surprise although I had a respectable academic career. I completed by university study at 19, had a doctorate from the University of Cambridge and a good job. In the last one-and-a-half years, I learned enormously. I sat next to Bill Clinton and Mary Robinson at a podium discussion. In a public debate, I faced a minister of the Blair government on national television. I acclimated myself to this new environment. Still I never believed that the world owed me anything. The world owes the 1.2 billion people living in poverty infinitely more than it gives them. The world owes a great debt to the eight million whose lives could be saved every year if the rich countries spent twenty billion dollars more in development assistance. The world owes something to infinitely many people, not to me.

You live the life of an absolute globalization winner, even a global “jet-setter” who hurries from lecture to lecture and advises large corporations, figures of the establishment. At the same time you are the “radical chic” in person as a protagonist of anti-globalization. Do you sometimes regard criticism as an insult of majesty? When Martin Wolf of the Financial Times tore your book to shreds as inconsistent, you said men at a certain age have problems with attractive intelligent young women. Wasn’t that a sexist remark?

There aren’t many critics of the status quo that enjoy as much media attention as I enjoy. My ideas and principles threaten certain people devoted to the defense of the status quo. These peoples use all available means to discredit someone like myself including se4xist comments and disparaging references to my age. Then I strike back. I attended an elementary school with sixty maidens and six hundred lads and learned early to assert myself in a male environment. What is wretched about such comments is that they frighten many young women from active public life. These women fear becoming victims of broadsides. This is a hurdle for young talented women.

Haven’t neoliberalism and globalization brought more chances for women since formerly hermetically closed men’s clubs must open for reasons of competitiveness?

While that is theoretically true, the numbers unfortunately speak another language. In OECD countries, women on the average still earn 36 percent less than men. Women are a rarity on the red carpet floors of the economy. When I gave an address at an annual symposium of the World Trade Organization several months ago, I was the only women out of 72 speakers. Obviously some things have taken a turn for the better for educated women in the last decades. However this is not true for the majority of women, particularly poor women. The neoliberal model emphasizes personal freedom and political rights. What good is this to a single mother living in social housing who can hardly support her children?

For a long time, the neoliberal model successfully faded out the adverse fact that the homo oeconomicus, the rational profit maximizer, only constitutes an increasingly small minority of the whole world population.

This incapacity for learning has much to do with shame. Admitting that some of their dogmas are completely insubstantial is not easy for disciples of market fundamentalism. An economics professor at Princeton University recently said to me: “I don’t know what I should teach my students any more. I no longer believe in the model.” Obviously there are certain social groups that profit very intensely from the present system and consequently resist rethinking. Still even these groups in the long run cannot simply screen or separate themselves in their “gated communities”, in their strictly guarded rich districts while ghettos arise around them.

Do those who live in prosperity-oases today know this?

At the last WEF, I spoke with the heads of two large investment banks who were convinced the status quo could not continue and the growing inequality must be energetically tackled. Gradually it began to dawn on certain economic leaders that economic orthodoxy was full of mistakes. This rethinking was not always as public as in the case of the Nobel Prize winner Joseph Stiglitz who left his job as chief economist of the World Bank because the policy of the International Monetary Fund (IMF) and the World Bank only intensified poverty in developing countries instead of reducing distress. The success of the anti-globalization movement should not only be measured by the number of demonstrators in Seattle, Genoa and Nizza. Anti-globalization ideas gradually spread. At the last WEF, many said the atmosphere was different than in earlier years when an unbroken triumphalism prevailed.

Why aren’t there two or three hundred Stiglitzes? Surely most economists of the World Bank and the IMF recognize that the market cannot create the prerequisites of its functioning – infrastructure, institutions, education and social stability.

Neoliberal prescriptions operate in all countries irrespective of their state of development, institutions and culture. When I worked for the World Bank in Russia, there was the firm conviction that one only needed to liberalize and privatize the economy and a land like the US would arise in a few years. This neoliberal hubris and dogmatism are unbearable. We should admit that we hardly have a presentiment how a country can successfully develop and become wealthy.

Do you proclaim the end of development economics or the end of economics generally?

The end of economics as a “hard” science. Assuming the world could be grasped in one-, two-, or multi-dimensional models was always absurd. Economics cannot be separated from politics, history and culture. When I gained my MBA at the renowned Wharton Business School, globalization was presented to us as a process without significant problems. In Russia, I briefly advised a firm that simply didn’t pay its debtors. When I asked about the reason, people said: “We are all facing problems.” This is not the kind of answer that the neoliberal model expects.

Your proposals don’t always seem very realistic. They urge the World Trade Organization to be concerned with human-, social- and environmental rights and not only with trade. Are you advocating a world government?

No, I don’t want a world government. However we need very strong global rules and norms. We can only respond globally to certain global problems like destruction of the environment or sicknesses like Aids. We need international norms to bring multinational corporations to obser4ve human rights, environmental rights and ethical standards in the third world.

Can international politics develop in this direction? Common norms on the European Union (EU) plane provoke many national critics. The European Union has a more supportive value base than the “world community”.

Nevertheless we have seen dramatic changes in the last years. For example, the Belgian Prime Minister Guy Verhofstadt as EU president spoke of the necessity of binding global rules. The former chief of the WTO Renato Ruggiero sought a worldwide environmental organization. The current chief of the WTO, Supacha Panichpakdi, urges serious rules of conduct for multinational corporations. A mechanism of international standards and international rights is slowly arising. For example, representatives of 190 governments are meeting twice a year in the framework of the convention on Tobacco Control to discuss far-reaching rules for the tobacco industry, particularly concerning their right to advertise.

Justice enters increasingly in global questions.

Right. Corporations in the United States are sued for their actions in the third world, as for example Coca Cola for its allegedly miserable treatment of workers in its Colombian plants. We have important new institutions like the International Criminal Court. Attor5ney7s for tobacco companies must clarify today whether their top managers can be charged before the International Criminal Court for crimes against humanity for knowingly manufacturing a product that kills millions of people.

You cannot rely only on justice, demonstrations and consumer boycotts. Wouldn’t the anti-globalization movement reach more people if it thematicized more strongly the shady sides or drawbacks of globalization in our societies, permanent stress, job insecurity and the related fact that birth rates are alarmingly low in Europe and Japan?

These are obviously important and legitimate themes. The worldwide sales of Prozac already surpass the gross national product of small countires. I invest my time and energy in questions of life and death. Life expectancy in Botswana is 36 years. 70 percent of the adults in African hospitals are HIV-positive. We aren’t doing enough to prevent these tragedies.